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TMI Blog1999 (3) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... er cent. of the super built area in lieu of the cost of construction. The supplementary agreement dated January 25, 1990, was also entered into between the parties providing the manner in which 35 per cent. of the constructed area was to be handed over to the Trust. On July 20, 1995, the land owner and the developer referred to above entered into an agreement with Mr. N. Malik and Mrs. Meena Malik to sell the undivided share of the land and flat No. 442 situated at fourth floor measuring approximately 2,700 sq. feet along with two car parking spaces for a consideration of Rs. 40,45,000. It is stated that the undivided share of the property comes to 1047.14 sq. feet. A statement in Form No. 37-1 as required under Chapter XX-C of the Income-tax Act was filed along with a copy of the agreement dated July 20, 1995. Show-cause notice was issued for pre-emptive purchase. On the ground that the consideration of the flat would be Rs. 31,75,393 after deducting the car parking which was notionally valued at Rs. 2 lakhs, the net value was assessed at Rs. 29,75,393 at the rate of Rs. 1,424 per sq., feet. Compared to other flats in Bangalore the consideration was stated to be grossly understate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the appropriate authority were not comparable. The observations in Anagram Finance Ltd. v. Appropriate Authority [1996] 217 ITR 22 (Guj) ; Gordhandas Purshottamdas Patel v. Appropriate Authority [1996] 217 ITR 62 (Guj) and Hunaida Jamnagarwala v. Appropriate Authority [1996] 217 ITR 679 (Guj) are relied on for the proposition that the provisions of section 269UD(1A) and (1B) are not complied with. It was also submitted that the appropriate authority has committed an error in not placing reliance on the two sale instances of property 1 and property 2 on which the petitioners based their claim that consideration was adequate and sufficient. On the basis of the judgments cited it is stated that the appropriate authority has not given any positive finding regarding the market value of similar flat in the same locality and thereafter considering the difference of 15 per cent. in the value the authority has come to the conclusion of the intention of evasion of tax or understatement of consideration. A consolidated order is passed in respect of the two properties. In the order of the appropriate authority dated October 30, 1995, it is stated that Srinivasa Builders and Sabari Tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the considered opinion that merely because no appeal is provided for against the order of the appropriate authority, directing compulsory acquisition by the Government, the supervisory power of the High Court does not get enlarged nor the High Court can exercise an appellate power". I have considered over the matter. The principles for valuation of immovable property were summarised by Justice Sabyasachi Mukharji (as he then was), in Debi Prosad Poddar v. CWT [1977] 109 ITR 760 (Cal) as under : "(i) Attempt must be made to find out the price which the immovable property would fetch on the valuation date imagining a willing buyer to purchase the property from a willing seller in respect of the property. (ii) In respect of the immovable property there is no fixed market such as market for shares or for other commodities, like sugar, cloth, etc. In order to arrive at a valuation in respect of the property there must necessarily be certain element of guess. But the guess must be based on certain facts and according to certain principles which would be, in the facts and circumstances of each case, as fair as possible to the Revenue as well as to the assessee in trying to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enuine instances. The most comparable instances out of the genuine instances have to be identified on the considerations of proximity from the time angle and proximity from the situation angle. After identifying the instances which provide the index of market value, the price reflected therein may be taken as a norm and the value of the land in question may be deduced by making suitable adjustments for the plus and minus factors, vis-a-vis the land under consideration by placing the two in juxtaposition. The plus factors are proximity to a road, frontage on a road, regular shape, etc., while minus factors are situation in the interior at a distance from the road, narrow strip of land with small frontage, compared to depth and some special disadvantageous factor which would deter the purchaser. It is not possible to lay down any hard and fast rule to ascertain the fair value by adopting instance method but the authority should determine the fair value after taking an overall view of the situation. A reference can be made in this connection to the decision of the Supreme Court in Chimanlal Hargovinddas v. Special Land Acquisition Officer, AIR 1988 SC 1652." The Kerala High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the property, the purpose for which the property is used, the nature of the property, the time when the agreement is entered into and similar other objective factors. The valuation, therefore, has to be done by a method which is more objective and could furnish reliable data to arrive at a just conclusion." in Mrs. Kailash Suneja v. Appropriate Authority [1998] 231 ITR 318, 427 (Delhi) : "A combined reading of section 269UD(1A) and (1B) of the Act leaves no room for doubt that it is a question of objective decision making process by taking into consideration all the relevant materials which have come before the hearing authority and considering the rival aspects of the matter. Moreover, the requirement of law is', to specify the grounds on which the order of the pre-emptive purchase is made. The obligation does not stop by merely rejecting the submissions made before it. The rejection of submissions made by the vendors or the transferee or the persons interested in the property, does not lead to a consequence that grounds for making pre-emptive purchase exist. The sine qua non is that reasons must exist, on the material placed before it, for supporting the action taken for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst him including the material collected so far by the competent authority, and be furnished copies of the statements recorded and those of the documents collected by the competent authority on which he intends to rely so as to give the person interested or affected an opportunity to state his case and to correct or controvert the material sought to be relied upon, and the competent authority should act in a just manner at all stages of such inquiry which would necessarily imply that the authority shall furnish any other additional material which it might have collected after the initiation of the proceedings in the course of the inquiry to the person interested or affected by the proposed acquisition . . ." The Bombay High Court in Smt. Vimla Devi G. Maheshwari v. S. K. Laul [1994] 208 ITR 734 observed that if the order of purchase was made after considering the materials on record, it cannot be set aside unless the order is perverse. In Gautam (C. B.) v. Union of India [1993] 199 ITR 530 (SC) presumption of evasion of tax could be drawn if the undervaluation is more than 15 per cent. In Rajalakshmi Narayanan v. Margaret Kathleen Gandhi [1993] 201 ITR 681 it was observed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons is situated at Kolar Road (Old Madras Road, Indiranagar) on the National Highway. The flats were considered to be of a value not less than Rs. 2,000 per sq. ft. super built area and thus the undervaluation was considered at 29.90 per cent, Since it was more than 15 per cent. a presumption was drawn that it was with a view to avoid tax. The petitioner referred to an instance of flat No. 441 which was cleared by the appropriate authority, vide No Objection Certificate No. 4(9)7 of 1994-95 in respect of the agreement dated March 31, 1994, and the rate was Rs. 1,062 per sq. ft. It is stated that even if 20 per cent, as escalation on account of lapse of time is taken into consideration the value cannot exceed Rs. 1,300. Similarly, in Ramaiah Building, Apartment No. 305, Third Floor, was also cleared by the appropriate authority, vide No Objection Certificate No. 1 (655)4 of 1994-95 under the agreement dated January 11, 1995, where the value was Rs. 870 per sq. ft. The appropriate authority considered the representation submitted by the petitioner and the disadvantages pointed out were held also liable to be ignored on account of the situation of the property at two important roads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose the material placed by the petitioner was required to be considered. The reason for rejecting the materials placed in support of the action for pre-emptive purchase has to be given. The appropriate authority has taken all the contentions raised by the petitioner and the reasons why the instances cited by the petitioner are not acceptable. Even in the case of Smt. Sudha Patil [1999] 235 ITR 118 (SC) referred to above, it was observed that this court has a limited jurisdiction and even if on the material two views are possible, then it would not be proper for the High Court to substitute its conclusion for that of the Tribunal. The supervisory power contemplated could be exercised when this court comes to the conclusion that the Tribunal has failed to consider some relevant material or the finding is based on no evidence or that the finding is such that no reasonable man can come to such a conclusion on the basis of which the finding has been arrived at. Nothing of the sort exists in these petitions. The order passed by the appropriate authority is well reasoned and does not require any interference. It may also be observed that the contention for valuation of the land and b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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