Kishore K. Shahani and Others vs Appropriate Authority, Income Tax Department and Others

THE COURT

Rule, returnable on 8th Feb., 1993. Counsel for the respondents waive service.

Heard counsel for the parties on the prayer for interim orders. Counsel for the petitioners submits that under the facts and circumstances of the case, it is necessary to pass interim orders as prayed for as otherwise this petition itself might become infructuous. Counsel for respondents 1 and 2 opposes the prayer. An affidavit has also been filed on behalf of these two respondents wherein it has been stated that they want to file a detailed affidavit in the matter after obtaining necessary instructions from the CBDT and advice from the Attorney General of India. Counsel, therefore, submits that no interim orders may be passed at this stage.

We have considered the rival submissions on the question of interim orders. On perusal of the facts and circumstances of the case we find force in the prayer of the petitioners that to protect the petitioners'' interests it is necessary to pass some interim orders restraining the respondents from taking further steps in pursuance of the impugned order passed by the appropriate authority. In fact, it is in this context that when the matter came up before us for the first time on 15th Dec., 1992 for admission, we pointed out to counsel for the respondents that this case may be disposed of finally at the admission stage itself as its pendency might give rise to a fresh spell of litigation in similar cases. It may be expedient to observe that one of the main grounds of challenge to the impugned order passed by the appropriate authority under s. 269UD(1) of the IT Act, 1961 pertains to the nature of the opportunity of hearing that is required to be given to the parties in terms of the decision of the Supreme Court in C.B. Gautam vs. Union of India Transferred Case No. 25 of 1987 decided on 17th Nov. 1992. The case of the petitioners is that they requested the appropriate authority to furnish them the particulars and materials on the basis of which the prima facie decision which led to the issue of the show cause notice for compulsory purchase under s. 268UD(1) had been taken. This was denied by the appropriate authority. It also appears from the impugned order of the appropriate authority that it was of the opinion that it was not obligatory on its part to furnish the requisite information to the concerned parties. The petitioners contend that there was no under valuation of the property in their case. They gave a number of instances of transactions of sale of identical properties in justification of the sale price shown in the agreement of sale. The appropriate authority also, as it appears from its order, had with it instances of transactions of sale of certain properties which were identical, according to it, to the property of the petitioners and were sold at a much higher price. The admitted position is that the particulars of these transactions were not furnished by the appropriate authority to the petitioners despite specific request being made to that effect, as according to it, it was not necessary to do so and the reasonable opportunity of hearing contemplated by the decision of the Supreme Court did not include furnishing of such information. It is also evident from the order that the decision was based on these very instances. These particulars admittedly formed the basis of the impugned order. The petitioners have challenged the order as arbitrary and violative of principles of natural justice. According to them the opportunity of hearing given to them is not a real opportunity of hearing. It is merely a pretence and an empty formality. According to them what the Supreme Court has directed is an effective opportunity of hearing which has not been done in their case.

In the premises, we felt that it may be expedient and in the interest of all concerned, particularly the Revenue, if the controversy in regard to the nature and scope of reasonable opportunity of hearing was decided at the very threshold at the admission stage itself. It cannot be disputed that the controversy goes to the root of the matter and earlier it is decided better it is in the interest of the Revenue. The decision on this issue does not require any affidavit on facts as there was no controversy in that regard. Learned counsel for the Revenue sought time to obtain instructions as to whether the hearing can be conducted at the admission stage itself or not and on getting instructions has filed an affidavit stating that as the Board itself was examining the matter they need time to argue the case. He, therefore, submitted that the matter cannot be decided at the admission stage. We appreciate to difficulty of the learned counsel in conducting the hearing at the admission stage in view of what is stated in the affidavit. We have, therefore, no option but to issue a returnable rule and to keep the matter pending. So far as the prayer for interim order is concerned, as we have already indicated, we are satisfied that in view of the facts and circumstances, it is a fit case where interim order is called for.

We, therefore, pass ad interim order in terms of prayer (c).