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TMI Blog2007 (10) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... rashi instructed by Shah and Sanghvi for the petitioners. R. Asokan with P. S. Sahadevan for the respondents. JUDGMENT The judgment of the court was delivered by J. P. DEVADHAR, J.- This petition is filed to challenge the order dated 25-2-1993 passed by the Appropriate Authority under Section 269UD(1) of the income Tax Act, 1961 ('the Act' for short). 2. By an agreement dated 18 th September, 1986, the petitioners had agreed to purchase flat No.1 situated on the ground floor of a building known as 'Rekha' at Ridge Road, Bombay- 400 006 ('flat in question' for short) for a consideration of Rs.10,51,000. The carpet area of the said flat was 925 square feet and the built up area of the said flat was 1014 square feet. The pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 rd July, 1987 under Section 269UD(1) of the Act, calling upon the petitioners to show cause as to why the flat in question should not be acquired. The petitioners filed detailed reply to the said notice setting out the reasons as to why the flat in question should not be acquired under Chapter XX-A of the Act. By an order dated 28 th march, 1988, the Competent Authority dropped the proceedings for acquisition of the flat in question under Chapter XX-A of the Act. 7. As regards the proceedings under Chapter XX-C is concerned, the Appropriate Authority, on remand, issued a show cause notice on 30 th December, 1992 calling upon the petitioners to show cause as to why the said flat should not be purchased in the light of sale instance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority has not determined the fair market value of the flat in question without which no order could be passed under Section 269UD(1) of the Act by holding that there is under valuation to the extent of 15% or more than the fair market value. Secondly, the sale instances relied upon by the Appropriate Authority are not comparable with the flat in question. Thirdly, the Appropriate Authority is not justified in purchasing the property in question by holding that there is undervaluation, when sale of a similar flat has been approved by the Appropriate Authority as NOC has been granted. Accordingly, Mr. Pardiwala submitted that the impugned order passed under Section 269UD(1) is liable to be quashed and set aside. 9. Mr. Ashokan, learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. In the present case, admittedly the fair market value of the flat in question has not been determined by the Appropriate Authority. As per the decision of the Apex Court in the case of C.B. Gautam [1993] 199 I.T.R. 530, the purchase order under Chapter XX-C of the Act can be passed only where there is significant undervaluation of the property to the extent of 15% or more than the fair market value. Therefore, without determining the fair market value of the flat in question, it could not be said that the price at which the petitioners agreed to purchase the flat in question is undervalued by 15% or more than the fair market value. Consequently, the impugned purchase order passed without determining fair market value cannot be said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n question is undervalued by 15% or more than the fair market value, an order for purchase of the flat in question could have been passed. In the present case, the appropriate authority failed to consider the merits and demerits of the case pointed out by the petitioners. In these circumstances, it is difficult to hold that the sale instances relied upon by the Appropriate Authority were comparable and consequently, it is difficult to hold that the flat in question sought to be purchased by the petitioners has been undervalued by 15% or more than the fair market value. 12. It is pertinent to note that the petitioners had relied upon two sale instances, namely sale of a flat in building 'Dev Darshan' and sale of a flat in building 'Rekha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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