I T C LTD Vs. APPROPRIATE AUTHORITY

JUDGEMENT

(1.) The petitioner being the intended vendee has asked for quashing of the order passed by the appropriate authority, namely, respondent No. 1, dated January 28, 1993, purported to have been passed under Section 269UD(1) of the Income-tax Act, 1961 (hereinafter referred to as "the said Act"), and also for consequential relief for granting "No objection certificate" to purchase the two flats, bearing Nos. 1-C and 4-C, situate in the building commonly known as "Sun Flower Court" at and being premises No. 7, Love Lock Place, Calcutta 700 019 (hereinafter referred to as "the said property"). By the order impugned the Central Government has exercised its option to buy up the said property at a consideration of Rs. 50 lakhs.

(2.) The short facts of the case are that the petitioner entered into an agreement for sale of the aforesaid property with respondents Nos. 4 and 5, being the vendor at a sum of Rs. 50 lakhs. Thereafter the petitioner under Section 209UD, filed an application in Form No. 37-1 of the Act. Therefore, a show-cause notice was served upon the petitioner on or about January 7, 1993, issued by the appropriate authority. The petitioner duly replied to the said show-cause notice by letter dated January 13, 1993. Before replying to the show-cause notice the petitioner duly demanded and was supplied with several documents, namely, details of scrutiny report, valuation report dated October 21, 1992 and site inspection report. By the impugned order respondent No. 1 did not accept the cause shown by the petitioner and held amongst others that the apparent consideration, mentioned in the agreement for sale is significantly understated and after having valued the said two properties it was decided that the said property would be purchased by the Central Government at a sum of Rs. 50 lakhs.

(3.) Dr. Pal, learned senior advocate, appearing in support of the writ petitioner contends that if the methods and economics of the valuation of the property as done by the Superintendent Engineer are to be accepted then it is a clear case that the consideration for the purchase of the property in question is not lower than the consideration of the two flats at Trivoli Court offered by the petitioner and in any event less than 15 per cent, of the gross valuation which has been disclosed in the two comparable cases. He contends that the two properties at Trivoli Court cannot be comparable instances because the property situated at Trivoli Court is at a commercial complex and at the junction of the Ballygunge Circular Road and Circular Road, which is situate at a more locationally advantageous position. His further contention is that the impugned order suffers from apparent infirmities so far as the valuation report is concerned. This valuation in the impugned order proceeded upon a basis which the petitioner was not confronted with and the same was different from that was adopted in the valuation report. This basis of the valuation was never disclosed in the valuation report nor in the show-cause notice as such the petitioner has not even got any opportunity to controvert the same. His further contention is that the appropriate authority has also taken into account the rate of inflation at 1.5 per cent, per month and added 10.5 per cent, to the consideration for 56 Trivoli Court and at the rate of 9 per cent, to the consideration of 91 Trivoli Court and this has not been disclosed in the valuation report or at any stage of hearing before the appropriate authority. The rate of inflation taken by the Central Board of Direct Taxes is at one per cent, per month. Therefore, judged from all standards the basis of increase of the valuation is not only illegal but also flagrant violation of the principle of natural justice. The appropriate authority has thus introduced certain facts that is the age of the building, the time lag, the rate of inflation, etc., which were absolutely new materials and were not disclosed even in the show-cause notice or at the time of hearing before order was passed and the assessee was never given any opportunity to controvert these materials. The order of the . appropriate authority, therefore, suffers from blatant and flagrant violation of the principle of natural justice.