9911796707
TMI Blog1998 (2) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... ropriate authority, respondent No. 2. On January 22/23, 1990, respondent No. 2 passed an order directing the filing of the statement, i.e., consigning the same to the record room without any action thereon. The appropriate authority formed an opinion that the plot was allotted by the Chandigarh Administration to the predecessor-in-title of the vendor subject to certain terms and conditions restraining its alienation for a period of 10 years from the date of completion of construction thereon, which term having not been complied with, the transferor was estopped from transferring the property. The order of the appropriate authority was preceded by certain enquiries having been made with the estate officer. To put it in other words, the appropriate authority formed an opinion that the transferor being not entitled to transfer the plot for having breached the terms of the original agreement, the object of the agreement was unlawful and as the transfer---if materialised---would defeat the provisions of law, the same was void. The appropriate authority concluded : "The statement in Form No. 37-I based on unlawful and void agreement is also to be treated as invalid. The question of acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernatives available to it under section 269UD of the Act; either to pass an order of pre-emptive purchase or to issue a no objection certificate; the appropriate authority did not have a third alternative such as one of adjudicating upon the validity or legality of the agreement entered into between the parties. If an order of pre-emptive purchase was not passed within the prescribed time, then the appropriate authority had only one option and that was to issue a no objection certificate. The appropriate authority formed an opinion that the order dated January 22/23, 1990, was not challenged by the petitioners by pursuing their remedy there against and instead they had chosen to file a fresh statement in Form No. 37-I and, therefore, the petitioners could not claim any benefit from loss of time calculated by reference to the date of filing of the earlier statement, i.e., October 25, 1989. The appropriate authority also formed an opinion that the value of the plot was understated by more than 15 per cent. Consequently, the appropriate authority ordered the purchase of the plot by the Central Government. By the impugned order dated April 27, 1995, the authority exercised the power v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement in Form No. 37-I, based on an agreement which is illegal or void. The question centres around the interpretation of the provisions of Chapter XX-C so as to determine and find out the scope of authority conferred on the appropriate authority and the nature of orders which can appropriately be passed by it. On behalf of the petitioners, implicit reliance has been placed on the Division Bench decision of this court in Tanvi Trading and Credits P. Ltd. v. Appropriate Authority [1991] 188 ITR 623. Therein the appropriate authority had formed an opinion that it was not certain as to which portion of the land would be surrendered to the State Government in view of the orders having been passed under the Urban Land Ceiling Act declaring 680.26 sq. mtrs. of land as surplus. The agreement was not capable of being made certain and was void under section 29 of the Indian Contract Act. Further, the agreement was a contingent contract depending upon the orders of the competent authority under the Urban Land Ceiling Act and a no-objection certificate could not be issued in respect of an agreement which was void or contingent---at best. The appropriate authority concluded that the statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onounce on the legality or validity of the transaction. If the transaction is otherwise illegal or invalid, it will be for some other authority, in another forum, to decide on the same. As far as the appropriate authority is concerned, the certificate which is issued has relation only to the question whether the Government is interested in purchasing the property or not." A writ of certiorari was issued quashing the impugned order of the appropriate authority followed by a writ of mandamus directing it to issue a no objection certificate in terms of section 269UL(3). As against the abovesaid decision of the Delhi High Court, the appropriate authority went in appeal to the Supreme Court. By the time the matter came up for hearing before the Supreme Court, it appears that the requisite no-objection certificate had already been issued to the writ petitioners. Their Lordships noted the said subsequent event but at the same time dismissed the petition on the merits by making the following speaking order : "We agree the two alternatives are open under the scheme of the legislation.---(1) the Union of India through the appropriate authority could buy the property, or (ii) in the event ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity v. Naresh M. Mehta [1993] 200 ITR 773 (Mad) ; Kelvin Jute Co. Ltd. v. Appropriate Authority [1990] 185 ITR 453 (Cal) ; Ramanlal B. Pandya v. Union of India [1998] 230 ITR 454 (Kar) ; Ghaziabad General Industries (P.) Ltd. v. Appropriate Authority [1997] 227 ITR 884 (All). (ii) The time limit of two months specified in section 269UD(1), first proviso (within which the appropriate authority has to act), cannot be extended (Appropriate Authority, Government of India v. Naresh M. Mehta [1993] 200 ITR 773 (Mad) ; Irwin Almeida v. Union of India [1992] 197 ITR 609 (Bom) and IOL Ltd. v. S. C. Prasad [1996] 217 ITR 52 (Bom). (iii) If no order is passed within the prescribed time of two months, it automatically follows that a certificate under section 269UL(3) must be issued (Mount Plaza Builders Pvt. Ltd. v. Appropriate Authority [1992] 195 ITR 750 (Mad) ; Moi Engineering Ltd. v. Appropriate Authority [1992] 198 ITR 270 (Cal) and IOL Ltd.'s case [1996] 217 ITR 52 (Bom)), (iv) The only question which the appropriate authority can decide is whether the property is undervalued or not. The appropriate authority cannot go beyond the terms of the agreement ; it cannot question the validi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forceable or not enforceable and whether the agreement is valid or not. The appropriate authority has no jurisdiction to decide and say that the agreement is ab initio void and contrary to the principles of the Partnership Act. If the Department is not willing to purchase the property on the ground of invalidity of title or on account of any other invalidity, the only course open to it is to grant a 'no-objection certificate' and leave the matter to be decided by the parties and it is for the parties to face the consequences and it is not for the appropriate authority to take upon itself to decide the issue." What is the object sought to be achieved by Parliament by enacting Chapter XX-C ? Proliferation of black money was evident in the transfer of immovable properties. One way of tackling the problem of tax evasion is to confer on the Government the pre-emptive right to acquire immovable property undergoing a transfer for consideration above certain value if the transaction be outwardly undervalued. The object is to induce the transferee and transferors to declare the full amount of consideration in the agreement for transfer. It is essentially a theory of preemption which has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rve Bank without which it could not be sold. It was submitted before the Division Bench that if section 269UD could be brought into operation before the sanction of the Charity Commissioner was obtained, the consequences of an agreement for sale of the property of a public trust for a consideration less than the market value of the property may be vested on the public trust. The income-tax authorities would pay the apparent consideration which is less than the market value to the public trust to acquire the property and the beneficiaries of the public trust would be losers. That would lose the protection which section 36 of the Bombay Trust Act gave them. Their Lordships were persuaded to hold that the approval by the Charity Commissioner preceding the agreement of sale would ensure the reasonableness of the agreement of sale and that would have to be borne in mind by the income-tax authorities while exercising their power under section 269UD. Their Lordships held that the question of consideration has to be considered by the income-tax authorities in the context of the special circumstances which accompany a sale by a public trust. The clear statutory prohibition against the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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