High Court Of Madras
Soffia Software Ltd. & Anr. vs. Mrs. Kalpagam Bhaskaran, Member, Appropriate Authority
Section 276AB, 279
K. Mohan Ram, J.
Criminal Original Petn. Nos. 21621 & 21624 of 2002 and
Criminal Misc. Petn. Nos. 8927 & 8929 of 2002
21st December, 2009
Counsel Appeared :
V. Ramachandran for Anitha Sumanth, for the Petitioner : K. Ramasamy, for the Respondent
ORDER
K. Mohan Ram, J. :
The petitioners, who are the first and second accused in EOCC No. 594 of 2002 on the file of the Addl. Chief Metropolitan Magistrate (EO 1), Egmore, Chennai, wherein, they are facing trial for the alleged offences under ss. 276AB r/w s. 269UC and s. 269UL(2) of the IT Act, 1961 (hereinafter referred to as “the Act”), have filed the above criminal original petitions seeking to quash all further proceedings therein.
2. A perusal of the complaint filed by the respondent against the petitioners and others reveals the following allegations : (a) By two sale deeds, dt. 25th Jan., 2001 and 27th March, 2001, the property situated at Plot No. 3093 in Aringnar Anna Nagar Scheme, comprised in Block No. 1D, T.S. No. 294, R.S. No. 26 (Pt.) Naduvankarai Village, Anna Nagar measuring an extent of one ground and 1200 sq. ft. with the building thereon having built up area of 3400 sq. ft. bearing Municipal Door No. AH 151, 3rd street, Anna Nagar, Chennai-40, was sold by the first accused to the fourth accused for a consideration of Rs. 20 lakhs each totalling Rs. 40 lakhs, with wilful intention to evade the legal obligations to be performed as required under Chapter XX-C of the IT Act, 1961 and they have subjected the impugned property which is one single unit by two sale deeds of absolute sale for a total consideration of Rs. 40 lakhs. (b) The first accused to the fourth accused ought to have entered into an agreement for the sale of the aforesaid property the apparent consideration of which exceeds Rs. 25 lakhs and filed Form 37I as required under s. 269UC of the Act within the statutory time-limit prescribed thereunder, thereby the accused 1 to 4 have contravened the provisions of s. 269UC of the Act and committed an offence under s. 276AB of the Act. (c) Accused 1 to 4 ought not to have completed the sale transaction without obtaining ‘no objection certificate’ from the complainant as required under s. 269UL(2) of the Act, thereby they committed an offence punishable under s. 267AB of the Act. (d) Accused 1 to 4 have prevented the complainant, Appropriate Authority from exercising its preemptive right of purchase of the impugned property as provided under s. 269UD of the Act.
Though there are two sale deeds, the property transferred is one single unit for a consideration of Rs. 40 lakhs and therefore, the provisions of Chapter XX-C of the Act clearly apply to the said transaction and the accused have contravened the provisions of s. 269UC and s. 269UL(2) of the Act, which is punishable under s. 276AB of the Act. A complaint was filed after sending a show-cause notice and considering the reply received from the accused, the said complaint was taken on file for the aforesaid offences against the accused. Being aggrieved by that, the first accused has come before this Court. Heard the learned counsel on either side. Learned senior counsel for the petitioners made the following submissions : (a) that the property was sold by the petitioners under two sale deeds for a consideration of Rs. 20 lakhs each, which is below the prescribed limit of Rs. 25 lakhs as provided under s. 269UC and the property conveyed under each sale deed is not a single unit property as alleged by the complainant, but it is different and separate property and there is no basis or justification for the Appropriate Authority to club the two distinct and separate transactions as one to bring such transaction under s. 269UC. (b) that to proceed under s. 276AB against the accused, the provisions contained in s. 279 of the Act do not confer any power to an individual Member of the Appropriate Authority to file a complaint under s. 276AB, but it confers power on the whole body of the Appropriate Authority consisting of three Members, whereas the above complaint has been filed by a single Member, which is against law and therefore, on that ground alone, it should be quashed. (c) that in the complaint it is stated that accused 1 to 4 executed two different sale deeds in respect of two different properties with a view to avoid legal obligation under Chapter XX-C of the Act, which is untenable for the reason that the property transferred under each deed of sale was less than Rs. 25 lakhs, which would not amount to violation of s. 269UC as the section comes into play when a single unit of property was sold for Rs. 25 lakhs, whereas the facts in this case is otherwise and therefore, the complaint has to be quashed. (d) Sec. 269UC requires that no transfer of immovable property of specific value shall be effected except in accordance with the said section; immovable property is defined under s. 269UA to include any land and building including any right therein; hence any right, title or interest in the immovable property is also included within the definition of immovable property; hence undivided interest in the immovable property is recognised as immovable property for the purpose of s. 269UC; any specific undivided interest in a property by any document which is legally executed and which has been accepted for registration by the registering authority would constitute immovable property; the registering authority who is aware of the provisions of Chapter XX-C and is an authority appointed by the Government has accepted the transaction and registered the transaction of sale; consequently it is not open to the complainant to take the stand that there is a contravention of s. 269UC; such an act would be violative of the stand taken by another authority of Government which is competent to act in the matter; the complaint is hence totally mala fide and is intended only to harass the petitioners.
The complaint is based on the averment that the two transactions of sale under two different documents of sale executed on 25th Jan., 2001 and 27th March, 2001 should be deemed to be a single transaction and combined value of the two properties sold under two documents of sale should be taken for the purpose of s. 269UC; this stand is totally untenable in law and is in fact opposed to law; the two documents are legal documents accepted and registered by the Appropriate Authority under law; each document conveys a different property thereunder; hence it is against law to assume that two different documents constitute a single document. (f) the two documents of sale have been registered by the registering authority who has accepted the transactions as legally valid, just and proper; if there is a contravention of s. 269UC, the registering authority is equally responsible for the same; the very fact that the complaint has not arrayed the registering authority among the accused clearly shows that the complaint is filed with mala fide intention, with a view to harass the accused named in the complaint. (g) the complaint is filed on 29th June, 2002, while Chapter XX-C itself has been deleted by the Finance Act of 2002 w.e.f. 1st July, 2002; hence the complaint has been filed in a haste and with a view to beat time and harass the accused; this also vitiates the complaint. (h) the object of Chapter XX-C is to prevent the evasion of tax; there is no averment that there is under-valuation of the property with a view to evade tax; even after the issue of the notice under s. 269UC, an order of purchase has not been made by the complainant; this establishes that there is no under-valuation of the property; in these circumstances, the complaint is wholly untenable. (i) that the show-cause notice issued to accused 1 to 3 relates to some other property and not related to the property mentioned in the complaint and on that ground the complaint is not sustainable.
On the aforesaid submissions, the learned Special Public Prosecutor for the IT cases was heard. Learned Special Public Prosecutor submitted that the property sold by the accused is a single unit property and to avoid the legal obligation, the accused sold the same by splitting the same into two units under two different sale deeds in order to defeat the provisions contained in s. 269UC of the Act and to avoid filing Form 37-I. He submitted that the contention of the learned senior counsel for the petitioners that the complaint for the alleged offence under s. 276AB of the Act could be filed only by the Appropriate Authority and the same cannot be filed by one of the Members of the Appropriate Authority is not sustainable. He submitted that in the sanction order issued under s. 279(1) of the Act by the Appropriate Authority while accorded sanction to file a criminal complaint, the Appropriate Authority has authorised the First Member, I. Kalpagam Bhaskaran, Appropriate Authority, Chennai, to file the complaint and therefore, the complaint filed by the Appropriate Authority, represented by one of its Member is maintainable. In support of the said contention, the learned Special Public Prosecutor relied upon a decision of the apex Court reported in T.S. Baliah vs. T.S. Rangachari, ITO (1969) 72 ITR 787 (SC). In the said decision, it has been laid down as under : “…. It is not disputed in the present case that the respondent has filed complaint petitions on the authority of the IAC. There is no statutory requirement that the complaint petition itself must be filed by the IAC. The clause ‘at his instance’ in s. 53 of the 1922 Act only means ‘on his authority’ and it is, therefore, sufficient compliance of the statutory requirement if the complaint petition is filed by the respondent on being authorised by the IAC.” Basing reliance on the said decision, the learned Special Public Prosecutor submitted that the Appropriate Authority under the Act has accorded sanction to file the complaint and is also authorised to file the complaint by the first Member of the Appropriate Authority and as such the complaint has been filed at the instance of the Appropriate Authority only, represented by its first Member and therefore the complaint is maintainable.
8. Learned Special Public Prosecutor further submitted that the contention of the learned senior counsel for the petitioners that since immovable property is defined under s. 269UA to include any land and building including any right therein and hence any right, title or interest in the immovable property is also included within the definition of immovable property and therefore undivided interest in the immovable property is recognised as immovable property for the purpose of s. 269UC and therefore such undivided interest is capable of being transferred and therefore there is no violation of s. 269UC is untenable. He also submitted that simply because the registering authority has accepted the two sale deeds and registered the same, it does not mean that the accused have not contravened s. 269UC of the Act; similarly, he submitted that simply because the registering authority has not been prosecuted, it does not mean that the accused cannot be prosecuted. He further submitted that there is no provision under the Act to prosecute the registering authority under s. 276AB of the Act. If the contention of the learned senior counsel for the petitioners is to be accepted, then, everybody can spilt up a single unit of immovable property into several undivided shares and transfer the same under different sale deeds and defeat the very purpose and object of s. 269UC of the Act and therefore submitted that splitting a single unit into several units is not permissible under the Act. In support of the said contention, the learned Special Public Prosecutor relied upon a decision of the apex Court in Appropriate Authority & Anr. vs. Smt. Varshaben Bharatbhai Shah & Ors. (2001) 166 CTR (SC) 373 : (2001) 248 ITR 342 (SC). In the said decision, the apex Court has laid down as under : “What, in our opinion, therefore, has to be seen for the purposes of attracting Chapter XX-C is : what is the property which is the subject-matter of transfer and what is the apparent consideration for such transfer. This has to be seen in a real light with due regard to the object of the chapter and not in an artificial or technical manner. If the apparent consideration for the transfer is more than the limit prescribed for the relevant area under r. 48K, what has then to be seen is whether the apparent consideration for the property is less than the market value thereof by 15 per cent or more. If so, the notice for pre-emptive purchase can be issued and it is then for the parties to the transaction to satisfy the Appropriate Authority that the apparent consideration is the real consideration for the transfer. Now, in the present case, the said agreement is for the sale of the said immovable property. That the equal shares of the second and third respondents therein are to be transferred to the first respondent is a necessary incident of such sale. The parties to the transaction filed Form No. 37-I with the Appropriate Authority and correctly stated that what was being sold was the said immovable property and not the one-half shares of the second and third respondents therein.
It also stated, correctly, that the total apparent consideration for the transfer of the said immovable property was Rs. 47 lakhs. This leaves us in no doubt at all that what was to be transferred was the said immovable property and that the consideration for such transfer was the sum of Rs. 47 lakhs. It is of no consequence that the second and third respondents owned the said immovable property as tenants-in-common or that this is how they had shown their ownership in their IT returns. We are, therefore, of the opinion that the High Court was in error in concluding that what had been sold by the second and third respondents to the first respondent was their equal share in the said immovable property, that the apparent consideration, was, therefore, less than Rs. 25 lakhs and that, therefore, the provisions of Chapter XX-C would not apply.We should add that even if the agreement of transfer had been so drawn as to show the transfer of the equal shares of the second and third respondents in the said immovable property, our conclusion would have been the same for, looked at realistically, it was the said immovable property which was the subject of the transfer.”
9. Learned Special Public Prosecutor by referring to the contention of the petitioners that the complaint has been filed in a haste on 29th June, 2002 while Chapter XX-C itself has been deleted by the Finance Act of 2002 w.e.f. 1st July, 2002 is concerned, submitted that even if the complaint had been filed after the repealing of the said chapter in respect of the offences committed while the Act was in force, prosecution can be launched even after the repealing of the Act and therefore there is no substance in the contention that the complaint has been filed in a haste. He further submitted that for prosecuting a person for violation of the provisions contained in s. 269UC under s. 276AB of the Act, there need not be under-valuation of the property in the sale deeds concerned; the prosecution is only for violation of s. 269UC namely that for not obtaining no objection certificate by filing Form 37-I; the contention of the petitioners that since the show-cause notice contains incorrect details relating to the immovable property and therefore the complaint is not maintainable is also not sustainable for the reason that before prosecuting a person for violation of the provisions contained under s. 269UC, there is no requirement in any of the provisions of the Act to issue a show-cause notice before actually filing the complaint. I have considered the submissions made by the learned counsel on either side, perused the materials available on record and the allegations contained in the complaint. Sec. 269UA of the Act defines certain terms for the purposes of Chapter XX-C which deals with the purchase by the Central Government of immovable properties in certain cases of transfer. An “agreement for transfer” is defined by cl. (a) thereof to mean an agreement for the transfer of any property. “Property” is defined by cl. (d) to mean any land or any building or part of a building and any rights in or with respect to any land or any building or a part of a building. “Transfer” in relation to any property means, by reason of cl. (f), the transfer of such property by way of sale or exchange or lease for a term of not less than twelve years. “Apparent consideration” is defined by cl. (b) to mean, if the immovable property is to be transferred by way of sale, the consideration for such transfer as specified in the agreement of transfer. Sec. 269UC places restrictions on the transfer of immovable property. Therefore, for the purpose of attracting Chapter XX-C of the Act, it has to be seen as to what is the property which is the subject-matter of transfer and what is apparent consideration for such transfer. It has to be seen in a real light with due regard to the object of the chapter and not in an artificial or technical manner.
12. In this case, there is no dispute that the immovable property in question was owned as a single unit by M/s Soffia Software Ltd., and the same has been dealt with under two sale deeds dt. 25th Jan., 2001 and 27th March, 2001 and whereby two undivided shares have been transferred to the third accused for a consideration of Rs. 20 lakhs each. If the test laid down in (2001) 166 CTR (SC) 373 : (2001) 248 ITR 342 (SC) (referred to supra) by the apex Court is applied to the facts of this case, it could be seen that the immovable property, which is subjected for sale, is the entire property belonging to the first accused. To circumvent the provisions of Chapter XX-C, the said immovable property has been divided into two equal undivided shares and each such undivided share has been transferred under the aforesaid two sale deeds dt. 25th Jan., 2001 and 27th March, be prevented by Chapter XX-C of the Act. If the immovable property as a single unit had been transferred by the first accused to the third accused, then automatically Chapter XX-C of the Act is attracted and since the apparent sale consideration will exceed the limit prescribed and automatically the vendor and the vendee ought to have filed Form 37-I and sought for no objection certificate from the Appropriate Authority. On the other hand, if certain unit is divided into two undivided halfs and the same is sold under two different sale deeds, then the apparent consideration will fall within the prescribed limit and the need for obtaining no objection certificate would not arise and therefore, in the considered view of this Court, the accused have split the single unit of immovable property into two undivided halfs and the first accused has executed two sale deeds in favour of the third accused just to evade compliance of s. 269UC of the Act. Therefore the contention of the learned senior counsel for the petitioners cannot be countenanced. As far as the contention of the learned senior counsel for the petitioners that since the complaint has not been filed by the Appropriate Authority but the same has been filed by one of its Members and therefore the complaint is not maintainable is concerned, it has to be pointed out that in the sanction order, the Appropriate Authority while sanctioning the prosecution against the accused had specifically authorised one of its Members namely the first Member, Mrs. I. Kalpagam Bhaskaran, to file the complaint. As rightly contended by the learned Special Public Prosecutor the complaint has been filed at the instance of the Appropriate Authority and represented by one of its Members and therefore as laid down in (1969) 72 ITR 787 (SC) (referred to supra) the complaint is maintainable. As far as the contention of the learned senior counsel for the petitioners that since the registering authority has accepted the documents and registered the same and therefore there is no violation of the Act and when the registering authority has not been prosecuted, the prosecution of the accused alone is tainted with mala fides is concerned, it has to be pointed out that there is no provision in the Act to prosecute the registering authority for the violation of the provisions contained under s. 269UC of the Act by the owners of the immovable properties subjected for transfer. Therefore, the said contention of the learned senior counsel for the petitioners cannot be countenanced.
Learned senior counsel for the petitioners submitted that since the show-cause notice issued by the Appropriate Authority is defective in respect of the description of the immovable property and therefore the prosecution is bad in law is concerned, it has to be pointed out that there is no requirement as per s. 276AB of the Act to issue a show- cause notice prior to the prosecution. The show-cause notice is issued by the Appropriate Authority for exercising its option to purchase the property and not for prosecuting the person for violating s. 269UC of the Act. A reading of s. 276AB of the Act does not show that there is any need to issue any show-cause notice before filing the complaint. Similarly, s. 279 of the Act also does not contemplate the issue of any show-cause notice. A reading of s. 269UD(1A), which reads as follows: “269UD. Order by Appropriate Authority for purchase by Central Government of immovable property.—(1) ….. (1A) Before making an order under sub-s. (1), the Appropriate Authority shall give a reasonable opportunity of being heard to the transferor, the person in occupation of the immovable property if the transferor is not in occupation of the property, the transferee and to every other person whom the Appropriate Authority knows to be interested in the property…..” shows that before making an order under sub-s. (1) of s. 269UD of the Act by the Appropriate Authority for purchase of the immovable property, an opportunity of hearing should be accorded to the transferor etc., which includes a show-cause notice. But no such requirement is contemplated in the penal provisions for prosecuting a person for violation of s. 269UC of the Act. Therefore, the contention of the learned senior counsel for the petitioners cannot be countenanced.
17. For the aforesaid reasons, the above criminal original petitions fail and the same are dismissed. Since EOCC No. 594 of 2002 is pending from the year 2002, the learned Addl. Chief Metropolitan Magistrate, Egmore, Chennai, is hereby directed to dispose of the same within a period of six months from the date of receipt of a copy of this order. Consequently, the connected criminal miscellaneous petitions are closed.
[Citation : 321 ITR 122]
