Bharucha, J. - (1.) The Revenue is in appeal by special leave against the judgment and order of a Division Bench of the High Court of Gujarat. The judgment and order was passed on a writ petition filed by the first respondent in the following circumstances.
(2.) On 12th August, 1995, the second and third respondents entered into an agreement to sell to the first respondent immovable property situated in Ahmedabad for the sum of Rs. 47 lakhs. The approriate authority of the Revenue came to the conclusion that the apparent consideration in respect of the said immovable property under the said agreement was less than the market value thereof by 15% or more. Accordingly, a notice dated 6th Nov. 1995 was issued to the respondents to show cause why the said immovable property should not be subjected to pre-emptive purchase under Chapter XX-C of the Income-tax Act, 1961. The respondents showed cause, but the order of pre-emptive purchase was made by the appropriate authority. This order was challenged in the writ petition.
(3.) Before the High Court, it was contended that what had been transferred by the second and third respondents to the first respondent were their equal half shares in the said immovable property and that they owned such equal half shares was indicated in their income-tax returns and in the said agreement, which stated that the earnest money had been paid by two separate cheques to the second and third respondents. The High Court said, "There may be one agreement for transfer of property where the transferors may be co-owners or joint owners. It may be that the share of the transferor is not specified . It may happen that there may be one transferee or more than one. The question to be examined is whether the provisions of Chapter XXC of the Act would be attracted or not in a case where co-owners have agreed to transfer their property rights and each co-owners is to be paid an amount of consideration which is less than the amount specified, i.e.. each co-owner transferor wlll get less than Rs. 25 lakhs as per the agreement." The High Court followed the judgment of the Madras High Court in K.V. Kishore vs. Apppropriate Authority (1991) 189 ITR 264. It held that it was in the case before it clear that what was agreed to be transferred was the individual undivided share in the said immovable property and the value of each such share was less than Rs. 25 lakhs. The transferors were co-owners and each co-owner was getting an apparent consideration that was less than the limit prescribed, that is, less than Rs. 25 lakhs. The provisions of Chapter XXC were not attracted even though the amount that all the co-owners received exceeded Rs. 25 lakhs. Before the High Court , it was not disputed on behalf of the Revenue that all the reports obtained by it in regard to the valuation of the said immovable property had not been supplied to the respondents. For that reason, the High Court came to the conclusion that the principles of natural justice had not been followed. The High Court characterised as perverse a finding of the appropriate authority in regard to the case of the first respondent that no unaccounted money had figured in the sale transaction. For all these reasons, the High Court quashed the order of pre-emptive purchase.;