Court quashes purchase orders, cites natural justice violation, denies damages, parties bear costs.

The court allowed the petition, quashing the compulsory purchase orders due to the violation of natural justice principles. The court did not remand for a fresh hearing due to prolonged litigation and the deletion of Chapter XX-C from the Income-tax Act. The claim for damages was rejected, and each party was directed to bear its own costs.

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Issues Involved:
1. Validity of orders under section 269UD of the Income-tax Act, 1961.
2. Alleged violation of principles of natural justice.
3. Comparison of property valuation.
4. Payment compliance under section 269UG.
5. Claim for damages.

Detailed Analysis:

1. Validity of Orders under Section 269UD of the Income-tax Act, 1961:
The petitioner challenged the validity of two orders dated November 29, 1994, issued by the appropriate authority for the compulsory purchase of two commercial flats under section 269UD of the Income-tax Act, 1961. The petitioner argued that the orders were based on an erroneous and misconceived interpretation of the law and facts.

2. Alleged Violation of Principles of Natural Justice:
The petitioner contended that the appropriate authority violated the principles of natural justice by not providing the material used to conclude that the property value was understated by more than 15%. Specifically, the petitioner was denied:
- A copy of the Valuation Officer's report.
- Details of instances considered by the authority.
- Inspection of the sale deed of a comparable property (Ansal Tower).

The court agreed with the petitioner, citing the Supreme Court's decision in C. B. Gautam v. Union of India [1993] 199 ITR 530, which mandates a fair hearing and the provision of relevant material to affected parties before making an order under section 269UD. The court emphasized that without access to the material, the petitioner could not effectively defend against the proposed action, thus violating natural justice principles.

3. Comparison of Property Valuation:
The petitioner argued that the comparison between the petitioner's property and a property in Ansal Tower was illogical and irrational. The petitioner highlighted significant differences, such as:
- Age of the buildings (Hemkunt Tower being older).
- Fire safety deficiencies in Hemkunt Tower.
- General condition and reputation of the buildings.

The court noted that the appropriate authority's comparison overlooked these differences and did not provide the petitioner with the necessary documents to challenge the valuation effectively.

4. Payment Compliance under Section 269UG:
The petitioner claimed that the appropriate authority did not comply with section 269UG, which mandates timely payment or deposit of the purchase amount. The respondents argued that the amount was deposited within the stipulated time as the petitioner had declined to receive it. The court did not find sufficient grounds to dispute the respondents' compliance with section 269UG.

5. Claim for Damages:
The petitioner sought damages for the alleged illegal, arbitrary, and mala fide withholding of permission for property transfer. However, the court did not find any basis for awarding damages, focusing instead on the procedural violations in the compulsory purchase orders.

Conclusion:
The court allowed the petition, quashing the impugned orders of compulsory purchase due to the violation of principles of natural justice. The court decided against remanding the matter for a fresh hearing, considering the prolonged litigation and the deletion of Chapter XX-C from the Income-tax Act. The claim for damages was not entertained, and each party was directed to bear its own costs.

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