:1: IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.589 OF 1993 Mrs.Sayyeda Farheen Murtuza Achwa, presently residing at 302, Green Gate, 693, Perry Cross Road, Bandra, Bombay – 400 050. ..Petitioner Vs. 1. Union of India 2. S.K.Laul, 3. S.C.Tiwari, 4. C.M.Betgeri, Members of the Appropriate Authority constituted under the provisions of Sec.269 UB of the Income-tax Act,1961 and having their office at Mittal Court, 3rd Floor, A-wing, Nariman Point, Bombay – 400 021. 5. Mr.Arif Jafferali Dossa 6. Mr.Raiz Jafferali Dossa Respondent Nos.5 and 6 are presently :2: residing at Beach Apartment, 1st floor, Seven Bunglows, Versova, Andheri (W), Bombay – 400 058. ..Respondents Mr.J.D.Mistry with Mr.B.V.Jhaveri for the Petitioner. Mr.R.Asokan for the Respondents. CORAM : DR.S.RADHAKRISHNAN & A.P.BHANGALE, JJ. DATED : 3RD JUNE,2008 JUDGMENT : (PER DR.S.RADHAKRISHNAN,J.) 1. In this petition, the challenge is to the order dated 24th February, 1993 passed by the Appropriate Authority under Section 269UD(1) of the Income Tax Act, 1961 (‘the Act’ for short) whereby Flat No. 302 of Green Gate Premises Co-operative Housing Society Ltd, situate at 693 Perry Cross Road, Bandra, Bombay-400 050 is sought to be purchased by the Appropriate Authority under Chapter XX-C of the Act. 2. The facts relevant for the purpose of the present petition are that by an agreement dated 19th November,1987 the Petitioners :3: agreed to purchase from the Respondent No. 5 and Respondent No.6 the flat no.302 of the Green Gate Co-operative Housing Society(“the said flat”) for an aggregate consideration of Rs.20,00,000/-. Accordingly, Rs.50,000/- was paid by the Petitioner on 11th November,1987 as earnest money and on the 23rd November, 1987, the Petitioner paid the balance amount of Rs.19,50,000/- and received possession of the flat. The price worked out to Rs.1558/- per sq.ft. For built up area. On 23rd November itself the Petitioners and the Transferor (Respondent No. 5 and Respondent No. 6) filed an application in form No. 37-I in respect of the transfer of the said flat with the Appropriate Authority. On 29th December, Petitioners received a notice from Appropriate Authority. 3. On the 2nd January 1988 M/S Dilip Kulkarni and Associates, Architects and Interior Designers examined the flat and gave an estimate of the repair works to be carried out on the said flat. On 5th January, 1988 the Petitioners replied to the Appropriate Authority enclosing letter of M/S Dilip Kulkarni and Associates. Moreover in the said letter Petitioner cited the instance of flat No.11 in the neighbouring Pericot building, 22A, Perry Cross road, Bandra, :4: Bombay 400 050 which was sold for Rs.14,30,000/- i.e. Rs.1392/- per sq.ft (sale in August,1987) and had been issued a No Objection Certificate by the Appropriate Authority. Thereafter on 27th January, 1988, Appropriate Authority passed an impugned order under section 269UD(1), directing the purchase of the said flat by Union of India at amount equal to the apparent consideration of the said flat without giving any opportunity of hearing to the Petitioner. 4. Aggrieved by the said order, the Petitioners filed a Writ Petition bearing No.361 of 1988. The said Writ Petition was admitted by this Court on 24th February 1988. On 16th December, 1992, purchase order dated 27th January 1987 was quashed and set aside by this Court following the Judgment of the Supreme Court in C.B. Gautam Vs. Union 199 I.T.R. 530 and the Respondents were directed to give a fresh show cause notice and then to hear the Petitioner. 5. Thereafter a notice dated 30/12/1992 was issued to the Petitioners by the Appropriate Authority annexing reasons recorded by the Appropriate Authority in the order dated 27th January 1987 and fixed hearing on 13h January 1993. The Petitioner, through her :5: Advocate, replied to the Appropriate Authority notice dated 18th January,1993 and stated that the three sale instances cited by the Appropriate Authority are not applicable in the instant case. Moreover the Petitioners requested the Appropriate Authority to furnish them a copy of the notings of Inspecting Assistant Commissioner and Valuation Report relied upon by the Appropriate Authority in the said show cause notice. The reply further pointed out that the Appropriate Authority has not determined the fair market value. Besides the sale instance in White Rose building proves that the apparent consideration shown by the petitioner is within the 15% differential margin, declared as permissible by the Supreme Court. Moreover it was stated that the sale instances cited by the Petitioner in their reply letter dated 5/1/1988 ought to have been taken into account. It also brought to notice that Petitioner’s flat required repairing which was estimated to be Rs.1,38,120 as given by M/S Dilip Kulkarni and Associates. Through a letter dated 20th January 1993, A.K. Lal, Advocate of the Petitioners, cited 4 instances of auction sale conducted by the Appropriate Authority, Metropolitan, Bel Air, Hill Top buildings in the vicinity of Petitioner's flat. A.K.Lal in his letter dated :6: 1st February 1993 referred to Flat bearing No. 404 of Green Gate Co- operative Housing Society, sold on the 20th April, 1991 for Rs 22,60,000/- at a rate of Rs.2342/- per sq.ft justifying thus the purchase of the said flat by the Petitioner for Rs. 20,00,000/- on 18th November,1987. 6. By the impugned order dated 24th February, 1993 the Appropriate Authority (Respondent No. 2 and Respondent No.4) purported to purchase the property in question. Challenging the said order, the present petition is filed. During the pendency of the Writ Petition, in view of the stay granted by this Court, no further action has been taken to implement the impugned order dated 24th February, 1993. 7. Mr.Mistry, learned Counsel appearing on behalf of the Petitioners submitted that the impugned order dated 24th February, 1993 suffers from serious infirmities and is liable to be quashed and set aside, because, firstly, the Appropriate Authority has not determined the fair market value of the property in question so as to arrive at a conclusion that there is any undervaluation to the extent of 15% of the fair market value. Secondly, it is contended that the :7: impugned order passed without furnishing particulars and details relating to the sale instances, is in breach of the principles of natural justice. Thirdly, it is contended that in one of the sale instances set out by the Appropriate Authority the differential rate is not more that 15% and is thus in accordance with the acceptable margin established by the Supreme Court in the case of C.B. Gautam. Fourthly, it was submitted that the sale instances pointed out by the Petitioner has not been considered by the Appropriate Authority. Lastly, the Appropriate authority did not furnish to the Petitioner, the Valuation Report and IAC notings which were strongly relied upon in the show cause notice, though demanded by the Petitioner. For all the aforesaid reasons, Mr.Mistry, the learned Counsel for the Petitioner submitted that the impugned order is liable to be quashed and set aside. 8. Mr. Ashokan, learned Counsel appearing on behalf of the revenue submitted that prior to the decision of this Court in the case of Vimal Agarwal v. A.A. and Ors. reported in 210 I.T.R. 16, there was no practice of determining the fair market value. Mr. Ashokan further submitted that the objections raised by the Petitioners have in fact been considered in the impugned order and, therefore, no fault :8: can be found with the said order. Accordingly, Mr. Ashokan submitted that there is no merit in the petition and the same is liable to be dismissed. 9. We have carefully considered the rival submissions. The Apex Court in the case of C.B. Gautam (supra) has held that the provisions of Chapter XX-C can be resorted to only when there is a significant undervaluation to the extent of 15% of the fair market value with a view to evade tax. As held by this Court in the case of Vimal Agarwal (supra) it is necessary to first determine the fair market value of the property in question in the light of the attending circumstances. This Court has further held that without determining the fair market value, it is not only difficult but impossible to say that the apparent consideration is lower than the fair market value by 15%. In the present case, admittedly, the fair market value of the property in question is not determined and, therefore, purchase of the property in question on the footing that there is undervaluation to the extent of 15% of the fair market value has to be held to be without any basis. 10. Moreover, before passing the impugned order, the appropriate authority has neither given the documents and other details and :9: particulars relating to the sale instances referred to in the show cause notice nor in the impugned order, the appropriate authority has referred to the sale instance pointed by the Petitioners in their reply to the show cause notice. In these circumstances, the grievance of the Petitioners that the impugned order suffers from serious infirmities as clearly violative of principles of natural justice and deserves acceptance. 11. Moreover, the show cause notice was issued by the Appropriate Authority was based on the order dated 27th January, 1988 which was already set aside by this Court, clearly exposes the pre-determined approach of the Appropriate Authority. 12. Admittedly, the Petitioner was not furnished with the Valuation report and IAC notings relied upon by the Appropriate Authority in the show cause notice, though demanded by the petitioner. 13. For all the aforesaid reasons, we are clearly of the opinion, that the impugned order cannot be sustained and we have no option but to quash and set aside the same which is passed under Section 269 UD (1) of the Act. :10: 14. Accordingly, the petition is allowed. Rule is made absolute in terms of prayer clauses (a) & (b), however, with no order as to costs. (A.P.BHANGALE,J.) (DR.S.RADHAKRISHNAN,J.)