HINDUSTAN MOTORS LIMITED Vs. MEMBERS APPROPRIATE AUTHORITY

JUDGEMENT

(1.) AGGRIEVED by the order of the first respondent/the Appropriate Authority (Income-tax Department), Chennai-54, dated August 21, 1997, passed under Section 269UD(1) of the Income-tax Act, 1961, Hindustan Motors Limited, Calcutta-1, has filed Writ Petition No. 13303 of 1997.

(2.) AGGRIEVED by the very same order, the other party to the "exchange", Smt. A. R. Chandrika has filed Writ Petition No. 15631 of 1997. Since the issue raised is one and the same in both the writ petitions, they are being disposed of by the following common order. Inasmuch as the petitioner in Writ Petition No. 15631 of 1997, is also the fifth respondent in Writ Petition No. 13303 of 1997, for convenience I shall refer to Hindustan Motors Limited as petitioner and Smt. A. R. Chandrika as fifth respondent.

(3.) THERE is no dispute that the petitioner owns a property comprising the land and building situated at No. 10, First Avenue, Harrington Road, Chetput, Chennai-31. The said property comprises land measuring three grounds 777 square feet with a residential building thereon. Likewise, the fifth respondent is the owner of the property comprising land measuring five grounds and 1,552 square feet with residential building thereon situated at No. 1, Second Main Road, Gandhi Nagar, Adyar, Chennai-20. After negotiation, the petitioner and the fifth respondent came to an agreement that the property belonging to the petitioner and the property belonging to the fifth respondent could be mutually exchanged. It is further seen that pursuant to the said agreement between the petitioner and the fifth respondent to exchange the properties mutually, they sought the assistance of a registered valuer to arrive at the terms of exchange, after considering the nature of the properties. It is further seen that accordingly, the parties agreed that the property at Adyar belonging to the fifth respondent shall be exchanged for the property at Harrington Road belonging to the petitioner, the petitioner paying to the fifth respondent a sum of Rs. 63,00,000 pursuant to the exchange of the properties. Finally, the parties entered into an agreement of exchange dated March 28, 1997, setting out the terms mutually agreed to between them with regard to the said exchange. It is further seen that both the parties were advised that in order to obtain a "no objection certificate" to secure the registration of the deed of exchange, they were required to file a statement in Form No. 37-1 in terms of Section 269UC of the Income-tax Act (hereinafter referred to as "the Act"). Accordingly, the petitioner filed a statement in Form No. 37-1, dated March 28, 1997, prescribed under rule 48L of the Income-tax Rules (hereinafter referred to as "the Rules"). In the said form, the petitioner was shown as the transferor and the fifth respondent as the transferee. On the basis of the direction to file a separate statement showing the fifth respondent as the transferor and the petitioner as the transferee in respect of the property at No. 1, Second Main Road, Gandhi Nagar, Adyar, belonging to the fifth respondent, two statements in Form No. 37-1 were filed one showing the petitioner as transferor in respect of the property at Harring-ton Road belonging to the petitioner and the other showing the fifth respondent as the transferor in respect of the property at Gandhi Nagar belonging to the fifth respondent. After rectifying certain errors that were noticed in the statements, a fresh set of statements in Form No. 37-1 were filed rectifying the errors, on May 5, 1997. While so, on May 19, 1997, the petitioner received a show-cause notice relating to the property belonging to the petitioner at Harrington Road, Chetput, Chennai, to show cause why an order should not be made in respect of the above property in accordance with the provisions of Section 269UD of the Act. In the said notice, the first respondent referred to two sale instances in the past in the vicinity of the said property and came to the conclusion that there was a difference of 39.92 per cent, taking into account the first property and 36.74 per cent, taking into account the second property. In the very same notice, it was pointed out that the property at Gandhi Nagar, Adyar, belonging to the fifth respondent sought to be exchanged for the petitioner's property has shown "considerable appreciation" when compared to two sale instances relating to 1995. In the said show-cause notice, after referring those material aspects, the first respondent sought to exercise the right of pre-emptive purchase. The petitioner submitted objections to the said notice in their letter dated June 9, 1997. The petitioner also submitted valuation reports as well as detailed technical objection from a registered valuer apart from its own objections objecting of the assumption of the first respondent that there was an undervaluation of the petitioner's property and that the presumption of attempt to evade tax would arise. After affording adequate opportunity to the petitioner and after a full-fledged enquiry, the first respondent, by the impugned order dated August 21, 1997, by virtue of the powers vested on them under Section 269UD of the Act, passed an order to purchase the property at Harrington Road, more particularly described in annexure I to the order by the Central Government for a sum of Rs. 1,87,00,000. By virtue of the provisions of Section 269UE(1) of the Act, the said property shall vest in the Central Government from the said date. In so far as the property of the fifth respondent is concerned, the form submitted by them in Form No. 37-1 was rendered as infructuous.