Co-op Society lacks land title, seeks CBDT sympathy. Petition disposed with payment proposal.

The Cooperative Housing Society lacks legal title to the land due to the land vesting in the Government in 1994. Despite this, a proposed conciliation involves the Society paying a sum to resolve the issue, with the CBDT requested to consider this proposal sympathetically. The petition is disposed of with these directions.

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Issues Involved:
1. Ownership and title of the land.
2. Validity of the order passed under Section 269UD of the Income Tax Act, 1961.
3. Rights of the Cooperative Housing Society as bona fide purchasers.
4. Actions and inactions of the Income Tax Department.
5. Possible conciliation and resolution.

Issue-wise Detailed Analysis:

1. Ownership and Title of the Land:
The Cooperative Housing Society claims ownership of the land on which a residential complex is constructed. The Income Tax Department claims ownership of the land by virtue of Section 269UE of the Income Tax Act, 1961. The original owner had agreed to sell the land to prospective purchasers, but the Appropriate Authority under the Act passed an order under Section 269UD, stating that the fair market value was higher than the declared sale consideration. Consequently, the land vested in the Government.

2. Validity of the Order Passed Under Section 269UD:
The Appropriate Authority passed an order on 21.10.1994 under Section 269UD, determining that the fair market value of the property was higher than the sale consideration. This order was challenged but later dismissed as the petitioners were not interested in pursuing it further. The Cooperative Housing Society, not being a successor in title or a legal heir of the original petitioners, lacks the locus standi to challenge this order.

3. Rights of the Cooperative Housing Society as Bona Fide Purchasers:
The Society claims to be bona fide purchasers without notice, having invested in residential units constructed by M/s. N.I. Developers. However, since the land had vested in the Government in 1994, the original owner had no authority to execute a development agreement in 2004. The Society, therefore, does not have any legal title to the land.

4. Actions and Inactions of the Income Tax Department:
The Department did not take steps to safeguard its interest in the land after the order under Section 269UD. No entry of the Government's interest was made in the property records, allowing the original owner to fraudulently execute a development agreement. This inaction contributed to the complications faced by the Society.

5. Possible Conciliation and Resolution:
Considering the Department's inaction and the Society's status as bona fide purchasers, a conciliation is proposed. The Society may agree to pay a sum of Rs. 39 Lakhs (comprising Rs. 25 Lakhs to the Department and Rs. 14 Lakhs to the heirs of the original purchasers) along with simple interest and a further sum of Rs. 10 Lakhs towards litigation costs. If the Society agrees, the CBDT should consider regularizing the ownership and possession of the residential units. If the Society does not agree, the petition will be dismissed.

Conclusion:
The Society lacks legal title to the land, and the original owner had no authority to execute the development agreement. However, due to the Department's inaction, a conciliation involving payment by the Society is proposed to resolve the matter. The CBDT is requested to sympathetically consider this proposal. The petition is disposed of with these directions.

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