TaxTMI 
TaxTMI 
2002 (5) TMI 43
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.... Sector 9C, Chandigarh, with one Shri Nirankar Singh, son of Shri Karam Singh, resident of House No. 632, Phase VI, S. A. S. Nagar (Mohali), (Punjab). A copy of the agreement is attached as annexure P-1 with the writ petition. Shri Nirankar Singh had purchased this property in an open auction held on January 2, 1998, from the Municipal Corporation, Chandigarh. The allotment was made on lease hold basis for 99 years vide allotment letter dated March 10, 1998. As per the terms of the allotment, 25 per cent. of the amount being Rs. 44.75 lakhs was deposited by him and the balance was to be deposited in instalments payable over the next three years. He, however, did not deposit the instalments on the ground that the Municipal Corporation, Chandigarh, had failed to provide the requisite amenities. The Municipal Corporation initiated resumption proceedings against him on account of nonpayment of instalments along with interest due thereon. Shri Nirankar Singh maintained that neither the instalments nor the interest was payable by him as no amenities had been provided by the Municipal Corporation. For this purpose, he along with some other persons filed C. W. P. No. 959 of 1999 in this....
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....ossession would ultimately be subject to the permission of the Income-tax Department which was necessary to complete the transaction. As a result of the agreement, the petitioner paid a sum of Rs. 65 lakhs to Shri Nirankar Singh. He also deposited an amount of Rs. 1,34,25,000 with the Municipal Corporation, Chandigarh, by demand draft dated September 10, 2001. Chapter XX-C of the Act provides that sale of immovable property cannot be effected except by first making an application before the appropriate authority under section 269UC seeking permission for transfer of the said property. This application has to be made on Form No. 37-I, the prescribed format for this purpose, Upon receipt of such an application, the appropriate authority, which consists of three persons, has the power to either make an order for purchase of the said property at an amount equal to the amount of consideration mentioned in the agreement to sell or to grant a certificate of "no objection". In other words, if the authority comes to the conclusion that the sale price mentioned in the agreement to sell is not a genuine sale price reflecting the real market value of the property, then, the Central Gover....
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....AB be not initiated against them for violation of section 269UL(2). It was pointed out that clause 5 of the agreement to sell indicated that the possession of the property had already been given to the transferee which could not have been done without first obtaining the "no objection certificate". The charge was denied vide letter dated December 15, 2001, and it was explained that no transfer of immovable property had taken place merely because possession was handed over to the transferee under clause 5 of the agreement. Mr. P.S. Patwalia, learned counsel for the petitioner, submits that the order, annexure P-15, holding that the statement in Form No. 37-I was not maintainable was contrary to the provisions of the Act. According to him, once an application under sub-section (3) of section 269UC was filed, only two options were open to the appropriate authority, i.e., either to buy the property or in the event of its decision not to buy it, to issue a "no objection certificate" leaving it open to the parties to deal with the property. According to him, section 269UD speaks only of one type of order which can be passed by the appropriate authority and that is an order of purchase....
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....early shows that the possession had been handed over to the petitioner in part performance of the agreement to sell. This, according to him, tantamounted to the transfer of property before filing the statement in Form No. 37-I in violation of the provisions of section 269UL(2). He, therefore, contends that, under such circumstances, it cannot be said that the appropriate authority had to exercise only one of the two options, viz., to purchase the property or to issue a no objection certificate. There was a third option available with it, i.e., not to act upon the invalid statement in Form No. 37-I. For this purpose, he placed strong reliance on a decision of the Rajasthan High Court in Rajasthan Patrika Ltd. v. Union of India [1995] 213 ITR 443, which was followed by the Calcutta High Court in Digvijay Cement Co. Ltd. v. Appropriate Authority [1999] 235 ITR 725. We have heard counsel for the parties and perused the relevant provisions of law. Chapter XX-C contains provisions with regard to purchase by the Central Government of immovable property in certain cases of transfer. According to section 269UC, no transfer of any immovable property in excess of the value of Rs. 10 lakhs ....
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....reckoned, where any stay has been granted by any court against the passing of an order for the purchase of the immovable property under this Chapter, with reference to the date of vacation of the said stay. (1A) Before making an order under sub-section (1), the appropriate authority shall give a reasonable opportunity of being heard to the transferor, the person in occupation of the immovable property if the transferor is not in occupation of the property, the transferee and to every other person whom the appropriate authority knows to be interested in the property. (1B) Every order made by the appropriate authority under sub-section (1) shall specify the grounds on which it is made. (2) The appropriate authority shall cause a copy of its order under subsection (1) in respect of any immovable property to be served on the transferor, the person in occupation of the immovable property if the transferor is not in occupation thereof, the transferee, and on every other person whom the appropriate authority knows to be interested in the property." From a perusal of the above, it is clear that the only right which it confers upon the appropriate authority is to enable it to ma....
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....opriate authority. Section 269UD speaks of only one type of order which can be passed by the appropriate authority and that is an order of purchase. If it decides not to purchase the property in question, section 269UD does not contemplate the passing of any order similar to the order which has been passed by respondent No. 2 in the present case. In fact, the provision of section 269UD clearly provides that if no order for purchase is passed and the period within which such an order can be passed has expired, then no order for purchase can at all be passed. When no order of purchase is passed, then the provisions of section 269UL come into operation. This section reads as follows: "269UL. (1) Notwithstanding anything contained in any other law for the time being in force, no registering officer appointed under the Registration Act, 1908 (16 of 1908), shall register any document which purports to transfer immovable property exceeding the value prescribed under section 269UC unless a certificate from the appropriate authority that it has no objection to the transfer of such property for an amount equal to the apparent consideration therefor as stated in the agreement for transfer ....
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....te under section 269UL(3). The view that we are taking is fully supported by the decision of the Delhi High Court in the case of Tanvi Trading and Credits P. Ltd. [1991] 188 ITR 623, which was affirmed by the Supreme Court. In fact, an identical matter had come up for consideration before the Delhi High Court in Megsons Exports v. Union of India [1992] 194 ITR 225. In that case also, the appropriate authority on an application on Form No. 37-I had neither passed an order exercising the right of pre-emptive purchase nor granted the no objection certificate. According to the appropriate authority, possession of the property had already been handed over to the transferee in part performance of the contract and, as such, the letter and intent of the provisions of Chapter XX-C of, 'the Act had been violated. The High Court, following its earlier decision in the case of Tanvi Trading and Credits P. Ltd. [1991] 188 ITR 623, quashed the order of the appropriate authority declining the grant of permission to the petitioner which had been sought by an application on Form No. 37-I and directed the authority to issue the "no objection certificate" in terms of section 269UC(3). The Rajast....
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....nt could not have stopped the limit of making the payment to respondent No. 4 and it would have done so only to its detriment and then to fight for possession with the petitioner and go on litigating the matter for years after years after blocking a huge sum without the advantage of the property so purchased. Therefore, in the facts of the present case, in addition to the two options which have been mentioned by the Supreme Court in Appropriate Authority v. Tanvi Trading and Credits P. Ltd. [1991] 191 ITR 307, we agree with Shri G. S. Bafna that the third option was also available to the appropriate authority, i.e., not to act upon the invalid statement in Form No. 37-I filed by the parties after effecting the transfer and violating section 269UC(1) and the parties had thus rendered themselves liable to action for violating the provisions of the Income-tax Act. We are of the considered opinion that when the parties have violated the provisions of the Income-tax Act and have acted in a manner so as to thwart the very purpose of the provisions relating to the restrictions on transfer of immovable property and to thwart the Central Government's pre-emptive right of purchase, besides t....
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....authorised by the appropriate authority in this behalf within fifteen days of the service of such order on him: Provided that the provisions of this sub-section and sub-sections (3) and (4) shall not apply where the person in possession of the immovable property, in respect of which an order under sub-section (1) of section 269UD is made, is a bona fide holder of any encumbrance on such property or a bona fide lessee of such property, if the said encumbrance or lease has not been declared void under the proviso to sub-section (1) and such person is eligible to continue in possession of such property even after the transfer in terms of the aforesaid agreement for transfer. (3) If any person refuses or fails to comply with the provisions of subsection (2), the appropriate authority or other person duly authorised by it under that sub-section may take possession of the immovable property and may, for that purpose, use such force as may be necessary. (4) Notwithstanding anything contained in sub-section (2), the appropriate authority may, for the purpose of taking possession of any property referred to in sub-section (1), requisition the services of any police officer to assis....
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....If a person in possession of the property does not surrender or deliver its possession to the appropriate authority as envisaged under sub-section (2) of section 269UE, the violation would attract section 276AB which provides for rigorous imprisonment up to two years and also payment of fine. Similarly section 269UL(2) debars a person from doing anything which will have the effect of transfer of any immovable property unless the appropriate authority has issued a no objection certificate. The consequence of any violation of this provision as mentioned in section 269UE are imprisonment and fine. There is, however, no provision empowering the appropriate authority to file the application in Form No. 37-I as non-maintainable. In case there was the third option available with the appropriate authority not to act on Form No. 37-I at all then, in our opinion, there was no need to provide for penal consequences for violation of sections 269UE(2) or 269UL(2) of the Act. Accordingly, we concur with the view taken by the Delhi High Court in Megsons Exports' case [1992] 194 ITR 225, in preference to the view expressed by the Rajasthan High Court in Rajasthan Patrika Ltd.'s case [1995] 213 ....