SURYA KIRAN ASSOCIATION Vs. APPROPRIATE AUTHORITY

JUDGEMENT

(1.) Rule. Mr. J. P. Shah, learned counsel for the petitioner prays to delete Dr. Shshikant Karsandas Patel, respondent No. 2 as, according to him, the petitioner does not seek any relief against that respondent. Permission granted. Original respondent No. 1 appropriate authority will now be treated as sole respondent. Mr. B. J. Shelat instructed by M/s R. P. Bhatt, appears and waives service of Rule. In the facts and circumstances of the case, the matter is taken up today for final hearing.

(2.) This petition is filed by the petitioner for quashing and setting aside the order Annexure - E dt. April 28, 1995 passed by appropriate authority in exercise of powers under Section 269 UD (1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), of pre-emptive purchase of property and consequential order of even date at Annexure - E/1 vesting the property in Government under Section 269 UE(2) of the Act being illegal, ultra - vires and unconstitutional.

(3.) It is the case of the petitioner that it is a Non-Trading Corporation incorporated under the Bombay Non-Trading Corporation Act, 1959. It consists of members who belong to lower middle class. One Dr. Shshikant Karsandas Patel, whose family was settled in the United States, decided to sell the property in question with a view to get himself to settle in America. The petitioner-association, therefore, entered into an agreement on January 20, 1995, to purchase sub-plot No. 2 of Final Plot No. 178 under Town Planning Scheme No. 3, admeasuring 743 sq. yds. with a superstructure thereon situated behind Mount Carmel High School, Navrangpura, Ahmedabad for an apparent consideration of Rs. 45,25,000/-. A copy of Banakhat is annexed to the petition. According to the petitioner-Corporation, all expenses of stamp paper, registration charges, advocate fees and miscellaneous expenses were to be borne by the petitioner. Since the amount of apparent consideration exceeded Rs. 10 lacs, vendor and vendee filled in form No. 37-I of the Act in accordance with the provisions of the Act on January 23, 1995. In that formula also, it was mentioned that transfer expenses were to be borne by the purchaser. It is asserted by the petitioner that the fact regarding expenses were specifically mentioned because according to usual practice in the State, such expenses were to be shared equally by transferor and transferee. For a substantial long period, nothing was done by the respondent authority. Transferor as well as transferee believed that appropriate authority was satisfied about the consideration and bona fide transaction. However, the respondent authority, in purported exercise of power under Section 269 UD(1A) of the Act issued a show-cause notice and called upon the transferor and transferee on April 20, 1995 alleging that taking into account consideration of the sale instance property (SIP) apparent as well as discounted consideration of property under consideration (PUC) was understated by more than 15%. The transferor and transferee were, therefore, asked to show cause as to why action under Chapter XX- C of the Act should not be taken against them and the property should not be ordered to be purchased under Section 269 UD (1). The parties were called upon to file written reply/submission within stipulated period, failing which appropriate authority would presume that they had no objection to the proposed order under Section 269 UD(1) of the Act.