TaxTMI 
TaxTMI 
2022 (3) TMI 41
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....ginal writ petitioner was Mr. Ashwani Kapur, the first respondent Union of India through the Secretary, Ministry of Revenue, Government of India, New Delhi, the second respondent, the Appropriate Authority, Income Tax Department, Calcutta, the third respondent, Superintending Engineer, Appropriate Authority, Income Tax Department, Kolkata, the fourth respondent Mrs. Mina Gupta, the fifth respondent Dr. Ambar Gupta and the sixth respondent M/s. Stewart Hall (India) Limited. 4. An agreement dated 05.08.1988, was entered into between Mrs. Mina Gupta and Dr. Ambar Gupta with M/s. Stewart Hall (India) Limited, agreeing to let out a flat bearing No. D-113, Tower Block, Saptaparni Cooperative Housing Society Limited, Ballygunge, Kolkata agreeing to lease out the said flat for a monthly rent of Rs. 4,000/-initially for a period of three years, renewable for a further period of two years. The original writ petitioner Mr. Ashwani Kapur was employed in a senior position in M/s. Stewart Hall (India) Limited and he was permitted by his employer to occupy the flat as a licensee under the company. During February 1993, Mrs. Mina Gupta and Dr. Ambar Gupta wrote to M/s. Stewart Hall (India) Limi....
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....ll (India) Limited also filed their reply. The original writ petitioner challenged the valuation report provided along with the show cause notice and requested for the report of the valuating team which had visiting the flat in May 1993. No reply was received by the original writ petitioner and an order dated 29.07.1993 was passed by the Appropriate Authority exercising their right of pre-emptive purchase. This order was put to challenge in the writ petition. 5. The writ petitioner contended that the order of pre-emptive purchase of the flat under Section 269 UD (1) of the Act is arbitrary and unreasonable and in violation of the principles of natural justice. The valuation of the property as adopted by the Appropriate Authority was challenged as being excessive, irrationally prepared based on incorrect valuation method. Further it was contended that the rent capitalisation method should have been adopted in computing the valuation of the flat as the lease executed by the transferors in favour of the company was subsisting. It was further contended that the Appropriate Authority without any material came to an erroneous conclusion that there is a likelihood of the company to for....
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....f the property, the petitioner placed reliance on the decision of the Hon'ble Supreme Court in C.B. Gautam Versus Union of India and Others (1993) 199 ITR 530 (SC). 6. The Appropriate Authority and the other official respondents resisted the prayers in the writ petition by contending that the case involves decision on disputed question of facts which cannot be decided in the writ petition under Article 226 of the Constitution of India, this Court would not go into merits of the decision taken by the Appropriate Authority or re-appreciate the facts which were available on record before the Appropriate Authority. It was further submitted that the valuation adopted by the department determined the fair market value of the property at Rs. 26,35,000/-as against the apparent sale consideration of Rs. 12.98,250/- which was 118.37 % more than the apparent sale consideration. The valuation was done by relying upon three sale instances all of which are in respect of properties situated in similar localities and near to the property in question, after giving due allowance to various relevant factors. The transferors, the transferee and the company were issued show cause notices, they had f....
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....ion of the property, upon noting the facts as also the encumbrance with UCO Bank, the Learned Single Bench observed that the right of an individual flat owner will be affected only minimally. Further the Court approved the valuation report prepared by the authorities. Taking note of the decision relied on by the writ petitioner in the case of Appropriate Authority and Another Versus Kailash Suneja and Another (2001) 251 ITR 1, the Court held that in the case on hand the Appropriate Authority has not questioned the validity of the agreement to transfer the property or the title of the vendor, it has only questioned the quality of the encumbrances i.e. the tenancy which the Appropriate Authority was entitled to do so. With regard to the contention of the writ petitioner that valuation should be on rental basis, the Learned Single Bench held that the Appropriate Authority had doubted the tenancy itself and there were good reasons to do so. It also observes that the writ petitioner was in possession of the flat and at the time of entering into the agreement for sale, he was in employment of the company, Stewart Hall (India) Limited, but retired from service on 01.01.2007. Further the L....
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.... filing the statutory form, a team of valuers from the office of the Appropriate Authority have visited the flat, after which nothing happened for one month and letter dated 15.07.1993 was sent by the Appropriate Authority, received by the transferors and the transferee on 17.07.1993, raising certain queries. The writ petitioner sent reply dated 20.07.1993 stating that the agreement between the landlord and the tenant enclosing vouchers, evidencing payment of rent and other documents were enclosed along with form 37 I, however, one more set of copies of those documents were also furnished along with the letter dated 20.07.1993. The writ petitioner stated that the tenancy is governed by The West Bengal Premises Tenancy Act, 1956 and that there is no litigation between the transferors and the tenant (Stewart Hall India Limited). Further it was stated that the tenant is the company and the transferee is in occupation of the said flat as an employee of the company as the company provides accommodation to its senior employees. The flat in question is in a cooperative housing society exclusively meant for residential purpose. Further the encumbrance on the property and the disadvantages,....
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....otice. The question would be whether such an opportunity was really an opportunity, was it adequate, considering the facts and circumstances of the case. It is no doubt true that the transferors, the transferee (writ petitioner) as well as the tenant company had filed their objections. The further question would be merely because the writ petitioner had filed his objection/reply to the show cause notice and participated in the hearing, would negate compliance of the principles of natural justice. We note the reply given by the transferors, dated 27.07.1993, that is on the date fixed for personal hearing. In the first paragraph, it has been stated that the vendors have received the show cause notice on 26.07.1993 in the evening and had no time to prepare a reply and submit before the hearing because the hearing was fixed at 11:00 AM on 27.07.1993. The vendors reiterated the submissions made by the writ petitioner in his letter dated 20.07.1993 in response to the query raised by the Appropriate Authority in his letter dated 15.07.1993. Further it was pointed out that no documents relating to the three sale instances referred to for determining the value of the property at Rs. 28,35,0....
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....rs has to be interpreted or distinguished. The opportunity granted to the aggrieved should not be illusory but should be effective and reasonable. In the preceding paragraphs, we have set out the relevant dates and one day before last day, after which the Appropriate Authority cannot exercise jurisdiction the pre-emptive purchase order was passed. The power exercised under Section 269 UD(1) is a very serious matter as the department seeks to exercise its right of pre-emptive purchase, thereby compelling the vendor to sell the property to the Government and not in accordance with the agreement they had entered into with the prospective purchaser. Therefore, the opportunity should be adequate, reasonable and not illusory. Assuming the writ petitioner had sought for an adjournment, obviously the Appropriate Authority could not grant one as within a day thereafter, he would loose jurisdiction to pass any orders. Thus, even if such a representation had been made, the Appropriate Authority would have not acceded to the request as he was statutorily barred from doing so. In DLF Universal Ltd. Versus Appropriate Authority (2000) 243 ITR 730 (SC), it was held that the provisions of Section ....
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....considering this issue has made an observation that the Appropriate Authority doubts the tenancy. On a careful reading of the order passed by the Appropriate Authority dated 29.07.1993, we find that there is no such finding rendered by the authority. As the authority has used the expression that the "tenancy is not recognised."As pointed out, as on the date of the agreement of sale i.e. 21.04.1993, the tenancy was subsisting. Hence the Appropriate Authority exceeded its jurisdiction in assuming certain events which were to take place much after the agreement for sale. These are all aspects which are beyond the jurisdiction of the Appropriate Authority. Therefore, in our view the decision in K.L Suneja would apply to the facts and circumstances of the case, wherein it was held that only question which the Appropriate Authority can decide is whether the property is undervalued or not; it cannot go beyond terms of the agreement; it cannot question the validity of the agreement, legality of the transaction or the title of the vendor. Thus, we are fully satisfied that the Appropriate Authority clearly breached all the above legal principles rendering the order to be wholly illegal. Thus....
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....cumbrances and leasehold rights, and very often agreements to sell immovable property do not provide that the property sold would be free from encumbrances or leasehold rights. In such a case, the apparent consideration, even if it is equivalent to the fair market value, would be indicative of the market value of the property subject to such encumbrances. If, in such a case, an order for compulsory purchase is made, the result would be that the property would be compulsorily purchased and the amount to be paid for the purchase would be only equal to the apparent consideration and the apparent consideration would not take into account the value of the encumbrances on the property like mortgages and so on or the leasehold rights. It was further held that a property may be heavily encumbered and its value can be considerably depressed if it were sold subject to encumbrances. Further it was observed that it is equally well known that a property in respect of which there is a subsisting lease for a substantial period of time would fetch a comparatively low price because the purchase thereof would not carry with it the right to possession or occupation during the subsistence of the lease....
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.... is violation of principles of natural justice, when the finding of the authority is perverse or based on no materials and when the authority has committed an error of law relating to jurisdiction. The facts in the decision in Mrs. Sunny Uppal are distinguishable, the Court held that the writ petitioners therein had never complained about non supply of valuation report and only in the writ petition such a plea was raised. That apart, the writ petitioner therein did not raise that rent capitalisation method has to be adopted. Therefore, the Court found that the writ petitioner therein cannot raise the same for the first time before the Writ Court. Thus the decision is clearly distinguishable on such aspects as the parties before us had sought for the copies of the reports/documents, consistently pleaded that rent capitalisation method has to be adopted as there was a valid tenancy subsisting. The revenue placed reliance on the decision in Appropriate Authority Versus Smt. Sudha Patil and Another (1999) 235 ITR 118 (SC). This decision was with regard to the jurisdiction of this Court under Article 226/227 of the Constitution of India. As pointed out by us, when there has been gross v....