Judgment:
J.H. Bhatia, J.
1. The petitioner has challenged the order passed under Section 269UD(1-A) of the Income-tax Act, 1961 passed by the appropriate authority for purchase of the flat of the petitioner for the Government of India.
2. To state in brief, the petitioner is the owner of the flat No. 16, admeasuring 860 sq.ft. built up area, situated on the fourth floor of the building known as Mahim Jolly Cottage Co-operative Housing Society Limited at Bhagoji Kir Marg, Mahim. The petitioner agreed to sell the said flat to the respondent No. 5 for a consideration of Rs. 17,50,000/-. Accordingly, an agreement for sale was entered into between the petitioner and the respondent No. 5 on 4.9.1994 through a broker J.D. Pingale. An amount of Rs. 9 lac was paid by the respondent No. 5 to the petitioner at the time of execution of agreement for sale and the balance amount was to be paid on or before 30th November, 1994. Form No. 37-I giving details of the said transaction and duly signed by the petitioner and the respondent No. 5, was handed over to the broker for presentation to the appropriate authority. According to the petitioner when he entered into the agreement, he had decided to quit the job with the bank and to go to Pune and, therefore, he had agreed to sell the flat. However, because of certain health problems, he decided to continue to in Bombay and, therefore, both the parties mutually canceled the said agreement for sale on 22/23rd September, 1994 and whole of the earnest money was repaid by the petitioner to the respondent on 28.9.1994. Without being aware of the cancellation of the agreement, the broker filed form No. 37-I before the appropriate authority on 26.9.1994. By letter dated 7.10.1994, the petitioner informed the appropriate authority about the cancellation of agreement for sale and requested him not to proceed with the matter. Petitioner received show-cause notice dated 25.11.1994 under Section 269UD(1-A) from the appropriate authority as to why an order should not be passed for purchase of the same flat by the Government of India as there was substantial difference in the apparent consideration and the market value of the flat. In his reply, he contended that the agreement was already cancelled and that the flat was agreed to be sold as per the market value. However, the appropriate authority passed the final order under Section 269UD(1) on 13.12.1994 against the petitioner.
3. In the said order, there is reference to 3 transactions of different properties, on the basis of which appropriate authority had come to conclusion that the market value of the subject property was about Rs. 5,000/-per sq.ft. While the apparent consideration was only Rs. 1933/-per sq.ft. According to the petitioner, the properties in three transactions relied upon by the appropriate authority are far away from the subject property. Those properties are quite close to Shivsena Bhavan and Shivaji Park and properties in that area carry higher market price in comparison to the price of the properties in the vicinity where the subject flat is situated. In support of this contention, he also relied upon a transaction between Mr. Ashutosh Arvind Kumbhakoni and Mrs. Nirmala Pandit and others by which Mr. Kumbhakoni had purchased the flat No. 9 on the second floor of the same building, in which the flat of the petitioner is situated, for a consideration of Rs. 18,51,000/-as per the agreement dated 15th May, 1993.
4. Heard the learned Counsel for the Parties. Perused the relevant documents and the impugned order. As per the impugned order dated 13.12.1994, appropriate authority had come to conclusion that as per the 3 transactions relied upon by the department, market value of the properties in that area was more than Rs. 5,000/-per sq.ft. of the built up area. The three transactions are shown in the annexure with the impugned order and those transactions were approved by the department . First two transactions pertained to flat Nos. 102 and 103 situated on the first floor of the building in Anmol Co-operative Housing Society Limited, 89, Sakharam Keer Road, Mahim (West), Mumbai. Out of that flat No. 103 was sold on 28.4.1994. Its built up area was 714 sq.ft. and the rate was Rs. 5490/-per sq.ft. of built up area .Flat No. 102 was sold in auction on 26.10.94. Its built up area was 522 sq.ft and the rate was Rs. 4957/-per sq.ft. of built up area. Property being flat No. 303 and 304 on 3rd floor of Mahesh Cottage on Cadel Road, Mahim (West) was sold on 31.1.94. Their built up area was 1189 sq.ft. and the price was Rs. 5112/-per sq. ft. of built up area. In his affidavit dated 1st December, 2008, petitioner contended that Anmol Co-operative Housing Society Ltd. is situated just after the Shivsena Bhavan from where the boundary of Mahim starts. Society's address as per its letter head is 'Anmol Apartments 89, Sakharam Kir Road, Shivaji Park, Mahim, Bombay.' Anmol Apartment is newly constructed building with ground plus 8 storeys, having 2 lifts with parking facility. Mahesh Cottage Cooperative Housing Society Ltd. is situated at 216, Cadel road, Mahim. The building is sea facing and is near the Shivaji Park, with ground plus six storeys having one lift and car parking facility. Building is situated between the cadel road and the Arabian sea. The subject property is on the fourth floor of Mahim Jolly Co-operative Housing Society Ltd. It is near the Paradise cinema which is atleast two kilometers from Anmol Apartments and about 1 and half kilometers from Mahesh Cottage Cooperative Housing Society Ltd. This building has no lift and the building was constructed in the year 1972 and is surrounded by the hutments. Therefore, sale transactions in respect of the flats situated in Anmol Apartments and Mahesh Cottage cannot be compared with this property. In his another affidavit dated 11th December, 2008, he pointed out that flat purchased by Mr. Ashutosh Kumbhakoni is situated on the second floor of the same building. Its built up area is 925 sq.ft. and it was sold at the rate of Rs. 2001 per sq.ft. of the built up area while the petitioner agreed to sell his flat one year later at the rate of Rs. 2035/per sq.ft. of the built up area. The learned Counsel for the petitioner vehemently contended that in the building where there is no lift, upper floors will always carry much less price than the lower floors. It is common knowledge that in the buildings having lift facilities, the upper floors particularly in Bombay, carry more rate than the flats in the lower floors. However, if the lift facility is not available generally people avoid to purchase flats on the higher floors because of the inconvenience which is caused in climbing higher floors. There is no denial to his contention that that there is no lift in his building. Admittedly, Mr.Ashutosh Kumbhakoni purchased the flat on second floor while the flat of the petitioner is situated on the 4th floor. In view of this, value of the flat on the fourth floor should be much less than the value of the flat on the second floor.
6. Admittedly, the carpet area of the flat purchased by Mr.Ashutosh Kumbhakoni was shown to be 805 sq. ft. and the consideration was Rs. 18,51,000/-. It is rightly pointed out by the learned Counsel for the petitioner that in respect of the subject flat, built up area was shown to be 860 sq.ft. According to the petitioner, built up area of the flat purchased by Mr. Ashutosh Kumbhakoni would be 925 sq.ft. Normally built up area is 15 to 20% more than carpet area. There is no denial that the built up area of the flat No. 9 purchased by Ashutosh Kumbhakoni may be about 925 sq.ft. and, therefore, rate of that flat has to be considered taking into consideration 925 sq.ft. built up area if the rate of subject flat is to be considered on the basis of built up area 860 sq.ft. It is pointed out by the petitioner that in view of the built up area of these two flats and the agreed prices , the rate of flat of Mr. Ashutosh Kumbhakoni would come to Rs. 2001/-per sq.ft. of the built up area. According to the petitioner, the rate of his flat would come to Rs. 2035/per sq.ft. Of course as per the valuation made by the department, rate would be Rs. 1933/-per sq.ft taking into consideration the expenses of registration and society borne by the vendor. Even if the rate in case of subject flat is slightly less than that of flat purchased by Ashutosh Kumbhakoni, the fact remains that the subject flat is on 4th floor while the flat purchased by Ashutosh Kumbhakoni is on second floor and as the building does not have lift facility that makes a lot of difference. According to the petitioner, Anmol Housing Society is close to Sena Bhavan, just where Mahim begins while his flat is at the distance of about 2 kms. from that place and also at the distance of 1.5 kms. from Mahesh Cottage. On the other hand, according to the appropriate authority, distance of the flat of the petitioner is only 800 meters from Sena Bhavan while that of Mahesh Cottage is also 800 meters. As such there is dispute about exact distance of these two properties from Sena Bhavan while Anmol Co-operative Housing Society is at distance of only 200 meters from Sena Bhavan even according to the Revenue.
The petitioner has also produced the copy of the ready reckoner issued by the Government for the purpose of charging stamp duty during the period from 1990-99 .As per the affidavit of the petitioner, the properties at Anmol Society and Mahesh Cottage are situated in zone 5-R which is the area of Lady Jamshedji Road between Gadkari Chowk Sena Bhavan to City Light Cinema while the subject property is situated in the portion of Lady Jamshedji Road between City Light cinema to Mahim Junction on the same road. That area falls in 6-R zone. Ready Reckoner confirm this fact as property numbers included in each zone are mentioned in the Annexure. The Ready Reckoner reveals that during the year 1994, the prices of the residential units without lift were Rs. 3,000/-per sq.ft. in 5-R zone, while for the similar property in zone 6-R, prices were Rs. 1600/-per sq.ft. If the rates for the similar areas for premises or for the later years are seen, it will appear that the rates in 5-R zone were almost double of the rates in 6-R zone, that too if the properties were similar in nature. In the present case, it is pointed out that in Anmol Co-operative Housing Society as well as in Mahesh Cottage, lift facility as well as car parking are available while no such facility is available in building of the subject flat. Therefore, the prices in the three transactions relied upon by the appropriate authority could not be compared with the price of the subject property. It is common knowledge that the area near Shivaji Park is very posh and is inhabited by rich and influential and prices of property in that area are very high. The learned Counsel for the Revenue contended that Ready Reckoner cannot be the basis for determination of the market value while usual test is price which may be offered by the prudent buyer and the price at which the prudent seller is inclined to sell the property in the same vicinity. For this, he relied upon Mrs. Nirmal Laxminarayan Grover v. Appropriate Authority (Income-Tax Department) and Ors. : [1997]223ITR572(Bom) . There can be no dispute about this preposition. However, the prices shown in the Ready Reckoner can be used atleast to find out whether there was any difference in the prices in the properties situated in different zones. In the present case, the prices shown in the Ready Reckoner for the purpose of stamp-duty in 5-R zone and 6-R zone are substantially different. It may be pointed out that in Vishwa Bandhu Pearyelal Gupta of Bombay and Anr. v. S.K. Laul and Ors. : [2008]302ITR157(Bom) , Division Bench of this Court had taken into consideration the ready reckoner to see the disparity in the prices fixed by the Government for the properties situated at Juhu and Versova areas. In Deputy Commissioner of Income-tax and Ors. v. Express Towers P. Ltd. and Ors. : [2001]249ITR556(SC) , the Supreme Court maintained the order of this High Court setting aside pre-emptive purchase on the ground that instances taken by the authorities were not comparable with the subject property owing to absence of basic similarity. In our opinion, in the present case, the three sale instances relied on by the appropriate authority can not be compared with the agreement for sale of subject flat taking into consideration the location of the properties, prices commanded by property in those areas as well as the basic amenities. None of these aspects were considered by the Appropriate Authority. In view of these reasons, we find that the impugned order is liable to be set aside. The learned Counsel for the petitioner contended that even before the show-cause notice was issued by the appropriate authority, the petitioner had informed that the agreement for sale was already cancelled even before the form No. 37-I was submitted and, therefore, it should not be considered. However, this objection was rejected in view of the language of Section 269UK, which provides that no person shall revoke or alter an agreement for transaction of immovable properties in respect of which statement has been furnished under Section 269UC unless the appropriate authority has not made an order for purchase and the period for making such order expires. Prima-facie, the stand taken by the appropriate authority appears to be correct. However, in view of the fact that on merits, the impugned order passed by the appropriate authority is liable to be set aside, we do not find it necessary to examine this legal question.
For the aforesaid reasons, writ petition is allowed. Impugned order is hereby set aside. Rule made absolute accordingly.