HIDRIVE FINANCE LIMITED Vs. APPROPRIATE AUTHORITY IT DEPARTMENT

JUDGEMENT

(1.) Rule D.B. Since a short point is involved, with the consent of counsel for the parties, the petition is taken up for disposal. Challenge in this writ petition is to the order passed by the Appropriate Authority, Income-tax Department (in short the Authority) purportedly under Section 269UC(4) of the Income-tax Act, 1961 (in short the Act). By the said order the Authority held that transfer of the subject property without obtaining the requisite No-objection Certificate (NOC in short) from the Authority is void in terms of the provisions of sub-section (2) of Section 269 UK read with Sections 269 UK(1) and 269 UA(2)(f)(1) of the Act. The statement filed in Form 37-1 on 23/04/1999 was held to be not maintainable in law as it was in respect of a void transaction and was not to be acted upon.

(2.) Brief reference to the factual aspects would suffice: On 9/10/1989 an agreement to sell was entered into by the petitioner and Mr. Pradeep Narang, respondent No.3, in respect of plot No.B, at 101, New Friends Colony, New Delhi (hereinafter referred to as the subject property) for a total sale consideration of Rs.85 lakhs. On the said date, another agreement to sell was also executed between J.K. Industries Limited and Smt.Satwant Narang, mother of respondent No.3, by which plot No.A, at 101, New Friends Colony, New Delhi was agreed to be sold to J.K.Industries Limited. Statement in the prescribed form 37-1 under Section 269 UC of the Act was filed on 20/10/1989 by petitioner and respondent N0.3. On 15/12/1989 the Authority held that both the plots A and B being contiguous have to be considered together and are not separable. Therefore, no NOC in terms of Section 269UC of the Act was issued, inter alia, on the ground that part of land was covered by the Urban Land (Ceiling and Regulation) Act, 1976 (hereinafter referred to as the Land Ceiling Act) and, therefore, the application was premature. It appears that Smt. Satwant Narang filed CWP 47/90 against the said order and by judgment dated 14/12/1990 in the said case, Authority was directed to issue NOC in respect of plot No.A. Representations, praying for reconsideration of the matter, were filed on 7/03/1994 and 13/04/1994 as, according to petitioner, law applicable was settled by the Apex Court in Appropriate Authority & Anr. Vs. Tanvi Trading and Credits P.Ltd & Ors. f1991] 191 ITR 307 SC. On 26/09/1994 Authority informed the petitioner that no amendment could be made to the previous order dated 15/12/1989 after expiry of six months. A suit was filed on 10/11/1994 for declaration and for mandatory injunction for issuance of NOC. Authority filed its written statement and raised objections about maintainability of the suit. Later on suit was withdrawn. By Act No. 15 of 1999 the Land Ceiling Act was repealed with effect from 22/03/1999. On 23/04/1999 petitioner again requested the respondent to re-consider the matter in view of repeal of the Land Ceiling Act and to give fresh consideration to form 37-1 already on record. Another application in the said form was also filed. On 17/06/1999 Authority issued notice under Section 269UC(4) of the Act indicating objection about maintainability of the fresh application. After hearing the parties, by impugned order dated 29/07/1999 Authority rejected the statement as not maintainable. In the meantime, action for prosecution under Section 276 AB has been initiated. Prayer in the writ petition is to quash the aforesaid order dated 29/07/1999; for direction to the Authority to issue the NOC and to nullify proceedings under Section 276AB.

(3.) It is the stand of the petitioner that two options are available to the respondent under the scheme of the Act when statement in form 37-1 is submitted before it. Two options, according to him, are (a) issue NOC or (b) make pre-emptive purchase of the property. According to learned counsel for respondent No. 1 basic feature of the transaction was possession of property notwithstanding absence of NOC or even before the consideration of Form 37-1 application, which was filed afresh. This, according to him, was a fraud on the statutory provisions and being illegal, authorities are justified in declining to issue the NOC.