MAGADH STOCK EXCHANGE ASSOCIATION Vs. UNION OF INDIA

JUDGEMENT

(1.) THE order passed by the Appropriate Authority dated January 25, 1990, under Section 269UD(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), is the subject-matter of challenge in C.W.J.C. No. 879 of 1990, and the petitioner therein is the transferee. THE petitioner challenged the constitutional validity of Chapter XX-C of the Act as well as the impugned order passed by the appropriate authority, inter alia, on the ground that the said order had been passed without affording an opportunity of hearing to the affected parties. THE further stand of the petitioner is that the consideration money not having been tendered to the transferor, as required under Section 269UG of the Act, the property in question must be held to have been revested and, consequently, possession of the Central Government is without jurisdiction.

(2.) WHEN this writ application was listed before this court, on February 9, 1990, this court had passed an interim order to the effect that (i) the operation of the order of the appropriate authority under Section 269UD of the Act shall remain stayed, (ii) the income-tax authorities shall not be required to pay either to the seller or to the purchaser the amount of the purchase price of the property until further orders or to deposit with the prescribed authority ; (iii) the provisions regarding limitation, as contained in Sections 269UG and 269UE, shall not operate against the Income-tax Department, and (iv) respondent No. 4 shall be at liberty to proceed with the construction of the project in question. At that point of time, the application filed by C. B. Gautam challenging the very same provisions of the Act was pending before the apex court. On December 3, 1990, this court modified its earlier order dated February 9, 1990, and on the prayer of the petitioner the said interim order was vacated, but, it was made clear that any action taken in the meantime shall be subject to the result of the said writ application.

(3.) THE next question that arises for consideration is whether no opportunity of hearing having been afforded to the affected parties, in terms of Gautam's case [1993] 199 ITR 530, within two months from the date when the order of stay was vacated by this court, or, at least, within two months from the date of judgment of the Supreme Court in Gautam's case [1993] 199 ITR 530, the embargo contained in the proviso to Sub-section (1) of Section 269UD of the Act would apply. In other words, the question for consideration is as to from which date the limitation of two months, contained in the proviso to Sub-section (1) of Section 269UD of the Act, would be reckoned. According to learned counsel for the petitioner, the said period of two months has to be reckoned from the date when this court vacated the interim order of stay, or, in any event, from November 17, 1992, the date when the apex court delivered the judgment in Gautam's case [1993] 199 ITR 530. According to Mr. Rastogi, counsel for the Department, the period of two months has to be reckoned only after the disposal of the writ application that was pending in court and not from any earlier point of time. THEir Lordships of the Supreme Court in Gautam's case [1993] 199 ITR 530 have observed that the object of the provisions of Chapter XX-C of the Act is a laudable one, namely, to counter evasion of tax in transactions of sale of immovable property. THEir Lordships have further found that if the original time-frame prescribed in Chapter XX-C is rigidly applied, it would not be possible for the appropriate authority concerned to pass an order under Section 269UD(1) at all in respect of the property in question. THE aforesaid observations should be borne in mind while examining the contentions raised by learned counsel for the petitioner.