Chapter XX-C limits the authority to compulsory purchase or no-objection certificate; title defects cannot justify refusal.

Chapter XX-C of the Income-tax Act, 1961 required the Appropriate Authority, on receiving a statement in Form 37-I, to choose only between compulsory purchase and issuance of a no-objection certificate. The statutory scheme did not permit refusal on the basis of alleged defects in the form or defects in the transferor's title, and the power to return a form for correction arose only later. Even after Section 269UC(4), the authority could not insist on rectification of title defects before deciding whether to purchase. The object of the chapter was limited to preventing tax evasion, not to securing an indefeasible title for the Government.

---

---

Issues: Whether, under Chapter XX-C of the Income-tax Act, 1961, the Appropriate Authority could decline a no-objection certificate and return the statement on the ground of alleged defects in the form and alleged defects in the transferor's title instead of either proceeding to compulsory purchase or issuing the certificate.

Analysis: Section 269UL required the Appropriate Authority to consider the statement filed in Form 37-I and, if it did not propose compulsory purchase, to issue a no-objection certificate. The statutory scheme contemplated only two alternatives: compulsory purchase or grant of the certificate. The power to return the form for correction of defects was introduced only later, and even after the introduction of Section 269UC(4) the authority had no power to require rectification of defects in the transferor's title or to refuse the certificate on that basis. The object of Chapter XX-C was limited to preventing tax evasion and did not extend to enabling the Government to ensure an indefeasible title before deciding on purchase.

Conclusion: The refusal to issue the no-objection certificate and the purported deemed return of the form were without authority of law, and the petitioner was entitled to the certificate.

Ratio Decidendi: Under Chapter XX-C of the Income-tax Act, 1961, the Appropriate Authority has only two lawful options on a statement under Section 269UL: compulsory purchase or issuance of a no-objection certificate; it cannot reject the matter on alleged defects in title or treat the form as returned without express statutory power.

---