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Issues: Whether the appropriate authority could validly exercise pre-emptive purchase power under section 269UD(1) without recording a specific finding that the understatement of consideration was with a view to evade tax.
Analysis: The order under Chapter XX-C must disclose that the authority was satisfied not merely about undervaluation, but also that the apparent consideration was understated with the intention of evading tax. A presumption of tax evasion may arise where undervaluation exceeds the statutory threshold, but that presumption is rebuttable and cannot substitute for the authority's own recorded satisfaction. The impugned order only stated that the apparent consideration was below fair market value by more than 15 per cent and that the case was fit for pre-emptive purchase; it did not record any finding on the nexus between undervaluation and tax evasion.
Conclusion: The order under section 269UD(1) was unsustainable for want of the requisite finding on tax evasion, and the petitioners succeeded.
Ratio Decidendi: Pre-emptive purchase under Chapter XX-C can be exercised only when the authority records a reasoned satisfaction that the apparent consideration is understated with a view to evade tax, and not on undervaluation alone.
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