V.K.GUPTA,J. - (1.) AN order passed on 31st Jan., 1995, by the Appropriate Authority of Income-tax, Calcutta, respondent No. 2 in this petition, has been challenged by the petitioner on a number of grounds. However, since this petition is being disposed of on a solitary ground, other grounds need not be taken into consideration. The brief facts are that respondent No. 5, Shrimati Jayanti Mukherjee, was the owner of flat No. 10, Block-B, situated on the 4th floor in a multi-storeyed building known as Sunny Park Co-operative Housing Society, situated at 6, Sunny Park, Calcutta. By an agreement dt. 21st Oct., 1994, she decided to sell this property to the petitioner, Shrimati Sita Cheriyan Mukerji, for a consideration of Rs. 16.50 lakhs. Since the apparent consideration of the property in question exceeded the then prescribed limit of Rs. 10 lakhs at the relevant time, the vendor and the vendee both filed Form No. 37-I on 21st Oct., 1994, before respondent No. 1, as was required under S. 269UC of the IT Act, 1961. However, respondent No. 1 did not accept the value reflected by the petitioner and respondent No. 5 in the aforesaid agreement for sale and instead passed an order on 31st Jan., 1995, whereby the said property was purchased by the Central Government at the amount of Rs. 16,03,500 which was an amount equal to the amount of effective apparent consideration. This purchase actually was in the nature of a pre-emptive purchase effected by the Central Government through respondent No. 1 in terms of S. 269UD(1) of the IT Act, 1961. It is this order which is under challenge in this petition filed by the petitioner, the vendee, under Art. 226 of the Constitution of India.
(2.) AS observed, the learned advocate for the petitioner initially raised a number of questions relating to the correctness and the validity of the impugned order, but ultimately the case was argued by the parties only on a single question, that is, the non-observance of the provisions contained in s. 269UG of the Act relating to the failure on the part of the respondents in tendering to the seller of the property, that is, respondent No. 5, the amount of consideration payable in accordance with the provisions of S. 269UF within the prescribed period, i.e., one month starting from the end of the month in which the property became vested in the Central Government under sub-s. (1) of S. 269UE of the Act. It is alleged by the petitioner that despite an order having been made under S. 269UD(1) of the Act for the pre-emptive purchase of the property and despite the fact that as on the date of such order, in terms of the provisions contained in S. 269UE(1) of the Act, the property stood vested in the Central Government, the amount of consideration which was required to be paid to the seller was not tendered to her within the period prescribed under s. 269UG of the Act. This factual assertion has not been denied by the respondents. The defence of the respondents is that even though the order of pre-emptive purchase was passed on 31st Jan., 1995, and the said order was served upon the vendor on 8th Feb., 1995, on 6th Feb., 1995, respondent No. 1 requested the vendor to hand over possession of the property in question to the authorised officer. By the said letter, the vendor was also requested to submit the original deed of conveyance of the property on or before 14th Feb., 1995. However, the vendor did not comply with the aforesaid requirements. In the meantime, an Inspector was deputed to find out whether there was any liability in respect of the property in question. He submitted a report that an outstanding liability amounting to Rs. 9.24 lakhs against the vendor in respect of the tax payable to the Calcutta Municipal Corporation was in existence. As per cl. 15 of the agreement, the vendor was liable to pay all the municipal taxes including arrears. The defence of the respondents is that since the vendor did not either deliver the conveyance deed or the possession of the property and further since there was an outstanding liability of Rs. 9.24 lakhs and additionally since five per cent of the value of the property was to be paid to the Sunny Park Co-operative Housing Society, the Chief CIT directed that the cheque in lieu of the consideration amount be made in favour of respondent No. 1 rather than the vendor. It is further stated by the respondents that they received a communication dt. 14th Feb., 1995, from the solicitors and advocates whereby the respondents were informed that the present writ petition would be moved on 16th Feb., 1995, in this Court and that the petitioner would ask for an interim relief. In fact, it is revealed from the affidavit-in- opposition that on 24th Feb., 1995, a cheque for Rs. 16,03,500 was sent to respondent No. 1 apparently towards the consideration price of the aforesaid property. It is claimed by the respondents that the amount of consideration was not tendered to respondent No. 5, the vendor, in terms of S. 269UG(3) of the Act since there was a dispute as to the title of the person concerned to receive the amount of consideration. It is worthwhile to mention that the CBDT, New Delhi, vide its communication dt. 26th April, 1995, had enquired from the Chief CIT-II, Calcutta, as to why the consideration amount was deposited in the account of the Appropriate Authority. The text of this letter reads as under: "I am directed to refer to your letters No. CC-II/AA/Cal/1136/October, 94/94/1591, dt. 22nd/1st March, 1995, and 3rd April, 1995, on the above subject and to request you to intimate the reasons for depositing the apparent consideration in this case in the account of the Appropriate Authority. An immediate reply in the matter is requested. Yours faithfully, (Sd.) (Arvind Kumar). Under Secretary (OT) Central Board of Direct Taxes." The reply of the Chief CIT to the aforesaid communication was sent on 12th/18th May, 1995, which reads thus : "Shri Arvind Kumar, Under Secretary (OT), Central Board of Direct Taxes, New Delhi. Subject : Pre-emptive purchase of property at 6, Sunny Park, Calcutta-Reg. Ref. : Your letter F. No. 316/28/95-OT dt. 26th April, 1995. With reference to the letter quoted above I have been directed to intimate that the payment in regard to the property located at 6, Sunny Park, Calcutta, was made to the Appropriate Authority on the grounds mentioned below: 1. The transferee has gone to the High Court challenging the acquisition of the property under s. 269UD(1). This was mentioned in para 6 of CCIT-II's D.O. to Shri C.V. Gupta, Member (R&A), vide No. CC.II/AA/Cal/1136/Oct. 94/94-95/1591 dt. 22nd Feb., 1995/1st March, 1995. 2. As per cl. 15 of the said agreement the transferor has to pay off the liability of municipality tax including arrears and all other outgoings of any nature whatsoever including arrears up-to-date of the possession. The order under S. 269UD(1) has not mentioned details of such outstanding liabilities which should be deducted from the effective apparent consideration. So this office did not know the outstanding dues on statutory heads. Under the circumstances, a decision to make payment to the Appropriate Authority was taken. (Sd.) (A.K. Basu), Asstt. CIT, Hqrs.-II, Calcutta, for C.C.I.T.-II, Calcutta". Even though in the affidavit filed on behalf of the respondents there was no definite stand as to why the consideration money was not paid to respondent No. 5 and why it was deposited with respondent No. 1, the aforesaid reply sent to the CBDT reveals the stand of the respondents with regard to this issue. Sec. 269UG of the Act clearly lays down that the amount of consideration payable in accordance with the provisions of S. 269UF shall be tendered to the person or persons entitled thereto, within the period prescribed therein. The proviso to sub-s. (1) stipulates that if any liability for any taxes is discovered, payable by the person entitled to the consideration money, the Appropriate Authority may in lieu of the payment of the amount of consideration set off the amount of consideration or any part thereof against such liability after giving an intimation in this behalf to the person entitled to the consideration. The other relevant provision contained in S. 269UG is that if the person entitled to the amount of consideration does not consent to receive it or, if there is any dispute as to the title to receive the amount of consideration, the Central Government shall deposit with the Appropriate Authority the amount of consideration within the period specified in sub-s. (1) of 269UG. Sub-s. (3) of S. 269UG reads thus: "269UG(3) Notwithstanding anything contained in sub-s. (1), if the person entitled to the amount of consideration does not consent to receive it, or if there is any dispute as to the title to receive the amount of consideration, the Central Government shall deposit with the Appropriate Authority the amount of consideration required to be tendered under sub-s. (1) within the period specified therein: Provided that nothing herein contained shall affect the liability of any person who may receive the whole or any part of the amount of consideration for any immovable property vested in the Central Government under this Chapter to pay the same to the person lawfully entitled thereto..."
(3.) AS will be seen, under the proviso to sub-s. (1) of S. 269UG the setting off of any liability for payment of any amount towards taxes is the prerogative of the Appropriate Authority. It is only in the order that the Appropriate Authority passes, either resorting to pre-emptive purchase or otherwise, that it may order the setting off of the amount against any such liability for any tax. The Central Government is not empowered to do so. Despite such stipulation in the proviso to sub-s. (1) of S. 269UG, the respondents resorted to this act. Even this defence is not tenable because ultimately they actually tendered the entire consideration amount to the Appropriate Authority, which means that the amount towards the liability of the tax was not set off even by the respondents. That leaves us to consider the remaining question regarding the existence of a dispute relating to the title to receive the amount of consideration. The respondents contended that since the petitioner filed the present petition in this Court, that amounted to the existence of the dispute relating to the title to receive the compensation amount and, therefore, they did not tender the amount to the vendor, and instead deposited it with the Appropriate Authority. The respondents have relied upon the Division Bench judgment in the case of Mrs. Sooni Rustam Mehta vs. Appropriate Authority (1991) 98 CTR (AP) 84 : (1991) 190 ITR 290 (AP) : TC 3R.1160. The facts are different because the writ petition in that case was filed by the vendor himself whereas in the present case before us the writ petition has been filed not by the vendor but by the vendee.;