Limited scope of Chapter XX-C: authority cannot test transfer validity on extraneous grounds or club separate property.

Chapter XX-C of the Income-tax Act confined the appropriate authority to examining the statement under section 269UC, deciding whether the Central Government should purchase the property under section 269UD, or issuing a certificate under section 269UL if no purchase order was made or the order abated. The authority could not probe the legality or validity of the transfer by reference to the Urban Land (Ceiling and Regulation) Act, municipal laws, or a separate adjoining property, nor reopen a title finding already recognised under the urban land law. The Delhi HC held the refusal of the certificate to be beyond jurisdiction and set aside the order.

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Issues: Whether the appropriate authority under Chapter XX-C of the Income-tax Act could go behind the apparent transfer document to test the legality or validity of the transaction by reference to other enactments and by clubbing the petitioner's property with a separate adjoining property.

Analysis: Chapter XX-C confined the appropriate authority to considering the statement filed under section 269UC, deciding whether the Central Government should purchase the property under section 269UD, or, if no purchase order was made or the order abated, issuing a certificate under section 269UL. The authority's role was limited to the adequacy of consideration and the statutory choice between purchase and clearance. It had no power to inquire into the object, legality, or validity of the agreement by reference to the Urban Land (Ceiling and Regulation) Act, the municipal laws, or the position of an adjoining property owned by another person. The petitioner's title to her own plot had already been recognised by the competent authority under the Urban Land (Ceiling and Regulation) Act, and that finding could not be reopened by the income-tax authority. The impugned order therefore rested on matters outside the statutory remit and on irrelevant considerations.

Conclusion: The issue was decided in favour of the petitioner. The appropriate authority acted beyond its jurisdiction in treating the petitioner's transfer as unlawful and in refusing the certificate on extraneous grounds.

Conclusion: The impugned order was set aside and the respondents were directed to issue the no objection certificate under section 269UL of the Income-tax Act, 1961.

Ratio Decidendi: An authority exercising power under Chapter XX-C of the Income-tax Act can act only within the statutory confines of purchase or clearance and cannot invalidate a transfer by adjudging its legality on extraneous grounds or by clubbing it with a separate property.

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