The Appropnate
Authority & Anr Vs. Smt Sudha Patit & Anr [1998] INSC 524 (10 November 1998)
Sujata
V., G.B. Pattanaik. Pattanaik, J.
This
appeal is directed against the Judgment and order dated 6th March, 1907, passed by the Division Bench of
Karnataka High Court in Writ Appeal No. 1233 of 1996. The said Writ Appeal
arises out of a proceeding initiated under Chapter XX-C of the income Tax Act.
The property in question is situated in Btock 5, Jayanagar, Bangatore-560
measuring 85 feet from east to west and 122 feet from north to south bearing
no. 483/24. Respondent no. 2 Shri A.G. Krishna is the owner of the property. He entered into an agreement of sale with
respondent no. 1 Smt. Sudha Patil for a consideration of 63,44,000 under
agreement dated 25.9.1995. The Appropriate Authority under the Income Tax Act
in exercise of its powers under Section 269-UD of the Act passed an order for
purchase of the property by the Central Government on an amount equal to the
amount of consideration mentioned in the agreement to sate after due notice to
the transferor of the property and after arriving at a conclusion that the
property in question has been undervalued by a sum of Rs.200/- per square feet.
The aforesaid order was passed by the Appropriate Author on 28.2.1996. It may
be stated that the Appropriate Authority took into consideration tine various
sate instances relied on by the parties as well as the gradual trend in the
enhancement of the value of the property. The said order of the Appropriate
Authority was assarted by respondent no.l, the proposed transferee, by filing a
Writ Petition which was registered as Writ Petition No. 7586 of 1996. The
teamed Single Judge of the Karnafaka High Court dismissed the said Writ
Petition by order dated 22 March, 1906, holding inter alia that the order of
the Appropriate Authority does not suffer from any legal infirmity and the said
order has been passed after following the prescribed procedure and the
conclusion of the Appropriate Authority has been arrived at on consideration of
all relevant and germane materials produced in the course of the proceeding.
Respondent No.1, however, challenged the said order by preferring an appeal and
the Division Bench by the impugned judgment and order dated 6th March, 1997,
came to hold that the Appropriate Authority has come to the conclusion about
the valuation of the tend by taking into consideration the sale instances which
are not comparable with the property in question and thereby the conclusion is
vitiated. The Division Bench also came to the conclusion that the concerned
authority had no relevant material to arrive at the correct valuation of the
property and further the method adopted by the department was defective and
consequently the order made by the authorities concerned is Vitiated. With
these conclusions the order passed by the Appropriate Authority having been
quashed and the Writ Appeal having been allowed the said Appropriate Authority
is in appeal in this Court.
Mr. Rawal,
learned Additional Solicitor General appearing for the appellant contended that
the Dwision Bench of the High Court committed gross error of law and exceeded
its jurisdiction in interfering with the finding of the Appropriate Authority
with regard to the market value of the tend in question, in the absence of any
procedural irregularity and in the absence of a finding by the High Court that
the Appropriate Authority had considered irrelevant materials or have excluded
relevant materials from consideration. A finding of an inferior Tribunal like
the Appropriate Authority under the Income Tax Act can be interfered with by
the High Court when the Court comes to the conclusion that the Tribunal has not
considered relevant materials or it has considered irrelevant or extraneous
materials or the conclusion is one which no reasonable man can come to the said
conclusion on the materrials on record or the conclusion is one which based on
no evidence. Since in the case in hand the appropriate Authority took the
relevant sale instances in the locality to arrive at a conclusion where
valuation shown in the agreement to safe was grossly low and on consideration
of those relevant and germane materials the Appropriate Authority came to the
conclusion that the valuation shown in the transaction was grossly low, the
said conclusion should not have been interfered with by the High Court in
exercise of its supervisory jurisdiction under Article 226 even if the High
Court could have come to the conclusion as an original authority. In other
words what the learned Additional Solicitor General contended is that the power
of High Court being supervisory in nature the said power must be exercised
within the parameters already indicated in several decisions of this Court and
the High Court was not justified in embarking upon an enquiry of the evidence
and on reappreciating the same in coming to a conclusion that the valuation
arrived at was not proper.
Mr. G.
Sarangan, teamed senior counsel appearing for the transferee and Mr. Hegde,
learned counsel appearing for the transferor on the other hand contended, that
for 'invoking the powers of property purchased under Chapter XX-C of the Act
the burden being on the department to show that the apparent consideration of
tine property shown in the transaction is less than it fair market value by 15%
and the said burden, not having been discharged in the case in hand by the
department by adducing a reliable and germane materials the Division Bench of
the High Court was fully in interfering with the conclusion and order passed by
the Appropriate Authority.
According
to Mr. Sarangan, teamed counsel appearing for the respondent, the order passed
by the Appropriate Authority under Chapter XX-C having not provided for any
remedy of appeal the standard of scrutiny by the High Court should be some way
different from the standard of scrutiny as against orders of any other inferior
Tribunals and tine High Court is duty bound to take note of all submissions
made by an. aggrieved person. Judged from this stand point the Division Bench
having recorded a finding that the sate instances reared upon by the
Appropriate Authority cannot be held to be comparable, the ultimate conclusion
of the Appropriate Authority that the vacation of the property shown in the
transaction is grossly tow becomes a conclusion without any evidence and such
conclusion has rightly been interfered with by the High Court. In support of
such contention learned counsel, places reliance on a decision of Delhi High
Court in the case of Mahesh Chandra Agarwal and anr. vs. Union of India and
others reported in 231 ITR 319. According to the learned counsel for the
respondents, a reading of the order of the Appropriate Authority would indicate
that the said Authority has acted more or less in an arbitrary manner in
arriving at the fair market value of the property in question and, therefore,
in the interest of justice the Division Bench rightly quashed the said of the
Appropriate Authority.
in
view of the rival contentions of the parties two questions really arise for our
consideration.
1.
Merely because no appear is provided for under the statute against an order
passed by the Appropriate Authority under Chapter XX-C of the Act does the
supervisory power of the High Court under Article 226 get enlarged in any way
and can the High Court a such a case exercise an appellate power and
re-appreciate findings to come to its own conclusion?
2.
Whether in the case in. hand the conclusion arrived at by the Appropriate
Authority with regard to fair market value of the property in question was by
taking into consideration all relevant and germane materials and whether the
deportment discharged the burden that lay on it in establishing that the
apparent consideration, of the property as indicated in the agreement of sale
was tess than its fair market value by 15%? So far as the first question is
concerned, the parameters for exercise of supervisory jurisdiction of the High
Court under Article 226 of the Constitution, white examining the decision of an
inferior tribunal, has no connection with the question whether an appeal is
provided for against the sard order of the tribunal under the statute in
question. As has been held in several decisions of this Court, the power being
supervisory in nature in exercise of such power, a finding/conclusion of an
inferior tribunal can be interfered with if the High Court comes to the
conclusion that in arriving at the conclusion the tribunal has failed to
consider some relevant materials or has considered some extraneous and
irrelevant materials or that the finding is based on no evidence or the finding
is such that no reasonable man can come to such a conclusion on the basis of
which the finding has been arrived at. This being the settled position, it is
difficult to sustain a plea that when the order of the tribunal does not
provide for an appeal, the High Court can get its Jurisdiction enlarged and
exercise an appellate power while examining the correctness of the conclusion
arrived at by such tribunal. In the case of C.B.Gautam vs. Union of India and
Ors. 1993 (199) ITR 530 where the provisions of Chapter XX-C had been assailed
as being ultra vires the Constitution Bench of this Court negatived the
contention raised that the provisions are arbitrary since no appeal or revision
has been provided against the order made by the Appropriate Authority for
compulsory purchase of immovable property on the ground that the provisions of
said Chapter could be resorted to only when there is an attempt at tax evasion
by significant under-valuation of immovable property agreed to be sold and
further reasons are required to be recorded and disclosed to the affected
parties and opportunity to be heard is required to be given before making an
order for purchase. This Court ultimately came to the conclusion that The power
of the Appropriate Authority is not arbitrary and the pre-conditions engrafted
in the provisions must be satisfied for invoking the power to make an order for
compulsory acquisition. This being the position, we fad to understand how the
supervisory power of the High Court white examining the correctness of the
conclusion arrived at by such Appropriate Authority could get enlarged merely
because there is no appeal or revision against the order of the Appropriate
Authority. In the case of Kailash Suneja vs.
Appropriate
Authority 1998 (231) ITR 318 the decision of the Delhi High Court on which the
learned Senior Counsel for the respondent strongly relied upon, the teamed
Judges themselves have indicated that the satisfaction of the Competent
Authority for initiation of acquisition proceedings is a subjective
satisfaction on the objective facts and the reasons for the determination of
the belief must have a national and direct connection with the material coming
to the notice of the Competent Authority though the question of sufficiency or
adequacy of the material is not open to judicial review. The teamed Judges of
the Delhi High Court in the aforesaid case have themselves indicated that white
exercising powers of judicial review under Article 226 of the Constitution
though the case is not to be examined as an appellate court, it is to be kept
in view that a citizen has no alternative remedy and it is permissible to
examine whether extraneous matters have been considered by the authority and
relevant materials have not been taken into consideration. This statement of
the Delhi High Court on which the learned counsel for the respondent strongly
relied upon, in our considered opinion does not in any way enlarge the power of
judicial review in the matter of exercise of supervisory power of the High Court
under Article 226 against an order of an inferior tribunal. It may be stated
here that on the materials if two views are possible, one which has been given
by the inferior tribunal and tine other which tine High Court may on examining
the materials itself came to a conclusion, then also it would not be possible
for the High Court to substitute its conclusion for that of the tribunal. In
the aforesaid premises, we are of the considered opinion that merely because no
appeal is provided for against the order of the Appropriate Authority,
directing compulsory acquisition by the Government, the supervisory power of
the High Court does not get enlarged nor, the High Court can exercise an
appellate power.
Coming
to the second question, on examining the order passed by the Appropriate
Authority for arriving at a conclusion as to what would be the fair market
value of the property in question agreed to be sold, we find that the said
Appropriate Authority did consider all the germane and relevant materials produced
before it in course of the proceedings and formed 'its opinion that there is
under-statement of consideration in the agreement dated 25.9.96 by an amount
more than ^5% of the fair market value.
On the
basis of several sale transactions which are all contemporaneously made and
which have the same potentiality and situated in the same locality, the
Appropriate Authority came to the conclusion that the fairer market land rate
could not be less than Rs.850 per square feet. Further, in the absence of any irrebutable
materials adduced on behalf of transferor or transferee as to why in the
impugned transaction the property has been agreed to be sold @ Rs.650 per
square feet, the natural presumption arises that it was with a view to attempt
to evade tax. in fact in Gautam's case referred to supra [1993(199) lTR 530]
this Court had held that the provisions of Chapter XX-C can be resorted to Only
where there is a significant under-valuation of the property to the extent of
15% or more in the agreement of sale, as evidenced by the apparent
consideration being lower than the fair market value by 15% or more and a
presumption of an attempt to evade tax may be raised by the Appropriate
Authority concerned where the aforesaid circumstances are established but such
a presumption is undoubtedly a rebutable one. in the case in hand, the plea of
the transferor that he agreed to sell the land at a tower price as he was in
urgent need of money to defray the medica) expenses on account of kidney
transplantation was duty considered but negatived inasmuch as the
transplantation was done in June, 1994 and the agreement to sale was made in
September, 1995. The Authority also took into consideration the fact that the
transferor was highly qualified doctor and had various various offices with
distinction in a carrier spanning over four decades in India and abroad. No other reason having
been advanced and the only plea advanced having been considered and rejected
and in our view rightly, it is difficult for us to sustain the argument advanced
by tine learned counsel for the respondent that the transferor has been able to
rebut the presumption arising out of a grossly low valuation on the ground of
force sate. Having examined the order of the appropriate Authority we have no
hesitation to come to the conclusion that the Appropriate Authority passed the
order for compulsory purchase under Section 269 UD of the Act after giving due
opportunity to the parties concerned of hearing and after recording the reasons
as to the fair market value of the land and further after recording a finding
that there has been a significant under-valuation of the property to the extent
of more than 15% in the agreement of sale. Such conclusions of the Appropriate
Authority were based on consideration of relevant materials produced in course
of the proceedings and the authority was fully justified in drawing the
presumption that the under-valuation had been done with a view to evade the tax
and the transferor could not rebut the said presumption by adducing any positive
ground. The High Court, therefore, exceeded its jurisdiction in interfering
with such conclusions of the Appropriate Authority by embarking upon an inquiry
as an Appellate Authority and, by recording its own conclusion in substitution
of the conclusion of tine tribunal and, therefore, the said decision of the
High Court gets vitiated. In the aforesaid premises, we set aside the impugned
judgment of the Karnataka High Court in Writ Appeal No. 1233 of 1996 and affirm
the decision of the Appropriate Authority. The writ petition filed before the
High Court stands dismissed.
It was
contended on behalf of the respondents that even if the order of the
Appropriate Authority under Section 269-UD of the Act is ultimately upheld by
this Court, the respondents should be entitled to the interest on the amount of
consideration money indicated in the agreement dated 25.9.96, particularly when
the intended transferee under the deed has deposited a sizeable amount of the
said consideration amounting to Rs. 43 lakhs. Learned additional Solicitor
General appearing for the Appropriate Authority resisted the prayer of the
transferee for grant of interest on the ground that the transferee having
attempted to delay and defeat the compulsory purchase of the property and the
amount in question having been deposited after the transferor refused to take
the money it would not be in the interest of justice to award interest in tine
case in hand.
In
support of his contention reliance has been placed on Rajalakshmi Narayanan
(Mrs.) vs. Margaret Kathleen Gandhi (Mrs.) & Ors. 1993 Supp. (3) Supreme
Court Cases 296. In the aforesaid case this Court held that whether interest
should be paid to the owner of immovable property who has entered into an
agreement of sale but the sale could not be completed by reason of an order of
purchase under Section 269-UD of the income Tax Act, and if so, at what rate
will have to be decided in the facts and circumstances of each case. As a
general rule the Court had observed that when such setter has raised no
objection or obstruction either to the purchase of a property by an order under
Section 269-UD or to the completion to agreement of sale entered 'into by him
but is unable to get purchase price by reason of the said order and the stay
order 16 passed by a Court then interest appropriate rate can be pard to him,
if equity so requires. In the aforesaid case this Court had ordered that the
Government should pay to the appellant the amount stated as the consideration
for the safe of the said property in the agreement entered into between the
appellant and respondent no.1 with interest thereon at 15% per annum.
This
Court has issued the aforesaid direction to be followed in the event the order
of compulsory purchase passed is ultimately upheld. The Court while issuing the
aforesaid direction took judicial notice of the fact that the prices of the
immovable properties have shot up continuously for the last few years. Learned
Additional Solicitor General, however, stated that the amount in question which
has been deposited by the Government is carrying interest being deposited in a
fixed deposit.
Having
considered the facts and circumstances of the case we think it appropriate to
direct that the entire amount lying in deposit together with tine 'interest
accrued thereon should be paid to the respondents. This appeal is accordingly
allowed with the aforesaid direction and observation.
But in
the circumstances there will no order as to costs.
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