ANAGRAM FINANCE LIMITED Vs. APPROPRIATE AUTHORITY

JUDGEMENT

(1.) THROUGH this petition, the correctness and legality of the order at Annex. A, dt. 31st Jan., 1995, passed by the appropriate authority for purchase of the property in question under S. 269UD(1) of the IT Act 1961, has been questioned.

(2.) THE facts giving rise to this petition may be noticed in brief. The property in question is part of the first floor of the building knowns as "Sakar I" complex, situated opposite Gandhigram Rly. Station, Ashram Road, Ahmedabad, which is a commercial complex. Respondent No. 2, M/s. Dalal Consultants & Engineers Pvt. Ltd. (hereinafter called as vendors), are the current occupiers of the said property in question. The vendor executed an agreement to sell that property to the petitioner at a price of Rs. 1,05,08,000 (Rs. one crore five lakh and eight thousand only) (hereinafter called as "apparent consideration"). The vendors submitted requisite information as per S. 269UD of the Act in Form No. 37 I, dt. 18th Oct., 1994. Respondent No. 1 who is Appropriate Authority constituted under S. 269UD of the Act for the purpose of Chapter XX C of the Act, issued notice dt. 13th Jan., 1995 for the purpose of affording an opportunity of hearing in terms of newly inserted sub s. (1A) of S. 269UD of the Act to the vendor who is also in occupation of the property and transferee petitioner stating that as per agreement to sell in question, the apparent consideration for the property under consideration comes to Rs. 1,802 per sq. ft. and as per discounted consideration, its price comes to Rs. 1,763 per sq. ft. whereas as per the consideration of property comprising built up premises, the basement, ground floor and first floor in which has been sold on 20th Aug., 1983 show corresponding apparent value to be Rs. 2,744 per sq. ft. and as per discounted consideration, its market price to be Rs. 2,681 per sq. ft. According to the said notice, the difference between comparable sale transaction in respect of the properties situated in the same building, showed that the apparent consideration in the apartment in question has been understated by more than 15% particularly when time lapse between two transactions is taken into consideration, therefore, Authority intends to resort to pre emptive purchase under Chapter XX C of the Act. In the show cause notice, appropriate authority also stated net discounted consideration of the property suggested to be paid to the vendor and required the vendors and transferee to show cause against intended action. On 31st Jan., 1995, the impugned order was passed by rejecting submissions raised by the transferor and transferee who have filed written submissions on 25th Jan., 1995 and 27th Jan., 1995, respectively.

(3.) LEARNED counsel for the Revenue did not dispute the fact that guidelines for the purpose of making pre emptive purchase under Chapter XX C is that in the opinion of the appropriate authority, the apparent consideration of transaction in an agreement to sell must appear to have been understated by 15% of its market value. He argued that the notice to show cause against the proposed action was given on 30th Jan., 1995, well before the time prescribed and that the petitioners were afforded an adequate opportunity of hearing and after taking into consideration the written submissions made by them, the order was passed and, therefore, the order cannot be said to be suffering from the vice of breach of principles of natural justice. Regarding second contention, the learned counsel for Revenue stated in all fairness that though the contention is covered by the decision relied on by the petitioner in his favour, he strenuously urged that the decision to the extent it holds determination of fair market price as condition precedent, requires reconsideration. The requirement of law in view of the decision in the case of C.B. Gautam vs. Union of India & Ors. (1992) 108 CTR (SC) 304 r/w (1993) 110 CTR (SC) 179 : (1993) 199 ITR 530 (SC) : TC 3PS.87 does not travel beyond satisfaction of the appropriate authority about understatement of apparent consideration being more than 15% of the real market value, but actual determination of market value is not sine qua non. He further submitted that the order is otherwise founded on due application of mind by the appropriate authority by taking into consideration all relevant material that was before it and suffers from no illegality.