Limited statutory enquiry under Chapter XX-C cannot justify a roving challenge to title or agreement validity.

Chapter XX-C confined the appropriate authority to a limited statutory enquiry on whether to exercise pre-emptive purchase or issue clearance for transfer. It could not conduct a roving enquiry into the validity of the agreement, the title of the transferors, partnership law, personal law, or declare the agreement ab initio void. Because the impugned rejection rested on matters outside the statutory scope, it was beyond jurisdiction and was set aside. The matter was remitted for fresh disposal in accordance with law, with the later decree in favour of the petitioners to be considered on remand.

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Issues: Whether the appropriate authority, while dealing with a statement filed under Chapter XX-C of the Income-tax Act, 1961, had jurisdiction to examine the validity of the agreement, the title of the transferors, and other matters outside the statutory enquiry, and whether the impugned order rejecting the statement could stand.

Analysis: The statutory scheme under Chapter XX-C was held to confer only a limited enquiry on the appropriate authority, namely, whether to make a pre-emptive purchase within the prescribed time or to permit transfer by issuing the necessary clearance. The authority was not entitled to conduct a roving enquiry into title, apply partnership law or personal law to test the enforceability of the agreement, or declare the agreement ab initio void. If the authority was not willing to purchase the property, the matter had to be left to the parties, and the authority could not refuse relief on grounds beyond the scope of the statute. The later decree in favour of the petitioners was also directed to be taken into account on remand.

Conclusion: The impugned order was beyond jurisdiction and was set aside; the matter was remitted to the appropriate authority for fresh disposal in accordance with law.

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