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TMI Blog1986 (3) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... (the " Act "), initiated proceedings for acquisition of the same, issued notices (annexure-B) to the transferor, the transferee and all the tenants who were in occupation of different portions of the property. On a consideration of the objections filed by them, the Inspecting Assistant Commissioner made an order on March 23, 1976, under section 269F(6) of the Act (annexure-D), for its acquisition on his conclusion that the fair market value of the property exceeded the apparent consideration by more than 25%. Against the order made by the Inspecting Assistant Commissioner, one K.B. Nagarala, one of the tenants, who is now dead, and art unregistered association called " Chunnilal Compound Tenants' Association ", for and on behalf of all the tenants filed appeals in I.T. (Acq) Nos.1 and 2/Bang/ 1976-77 before the Income-tax Appellate Tribunal, Bangalore Bench, Bangalore. On June 30, 1976, the Tribunal dismissed them, however, upholding the decision of the Inspecting Assistant Commissioner on their maintainance ability with a declaration that the tenants cannot be ejected under section 269-I of the Act. Aggrieved by the said declaration of the Tribunal, the Inspecting Assistant Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be noticed and dealt with by us in due course. In Writ Petition No. 11570 of 1985, the transferee has challenged the notice and has sought for a writ in the nature of prohibition restraining the Inspecting Assistant Commissioner from executing the same. The respondents have resisted these writ petitions. Sri W. K. Joshi, learned advocate, has appeared for the petitioners in Writ Petitions Nos. 11353 to 11364 of 1985. Sriyuths K. S. Ramabhadran and J. N. S. Prasad, learned advocates, have appeared for the petitioner in Writ Petition No. 11570 of 1985. Sri G. Sarangan, learned special standing counsel for the Income-tax Department, has appeared for the respondents. We will first examine whether these are fit cases for our interference under article 226, then Writ Petition No. 11570 of 1985 of the transferee and thereafter the other writ petitions. In the acquisition proceedings, the transferee and all the tenants were notified and on a consideration of the objections filed by them and others, the Inspecting Assistant Commissioner made his order on March 23, 1976, which has become final. The transferor and the transferee had not challenged the order of the Inspecting Assist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d property vests in it under sub-section (4) of section 269-1 of the Act and not before that. The reason for making such a provision is obvious. Without delivery of the acquired property, the title to the same does not pass and vest in the Central Government and till that time, the non-deposit or payment cannot be laid at the doors of the Central Government. Even for the delay in the completion of the acquisition proceedings, the transferee cannot blame the Central Government. The deposit or payment can only be in terms of this provision and cannot be otherwise. If that is so, the transferee can make no grievance of the delay in payment of compensation. We see no merit in the contention of the transferee and we reject the same. Sri Joshi contends that a lease created under the Transfer of Property Act was not an encumbrance that is capable of extinguishment under section 269-I(4) of the Act. Sri Sarangan contends that a lease is an encumbrance and is capable of extinguishment. The term " encumbrance " is not defined in Chapter XX-A of the Act or section 2 of the Act. The term " encumbrance " is not a term of art with only one meaning in all situations. The term "encumbrance b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief justice of India. The power to legislate on taxes on income other than agricultural income comprehends in itself the power to make provisions for levy of penalties. We are of the view that the provisions in Chapter XX-A of the Act are really in the nature of penalty provisions to counteract evasion of income-tax and, therefore, fall within the purview of entry No. 82 of List 1. At any rate, Chapter XX-A including section 269-I of the Act are, incidental or ancillary to the subject of taxes on income other than agricultural income. From this, it follows that section 269-1 of the Act was within the legislative competence of the Union Parliament and is not legislation on a subject exclusively reserved to States under List II in the Seventh Schedule to the Constitution. In Rambhai Manja Nayak's case [1983] 142 ITR 211, the Gujarat High Court, repelling a similar challenge to section 269-1 of the Act, has expressed thus (pp. 234 to 236) : Mr. Raval, learned counsel for the petitioners, submitted that the provisions in Chap. XX-A, in so far as they seek to deprive sitting tenants of their right to occupy the demised property, fall within the scope of entry 18 of List II inasmuc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is not required to satisfy the requirements of art. 31(2) of the Constitution, in view of the overriding effect of cl, (5)(b)(i) thereof ....... .." We are in respectful agreement with these views expressed by their Lordships of the Gujarat High Court. On the foregoing discussion, we hold that there is no merit in this contention of Sri Joshi and we reject the same. Sri Joshi next contends that section 269-I of the Act that chooses tenants in occupation of buildings acquired under Chapter XX-A of the Act and those governed by the Karnataka Rent Control Act, for a different and hostile treatment, was violative of article 14 of the Constitution. Sri Sarangan contends that section 269-1 of the Act, an incidental provision to effectuate Chapter XX-A of the Act, at any rate on the application of the principles enunciated by the Supreme Court in Prakash Amichand Shah v. State of Gujarat [1986] 1 SCC 581, was not violative of article 14 of the Constitution. Chapter XX-A of the Act has been enacted to counteract evasion of taxes and provide for acquisition of properties acquired by such evasion. If acquisition should be completed, then those that are in possession of the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged for the petitioners fail, these writ petitions are liable to be dismissed. We, therefore, dismiss these writ petitions and discharge the rule issued in all these cases. But, in the circumstances of the cases, we direct the parties to bear their own costs. Order on the oral application made by the Petitioners for a certificate of fitness to appeal to the Supreme Court under articles 133 and 134A of the Constitution and for stay. Immediately after we completed the dictation of our order dismissing these writ petitions, Sriyuths Prasad and Joshi made oral applications under articles 133 and 134A of the Constitution for issue of a certificate of fitness to appeal to the Supreme Court on the ground that the questions decided by us are substantial questions of law of general importance and they need to be decided by the Supreme Court and for stay of our order for two months. Sri Sarangan opposes the oral applications made by the petitioners. In upholding the validity of section 269-I of the Income-tax Act, which is one of the principal questions that arises in these cases, we have followed the ruling of the Gujarat High Court in Rambhai Manja Nayak's case [1983] 142 ITR 211 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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