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TMI Blog2002 (7) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... 02 - Judge(s) : KALYAN JYOTI SENGUPTA. JUDGMENT KALYAN JYOTI SENGUPTA J.-The petitioner being the intended vendee has asked for quashing of the order passed by the appropriate authority namely, respondent No. 1, dated January 28, 1993, purported to have been passed under section 269UD(1) of the Income-tax Act, 1961 (hereinafter referred to as "the said Act"), and also for consequential relief for granting "No objection certificate" to purchase the two flats, bearing Nos. 1-C and 4-C, situate in the building commonly known as "Sun Flower Court" at and being premises No. 7, Love Lock Place, Calcutta 700 019 (hereinafter referred to as "the said property"). By the order impugned the Central Government has exercised its option to buy up the said property at a consideration of Rs. 50 lakhs. The short facts of the case are that the petitioner entered into an agreement for sale of the aforesaid property with respondents Nos. 4 and 5, being the vendor at a sum of Rs.50 lakhs. Thereafter the petitioner under section 269UD, filed an application in Form No. 37-I of the Act. Therefore, a show-cause notice was served upon the petitioner on or about January 7, 1993, issued by the approp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion taken by the Central Board of Direct Taxes is at one per cent. per month. Therefore, judged from all standards the basis of increase of the valuation is not only illegal but also flagrant violation of the principle of natural justice. The appropriate authority has thus introduced certain facts that is the age of the building, the time lag, the rate of inflation, etc., which were absolutely new materials and were not disclosed even in the show-cause notice or at the time of hearing before order was passed and the assessee was never given any opportunity to controvert these materials. The order of the appropriate authority, therefore, suffers from blatant and flagrant violation of the principle of natural justice. He further contends that in order to attract Chapter XX-C, there must be significant understatement of valuation of the property concerned, namely, of 15 per cent. or more of the fair market value and the appropriate authority must be satisfied further that no undervaluation was done with a view to evade tax. He further contends that although presumption of an attempt to evade tax may be raised by the appropriate authority concerned in case of the aforesaid circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... len for consideration is: whether the decision of the pre-emptive purchase of the aforesaid two properties under Chapter XX-C of the Income-tax Act has been taken in accordance with law and upon principle of natural justice or not. Right to acquire property of his own choice in any part of India, by a citizen, is a fundamental right as well. However, such a right is always subjected to reasonable restriction as contemplated in article 19(2) of the Constitution of India. In my view, the pre-emptive purchase by the Central Government under the aforesaid Chapter is one of the measures to put reasonable restriction and this has been engrafted in the statute to check and prevent evasion of income-tax, which is more often adopted selling a property at under-valuation. Both learned counsel have drawn my attention to the decision of the Constitution Bench of the Supreme Court in C.B. Gautam v. Union of India [1993] 199 ITR 530. Before the aforesaid judgment was rendered in section 269UD of the Chapter XX-C of the Act there was no provision for giving hearing or notice to the vendor or vendee, nor was there any provision to supply the materials and/or documents on which the Revenue is to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f all the documents and materials on which the Revenue has sought to rely and it was obliged with supply of the materials, thereafter the writ petitioner duly showed cause and dealt with all the allegations. The writ petitioner undeniably appeared and participated in the hearing. In such circumstances, the aforesaid preliminary plea has been and/or is deemed to have been waived. Accordingly, I reject this contention of the writ petitioner with the support of judicial pronouncement reported in Lytton Hotel Pvt. Ltd. v. Appropriate Authority [2001] 248 ITR 541 (Cal). It is contended by Mr. Ghosh that when a decision was rendered upon hearing of the petition it is not for the writ court to substitute its own decision in the name of judicial review, under article 226 of the Constitution of India. In principle, I accept the submission of Mr. Ghosh. But one cannot take a decision which is manifestly absurd, in the name of compliance with procedure, formality or rules of natural justice. I wish to examine as to whether the compliance with natural justice has been in true sense observed, following the principle laid down in C.B. Gautam's case [1993] 199 ITR 530 (SC) or not, then again, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of price would be Rs. 1,470 per sq. ft and the same is more than the rate of the numbers I and II of sale instances. However, the sum is less than 15 per cent. if the sale of the III instance is taken into consideration and, however, this cannot be a comparable instance as it is situate at a different place. Therefore, I have no hesitation to hold while accepting the argument of Dr. Pal that any reasonable prudent man could not have come to a conclusion applying the aforesaid sale instances, there is any understatement of the apparent consideration. It appears that the appropriate authority while assessing the value of the aforesaid two flats has not only relied on the amount of the consideration of the said two sale instances mentioned in the report at the time of sale, but has sought to value the same on the date of enquiry by adding time lag for seven months at the rate of 1.5 per cent per annum., age of the building of the Trivoli Court and architectural consideration. The aforesaid basis or method had never been disclosed to the petitioner, nor any opportunity was given to rebut the same. In my view, the appropriate authority ought not to have adopted such method or materi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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