Government's Failure to Pay Invalidates Pre-Emptive Purchase Orders under Income-tax Act

The court held that the Central Government's failure to tender the apparent consideration required by law invalidated the pre-emptive purchase orders under Chapter XX-C of the Income-tax Act, 1961. Due to non-payment of the apparent consideration, the right to purchase was revoked, leading to the quashing of the orders and the properties reverting to the petitioners. Citing legal precedent, the court set aside the orders, emphasizing the significance of complying with statutory requirements to uphold pre-emptive purchase validity. The decision aligned with principles established in Union of India v. Dr. A.K. Garg [2002] 256 ITR 660.

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Issues:
1. Validity of pre-emptive purchase under Chapter XX-C of the Income-tax Act, 1961.
2. Failure of the Central Government to tender the apparent consideration as required by law.
3. Consequences of non-payment of apparent consideration under section 269UH of the Act.
4. Legal implications of setting aside the pre-emptive purchase orders.
5. Comparison with the legal precedent set by the apex court in Union of India v. Dr. A.K. Garg [2002] 256 ITR 660.

Analysis:

1. The petitions in question arose from proceedings under Chapter XX-C of the Income-tax Act, 1961, regarding the acquisition of properties, specifically flat Nos. 1301/1401 and flat Nos. 903/1003 in Parasrampuria Tower No. 5. The basis for the pre-emptive purchase was that the consideration disclosed in the sale documents was below the actual market value of the properties.

2. The primary contention raised was the failure of the Central Government to tender the apparent consideration to the parties as required by sections 269UF and 269UG of the Act. It was noted that no amount of apparent consideration had been tendered or deposited by the Department in relation to the transactions under scrutiny.

3. In light of the admitted facts, the court held that the operation of section 269UH could not be halted due to the non-payment of the apparent consideration by the Department. As a result, the right to purchase exercised by the Central Government was deemed abrogated, leading to the quashing of the impugned orders and the properties reverting to the petitioners in accordance with section 269UH of the Act.

4. The judgment referenced a similar case where the apex court had set aside an order of pre-emptive purchase under comparable circumstances. Drawing from this legal precedent, the court concluded that the impugned orders in the present case were unsustainable in law and thus set them aside, allowing both petitions and making the rules absolute without any order as to costs.

5. The decision in this case aligned with the legal principles established by the apex court in Union of India v. Dr. A.K. Garg [2002] 256 ITR 660, reinforcing the position that non-compliance with the statutory requirements regarding apparent consideration could invalidate pre-emptive purchase orders. The judgment highlighted the importance of adherence to legal procedures and the consequences of non-payment in such matters.

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