Judgment:
ORDER
Ajit J. Gunjal, J.
1. Pursuant to an agreement to sell dated 9-3-1998, the petitioner proposed to purchase the land belonging to one Smt. Meena S.C. Babu. Seller made an application to the concerned authorities under Section 230A of the Income Tax Act (for short, the Act) for issuance of necessary certificate to enable the registration of the document in question, in as much as, the income-tax clearance certificate is required before a property is registered. The case of the petitioner is that there were two separate agreements for consideration of Rs. 20,00,000 each between the parties relating to the property mentioned in the schedule. The petitioner as well as the seller made an application on 11-9-1998 in two Form 37-I under Chapter XX-C before the Appropriate Authority one each in respect of the two agreements for Rs. 20,00,000 relating to the schedule in the agreement. The necessary certificate was issued on 15-10-1998 by the Appropriate Authority under Section 230A of the Act. The sum and substance of the complaint is that even though the property was one and the sale consideration was for Rs. 40,00,000, to avoid scrutiny, the said property was split into two and two separate sale deeds were sought to be executed for which the consideration was less than Rs. 25,00,000 so as to avoid the Central Governments right to purchase the property. The specific case made out is that the petitioner as well as the seller have tried to circumvent the provisions of Section 269UC of the Act. It appears, evidence was let in before charge and charges have been framed. The seller questioned the framing of charges before this Court in Criminal Petn. No. 4562 of 2004. This Court declined to entertain the petition and dismissed the same. A copy of the order passed is at Annex. D. Indeed, while disposing of the criminal petition, this Court fleetingly observed that the seller has shown value of the property at Rs. 20,00,000 to circumvent the provisions of Section 269UC of the Act. Thus, was of the view that the framing of charges itself cannot be interfered and has dismissed the petition. Thereafter it appears the matter is pending trial before the Criminal Court. In the meantime, the petitioner as well as the seller made an application under Section 279(2) of the Act for compounding the offence. It is' noticed that the applications were made both by the transferor and the transferee i.e., the petitioner. The offence is punishable under Section 276AB of the Act. The authority having regard to certain observations made by this Court in the criminal proceedings as well as the opinion of the Appropriate Authority was of the view that this is not a imminent case where compounding of offence is justified. Hence, declined to entertain the application. The said order at. Annex. G is questioned in this writ petition.
2. Ms. S. Nitya, learned Counsel appearing for the petitioner submits that the respondent has not taken into consideration the factual aspect of the matter and has proceeded to decide the issue only on the basis of certain observations made by the Appropriate Authority as well as this Court in the criminal proceedings to which the transferee was not a party. She further submits that the facts were clear, in as much as, the petitioners were not trying to circumvent the provisions of Section 269UC of the Act.
3. Learned Counsel appearing for the respondents supports the impugned order. He submits that one composite property was split into two and two separate sale deeds were executed in favour of the petitioner by the seller. He submits that obviously that was done to avoid Central Government stepping in and purchasing the property. He further submits that a finding is recorded by the Appropriate Authority as well as by this Court that offence is committed under Section 269UC of the Act.
4. I have perused the impugned order passed by the respondent. Apparently, the respondent is a quasi judicial body. It is required to actin accordance with law. It is also required to apply its mind to the contentions raised before it. The observations made by the Appropriatel Authority as well as by this Court may be supplementary material for the respondent to come to a conclusion. But however, independent of all these, the respondent ought to have applied its mind and recorded a finding that there is a clear contravention of the provisions of the Act and the question of entertaining the application under Section 279(2) of the Act is impermissible. A perusal of the order would disclose that it has stemmed from the observation made by this Court in the criminal petition as well as by the authority. Another factor which is required to be taken note of is that the respondent has considered the case of the seller i.e., the transferor but not the case of the petitioner i.e., the transferee. Indeed, it is to be noticed that the transferor-seller was before this Court in a criminal proceeding and not the transferee, the petitioner. Hence, the observation made by this Court were in relation to only the petitioner (sic--transferor) in the criminal petition and it cannot be made applicable to the application made by the petitioner under Section 279(2) of the Act.
5. Yes, it is not necessary for this Court to say as to what is a speaking order and as to how a quasi judicial authority is required to function. But however, in the given set of circumstances, it is necessary to quote certain observations made by the Apex Court in this regard. The Apex Court in the case of A. K. Kraipak v. Union of India : AIR 1970 SC 150 has observed that the principles of natural justice could be made applicable to administrative actions also. It is observed therein that the dividing line between an administrative power and a quasi judicial power is very thin and is being gradually obliterated. It was also pointed out that for determining whether a power is an administrative power or quasi judicial power one has to look to the nature of the power conferred, the person or persons to whom it is conferred, the framework of the law conferring the power, the consequences ensuing from the exercise of that power and the manner in which that power is expected to be exercised. It is also further observed that in a welfare State like ours, the jurisdiction of administrative bodies was inevitably increasing at a rapid rate and that the concept of rule of law would lose its validity if the instrumentalities of the State were not charged with the duty of discharging their functions in a fair and just manner. It has further observed that the requirement of acting judicially was held also to be nothing but a requirement to act justly and fairly and the procedures which are considered inherent in the exercise of a judicial power were held to be merely those which facilitate if not ensure a just and fair decision. It is to be noticed that in recent years the concept of quasi judicial power has been undergoing a radical change and that what was considered an administrative power years back was now being considered as a quasi judicial power. Indeed, the impugned order at Annex. G does not satisfy the requirement and the test laid down by the Apex Court in Kraipaks case.
6. The apex Court, in the case of Jaswant Rai and Anr. v. CBDT and Ors. : (1998) 231 ITR 745 (SC) observed that the power of the Commissioner is coupled with a duty to do justice and is under the statutory obligation to exercise the power in favour of an assessee who has fulfilled all the conditions of the provisions. Having regard to the fact that there is no application of mind on the part of the respondent in rejecting the request of the petitioner for compounding the offence under Section 279(2) of the Act, there is no option but to step in and upset the order passed by him.
Consequently, the following order is passed:
(1) Petition is allowed.
(2) Annex. G stands quashed. The matter stands remitted to the respondent for fresh consideration. The respondent shall independently assess whether the claim of the petitioner could be brought under the provisions of Section 279(2) of the Act.
(3) Compliance in six months from the date of receipt of this order.
Rule is issued and made absolute.