2002 (12) TMI 7 - SC - Income Tax

Court Validates Purchase Orders & Govt Compliance under Income-tax Act

Hans Raj Agarwal And Another Versus Cheif Commissioner of Income-tax And Others

The court upheld the validity of the first and second purchase orders under sections 269UD(1) and 269UL(3) of the Income-tax Act, 1961. It found that the ... Purchase of Immovable Property by Central Government - appellants' challenge under article 226 to the order passed by the appropriate authorities under section 269UD(1) - submission of the appellants that the Central Government had not deposited or tendered the amount within the time required under section 269UF, is raised for the first time, hence rejected - appeal also dismissed Issues Involved:1. Validity of the first purchase order under section 269UD(1) of the Income-tax Act, 1961.2. Validity of the second purchase order under section 269UD(1).3. Whether the property had been transferred to the appellants before the enactment of Chapter XX-C in Andhra Pradesh.4. Compliance with the provisions of section 269UF and section 269UG regarding the deposit or tender of the purchase amount.5. Determination of the true market value of the property.Detailed Analysis:1. Validity of the First Purchase Order:The appellants contended that the first purchase order dated November 28, 1989, was invalid as it was issued beyond the prescribed period. They argued that the first statement in Form No. 37-I was valid and filed on June 15, 1989, and since no decision was taken by August 31, 1989, the Appropriate Authority was bound to issue a no-objection certificate under section 269UL(3). However, the court noted that the 'filing order' dated August 23, 1989, was accepted by the appellants, who voluntarily filed a second statement in Form No. 37-I. Thus, the period of limitation was to be computed from the receipt of the second statement. The first compulsory purchase order could not be said to be invalid on this ground.2. Validity of the Second Purchase Order:The appellants challenged the second purchase order on the grounds that it directed the purchase of a demarcated share, which was not the subject matter of the agreement for sale or the Form No. 37-I statement. The court found that the shares of the three owners had been demarcated prior to the second purchase order. The appellants themselves had admitted to an oral partition in various sale deeds executed by them. The court held that the second purchase order was valid as it accurately described the demarcated share of Leila Lean.3. Transfer of Property Before Enactment of Chapter XX-C:The appellants claimed that they had taken possession of the entire premises pursuant to the agreement of sale dated March 13, 1988, and thus the transfer was complete before Chapter XX-C came into force in Andhra Pradesh. The court noted that the appellants had not pursued this contention before the High Court and had given up the case. The court also found that the appellants had not taken possession of Leila Lean's share pursuant to the agreement of sale dated March 13, 1988.4. Compliance with Section 269UF and Section 269UG:The appellants argued that the Central Government had not deposited the consideration money nor paid it to the transferor as required under section 269UF and section 269UG, and thus the premises stood re-vested in the transferor. The court found that the deposit had been made by the Central Government on December 22, 1989, within one month from the first purchase order and prior to the second purchase order. The payment had been received by the transferor without any protest.5. Determination of True Market Value:The appellants contended that the Appropriate Authority's determination that the stated consideration did not reflect the true market value of the property was based on immaterial and irrelevant considerations. The court noted that the Appropriate Authority had considered several instances of sale, the location of the property, its frontage, and accessibility, and had conducted a physical inspection. The court affirmed the valuation determined by the Appropriate Authority and the High Court, finding no reason to disturb the finding of fact.Conclusion:The court found the respondents' submissions entirely acceptable and upheld the High Court's rejection of the appellants' writ application. The appeal was dismissed with costs.