THE APPROPRIATE AUTHORITY AND ANR.versusSMT. SUDHA PATIL AND ANR.

             THE APPROPRIATE AUTHORITY AND ANR.                                   A
                                      11.
                    SMT. SUDHA PATIL AND ANR.

                          NOVEMBER 10, 1998

        [SUJATA V. MANOHAR AND G.B. PATTANAIK, JJ.]                               B

       Income Tax Act, 1961-Section 269-UD-Agreement of Sale-Under
valuation of property-Order of Appropriate Authority for purchase of
property by Government-On challenge High Court held no infirmity in the
 order-Division Bench of High Court quashed the order of Appropriate C
Authority holding that the method adopted for valuation of property was
 defective-On appeal, held, all germane and relevant materials produced
 were considered by Appropriate Authority before passing the order-Fully
justified in passing order of compulsory purchase-High Court exceeded its
jurisdiction by interfering with the conclusions of the Appropriate Authority. D

     Constitution of India-Article 226-supervisory Jurisdiction of High
Court-Scope of-Held, Supervisory Power of the High Court does not get
enlarged while examining the correctness of the conclusion of Appropriate
Authority under the Income Tax Act merely because no appeal is provided
fr                                                                                E
       Respondent No. 2 Owner of the property in question entered into an
agreement of sale with respondent no. 1 for certain consideration. The
Appropriate Authority came to a conclusion that the property has been under
valued and thus ii) exercise of its powers under section 269-UD of Income
Tax Act, 1961 passed an order for purchase of the property by the Central         F
Government for an amount equal to the amount of consideration in the
agreement of sale. The said order was challenged by respondent no. 1 by
filing a Writ Petition. Single Judge of the High Court dismissed the Writ
Petition holding that the order of the Appropriate Authority does not suffer
from any legal infirmity. However, on appeal, the Division Bench quashed the
order of the Appropriate Authority on the ground that the concerned authority     G
had no relevant material to arrive at the correct valuation of the property and
the method adopted was defective. Aggrieved by the order of the Division
Bench of the High Court the present appeal has been preferred by the
Appropriate Authority.

                                     619                                          H
        620                       SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R.

    A         The contention of the appellant was that the Division Bench of the High
        Court committed error of law and exceeded its jurisdiction in interfering
        with the findings with regard to the market value of the hmd in the absence
        of any procedural irregularity and in the absence of finding that the
        Appropriate Authority had considered irrelevant materials or have excluded
        relevant materials from consideration.
    B
              The contention of the respondent was that 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
        different from the standard of scrutiny as against orders of any other inferior
        Tribunals.
    c
              Allowing the appeal, the Court

              HELD : 1.1. The supervisory power of the High Court does not get
        enlarged while examining the correctness of the conclusion arrived at by the
        Appropriate Authority merely because no appeal is provided for against the
    D   order of the Appropriate Authority. (626-A)

              1.2. The parameters for exercise of supervisory jurisdiction of the
        High Court under Article 226 of the Constitution, while examining the
        decision of an inferior tribunal, has no connection with the question whether
        an appeal is provided for against the said order of the tribunal under the
    E   statute in question. The power being supervisory in nature, in exercise of
        such power, a finding conclusion of an inferior tribunal can be interfered
        with it the High Court comes to the conclusion that in arriving at the
        conclusion the tribunal has failed to consider some relevant 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
    F   finding has been arrived at. [624-F-G)

              C.B. Gautam v. Union of India and Ors., (1993) 199 ITR 530, relied
        on.

              Kai/ash Suneja v. Appropriate Authority, (1998) 231 ITR 318, referred
    G to.
              2. The Appropriate Authority did consider all the germane and relevant
        materials produced before it in the course of the proceedings and formed its
        opinion that there was under statement of consideration in the agreement by
        an amount more than 15% of the fair market value. The Appropriate
    H   Authority had passed the order for compulsory purchase under Section 269



J
              APPROPRIATE AUTHORITY v. SMT. SUDHA PATIL [PA TT ANAIK, J.]    62 J

    UD of the Income Tax Act after giving due opportunity of hearing to the          A
    parties concerned 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 bf relevant materials produced in the course of      B
    the proceedings and the authority was fully justified in the 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 hppropriate Authority by embarking
    upon an inquiry as an Appellate Authority and by recording its own 'conclusion   C
    in substitution of the conclusion of the tribunal and, therefore, the said
    decision of the High Court gets vitiated. (626-B-C; 627-A-B-C)

          3. The entire purchase amount lying in fixed deposit together with
    interest accrued thereon should be paid to the respondents. [628-D]
                                                                                     D
          Rajalakshmi Narayanan (Mrs.) v. Margaret Kathleen Gandhi (Mrs.) &
    Ors., (1993] Supp. 3 SCC 296, referred to.

            CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8600 of
    1997.
                                                                                     E
         From the Judgment and Order dated 6.3.97 of the Kamataka High Court
    in W.A. No. 1233of1996.

         K.N. Rawal, Additional Solicitor General, Rajiv Nanda and (Ranbir
    Chandra), B.K. Prasad for the Appellants.
                                                                                     F
            Ms. Janaki Ramachandran and P.P. Singh for the Respondents.

            The Judgment of the Court was delivered by

          PATTANAIK, J. This appeal is directed against the Judgment and order
    dated 6th March, 1997, passed by the Division Bench of Kamataka High G
    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 Block 5, Jayanagar, Bangalore-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. I Smt. Sudha Patil for H
    622                        SUPREME COURT REPORTS (1998] SUPP. 2 S.C.R.

A 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 sale after due notice to the transferor of the
B   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 Authority on 28.2.1996. It may be stated that
    the Appropriate Authority took into consideration the various sale 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
C   assailed by respondent no. l, the proposed transferee, by filing a Writ Petition
    which was registered as Writ Petition No. 7586 of 1996. The learned Single
    Judge of the Karnataka High Court dismissed the said Writ Petition by order
    dated 22 March, 1996, 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
D   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
E   about the valuation of the land 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
F   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
G contended that the Division 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 land 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
H   an inferior Tribunal like the Appropriate Authority under the Income Tax Act
       APPROPRIATE AUTHORITYv. SMT. SUDHA PATIL [PATTANAIK, J.]           623
can be interfered with by the High Court when the Court comes to the              A
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 materials 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   B
to arrive at a conclusion where valuation shown in the agreement to sale 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        C
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.           D

      Mr. G. Sarangan, learned 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           E
the apparent consideration of the property shown in the transaction is less
than it its 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 justified
in interfering with the conclusion and order passed by the Appropriate
Authority.                                                                        F

      According to Mr. Sarangan, !cawed 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      G
as against orders of any other inferior Tribunals and the 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
sale instances relied upon by the Appropriate Authority cannot be held to
be comparable. The ultimate conclusion of the Appropriate Authority that the
valuation of the property shown in the transaction is grossly low becomes         H
    624                        SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R.

A   a conclusion without any evidence and such conclusion has rightly been
    interfered with by the High Court. In support of such contention learned




B
    counsel, places reliance on a decision of Delhi High Court in the case of
    Mahesh Chandra Agarwal and Anr. v. Union of India and Ors., 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 order of the Appropriate Authority.

          In view of the rival contentions of the parties two questions really arise
c   for our consideration.

          I. Merely because no appeal 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 in such a case exercise an appellate power
D   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 department discharged the burden that lay on it in establishing
E   that the apparent consideration of the property as indicated in the agreement
    of sale was less 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,
    while examining the decision of an inferior tribunal, has no connection with
F   the question whether an appeal is provided for against the said 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

G   has failed to consider some relevant materials or has considered some
    extraneous and irrelevant materials or that the finding is based on no evidence
                                                                                        t

                                                                                        \
    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
H   enlarged and exercise an appellate power while examining the correctness of
           APPROPRIATE AUTHORITY v. SMT. SUDHA PATIL [PATTANAIK, J.l         625

    the conclusion arrived at by such tribunal. In the case of C. B. Gautam v. A
    Union ofIndia 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 B
    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 C
    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 fail to understand how the supervisory power of
    the High Court while 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 D
    case of Kai/ash Suneja v. 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 learned 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 E
    for the determination of the belief must have a rational 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 learned Judges of the Delhi High Court in the aforesaid case have
    themselves indicated that while exercising powers of judicial review under
    Article 226 of the Constitution though the case is not to be examined as an F
    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 G
    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 the
     other which the 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 H
    626                        SUPREME COURT REPORTS [1998) SUPP. 2 S.C.R.

A 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.
                                                                                       --
B       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 fo1med its
C opinion that there is under-statement of consideration in the agreement dated
  25.9.95 by an amount more than 15% 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
D 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 ITR 530 this
  Court had held that the provisions of Chapter XX-C can be resorted to. only
E 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
F plea of the transferor that he agreed to sell the land at a lower price as he
  was in urgent need of money to defray the medical expenses on account of
  kidney transplantation was duly 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
G the transferor was highly qualified doctor and had held 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 the learned counsel for the respondent that the
  transferor has been able to rebut the presumption arising out of a grossly low
H valuation on the ground of force sale. Having examined the order of the
       APPROPRIATE AUTHORITY v. SMT. SUDHA PATIL [PATTANAIK, J.]           627
Appropriate Authority we have no hesitation to come to the conclusion that         A
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    B
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   C
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 the 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. 1233of1996 and affirm the
decision of the Appropriate Authority. The writ petition filed before the High     D
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 E
the amount of consideration money indicated in the agreement dated 25.9.95,
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 F
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 the case in hand. In support of his contention reliance
has been placed on Rajalakshmi Narayanan (Mrs.) v. Margaret Kathleen
Gandhi (Mrs.) & Ors., [1993] Supp. 3 Supreme Court Cases 296. In the G
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 seller has raised no objection or H
     628                       SUPREME COURT REPORTS (1998] SUPP. 2 S.C.R.

·A   obstruction either to the purchase of a property by an order under Section
     269-UD or to the completion of agreement of sale entered into by him but is
     unable to get purchase price by reason of the said order and the stay order
     passed by a Court then interest at appropriate rate can be paid to him, if
     equity so requires. In the aforesaid case this Court had ordered that the
B    Government should pay to the appellant the aniount stated as the consideration
     for the sale of the said property in the agreement entered into between the
     appellant.and respondent no. I 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
     tie aforesaid direction took judicial notice of the fact that the prices of the
C    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
D appropriate to direct that the entire amount lying in deposit together with the
     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 be no order as to costs.

     S.V.K.l                                                      Appeal allowed.