S.K. Tiwari, J.
1. This writ application, has been filed for issuance of a writ of mandamus directing respondent No. 1 to withdraw the order dated December 29, 1993, passed by the appropriate authority in Income-tax Departmental proceeding No. AA/(Cal)/978/Sept. 1993, the communication dated January 4, 1994, issued by the Assistant Commissioner of Income-tax and the one dated January 6, 1994, sent by the executive engineer working under the appropriate authority, Calcutta, and to issue no objection certificate.
2. This judgment shall also govern the disposal of Matter No. 1192 of 1994, pending on the original side of this court.
3. Respondent No. 6, Chengmari Tea Company, is a private limited company. Respondent No. 6, is the petitioner in Matter No. 1192 of 1994. The petitioner, Ranjit Kumar Banerjee, owns premises No. 29A, Ballygunge Circular Road, Calcutta (hereinafter referred to as 'the premises'). The premises comprise an area of 1 bigha, 8 cottahs, 10 chittacks and 75 sq. ft. together with buildings and structures standing thereon. The petitioner is in occupation of the said premises.
4. The petitioner entered into an agreement with respondent No. 6, for development of the said premises. The agreement provided that respondent No. 6 would develop the premises at their own cost and construct multi-storeyed buildings in accordance with the plan to be sanctioned by the Calcutta Municipal Corporation. The terms and conditions were recorded in the development agreement dated August 26, 1993.
5. The terms of the agreement, inter alia, provide that the petitioner shall vacate the premises and shift to new rented premises to be provided by respondent No. 6, at their own cost. Respondent No. 6 was to complete the building construction within 30 months from the date of sanction of the plan. After the building is completed, the developer (respondent No. 6) shall get 60 per cent. of the built-up space and the rest 40 per cent. shall come to the petitioner's share. The petitioner was also to receive a sum of Rs. 27 lakhs in cash, immediately after the execution of the agreement from respondent No. 6. All other details of the agreement are enumerated in annexure 'A' to the petition.
6. The petitioner applied under Section 269UC of the Income-tax Act for obtaining a no objection certificate in Form No. 37-1 on September 10, 1993. Respondent No. 6 also joined him in the said application.
7. The authorised officer, vide his letter dated December 17, 1993, came to a tentative finding that there was gross under valuation. According to the authorised officer, the market value of the lands situated at Ballygunge Circular Road, was more than Rs. 10 lakhs per cottah.
8. Pursuant to notice dated December 17, 1993, the petitioner and respondent No. 6 appeared before the appropriate authority and filed reply (annexure 'E'). It was pointed out in the reply that the petitioner had not been given a copy of the relevant documents on the basis of which respondent No. 1 had arrived at a tentative conclusion. The objection went unheeded and respondent No. 1 thereafter passed the impugned order under Section 269UD(1) of the Income-tax Act. The order was communicated to the petitioner, vide letter dated January 4, 1994. The same was received by the petitioner on January 6, 1994. A copy of the impugned order was supplied to the petitioner on January 7, 1994.
9. According to the impugned order, the value of land was found at Rs. 9.20 lakhs per cottah. The value of superstructure was assessed at Rs. 3 lakhs. The authority (respondent No. 1) held that the value of 60 per cent. of land and superstructure comes to Rs. 1,61,143 lakhs, whereas the petitioner would he paid a total sum of Rs. 113.40 lakhs in cash as well as in kind. Hence, there is a gross undervaluation. As the difference was more than 15 per cent. in the light of the Supreme Court judgment in C.B. Gautam's case : [1993]199ITR530(SC) , the authority found it a fit case for pre-emptive purchase.
10. The petitioner has challenged the impugned order on the ground that according to the authority, 40 per cent. of the total constructed area comes to 18,565 sq. feet. The cost of construction was held by the authority at Rs. 1,800 per sq. feet (inclusive of cost of land). If the cost of land at Rs. 580 per sq. feet is deducted, the total cost of construction would come to Rs. 1,220 per sq. feet. If 18,565 is multiplied by 1,220, the total cost of construction would come to Rs. 2,26,49,300. As against the consideration of Rs. 2.26 crores, the petitioner shall be getting 60 per cent. of the land and superstructure, the total market value of which has been assessed at Rs. 1,61,143. According to the petitioner, rent for 30 months of the house procured for petitioner would cost Rs. 24,97,500 to respondent No. 6 and the value of car parking space of 40 per cent. of the constructed area would be Rs. 36 lakhs. The value of roof rights (10 lakhs) plus cash payment of Rs. 27 lakhs would in substance come to Rs. 3.24 crores. Thus, the total apparent consideration would thus be Rs. 3.24 crores.
11. It has been urged by counsel for the petitioner that the appropriate authority arbitrarily reduced the cost of building by ten per cent. because the construction would be carried out by the owners themselves. This is strange indeed, under Section 269UA(b)(2)(iii) of the Income-tax Act, which applies to this case, clearly speaks of the aggregate of the price that such thing or things would ordinarily fetch on sale in the open market on the date on which the agreement for transfer is made. Hence, the market price alone shall be the yardstick and not the cost of construction. The other conclusions arrived at by the authority have also been challenged by the petitioners.
12. Respondent No. 1 has challenged the maintainability of the petition on the grounds that material facts have been suppressed. The court cannot reappreciate the evidence in the exercise of its writ jurisdiction and the petitioners have no cause of action.
13. It has further been contended by respondent No. 1 that after receipt of Form No. 37-1, the matter was referred to the Superintending Engineer attached to the appropriate authority for determination, the apparent consideration and also the fair market value of the property. The said Superintending Engineer assessed the market value of the property in question at Rs. 10,61,800. According to their calculations, the petitioner was receiving an apparent consideration to the tune of only Rs. 10,13,40,000. Hence, the impugned order was rightly passed.
14. It has further been contended that the petitioners and respondent No. 6 have made various incorrect statements and assumptions which were not sustainable. There was no provision in law for filing the revised statement. Hence, it was rightly ignored.
15. After having heard learned counsel for both the parties, I have come to the conclusion that the petition deserves to be allowed for the following reasons :
(1) The Revenue has deliberately ignored the mandatory provisions of Section 269UA(b)(2)(iii) of the Income-tax Act and instead of assessing the cost of the building on the basis of the market value, based it on the cost of construction minus 10 per cent. on the ground that respondent No. 6 was an efficient contractor. For the reasons discussed above, this finding is not only arbitrary but perverse.
(2) The Revenue did not enclose a copy of the report of the executive engineer along with the show-cause notice. It would be pertinent to quote the observations of a Division Bench of the Bombay High Court in Nirmal Laxminarayan Grover v. Appropriate Authority (Income-tax Department) : [1997]223ITR572(Bom) which runs thus (at page 596) ;
'The petitioner is, therefore, clearly prejudiced in her defence since the relevant material upon which the prima facie view of the appropriate authority that the property in question is undervalued is based is not disclosed in the show-cause notice given to her. The impugned order of the appropriate authority passed pursuant to such a defective show-cause notice is thus illegal and is vitiated for not being in consonance with the basic principles of natural justice.' (3) Just two days' time was given for filing reply to show-cause notice. The Supreme Court in Gautam's case : [1993]199ITR530(SC) categorically laid down that a reasonable opportunity of showing cause against the proposed order must be given.
(4) The impugned show-cause notice disclosed only one ground, i.e., the value of land was more than Rs. 10 lakhs per cottah. Hence, there was a gross undervaluation. After the petitioners filed reply, the Revenue passed the impugned order and conceded that the value of the land works out at Rs. 9.20 lakhs per cottah and the cost of superstructure was only Rs. 3 lakhs. When the petitioners have satisfactorily explained the sole point raised in the notice, the question of acquisition of the property under Chapter XX-C of the Income-tax Act did not arise. The impugned order of acquisition passed on the basis of new grounds, without a fresh show-cause notice, was certainly arbitrary and unjust.
16. Learned counsel for the petitioner has also urged that the Revenue arbitrarily assessed the rent of the rented house at Rs. 6 per sq. feet without any material on record. He has further urged that the rent of 3,000 sq. feet area should be assessed on the basis of 12 1/2 per cent. per annum return on the market price of the flat (see Special Land Acquisition Officer v. Veerabhadarappa (P.) : [1985]154ITR190(SC) ). This contention of learned counsel appears to be reasonable. Similarly, the Revenue also failed to take notice of roof rights and the rights of ownership over the covered and open car parking space. If 40 per cent. of the constructed building's basement is to be used as garage, the value thereof would far exceed Rs. 2 lakhs, which was inadvertently not mentioned in the Form No. 37-1.
17. I need not go deep into these matters. Thus, I conclude that the notice being bad and calculation made in the impugned order being based on wrong assumptions, the petition is entitled to succeed.
18. Learned counsel for the Revenue has urged that in case this court finds that the notice or the impugned order are liable to be struck down, the matters should be remanded to the authority concerned as was done by the Supreme Court in Gautam's case : [1993]199ITR530(SC) and by this court in Hari Krishna Kanoi v. Appropriate Authority : [1994]207ITR743(Cal) . I humbly rely on the following passage of Nirmal's case : [1997]223ITR572(Bom) , wherein the Bombay High Court observed thus (at page 596) :
'Learned counsel for respondents Nos. 1 and 2 has urged before us that, if the show-cause notice given to the parties is defective, the proceedings should be remanded to the appropriate authority for a fresh enquiry and decision according to law after a proper show-cause notice is given to the parties containing the reasons or the material on the basis of which the appropriate authority is of the view that the property in question is grossly undervalued. We cannot accept the above submission made on behalf of the respondents because judicial notice can be taken of the fact that by passage of time prices of land appreciate and it would be unjust to the vendor to peg him down to a price to which he has agreed at the time of the agreement of sale dated June 3, 1992. That is also the reason why Section 269UD(1) of the Act requires the appropriate authority to pass an order within two months (after amendment three months) from the end of the month, in which the statement of particulars are submitted by the parties concerned in the prescribed Form No. 37-1 as required under Section 269UC of the Act read with rule 48L of the Income-tax Rules, 1962. Moreover, on the merits, we have shown how the land rate of Rs. 225 per sq. feet (or its discounted rate of Rs. 221 per sq. feet) for the suit land is not grossly understated in the sense that its fair market rate would be more by 15 per cent. or above as compared to the said land rate. The above submission made on behalf of the respondents cannot thus be accepted.'
19. The aforesaid observations equally apply to the circumstances of the present case on all force.
20. Similarly, one of the judges of this court in the case of Dwarkanath Chatterjee v. Union of India : [1995]213ITR470(Cal) rejected the Revenue's prayer for remand and observed as under (at page 484) :
'I am of the view that the decision (Kelvin Jute Co. Ltd. v. Appropriate Authority : [1990]185ITR453(Cal) ) does not authoritatively hold that it will be open to the Central Government to reconsider the question of purchase if an order passed by it is set aside by a competent forum.'
21. The Supreme Court in the case of State of Kerala v. T.P. Roshana, : [1979]2SCR974 , has also laid down that writ court can give any direction requiring affirmative action or positive activity in addition to quashing of the impugned order, 1, therefore, find that this court, instead of remanding the matter, is competent to command the Revenue to issue the no objection certificate.
22. As regards the contention of the Revenue, that this court cannot sit in appeal as against the impugned order, I may only add that this court only examined the validity of the impugned order and noticed with a view to ascertain whether or not the approach of respondent No. 1 was arbitrary or illegal Hence, the contention is unfounded.
23. Accordingly, both the petitions succeed and rule is issued in terms of prayers (a), (b) and (c) of paragraph 30 of Writ Petition No. C. O. 2561(W) of 1994. The connected writ petition shall also stand disposed of accordingly. The Revenue is directed to issue the no objection certificate within two months' from date. I leave the parties to bear their own cost.
24. Learned counsel for the respondent prays for stay of the operation of the order in order to enable him to prefer an appeal and obtain a stay order. The operation of the judgment is stayed for four weeks from date. Xerox copy of the judgment be supplied to the parties expeditiously if applied for.