Mandatory pre-decisional hearing in compulsory purchase proceedings required; absence of show-cause notice vitiated the order and led to remand.

Before an order of compulsory purchase under Chapter XX-C of the Income-tax Act is passed, the authority must give the intending purchaser and intending seller a reasonable opportunity to show cause; failure to do so vitiates the order. The Kerala High Court held that the impugned order under section 269UD(1) was made without the required prior show-cause notice and could not stand. It quashed and set aside the order and remitted the matter to the appropriate authority for reconsideration in accordance with law, leaving open questions concerning the date of the statement and any plea based on part performance for decision on proper factual material.

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Issues: Whether the order for compulsory purchase under section 269UD(1) of the Income-tax Act, 1961 was liable to be quashed for want of a prior show-cause notice and reasonable opportunity, and whether the matter should be remitted for fresh consideration.

Analysis: The order was made without the necessary show-cause notice. The applicable law under Chapter XX-C requires that the intending purchaser and intending seller be afforded a reasonable opportunity of showing cause before an order for compulsory purchase is passed. In view of the settled legal position, the impugned order could not stand. Questions relating to the date of the statement and the suggested plea based on part performance were left open for determination on appropriate factual material.

Conclusion: The impugned order was quashed and set aside, and the matter was remitted to the appropriate authority for reconsideration, with all open questions kept open.

Final Conclusion: The petition succeeded on the ground of breach of the mandatory pre-decisional opportunity required for an order of compulsory purchase, and the statutory proceedings were restored to the appropriate authority for fresh consideration in accordance with law.

Ratio Decidendi: Before passing an order of compulsory purchase under Chapter XX-C, the authority must give the intended purchaser and seller a reasonable opportunity to show cause, and failure to do so vitiates the order.

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