Compulsory purchase under Chapter XX-C requires notice and communicated reasons; an uncommunicated order cannot stand.

An order of compulsory purchase under Chapter XX-C requires prior notice and a reasonable opportunity for the intending seller and purchaser to show cause. The reasons for the decision must also be recorded and either set out in the order or separately communicated, so the order is legally complete and effective. Where no show-cause notice is issued and the reasons are not disclosed to the affected parties, the order cannot stand. On that basis, the Delhi High Court held the section 269UD(1) order invalid and set it aside.

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Issues: Validity of the order for compulsory purchase under section 269UD(1) of the Income-tax Act, 1961, when no show-cause notice was issued and the reasons for the order were not communicated.

Analysis: The order impugned before the Court was passed in the context of the pre-emptive purchase mechanism under Chapter XX-C after filing of Form No. 37-I. The governing legal position requires that, before an order of compulsory purchase is made, the intending purchaser and the intending seller must be given a reasonable opportunity of showing cause. It is also necessary that the reasons for the decision be recorded and either incorporated in the order or separately communicated to the affected parties, so that the order is a complete and legally effective one. The Court applied the principle that an order made without notice and without disclosure of reasons cannot stand.

Conclusion: The order under section 269UD(1) was set aside as invalid for want of notice and communicated reasons.

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