SONA BUILDERS and Others vs UNION OF INDIA and Another

M. P. SINGH, J. :

The learned single judge by his order dt. 18th April, 1994 dismissed three writ petitions - (1) Writ Petition No. 3492/93, Rajendra Giriraj Prasad Tiwari vs. Union of India; (2) Writ Petition No. 4667/93 M/s Sona Builders vs. Union of India; and (3) Writ Petition No. 1093/94 M/s Sona Builders vs. Union of India.

Three Special Appeals which have come up for hearing, are (1) DB Civil Special Appeal No. 320/94 - M/s Sona Builders vs. Union of India arising out of Writ No. 4667/93; (2) Special Appeal No. 585/96 - Rajendra Giriraj Prasad Tiwari vs. Union of India arising out of Writ Petition No. 3492/93 and (3) Special Appeal No. 377/94 - M/s Sona Builders vs. Union of India arising out of Writ Petition No. 1093/94. They are being disposed of by a common order as identical facts and similar questions of law are involved.

Writ Petition No. 3492/93 was filed by the vendor Rajendra Giriraj Prasad Tiwari for quashing of the show cause notice dt. 21st May, 1993 under s. 269UD(1) of the IT Act, 1961 issued by the Dy. CIT (Appropriate Authority), New Delhi, regarding transfer of immovable property located at D-34, Saraswati Marg, Bani Park, Jaipur. In the notice it was mentioned that the statement in Form No. 37-I under r. 48L of the IT Rules, 1962 was filed on 9th March, 1993 in respect of the said property in which the apparent consideration was disclosed as Rs. 28,50,000. This statement was signed by the petitioner, Rajendra Giriraj Prasad Tiwari as transferor and all the partners of the partnership firm, M/s Sona Builders as transferees.

Through the said notice the appellants attention was invited to the sale instance of a property No. D-37, Sawai Madho Singh Road, Bani Park, Jaipur, which was auctioned on 3rd October, 1991 where the land rate worked out was Rs. 3,896 per sq. mtr. The plot area of the said distance was 1411.47 sq. mtr. If an adjustment of 25 per cent on account of time-gap was made the rate worked out to Rs. 3,895 + 975 equal to Rs. 4,870 per sq. mtr. On this basis the land value of the said property worked out to be Rs. 4,870 x 954.23 equal to Rs. 46,47,000 as against disclosed apparent consideration of Rs. 28,50,000. Therefore, the apparent consideration was considered low. The prayer for quashing of the order dt. 31st May, 1993 passed by the Appropriate Authority of Income Tax under s. 269UD(1) was also made.

The facts set up by the appellant was that he was the absolute owner of the plot No. D-34, Bani Park, Jaipur by virtue of a registered will dt. 7th July, 1970 duly executed and registered by his father.

The appellant had agreed to sell the said immovable property measuring 1,141.25 sq. yds. or 955 sq. mtrs. to M/s Sona Builders for construction of multi-storied building for consideration of Rs. 28,50,000. The purchaser had paid Rs. 9,50,000 as part of the sale consideration.

The appellant and all the partners of M/s Sona Builders, Jaipur had submitted the statement of transfer of the immovable property in prescribed Form No. 37-I as provided in r. 48L of the IT Rules, 1962 before the Appropriate Authority under s. 269UC of the IT Act, 1961 on 9th March, 1993 along with the application for condonation of delay in submitting the said statement as required under s. 269UC of the IT Act.

The District Valuation Officer (Appropriate Authority), IT Department, Jaipur had issued the notice to the appellant (transferor) and to M/s Sona Builders (transferee) and called upon both these persons to submit the required documents duly mentioned in the said notice dt. 19th March, 1993 on or before 29th March, 1993 and also proposed to inspect the property at 10.00 a.m. on 30th March, 1993.

The required documents and information were submitted by the appellants vide letter dt. 29th March, 1993. The valuation report by the approved valuer - M/s K. N. Bhargava & Co. was also submitted which showed the valuation to be Rs. 26,88,000 on 7th February, 1993.

The DVO (Appropriate Authority), IT Department, himself had estimated the market value of said property in question less than 15 per cent higher of the apparent consideration, after inspecting the site and considering the necessary factual matrix and the valuation report of the approved valuer dt. 19th October, 1993.

The appellants case was that in spite of that factual aspect the Dy. CIT (Appropriate Authority), IT Department had issued the notice. The notice dt. 21st May, 1993 was served on 26th May, 1993. The appellant submitted his objection vide letter dt. 31st May, 1993. Shri Mahipat Raj Mohnot, the Chartered Accountant, appeared before the Appropriate Authority and raised the objection regarding the valuation of the said property. It was also stated that the right of the pre-emptive purchase shall not be exercised in the facts and circumstances of the instant case.

The appellant (petitioner) challenged the validity and legality of the action of the respondents for issuing show cause notice dt. 21st May, 1993 and for passing the order dt. 31st May, 1993 under s. 269UD(1) of the 1961 Act, for purchasing the said immovable property in question by Central Government at an amount equal to the amount of the said consideration.

The vendees M/s Sona Builders made similar prayer in its Writ Petition No. 4667/93.

Heard counsel for the parties at length.

The agreement dt. 11th March, 1992 was neither produced at the time of hearing nor was referred in the agreement dt. 1st February, 1993 nor was submitted along with the Form No. 37-I and thus the Appropriate Authority was right in not considering the same. In our view, the Appropriate Authority did not commit any mistake while passing the order under s. 269UD(1) and if the transferor and the transferees are permitted to place them after the order under s. 269UD(1), it may lead to improper filing of documents on record.

Rejecting the contention of the learned counsel for the petitioner that there has been denial of reasonable opportunity of hearing, a finding has been recorded that full opportunity was given to them. On the issue of denial of opportunity of hearing the learned single judge has given very elaborate reasonings with which we entirely agree.

The other contention that the property No. D-37 could not be compared with the present property because of the size, frontage situation and the possibility of commercial use, etc., we are of the view that this question of fact could not be gone into and examined under Art. 226 of the Constitution of India by the learned single judge. Moreover on this point detailed reasons have been given by the Appropriate Authority which the learned single judge found to be correct. It was further held that there was no justification to reduce the value of the property when the contention of the appellant was rejected. We hold that the order did not suffer from any illegality or could be said to be contrary to the established principles of law.

In appeal, nothing new has been pointed out and only the points decided by the learned single judge have been reiterated. We do not find anything special to differ from the view expressed by the learned single judge.

The learned counsel for the appellant has referred to a decision reported in Fedco (P) Ltd. and Another Vs. S.N. Bilgrami and Others, wherein it was found that even the cancellation of a licence obtained by fraud required that reasonable opportunity to licencee may be given. There is no dispute with the settled principle that no order could be passed without an opportunity of hearing, but the fate of each case depends upon its own facts and in the instant case we are satisfied that full opportunity was given to the vendees as well as vendor.

The Supreme Court in the case reported in Commissioner of Wealth Tax, Patna Vs. Raghubar Narain Singh, held that the valuation and the market value are ordinary questions of facts. As the learned single judge has agreed with the finding of the Appropriate Authority on the question of market value, which, in our opinion, is a question of fact, should not be disturbed in special appeal.

On behalf of the appellant a reference was made to Special Land Acquisition Officer vs. Veerabhadrappa (1984) 154 ITR 190, wherein the question to be considered was that the function of the Court in awarding compensation under the Land Acquisition Act is to be ascertained on market value of the land on the date of the notification under s. 4(1) of the Act and the method of valuation may be - (1) opinion of experts; (2) prices paid within the reasonable time in bona fide transaction on purchase and sale of the land acquired or the land adjustment to those acquired and possessing similar advantages; and (3) a number of years purchase of actual or immediately prospective profits from the lands acquired. But that principle has got no relevance to the facts of the instant case. The IT Act is a self-contained code.

No other case worth discussion, touching the controversy in hand, has been cited. Thus agreeing with the finding of the learned single judge, all the three special appeals are hereby dismissed.