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TMI Blog1998 (11) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... larged nor the High Court can exercise an appellate power. Coming to the second question, on examining the order passed by the appropriate authority for arriving at a conclusion as to what would be the fair market value of the property in question agreed to be sold, we find that the said appropriate authority did consider all the germane and relevant materials produced before it in the course of the proceedings and formed its opinion that there is understatement of consideration in the agreement dated September 25, 1995, by an amount more than 15 per cent. of the fair market value. On the basis of several sale transactions which are all contemporaneously made and which have the same potentiality and situated in the same locality, the appropriate authority came to the conclusion that the fair market land rate could not be less than ₹ 850 per square foot. Further, in the absence of any irrebuttable materials adduced on behalf of the transferor or the transferee as to why in the impugned transaction the property has been agreed to be sold at ₹ 650 per square foot, the natural presumption arises that it was with a view to attempt to evade tax. We think it appropriate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration of relevant material or based on any extraneous consideration. Sri Sarangan, learned senior advocate for the appellant, submitted that the view taken by the learned single judge cannot be supported at all in the light of the order made by the appropriate authority. He submitted that in order to attack a quasi-judicial order and to seek judicial review of the same what has to be established is that the order is based on some irrelevant material or relevant material has been eschewed from consideration amongst other factors. His contention is that in the present case he had cited several instances of sales which were comparable with respect to the transaction in question and they have been kept out of consideration by the authority for reasons which cannot be accepted at all while the Department had taken note of transactions which are not comparable with the transactions in question and on that basis decided the matter. In substance, his contention is that the appropriate authority has eschewed from consideration relevant material and taken note of irrelevant material, therefore, the learned single judge was not right in the view he has taken. Sri Seshachala, learning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty at No. 1190 (annexure-2) comes hardly a stone's throw away from the property under consideration. This property is thus really truly comparable. Similarly, property No. 29/10, in Jayanagar 8th Block and property No. 167, Sarakki 2nd Phase, are also comparable cases though they might not be situated in 5th Block, Jayanagar, where the subject property is situated. These two properties are not very far away and are at a distance of 2 to 3 kms. away from the property under consideration and are similar in ambience. Thus, the reliance by the appropriate authority on such sale instances has been correctly made." Admittedly, except for property referred to in Sl. No. 3 all other properties are situated quite far away from the property in question. In making comparisons between the properties proximity is one of the important factors. If the test adopted by the Department has to be accepted then any property in the city can be compared to any other property however distantly they may be located by reference to the amenities available and the kind of ambience a particular property may have. The rationale if adopted could lead to very startling results. Indeed, we specifically posed a q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rate of increase in the rate, that could be adopted as an appropriate data. That exercise has not been done in that case. Looking from that angle there is hardly any material before the authority to fix the market value of the property as fair market value to exercise the right of pre-emptive sale under Chapter XX-C. Thus, we find the appropriate authority has taken into consideration material which could not have been taken into consideration, namely, the value of the properties which are uncomparable with the property in question. However, Sri Seshachala, learned counsel for the Department, submitted that the lands in frontage of the road have greater value than those in smaller roads or the value of a tiny plot cannot be adopted as a basis for ascertaining the value of a larger plot. In our view, these principles are unexceptionable but have no relevance to the present case. We are not trying to find out the value of the property in question merely on the basis of the situation of the main road with heavy traffic which will diminish the value of the property. We do not see that factor alone could be adopted as the basis for market value. But the method adopted by the Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent No. 2. JUDGMENT The judgment of the court was delivered by G. B. PATTANAIK J.---This appeal is directed against the judgment and order dated March 6, 1997, passed by the Division Bench of the Karnataka High Court in Writ Appeal No. 1233 of 1996. The said writ appeal arises out of a proceeding initiated under Chapter XX-C of the Income-tax Act, 1961. The property in question is situated in Block 5, Jayanagar, Bangalore, measuring 85 feet from east to west and 122 feet from north to south bearing No. 483/24. Respondent No. 2, Shri A. G. Krishna, is the owner of the property. He entered into an agreement of sale with respondent No. 1, Smt. Sudha Patil, for a consideration of Rs. 63,44,000 under an agreement dated September 25, 1995. The appropriate authority under the Income-tax Act in exercise of its powers under section 269UD of the Act passed an order for purchase of the property by the Central Government on an amount equal to the amount of consideration mentioned in the agreement of sale after due notice to the transferor of the property and after arriving at a conclusion that the property in question has been undervalued by a sum of Rs. 200 per square foot. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty under the Income-tax Act can be interfered with by the High Court when the court comes to the conclusion that the Tribunal has not considered relevant materials or it has considered irrelevant or extraneous materials or the conclusion is one which no reasonable man can come to on the materials on record or the conclusion is one which is based on no evidence. Since in the case in hand the appropriate authority took the relevant sale instances in the locality to arrive at a conclusion where valuation shown in the agreement of sale was grossly low and on consideration of those relevant and germane materials, the appropriate authority came to the conclusion that the valuation shown in the transaction was grossly low, the said conclusion should not have been interfered with by the High Court in exercise of its supervisory jurisdiction under article 226, even if the High Court could have come to the conclusion as an original authority. In other words, what the learned Additional Solicitor-General contended is that the power of the High Court being supervisory in nature, the said power must be exercised within the parameters already indicated in several decisions of this court and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under the statute against an order passed by the appropriate authority under Chapter XX-C of the Act does the supervisory power of the High Court under article 226 get enlarged in any way and can the High Court in such a case exercise an appellate power and reappreciate findings to come to its own conclusion? 2. Whether in the case in hand the conclusion arrived at by the appropriate authority with regard to the fair market value of the property in question was by taking into consideration all relevant and germane materials and whether the Department discharged the burden that lay on it in establishing that the apparent consideration of the property as indicated in the agreement of sale was less than its fair market value by 15 per cent.? So far as the first question is concerned, the parameters for exercise of supervisory jurisdiction of the High Court under article 226 of the Constitution, while examining the decision of an inferior Tribunal, has no connection with the question whether an appeal is provided for against the said order of the Tribunal under the statute in question. As has been held in several decisions of this court, the power being supervisory in nature in e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfaction on the objective facts and the reasons for the determination of the belief must have a rational and direct connection with the material coming to the notice of the competent authority though the question of sufficiency or adequacy of the material is not open to judicial review. The learned judges of the Delhi High Court in the aforesaid case have themselves indicated that while exercising powers of judicial review under article 226 of the Constitution though the case is not to be examined as an appellate court, it is to be kept in view that a citizen has no alternative remedy and it is permissible to examine whether extraneous matters have been considered by the authority and relevant materials have not been taken into consideration. This statement of the Delhi High Court on which learned counsel for the respondent strongly relied, in our considered opinion, does not in any way enlarge the power of judicial review in the matter of exercise of supervisory power of the High Court under article 226 against an order of an inferior Tribunal. It may be stated here that on the materials if two views are possible, one which has been given by the inferior Tribunal and the other w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y considered but negatived inasmuch as the transplantation was done in June, 1994, and the agreement of sale was made in September, 1995. The authority also took into consideration the fact that the transferor was a highly qualified doctor and had held various offices with distinction in a career spanning over four decades in India and abroad. No other reason having been advanced and the only plea advanced having been considered and rejected, and in our view rightly, it is difficult for us to sustain the argument advanced by learned counsel for the respondent that the transferor has been able to rebut the presumption arising out of a grossly low valuation on the ground of forced sale. Having examined the order of the appropriate authority we have no hesitation to come to the conclusion that the appropriate authority passed the order for compulsory purchase under section 269UD of the Act after giving due opportunity to the parties concerned of hearing and after recording the reasons as to the fair market value of the land and further after recording a finding that there has been a significant undervaluation of the property to the extent of more than 15 per cent. in the agreement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction either to the purchase of a property by an order under section 269UD or to the completion of the agreement of sale entered into by him but is unable to get purchase price by reason of the said order and the stay order passed by a court then interest at an appropriate rate can be paid to him, if equity so requires. In the aforesaid case, this court had ordered that the Government should pay to the appellant the amount stated as the consideration for the sale of the said property in the agreement entered into between the appellant and respondent No. 1 with interest thereon at 15 per cent. per annum. This court had issued the aforesaid direction to be followed in the event the order of compulsory purchase passed is ultimately upheld. The court while issuing the aforesaid direction took judicial notice of the fact that the prices of the immovable properties have shot up continuously for the last few years. The learned Additional Solicitor-General, however, stated that the amount in question which has been deposited by the Government is carrying interest being deposited in a fixed deposit. Having considered the facts and circumstances of the case we think it appropriate to dir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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