RAJENDRA GIRIRAJ PRASAD TIWARI Vs. UNION OF INDIA

JUDGEMENT

(1.) ALL the abovenoted three writ petitions are being disposed of by this common order as the controversy involved therein is in respect of the same property and the ground for challenge is also the same.

(2.) THE petitioner, Rajendra Giri Raj Prasad Tiwari, is the owner of the plot No. D-34, Saraswati Marg, Bani Park, Jaipur, having an area of 955 sq. metres. It is alleged that two agreements dated March 11, 1992, and February 27, 1993, were entered into in between the petitioner and Messrs, Sona Builders, who are a partnership firm and building contractors, for the purchase of the said piece of land for a consideration of Rs. 28,50,000 through its partner, Jhangi Ram, A statement in Form No. 37-1 as required under Rule 48L of the Income-tax Rules was submitted before the appropriate authority in accordance with the provisions of Section 269UD of the Income-tax Act, 1961, on March 9, 1993. It is submitted that the notice was issued by the District Valuation Officer (appropriate authority) both to the transferee and the transferor, but no such notice was received by the transferee. In the said notice, the transferor and the transferee were called upon to submit the documents on or before March 29, 1993, and to allow inspection of the property on March 30, 1993. THE transferor submitted the documents as well as the report of the authorised valuer under the Income-tax Act dated April 9, 1993. THEreafter, notice under Section 269UD(1) of the Income-tax Act dated May 21, 1993, was sent to the transferor as well as the transferee which was received by both of them on May 26, 1993. In the said notice, it was mentioned that the apparent consideration was lower than the market value and for that purpose the sale of property D-37, Sawai Madho Singh Road, Bani Park, at the rate of Rs. 3,896 per sq. metre by auction on October 3, 1991, was taken into consideration. For the time-gap, increase by 25 per cent. was sought to be made and, therefore, the value of the present property at the rate of Rs. 4,870 per sq. metre was calculated at a figure of Rs. 46,47,000. THE petitioner was given opportunity before the appropriate authority to appear on May 31, 1993. On May 29, 1993, a request was made on behalf of Messrs. Sona Builders by the authorised representative to provide a copy of the sale deed of the property bearing No. D-37 and also the site plan so that the reply may be submitted. THE request for suitable time was also made. THE transferor, Rajendra Giriraj Prasad Tiwari, and their authorised representative, Mr. M.R. Mohnot, as well the transferee, Jagdish Narain, partner, attended and the written submissions were made by the transferor. THE contention that there was no price rise after the sale of the plot No, D-37 on October 3, 1991, the date of agreement of the present property, was rejected. THE said property was physically inspected by the members of the appropriate authority and it was found that the auction property (D-37) was having a common boundary with the present property. However, the auction property was having a 50' wide road and, therefore, ten per cent. deduction was allowed for that reason. THE relief on account of wide front of 123 of the auctioned property and 82 of subject property was not granted for the reason that the auctioned property was 1,141.25 sq. yards whereas the subject property was 955 sq. yards only. THE deduction of ten per cent. on account of smaller size was rejected and it was observed that the price of land of smaller size could be higher and not lesser. A further relief of ten per cent. was claimed on the ground that the auctioned property was having commercial value which was rejected on the ground that both the properties were residential. Accordingly, on the basis of adjustment on account of road, location and time gap the valuation of the present property was taken at Rs. 3,779 per sq. metre by giving net adjustment of minus 3 per cent. (-3 per cent.) on the auctioned price of Rs. 3,896 per sq. metre. Thus, the value worked out was at Rs. 36,08,945 and salvage value of Rs. 12.000 was added. Since the total value was estimated at Rs. 36,20,945 which exceeds the apparent consideration of Rs. 28,50,000 by 27 per cent., it was held that the apparent consideration is substantially low as compared to the value arrived at and, therefore, the order to purchase by the Central Government of the said immovable property was passed on May 31, 1993.

(3.) AS aforesaid, in the copy of the valuation report of the approved valuer dated April 9, 1993, the reference to plot No. D-37 is there and the valuation of plot No. D-37 was done. From the total sale value, the cost of the structure of Rs. 7,06,000 was reduced and the land rate was calculated after such reduction at the rate of Rs. 2,840 per sq. yard. According to the respondents the cost of structure of plot No. D-37 was taken at Rs. 3,896 per sq. metre. For the purpose of acquisition under Chapter XX-C of the Act, the appropriate authority is not bound to take the figure given by the approved valuer. This is besides the fact that the said report was not before the appropriate authority. The object of bringing Chapter XX-C in the statute book was to stop transfer of property at a price lower than the market price. The earlier efforts by way of Chapter XX-A have not brought the desired results and, therefore, the legislation was brought in the present form. The validity of the provisions has already been upheld by the apex court in the case of C.B. Gautam v. Union of India [1993] 199 ITR 530 and it was considered by the apex court that the provisions do not confer arbitrary or unfettered discretion on the appropriate authority and is not violative of Article 14 of the Constitution of India. The provisions of the last part of Sub-section (1) of Section 269UE were struck down and accordingly Sub-sections (2) and (3) of Section 269UE were held inapplicable to bona fide lessees and encumbrance-holders in possession and the property in question was to vest in the Central Government subject to such encumbrances and leasehold interests as are subsisting thereon except for such of them as are agreed to be discharged. Since Chapter XX-C does not have any provision for providing opportunity of being heard before passing an order under Section 269UD, it was held that the intending seller, purchaser and other affected parties must be given reasonable opportunity to show cause against the proposed order for purchase. It has further been held that the provisions of Chapter XX-C can be resorted to where in an agreement to sell immovable property in an urban area to which the said provisions apply, there is a significant undervaluation of the property concerned, namely, of 15 per cent. or more.