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of <h1>Court clarifies authority's role in property transactions under Section 269UD, sets aside invalid order</h1> The court held that the appropriate authority lacked competence to examine the validity of the sale agreement, emphasizing its role in either purchasing ... Acquisition Of Immovable Property, Appropriate Authority, Income Tax Act, Movable Property, Proposed Transfer Issues Involved:1. Competence of the appropriate authority to examine the validity of the sale agreement.2. The jurisdiction of the appropriate authority under Section 269UD of the Income-tax Act, 1961.3. The requirement of issuing a show-cause notice for rejecting Form No. 37-I.4. The time limit for the appropriate authority to make an order under Section 269UD.5. The issuance of a 'no objection certificate' by the appropriate authority.Detailed Analysis:1. Competence of the appropriate authority to examine the validity of the sale agreement:The petitioner challenged the order of the appropriate authority, arguing that it was not competent to examine the validity of the sale agreement. The court agreed, citing the decision in *Tanvi Trading and Credits P. Ltd. v. Appropriate Authority* [1991] 188 ITR 623, which held that the appropriate authority's power is confined to making an order of purchase or granting a no objection certificate. The authority cannot adjudicate upon the legality of the transaction.2. Jurisdiction of the appropriate authority under Section 269UD of the Income-tax Act, 1961:The court reiterated that the appropriate authority under Section 269UD has the power only to decide whether to purchase the property or not. It cannot reject the statement filed in Form No. 37-I on the grounds of the legality of the transaction. The Supreme Court in *Appropriate Authority v. Tanvi Trading and Credits P. Ltd.* [1991] 191 ITR 307 affirmed this view, stating that the authority could either buy the property or issue a no objection certificate.3. Requirement of issuing a show-cause notice for rejecting Form No. 37-I:The petitioner contended that the show-cause notice did not seek an explanation regarding the alleged defect in the title, making the rejection of Form No. 37-I invalid. The court found merit in this argument, emphasizing that the petitioner was not notified of this ground in the show-cause notice, rendering the authority incompetent to reject the form on this basis.4. Time limit for the appropriate authority to make an order under Section 269UD:The court noted that the appropriate authority must make an order within the stipulated period as per the proviso to Section 269UD(1), which mandates that no order shall be made after two months from the end of the month in which the statement is received. The court held that since the period had expired, no further order could be made by the authority.5. Issuance of a 'no objection certificate' by the appropriate authority:The court directed the appropriate authority to issue the 'no objection certificate' to the petitioner and the fourth respondent, as the authority's power is limited to either purchasing the property or issuing the certificate. The court emphasized that the certificate only indicates that the Government is not interested in purchasing the property and does not pronounce on the legality or validity of the transaction.Conclusion:The court set aside the order of the appropriate authority dated November 19, 1993, and directed the issuance of the 'no objection certificate' to the petitioner and the fourth respondent. The writ petition was allowed, and the rule was made absolute with a compliance time of two months.
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