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Issues: (i) Whether the Appropriate Authority validly compared the subject property with the adjacent property and other sale instances for determining fair market value; (ii) Whether the relevant circumstances affecting valuation, including tenancy, loss of title deeds, and guideline value, were properly considered; (iii) Whether the order of pre-emptive purchase stood abrogated for failure to tender or deposit the consideration within the statutory period under Chapter XX-C of the Income-tax Act, 1961.
Issue (i): Whether the Appropriate Authority validly compared the subject property with the adjacent property and other sale instances for determining fair market value.
Analysis: The valuation based on the adjacent Malar Hospitals property was found unsound because the relevant differences in frontage, site advantages, and developmental potential, including floor space index, were not properly accounted for. The Authority also relied on two additional sale instances that were not disclosed in the show-cause notice, thereby depriving the petitioners of an opportunity to meet that material. The comparison was therefore not fair and the reliance on undisclosed instances offended natural justice.
Conclusion: The comparison adopted by the Appropriate Authority was invalid and could not sustain the pre-emptive purchase order.
Issue (ii): Whether the relevant circumstances affecting valuation, including tenancy, loss of title deeds, and guideline value, were properly considered.
Analysis: The Court held that longstanding tenancy efforts and the absence of original title deeds were relevant valuation factors that could affect the price a willing purchaser would pay. The guideline value, however, was held to be only a registration value and not conclusive of market value. On the additional evidence of a later sale in the same area at a lower rate, the Court found support for the petitioners' challenge to the valuation adopted by the Authority.
Conclusion: The petitioners succeeded on the material valuation factors, except that guideline value by itself was not treated as determinative.
Issue (iii): Whether the order of pre-emptive purchase stood abrogated for failure to tender or deposit the consideration within the statutory period under Chapter XX-C of the Income-tax Act, 1961.
Analysis: The statutory scheme required the consideration to be tendered within the prescribed period after vesting, and on failure the purchase order stood abrogated and the property revested in the transferor. The Court held that pendency of writ proceedings did not excuse non-compliance, as section 269UG contained no saving clause extending time on that ground. Since no tender or deposit was made within time, the mandatory consequence under section 269UH followed.
Conclusion: The purchase order had abrogated by operation of law for non-tender of consideration within time.
Final Conclusion: The common order of the single judge and the pre-emptive purchase order were unsustainable, and the writ appeals were allowed with the purchase order quashed.
Ratio Decidendi: In pre-emptive purchase proceedings under Chapter XX-C, valuation must rest on fair and disclosed comparable material, and failure to tender the consideration within the statutory period automatically abrogates the purchase order and revests the property in the transferor.
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