Pre-emptive purchase under tax law cannot be reopened after a completed sale and accepted compensation without protest

Chapter XX-C pre-emptive purchase orders were subject to a requirement of reasonable opportunity of hearing as read into the scheme in C.B. Gautam, but completed transactions were not to be disturbed where the property had already been sold, possession had been dealt with, and compensation had been accepted without protest. On those facts, the absence of a prior hearing did not justify reopening the pre-emptive purchase order or remanding the matter. The challenge to the order therefore failed, leaving the completed auction sale undisturbed.

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Issues: Whether the writ petition challenging the order for pre-emptive purchase under Chapter XX-C of the Income-tax Act, 1961, on the ground of want of opportunity of hearing, should be allowed and the matter remanded for reconsideration.

Analysis: The constitutional validity of Chapter XX-C was already settled. The remaining question was whether the absence of a hearing before the impugned order required interference. The decision in C.B. Gautam read a requirement of reasonable opportunity into the scheme, but also clarified that completed transactions should not be upset where the property had already been sold, possession dealt with and compensation accepted without protest. The Court noted that the property had been sold in public auction during the pendency of the writ petition and the owner had accepted compensation without protest. In those circumstances, the completed transaction could not be reopened merely because an opportunity of hearing had not been given before the pre-emptive purchase order.

Conclusion: The challenge failed and the writ petition was not liable to be allowed or remanded. The decision was against the petitioner and in favour of the Revenue.

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