ASSOCIATED CEMENT COMPANIES LTD Vs. APPROPRIATE AUTHORITY

JUDGEMENT

(1.) The petitioner-company entered into an agreement to purchase a flat at premises No. 70D, Hindustan Park, Calcutta (referred to as "the flat") on September 22, 1992. The total consideration price was stated to be Rs. 28.50 lakhs. On September 29, 1992, the petitioner-company and the owner of the flat being respondent No. 5 herein filed Form No. 37-I before the appropriate authority under Section 269UC of the Income-tax Act, 1961 (referred to as "the Act"). On October 13, 1992, an inspection was held and detailed scrutiny made in respect of the transaction in question. The particulars together with instances of five other properties, their description, locality and values were submitted to the appropriate authority on November 4, 1992, along with a report of the executive engineer. The executive engineer was of the view that the consideration for the sale of the flat in question had been understated.

(2.) On November 20, 1992, notice was issued to the petitioner-company requesting it to show cause why the flat in question should not be purchased under Chapter XX-C of the Act as the apparent consideration shown by the petitioner appeared to be understated as compared to the fair market value of the flat in question. According to the petitioners, this notice was received on November 23, 1992. On November 25, 1992, the petitioner appeared and also submitted a letter asking for a copy of the valuation report prepared or obtained by the Department so that it could make submissions as to whether the apparent consideration as stated in the agreement for sale was less than the fair market value by 15 per cent. At the hearing on November 25, 1992, the petitioner was told that the appropriate authority was basing its finding as to undervaluation on two transactions : one relating to sale of a flat at Ballygunge Circular Road, Calcutta, and the other at Southern Avenue, Calcutta. The petitioner-company was also asked to make available details of any transactions done in respect of any flats sold in the vicinity. By a letter dated November 27, 1992, the petitioner submitted that the transactions on the basis of which the appropriate authority was holding that the transaction in question was being made at undervalue were not in respect of comparable properties. The petitioners also gave details of a transaction at Dover Road where two flats had been sold at Rs. 326 per sq. ft. in September, 1992, At the hearing held on November 27, 1992, the petitioners were handed over a xerox copy of a valuation note dated November 27, 1992, which showed that the market value of the flat in question was Rs. 35,17,910 (i.e., 25,4 per cent, more than the apparent consideration), xerox copy of the detailed scrutiny dated November 3, 1992, and xerox copy of the valuation done by the executive engineer on November 4, 1992. The petitioners asked for time in order to consider these documents. On November 30, 1992, a hearing was held and written comments were also submitted by the petitioners before the appropriate authority. On the same date, the appropriate authority passed an order under Section 2G9UD of the Act by which the appropriate authority ordered the flat in question to be purchased by the Central Government at Rs. 27,99,706 being the amount equal to the amount of effective apparent consideration. The appropriate authority gave detailed reasons for the order dealing with the points raised by the petitioners in the letter dated November 30, 1992.

(3.) Both the orders under Section 269UD(1) as well as the reasons in support of such order are the subject-matter of challenge in this writ petition.