Chapter XX-C authority limited to pre-emptive purchase or no-objection certificate; it cannot decide title or transaction validity.

Under Chapter XX-C of the Income-tax Act, 1961, the appropriate authority's role is confined to either exercising pre-emptive purchase under section 269UD or, if it does not purchase within the mandatory two-month period, issuing a no-objection certificate under section 269UL(3). It cannot examine the validity of the agreement to sell, the legality of the transaction, or the vendor's title, since disputed questions on those matters lie beyond its jurisdiction. Where no order of purchase is made within the prescribed time, the certificate must follow as a matter of course; the impugned order was quashed and the parties were held entitled to the certificate.

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Issues: Whether, on a statement filed under Chapter XX-C of the Income-tax Act, 1961, the appropriate authority could examine the validity of the agreement to sell, the legality of the transaction, or the vendor's title, and whether it was bound to issue a no-objection certificate on expiry of the prescribed period without an order of pre-emptive purchase.

Analysis: Under Chapter XX-C, the appropriate authority has only two courses open: to exercise the right of pre-emptive purchase under section 269UD or, if it does not choose to purchase, to issue a no-objection certificate under section 269UL(3). The statutory period of two months for action is mandatory and cannot be extended. Once that period expires without an order of purchase, issuance of the certificate follows as a matter of course. The authority cannot travel beyond the agreement to sell or decide disputed questions about the transaction's legality, the agreement's validity, or the vendor's title.

Conclusion: The impugned order was without jurisdiction and was quashed. The petitioners were held entitled to a no-objection certificate under section 269UL(3) of the Income-tax Act, 1961.

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