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Issues: Whether the order of pre-emptive purchase under section 269UD of the Income-tax Act was valid when the authority allegedly ignored material on its own record and proceeded on an inflated market valuation.
Analysis: Pre-emptive purchase under Chapter XX-C is intended to be invoked only where there is significant undervaluation suggestive of tax evasion, and the statutory presumption remains rebuttable. The authority must consider all relevant material and cannot act on a perverse or mechanically reached valuation. On the facts, the respondents' own engineers had assessed the property at a lower rate, and that material was not considered before fixing a higher rate. The omission amounted to non-application of mind, and the apparent undervaluation did not cross the threshold that would justify compulsory purchase on the ground of tax evasion.
Conclusion: The impugned pre-emptive purchase order was unsustainable and was quashed, with a direction to pass a fresh order after considering the engineers' report.
Final Conclusion: The writ petition succeeded to the extent that the compulsory purchase order was set aside and the matter was remitted for reconsideration in accordance with law.
Ratio Decidendi: An order of compulsory purchase under section 269UD cannot stand if the appropriate authority fails to consider relevant material in its own record and the alleged undervaluation does not reasonably support an inference of tax evasion.
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