Chapter XX-C applies where property transfer is incomplete and alleged prior possession cannot defeat statutory purchase.

A sale of immovable property intended to be completed only on receipt of full consideration was not treated as a completed transfer before 1 June 1989, so Chapter XX-C of the Income-tax Act applied. The alleged prior possession receipt was not disclosed in the statutory statement, was inconsistent with the contemporaneous documents, and was treated as an afterthought. Even if possession were claimed under section 53A of the Transfer of Property Act, it could not override the special statutory purchase regime in the notified area. The result was that the statutory purchase machinery under sections 269UC, 269UD and 269UE remained operative.

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Issues: (i) Whether the transfer of the immovable property had taken place before 1 June 1989 so as to exclude the transaction from the operation of Chapter XX-C of the Income-tax Act, 1961. (ii) Whether the alleged handing over of possession under the claimed possession receipt before 1 June 1989 prevented the application of Chapter XX-C and invalidated the order for statutory purchase.

Issue (i): Whether the transfer of the immovable property had taken place before 1 June 1989 so as to exclude the transaction from the operation of Chapter XX-C of the Income-tax Act, 1961.

Analysis: The deed itself showed that ownership was to pass only on receipt of the full consideration through the post-dated cheques, and the last instalment was payable only on 30 July 1989. The document therefore did not effect a completed sale before 1 June 1989. Since the transfer was not completed before Chapter XX-C became applicable in the area, the statutory scheme under sections 269UC, 269UD and 269UE applied to the property.

Conclusion: The transfer had not taken place before 1 June 1989 and Chapter XX-C applied; this issue was against the assessee.

Issue (ii): Whether the alleged handing over of possession under the claimed possession receipt before 1 June 1989 prevented the application of Chapter XX-C and invalidated the order for statutory purchase.

Analysis: The alleged possession receipt was not disclosed in the statutory statement filed with the appropriate authority, and the contemporaneous materials indicated that possession was to be delivered only after receipt of the entire consideration. The Court found the later story of prior possession to be an afterthought. In any event, possession under section 53A of the Transfer of Property Act, 1882, could not defeat the operation of the special statutory regime, which controlled transfers in the notified area and empowered the Central Government to purchase the property where the statutory conditions were met.

Conclusion: Prior possession was not established and did not bar the statutory purchase; this issue was against the assessee.

Final Conclusion: The impugned order under Chapter XX-C was valid, the property had lawfully vested in the Central Government, and the petition failed.

Ratio Decidendi: Where a sale of immovable property is contractually intended to be completed only on payment of the full consideration, and neither completed transfer nor proved prior possession exists before the notified commencement of Chapter XX-C, the special statutory purchase machinery applies notwithstanding the parties' later assertions.

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