1 AGK AGK AGK IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1904 OF 1993 1. Harish Kanayalal Thawani, residing at 12, Satguru Sharan, 28th Road, Bandra, Bombay 400 050 2. Smt.Shobha Harish Thawani, residing at 12, Satguru Sharan, 28th Road, Bandra, Bombay 400 050 3. Smt.Jaya Dungershi (deleted) 4. Mr.Kishore Dungershi Shah, residing at Flat No.701, 7th Floor, Randezvous, Plot No.120/121, Perry Road, (Master Vinayak Marg), Bandra, Bombay 400 050 5. Mr.Pratap Dungershi Shah, B 203 Gayatri Shivam Thakur Complex Kandivli East Mumbai - 400 101. 6. Mr.Hiren Dungershi Shah, 202 Eventide Khar Danda Khar West, Mumbai 400 052 ....Petitioners V/s. 1. S.C. Prasad, 2. W. Hasan, 3. C.M. Betgeri, All members of Appropriate Authority constituted under Chapter XX-C of the Income- Tax Act, 1961, having their office at Mittal Court, Nariman Point, Bombay - 21. 4. A.K. Behera, having his office at Mittal Court, Nariman Point, Bombay - 21. 5. Union of India ....Respondents. Mr.Soli Dastoor, senior advicate with Mr.Anil Menon 2 for the petitioners. Mr.R. Ashokan for the respondents. CORAM : P.B. MAJMUDAR & J.P. DEVADHAR, JJ. DATED : 1ST DECEMBER, 2008 ORAL JUDGMENT (Per P.B. Majmudar, J.) : 1. By filing this writ petition, the petitioners are challenging orders at Exhibit "E" and Exhibit "N". So far as the impugned order dated 26-7-1993 (Exhibit "E") is concerned, the same was passed under Section 269 UD of the Income Tax Act, 1961 (‘Act’ for short). The petitioners, thereafter preferred rectification application and the same was rejected by order dated 7-9-1993, which is annexed at Exhibit "N" to the petition. 2. So far as petitioner Nos.1 and 2 are concerned, they are purchasers of the flat sold by petitioner Nos.3 and 4. A show cause notice dated 14-7-1993 was issued for acquiring the said property under the provisions of Section 269 UD(1) of the Act. By the impugned order (Exhibit "E"), the appropriate authority, after considering sale transaction, came to the conclusion that the flat in question is superior as compared to other flats regarding whose transaction reliance was made on behalf of the petitioners. The authority found 3 that the rate worked out at Rs.5074/- per square feet is low and the fair market value of the flat in question should be atleast Rs.6,000/- per square feet, built-up area. It was found that the suit property is fit for purchase by the Central Government in exercise of the powers vested in Appropriate Authority under section 2690 UD(1) of the Act. 3. The petitioners thereafter preferred rectification application on the ground that certain sale instances cited by the petitioners before the authority were not taken into consideration. In the rectification application, it was also submitted that the figures of discounted value were not properly taken. A point was also taken in the rectification application that as per the decision of Supreme Court of India in C.B. Gautam Vs. Union of India & others reported in 199 ITR 530, a minimum of 15% under valuation with reference to the fair market value was necessary and that in the instant case, all the three figures indicated a difference of less than 15% and that on that ground, the original order was required to be rectified. The authority has found that the sale instances, on which reliance was made by the petitioners, cannot be a matter of 4 rectification and, therefore, the rectification application is not permissible in law. The authority also rejected other points raised in the rectification application. Accordingly, the petitioners filed present petition challenging the original order at Exhibit "E" and order on rectification application at Exhibit "N". 4. The learned counsel appearing for the petitioners submitted that the authority has not taken care to arrive at a correct market value by taking into consideration various sale instances produced before it. It is submitted that the authority is required to fix the fair market value after considering relevant sale instances in the area. It is further submitted that before passing the impugned order at Exhibit "E", the petitioners were not given reasonable opportunity to defend their case. It is further submitted that various sale instances, on which reliance is placed by the petitioners, have not been taken into consideration at all by the authority before passing the order. Copy of such sale instances have been annexed with the petition at Exhibit "A" (page 66). 5. It is required to be noted that before arriving at appropriate figure, the authority is 5 duty bound to take into consideration necessary sale instances in the area and an attempt is required to be made to reach fair market value. In this connection, it is required to be noted that there is no reference regarding the documents on which the petitioners relied before the authority, copies of such documents are produced at Exhibit A page 66 in the petition. Apart from that in para 6 of the order at Exhibit "E", other sale instances, on which the petitioner has relied, have been brushed aside by observing that the flat in question is superior, without considering the details of such sale instances in the impugned order and ultimately it is observed that Rs.5,074/- is obviously very low and the fair market value was fixed at Rs.6,000/- per square feet. In our view, the sale instances on which reliance was placed by the petitioners should have been considered by the authority in an appropriate manner and the said documents should have been properly considered in the order. Since the said documents have not been taken into account in an appropriate manner, it can be said that the authority has failed to arrive at a fair market value. As pointed out earlier, the sale instances referred to at page 66, which were produced before the authority, have not been dealt with at all by the appropriate authority. 6 6. At this stage, it is required to be noted that the area of flat is 1880 square feet, discounted value of sale consideration is Rs.96,39,983/- and on the basis of said rate, the rate per square feet comes to Rs.5,128/- and market rate per square feet considered by the authority is Rs.6,000/- as per the valuation fixed by the authority. If 15% is adjusted from the said rate fixed by the authority, it comes to Rs.5,100/-. Going by the said calculation, the rate of the concerned property worked out by the authority is Rs.5,128/- and the same is within 15% prescribed limited. This aspect is not in dispute. In view of the Supreme Court judgment in the case of C.B. Gautam (Supra), normally within the aforesaid bracket of 15%, a presumption can be drawn that the transaction in question was not made with an ulterior motive to defraud the revenue. Since the transaction in question is within the prescribed limit of 15% as per the price fixed by the authority, even on that ground, the proceedings initiated against the petitioners are required to be struck down. 7. Considering the abovesaid aspect of the matter, we are of the opinion that the authority 7 has not taken into account relevant documents produced by the petitioners and care has not been taken to arrive at a reasonable market value. Even considering the fair market value arrived at by the authority, the transaction falls within the prescribed limit of 15% and, therefore, the orders at Exhibit "E" and "N" are not sustainable. 8. Accordingly, we set aside both the orders at Exhibit "E" and Exhibit "N" and proceedings initiated against the petitioners are also quashed. The authority is directed to issue necessary certificate under Section 269 UL of the Act. Rule is made absolute accordingly. 9. The writ petition is accordingly allowed. Rule is made absolute with no order as to costs. (P.B. Majmudar, J.) (J.P. Devadhar, J.)