Separate undivided shares cannot be clubbed as one transfer to trigger Chapter XX-C compliance and penalties.

Distinct undivided shares transferred under separate sale deeds by different legal entities cannot be artificially clubbed as a single transfer to attract the pre-transfer obligations and penal consequences under Chapter XX-C of the Income-tax Act, 1961. The Madras HC noted that the complaint itself was inconsistent on whether the accused owned the whole property or only separate shares, and the sale deeds and returns showed independent transactions. The cited Supreme Court decision was distinguished because it involved co-owners transferring the same immovable property as one subject-matter, unlike the separate legally identifiable transfers here, so the alleged contravention under sections 269UC, 269UL(2) and 276AB was not made out.

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Issues: Whether the prosecution alleging contravention of sections 269UC and 269UL(2) of the Income-tax Act, 1961 and the offence under section 276AB could be sustained when the petitioner had sold only an undivided share under a separate sale deed and the department sought to treat two independent transfers as a single unitary transaction.

Analysis: The complaint itself disclosed inconsistency as to whether the accused were owners of the entire property or only their respective undivided shares. The sale deeds showed that each accused had purchased and then conveyed an independent undivided share, and the transfers were reflected as separate transactions in their respective returns. On those facts, the Court held that the two sales could not be clubbed together merely because the transferees were husband and wife. The ruling in the cited Supreme Court decision was distinguished because that case involved co-owners transferring the same immovable property as a single subject-matter of transfer, whereas the present case involved two separate legally identifiable transfers.

Conclusion: The alleged statutory violation was not made out, and the criminal proceedings were liable to be quashed in favour of the petitioner.

Ratio Decidendi: Where distinct undivided shares are transferred under separate sale deeds by different legal entities, they cannot be artificially clubbed as one transfer to attract the pre-transfer obligations and penal consequences under Chapter XX-C of the Income-tax Act, 1961.

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