2001 (10) TMI 6 - SC - Income Tax

Supreme Court directs review of property valuation under Income-tax Act

The Supreme Court set aside the High Court's judgment and directed the appropriate authority to reconsider the undervaluation of immovable property under ... Appellants are the purchasers of immovable property - pre-emptive purchase order passed by the appropriate authority on July 31, 1995, which held that the immovable property had been undervalued to the requisite extent in the agreement to sell - Matter remitted to appropriate authority. Issues involved:Challenge to the dismissal of a writ petition regarding undervaluation of immovable property under Income-tax Act, 1961 based on comparison with a different property's sale instance.Analysis:The judgment under challenge was passed by a Division Bench of the High Court at Delhi, dismissing the writ petition filed by the appellants, who are purchasers of immovable property in Delhi. The property was purchased under an agreement to sell, and the appropriate authority found it undervalued based on Chapter XX-C of the Income-tax Act, 1961. The appellants argued that the sale instance of another property in the same area should have been considered for comparison. The appropriate authority's order on the rectification application stated that the properties had different Floor Area Ratios (FAR) and the older sale instance was not relied upon. The appellants contended that the comparison was not appropriate, but the judgment did not address this contention specifically.Regarding the comparison with the other property's sale instance, the appellants argued that the appropriate authority should have considered it, as the time difference between the two transactions was not significant. The reason given for not considering the sale instance was the difference in FARs, but the specific FAR values were not disclosed. The Supreme Court found that the judgment and the appropriate authority's order should be set aside, and the matter reconsidered in light of the sale instance of the other property. The appropriate authority was directed to disclose relevant information to the appellants and make a fresh decision after hearing them. The Court emphasized that only the property at issue should be considered in the reconsideration, and the appeal was allowed with no order as to costs.In conclusion, the Supreme Court set aside the judgment and order under challenge, directing the appropriate authority to reconsider the matter in light of the comparison with the sale instance of another property. The Court highlighted the importance of disclosing relevant information to the appellants and giving them a chance to be heard before making a fresh decision. The decision emphasized that only the specific property in question should be considered in the reassessment, and the status quo was to be maintained until the reconsideration was completed promptly.