K.t.srinivasa Raja v. The Appropriate Authority (Income-Tax Department) First Floor

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 13.03.2007 CORAM: THE HONOURABLE MR.JUSTICE P.D.DINAKARAN andTHE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMAN W.A.No.3661 of 2002 1. K.T.Venkatesan 2. K.T.Srinivasa Raja .. Appellants versus 1. The Appropriate Authority (Income-tax Department) First Floor 108, Mahathma Gandhi Road Chennai-600 034. (Income-tax Department) First Floor 108, Mahathma Gandhi Road Chennai-600 034. 2. Union of India rep. by its Secretary Ministry of Finance New Delhi. rep. by its Secretary Ministry of Finance New Delhi. 3. C.R.Venkatachalam 4. Vandana Venkatachalam RespondentsRespondents .. 4[th] respondent impleaded asper order dated 13.3.2007made in W.A.M.P.No.1963 of2003. PRAYER: Writ Appeal filed under clause 15 of the Letters Patentagainst the order of this Court dated 31.10.2002 made in W.P.No.9956of 1999 to issue a writ of certiorari or any other appropriate writ,order of direction in the nature of a writ, calling for the recordsfrom the 1[st] Respondent culminating in its order A/A/MDS/No.2 (243)5/98-99 Dt.28.5.99 accompanied with the letter A/A/MDS/No.2 (243)5/98-99 Dt.28.5.99 and quash the same. For appellants :Mr.A.K.Lakshmi Narayanan For respondents-1 & 2 :Mr.Naresh KumarJunior Standing Counsel forIncome TaxJunior Standing Counsel forIncome Tax For 3[rd] respondent https://hcservices.ecourts.gov.in/hcservices/ For 4[th] respondent : No appearance :Mrs.Chitra Sampath (Judgment of the Court was delivered by CHITRA VENKATARAMAN,J.) This writ appeal is against the order of the learned singleJudge dated 31.10.2002, dismissing the writ petition preferred againstthe order of the appropriate authority the first respondent herein.The writ appellants herein are the transferees who had entered into anagreement to purchase the property. By order dated 23.5.1999, thefirst respondent herein, in exercise of its powers of preemptivepurchase, under Section 269-UD(1) of the Income Tax Act, orderedpurchase of a property for a consideration of Rs.27,60,670/-. 2. It is seen that the transferor C.R.Venkatachalam,petitioner in W.P.No. 9793 of 1999, was the owner of the premises atNo.3, Krishnamachari Avenue, Adyar, Chennai. The transferees are thewrit petitioners in W.P.No.9956 of 1999. The transferor andtransferees entered into an agreement to sell and purchase theproperty for an apparent consideration of Rs.28 lakhs on 10.2.1999.The parties filed their statement in Form 37-I in respect of theagreement dated 10.2.1999. A show cause notice under Section 269-UD(1A) dated 23.4.1999 was issued along with the valuation reportciting two comparable sale instances calling upon them to show causeas to why the property should not be purchased by the Department underSection 269-UD of the Income Tax Act. After the receipt ofobjections, the first respondent passed an order under Section 269-UD(1) on 28.5.1999 exercising its pre-emptive right to purchase theproperty for a consideration of Rs.27,60,670/-. The appropriateauthority, the first respondent herein, concluded that the value ofthe subject matter of the property was 38.6% lower compared to theland rate as per the sale instances. 3. Challenging the said order, writ petitions were filedbefore this Court contending that the property was a tenantedproperty; the property had no commercial value and that there was nounder-valuation of the property. It was also contended that theproperties, which were taken as comparative sales, were subject of theproceedings under chapter XX-C and that the same should not have beentaken into consideration. 3. Challenging the said order, writ petitions were filedbefore this Court contending that the property was a tenantedproperty; the property had no commercial value and that there was nounder-valuation of the property. It was also contended that theproperties, which were taken as comparative sales, were subject of theproceedings under chapter XX-C and that the same should not have beentaken into consideration. 4. The claim of the writ petitioners was countered by therespondent that the appropriate Authority had exercised its powersafter due deliberation and that there was no ground for interferingwith the reasoning of the appropriate authority. Considering the scopeof Article 226 of the Constitution of India, the remedial judicialreview could not be equated to a remedy of appeal. The respondentsplaced reliance on the decisions reported in 208 ITR 637 (DEVESHBEHARI SAXENA Vs. DEPUTY COMMISSIONER OF INCOME TAX AND ANOTHER, 235ITR 118 (APPROPRIATE AUTHORITY AND ANOTHER Vs. SMT.SUDHA PATIL ANDANOTHER, 247 ITR 182 (RAMESH BHAI J.PATEL Vs. UNION OF INDIA) and 251ITR 93 (UNION OF INDIA Vs. SHATABADI TRADING AND INVESTMENT P. LTD.AND OTHERS). https://hcservices.ecourts.gov.in/hcservices/ 5. In the course of the proceedings before this Court, thewife and the daughter of the transferor impleaded themselves seeking a direction to deposit the money due to them in respect of the decreepassed at the instance of the wife and daughter against thetransferor. 6. This Court referring to the decision of the Supreme Courtreported in (2001) 6 SCC 563 (APPROPRIATE AUTHORITY AND ANOTHER Vs.KAILASH SUNEJA), followed in (2001) 4 SCC 710 (APPROPRIATE AUTHORITYVs. R.C.CHAWLA), (2001) 6 SCC 748 (UNION OF INDIA AND OTHERS Vs.SHATABADI TRADING & INVESTMENT (P) LTD. and (1998) 8 SCC 237(APPROPRIATE AUTHORITY Vs. SUDHA PATIL) took the view that in thelight of the guidelines given by the Apex Court, this Court'sjurisdiction to examine the contentions is very limited in that thejurisdiction is not that of an appellate forum. Learned single judgealso pointed out that admittedly there was no complaint of proceduralviolation or violation of principles of natural justice while passingthe impugned proceedings. On the question of comparable instances,the learned Single Judge also found the reasoning as correct and wasnot disputed. It was also seen that the subject property and thecomparable sale instances were similar and could not be questioned asincomparables. Hence, the learned Judge held that the contention didnot deserve any further consideration. As regards the downward trendin the real estate market, the learned single Judge pointed out thatthe competent authority had taken note of the fall in the real estatemarket. Referring to the compelling circumstances which necessitatedthe sale of the property, this Court found that the suit was of theyear 1997. The decree was of the year 1998 and the agreement wasentered in 1999. Learned Judge pointed out that the wife and thedaughter were not paid as per the decree, but then the contention thatit was a distress sale could not be accepted and rightly so, therespondent had taken the view that the sale was not a distress sale.Learned Judge also rejected the plea that there was a tenancy in thepremises. 7. On the question of jurisdiction raised by the transferee,learned single Judge held that the same could not be sustained thatmerely because the agreement stipulated a lesser time, it could not besaid that Chapter XX-C could not be invoked when the transactionsattracted Chapter XX-C. In the circumstances, taking the view thatthere were relevant materials before the competent authority to orderthe preemptive purchase, the writ petitions were dismissed. Asregards the claim made by the wife and the daughter of the transferor,ordering the impleading petitions, this Court ordered in the directionpetitions that the appropriate authority would pay a sum of Rs.17lakhs with proportionate interest on the said sum earned by virtue ofthe deposit till the date of the order of this Court. 8. The writ appeal is preferred by the transferees. There isno appeal from the transferor. The grievance of the writ appellantsis that Section 269-UC, as it then stood, required that the agreementwould be not less than three months before the intended transfer, butthe agreement entered into between the appellants and the transferorprovided only fourteen weeks. Hence, when the agreement was not inaccordance with Section 269-UC(1), the first respondent had nohttps://hcservices.ecourts.gov.in/hcservices/jurisdiction to act on the circumstances, and the order in the writpetition amounts to conferring legality on an agreement that contravene Section 269-UC(1). The appellants also questioned that thefirst respondent had not furnished the documents relied upon. In thecircumstances, he prayed for setting aside the order of the learnedsingle Judge and thereby, the order of the appropriate authority.Although the appellants had raised other grounds in the writ appeal,except for the contention on the jurisdiction as stated above, theappellant has not raised any other objection in the course ofarguments before this Court. 9. The contentions of the appellants were countered by thelearned standing counsel, contending that the transferee, as such, hasno locus standi to maintain the writ appeal when the vendor had notpreferred any appeal challenging the order of the learned single Judgeupholding the order of the appropriate authority. Quite apart, hereferred to the jurisdiction of this Court under Article 226 of theConstitution of India and submitted that the learned single Judge, ona consideration of the entire case, had rightly come to the conclusionon every aspect of the matter now projected and consequently prayedthat the appeal be dismissed. 9. The contentions of the appellants were countered by thelearned standing counsel, contending that the transferee, as such, hasno locus standi to maintain the writ appeal when the vendor had notpreferred any appeal challenging the order of the learned single Judgeupholding the order of the appropriate authority. Quite apart, hereferred to the jurisdiction of this Court under Article 226 of theConstitution of India and submitted that the learned single Judge, ona consideration of the entire case, had rightly come to the conclusionon every aspect of the matter now projected and consequently prayedthat the appeal be dismissed. 10. We agree with the submission made by the respondents. Aperusal of Section 269-UC(1), no doubt, states that no transfer of anyimmovable property shall be effected after an agreement for transferis entered into between the transferor and the proposed transferee inaccordance with the provisions of sub section (2) at least threemonths before the intended date of transfer. Conscious of theprovisions under Section 269-UC, yet, the parties herein had enteredinto an agreement of sale on 10.2.1999 fixing a shorter time limit offourteen weeks for the validity of the agreement and that the timemight be extended further by mutual consent. Accordingly the partieshad filed Form 37-I in accordance with the provisions of the Act. Aperusal of the provisions as stated above shows that the emphasis inthe Section is to the time factor prescribed for filing Form 37-I.The date of entering into the agreement must have proximity of timewith the proposed transfer of property as defined in Clause (f) ofSection 269-UA. It is clear, hence, that whatever be the privateagreement entered into between the parties, it is a proforma agreementsigned by the parties which must be filed before the appropriateauthority within fifteen days of signing thereof. The limitation hasto be with reference to the date of signing of the agreement and notwith reference to the intended period in the agreement. Consequently,we do not find any ground to accept the plea of the appellant hereinthat the competent authority had no jurisdiction in this matter.Quite apart from this, as rightly contended by the learned counselappearing for the respondents, if at all there could be any grievance,it could be only from the vendor who had not raised a dispute. In thecircumstances, we do not find any justification in the contention ofthe appellant transferee. 11. Considering the parameters of the jurisdiction underArticle 226 of the Constitution of India, and there being noirrationality in the view of the appropriate authority, as rightlyfound by the learned single Judge, we do not find any justification tohttps://hcservices.ecourts.gov.in/hcservices/accept the submissions of the appellants herein. In thecircumstances, the appeals are dismissed, thereby confirming the order of the learned single Judge. 12. In W.A.M.P.No.1963 of 2003, one Vandana Venkatachalam, hadprayed for impleading herself as fourth respondent in the writ appeal.She had stated that in view of the decree obtained for maintenance andthe charge given over the property, they impleaded themselves in thecourse of the writ proceedings. The deponent had stated that in spiteof favourable orders, they had not received the amount payable underthe decree. The deponent's mother, who was also the beneficiarytherein, died on 4.12.2002 without receiving the money. The deponentstates that she is pursuing her studies with great difficulty. In thecircumstances, she has prayed for impleading herself as respondentNo.4 and also prayed for vacating the order of stay granted in thewrit appeal. In view of the dismissal of the writ appeal, the orderpassed earlier in the writ proceedings directing payment of the amountto this petitioner stands affirmed. The respondents are herebydirected to release the fund payable to the fourth respondent at theearliest without any delay. In the result, the writ appeal is dismissed. No costs.Connected W.A.M.P. No. 6135 of 2002 is closed. W.A.M.P.No.1963 of 2003is hereby ordered. ksvTo: Sd/-Asst. Registrar./true copy/ Sub Asst. Registrar 1. The Appropriate Authority (Income-tax Department) First Floor 108, Mahathma Gandhi Road Chennai-600 034. 2. The Secretary Ministry of Finance Union of India New Delhi. +2 C.C. to Mr.A.K.Lakshminarayanan, Advocate S.R.105908+1 C.C. to Mrs. Pushya sitaraman, Advocate S.R.No.15768+1 C.C. to M/s.Chitra Sampath, Advocate SR.15785 NR(25.4.2007) W.A.No.3661 of 2002Dated: 13.03.2007Dated: 13.03.2007