KRISHNA KUMAR RATWAT Vs. UNION OF INDIA

JUDGEMENT

(1.) THESE two special appeals are directed against the judgment of the learned Single Judge dated 14. 9. 1994 in the writ petition filed by the appellant Krishna Kumar Rawat and three others in which appellant Smt. Mithilesh Kumari was a respondent. Factual matrix of the case is that petitioners Krishna Kumar Rawat, Ashok Kumar Rawat, Ravindra Kumar Rawat and Rajindra Kumar Rawat were intending buyers of a property located at khasra no. 126 of Village Durgapura in Tehsil Sanganer of District Jaipur, which now forms part of Jaipur City. This property consists of a plot area admeasuring 9500 sq. yards / 7945 sq. mtrs. with two godowns and certain other structures. The appellant Mithilesh Kumari (for short the vendor), the owner of the property, entered into an agreement to sale dated 18. 12. 1993 for sale of the aforesaid property in favour of the prospective buyers for a consideration of Rs. 99,84,500/ -. The sale price was calculated at the rate of Rs. 1051/- per sq. yard and a sum of Rs. 40,00,000/- was paid in advance by the prospective buyers to the vendor vide cheque dated 18. 12. 1993. It was agreed between the parties that they shall obtain a certificate in Form 37-I of the Income Tax Act and within one month thereafter the sale deed shall be got executed. According to the prospective buyers however the actual possession of the said property i. e. Godown no. 13 and 14, guard room and office premises was delivered to them and with respect to 1/4th undivided share of the remaining open land, only symbolic possession was delivered to them on 18. 12. 1993. The appellants furnished the required information about the agreement to sale in accordance with the provisions of Section 269uc of the Income Tax Act to the Appropriate Authority of the Income Tax Department in form No. 37 I together with agreement to sale and statement of transfer of the property. The Valuation Officer of the Appropriate Authority of Income Tax Department thereafter vide his letter dated 18. 1. 1994 informed the appellants that he would like to inspect the property on 21. 1. 1994 and demanded certain informations. It is stated that the appellants furnished the required information to the Valuation Officer who was later learnt to have submitted a report to the Appropriate Authority. The Appropriate Authority after receiving the report from the Valuation Officer issued a show cause notice to the appellants on 8. 3. 1994 under section 269 UD (1a) of the Income Tax Act, 1961 stating therein that apparent sale consideration as disclosed by the appellants was on lower side for various reasons and that in fact the value of the land was much higher than the agreed rate. It was stated that a plot of land at A-90, Triveni Nagar near Durgapura Railway Station was sold by Jaipur Development Authority on 7th November, 1992 in auction @ Rs. 1781/- per sq. mtrs. The Appropriate Authority also pointed out that if an adjustment of -5% on account of less development, -10% on account of general condition of plot of the property and +12% on account of difference in time were allowed and with deduction of 5% being allowed, the rate of the plot would work out to Rs. 1692/- per sq mtrs and on that basis, the value of the land measuring 9,500 sq. yard / 7,943 sq. mtrs. x 1692 would work out to Rs. 1,34,39,556/- as against the price of Rs. 99,84,500/- declared by the appellants in Form No. 37-I. The appellants were therefore required to show cause as to why the preemptive purchase order u/s. 269ud (1) of the Income Tax Act was not made and were asked to appear before the Appropriate Authority on 21. 3. 1994 at 10. 30 PM either personally or through their representative.

(2.) THE prospective buyers and the vendor both separately submitted their reply /objection to the show cause notice on 21. 3. 1994. THE vendor submitted that comparison of a small developed plot of land in Triveni Nagar was not justified. It was submitted that development of a land according to rules would need 40% of the land to be left for amenities like park, roads etc. Moreover they would be required to incur the costs of development of roads, electricity, water supply and other civic amenities. THE piece of land would therefore be required to be sub-divided into plots. THE prospective buyers in their separate reply to the show cause notice contended that in notification of the Sub- Registrar, Government of Rajasthan, Jaipur the market price of the land in Durgapura area as on 1. 4. 1991 for the first category has been fixed at the rate of 550/- per sq. mtrs and in the second category at the rate of Rs. 450/- per sq. mtrs and if 12% on the aforesaid amount is added on account of time element of two years, this would work out to Rs. 690/- per sq. mtrs. Besides, subdivision of the property would be required to be got approved from JDA which would mean leaving 30% to 40% of the land open for roads and parks and incurring cost for development of such roads, parks, water supply and provision of electricity and cost of demolition of the present structure and removal of debris would require atleast six months. THE prospective buyers submitted an additional representation on 24. 3. 1994 that a piece of land similar to the one cited in show cause notice situated in Triveni Nagar Scheme measuring 116. 13 sq. mtrs. was sold on 3. 6. 1993 for a sum of Rs. 1,00,000/- at the rate of Rs. 861. 10 per sq. mtrs. THE Sub-Registrar fixed the market value of such land for registration purpose at the rate of Rs. 1,043. 05 per sq. mtr as per the rates prescribed by District Advisory Committee. Reference was given to the order of the JDA dated 4. 11. 92 according to which reserve price for lands in Durgapura area was fixed at the rate of Rs. 600/- per sq. mtrs for residential purposes.

(3.) SHRI Paras Kuhad argued that the determination of fair market value of the Appropriate Authority was wholly illegal because it was based on adoption of a totally incorrect price of the disputed land taking it to be a developed plot on the basis of the solitary example of auction sale dated 7th November, 1992 of plot no. A-19, Triveni Nagar, Jaipur. Adoption of such rate was unrealistic and totally incorrect as was evident from the price reflected under the sale-deeds of other developed plots in Triveni Nagar itself namely plot No. B-44 and A-256 which related to the transaction of sale carried out in the month of June and July, 1993. According to such sale transactions, the market rate that was determined was Rs. 1,300/- per sq. mtrs. The Appropriate Authority also failed to consider that while the price adopted for comparison was that of a developed building plot, the property in question was a larg undeveloped tract of agricultural land and if for the purpose of comparison, the price of the developed building plot was to be adopted, the cost of converting the undeveloped land area into developed building plots of small sizes was also required to be taken into consideration.