M/s. Sona Builders Vs. U.O.I. & Ors.
EmailAppeal: Civil Appeal No. 3685 of 1999
Petitioner: M/s. Sona Builders
Respondent: U.O.I. & Ors.
Apeal: Civil Appeal No. 3685 of 1999
Judges: S.P. BHARUCHA, Y.K. SABHARWAL & BRIJESH KUMAR, JJ.
Date of Judgment: Jul 24, 2001
Head Note:
INCOME TAX
Income Tax Act, 1961
Section 269(UD) with Constitution – Articles 14, 226 – Compulsory purchase – Form 37(I) filed on 9.3.93 – Notice from New Delhi issued on 21.5.93 – Sale instance quoted – Notice posted on 24.5.93 – Received on 26.5.93 – Letter of request for supply of copy of sale deed and site-plan sent on 24.5.93 and also to adjourn the matter – Orders passed by appropriate authority on 31.5.93 – Writ petition and appeal failed. On appeal, held that principle of natural justice had been violated. Appellant was given only 3 days’ time to reply and furnish the documents, which were not supplied to meet out the case. Hence, orders set aside and quashed. (Paras 3 to 5)
JUDGEMENT:
ORDER
1. The appellant is the transferee of immovable property situated at Sawai Madho Singh road, Bani Park, Jaipur. In respect of that transfer, the requisite form 37(I) was filed with the income tax authorities on 9th March, 1993 and a valuation report on 9th April, 1993. On 21st May, 1993, the appellant and the transferor of the said property were issued a notice by the office of the appropriate authority, Income Tax Department, New Delhi, to attend a hearing before him at Jaipur on 31st May, 1993 at 9.30 a.m. The notice invited the attention of the addressees to a sale instance, namely, the auction of another property on Sawai Madho Singh road on 3rd October, 1991. Based upon that sale instance, the notice informed the addressees that the apparent consideration of the transaction in appeal was low. The notice was sent from Delhi to the appellant at Jaipur by speed post and the photocopy of the envelope shows that it was posted only on 24th May, 1993. It is averred by the appellant that it was received by it on 26th May, 1993. On 29th May, 1993, a letter was written to the appropriate authority on behalf of the appellant which requested him to supply to the appellant, a copy of the deed in respect of the sale instance and a site plan of that property. The letter asked for an adjournment and time to make preparation. On 31st may, 1993, an order was made by the appropriate authority which held that the apparent consideration of the transaction between the appellant and the transferor was substantially low as compared to the value arrived at on the basis of the sale instance, duly adjusted, and therefore, the compulsory purchase of the property in appeal was ordered.
2. Writ petitions were filed by the appellant and the transferor to impugn the order of compulsory purchase. It was contended by them before the learned single judge that no reasonable opportunity had been given to them to meet the case made out in the notice with reference to the sale instance referred to therein. The learned single judge rejected the contention, as did the division bench in the appeal filed therefrom. The order of the division bench is now under challenge.
3. We are quite unable to agree with the view taken by the High Court. The notice was addressed on 21st May, 1993 from Delhi to the appellant in Jaipur fixing the hearing on 31st May, 1993. It was patent that it would take two or three days for that notice to be received in Jaipur even though despatched by speed post. In effect, therefore, the notice gave five days to the addressees to respond, and we are told that two of those days were Saturday and Sunday. Under section 269UD the appropriate authority had two months to act, commencing from the end of the month in which the 37(I) form was filed. The form was filed on 9th March so that the appropriate authority had about two months and twenty days to take action. He did not take action until only one week from the last available date, and then he gave the appellant, in reality, only three days to respond. This was, plainly, most inadequate.
4. Further, the notice alleged that the apparent consideration of the transaction between the appellant and the transferor was low, based on the sale instance mentioned thereon. To be able adequately to respond to that allegation, it was necessary for the appellant to ascertain what the merits and demerits were of that property which had been auctioned, and to know what were the terms and conditions of the auction. No copy of any document relating to the sale instance was furnished by the appropriate authority to the appellant along with the notice, or at any time whatsoever.
5. There is no doubt in our minds that on both counts, there has been a gross breach of the principles of natural justice because adequate opportunity to meet the case made out in the notice was not given to the appellant.
6. Having regard to the statutory limit within which the appropriate authority has to act and his failure to act in conformity with the principles of natural justice, we do not think we can remand the matter to the appropriate authority. We must set his order aside.
7. The appeal is accordingly allowed. The judgment and order under appeal is set aside. The order of the appropriate
authority dated 31st May, 1993 is quashed.
8. The respondents shall pay to the appellant the costs of the appeal.
1. The appellant is the transferee of immovable property situated at Sawai Madho Singh road, Bani Park, Jaipur. In respect of that transfer, the requisite form 37(I) was filed with the income tax authorities on 9th March, 1993 and a valuation report on 9th April, 1993. On 21st May, 1993, the appellant and the transferor of the said property were issued a notice by the office of the appropriate authority, Income Tax Department, New Delhi, to attend a hearing before him at Jaipur on 31st May, 1993 at 9.30 a.m. The notice invited the attention of the addressees to a sale instance, namely, the auction of another property on Sawai Madho Singh road on 3rd October, 1991. Based upon that sale instance, the notice informed the addressees that the apparent consideration of the transaction in appeal was low. The notice was sent from Delhi to the appellant at Jaipur by speed post and the photocopy of the envelope shows that it was posted only on 24th May, 1993. It is averred by the appellant that it was received by it on 26th May, 1993. On 29th May, 1993, a letter was written to the appropriate authority on behalf of the appellant which requested him to supply to the appellant, a copy of the deed in respect of the sale instance and a site plan of that property. The letter asked for an adjournment and time to make preparation. On 31st may, 1993, an order was made by the appropriate authority which held that the apparent consideration of the transaction between the appellant and the transferor was substantially low as compared to the value arrived at on the basis of the sale instance, duly adjusted, and therefore, the compulsory purchase of the property in appeal was ordered.
2. Writ petitions were filed by the appellant and the transferor to impugn the order of compulsory purchase. It was contended by them before the learned single judge that no reasonable opportunity had been given to them to meet the case made out in the notice with reference to the sale instance referred to therein. The learned single judge rejected the contention, as did the division bench in the appeal filed therefrom. The order of the division bench is now under challenge.
3. We are quite unable to agree with the view taken by the High Court. The notice was addressed on 21st May, 1993 from Delhi to the appellant in Jaipur fixing the hearing on 31st May, 1993. It was patent that it would take two or three days for that notice to be received in Jaipur even though despatched by speed post. In effect, therefore, the notice gave five days to the addressees to respond, and we are told that two of those days were Saturday and Sunday. Under section 269UD the appropriate authority had two months to act, commencing from the end of the month in which the 37(I) form was filed. The form was filed on 9th March so that the appropriate authority had about two months and twenty days to take action. He did not take action until only one week from the last available date, and then he gave the appellant, in reality, only three days to respond. This was, plainly, most inadequate.
4. Further, the notice alleged that the apparent consideration of the transaction between the appellant and the transferor was low, based on the sale instance mentioned thereon. To be able adequately to respond to that allegation, it was necessary for the appellant to ascertain what the merits and demerits were of that property which had been auctioned, and to know what were the terms and conditions of the auction. No copy of any document relating to the sale instance was furnished by the appropriate authority to the appellant along with the notice, or at any time whatsoever.
5. There is no doubt in our minds that on both counts, there has been a gross breach of the principles of natural justice because adequate opportunity to meet the case made out in the notice was not given to the appellant.
6. Having regard to the statutory limit within which the appropriate authority has to act and his failure to act in conformity with the principles of natural justice, we do not think we can remand the matter to the appropriate authority. We must set his order aside.
7. The appeal is accordingly allowed. The judgment and order under appeal is set aside. The order of the appropriate
authority dated 31st May, 1993 is quashed.
8. The respondents shall pay to the appellant the costs of the appeal.
