UNION OF INDIA AND ANR. versus M/S. CHIRANJI ESTATE (P) LTD. AND ANR.

Citation: [2001] SUPP. 1 S.C.R. 366 · Decided: 07-08-2001 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Dismissed
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Judgment (excerpt)

A 
UNION OF INDIA AND ANR. 
v. 
M/S. CHIRANJI ESTATE (P) LTD. AND ANR. 
AUGUST 7, 2001 
B 
[S. RAJENDRA BABU AND K.G. BALAKRISHNAN, JJ.] 
Income Tax Act, 1961. 
Chapter XX C-Under-statement of value of property-Acquisition of 
C property by Appropriate Authority-Whether correct-Held, comparison of 
incomparable properties and non comparison of comparable properties is 
fallacious-Hence order of appropriate authority rightly set aside by High 
Court. 
D 
The Appropriate Authority in exercise of powers under Chapter XX-C 
of the Income Tax Ad, 1961 considered the property in question to be under-
valued upon comparison with property situated in another Block. The 
appropriate authority rejected the contention of the respondents that the value 
of property in other Blocks was higher compared to the Block where subject 
property was situated, and ordered acquisition of property. Respondent-sellers 
E tiled writ petition challenging the said order and it was allowed by the High 
Court. Hence this appeal by Union of India. 
Dismissing the appeal, the Court 
HELD: I. The show cause notice had indicated the salvage value of the 
F property at Rs. 93,000 but in the order of the appropriate authority it was 
taken at about Rs. 9.92 lakhs, for coming to the conclusion that the fair market 
value was beyond the permissible 15 per cent limit. Neither the fact nor the 
basis for concluding that the building value is high as more than IO times 
was disclosed to the parties. The two valuation reports obtained before the 
G issue of show cause notice also did not indicate any under-valuation. 
1367-H; 368-Af 
H 
2. Just as the fact that comparison of incomparable properties is 
fallacious, non-comparison of comparable properties is equally fallacious. The 
instance of property relied upon by the parties was rejected on irrelevant 
366 
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U.0.1. v. CHIRANJI ESTATE (P) LTD. [RAJENDRA BABU, J.) 
367 
consideration. For one purpose valuation is sought to be relied upon and for A 
another purpose tlie same is sought to be ignored. (368-8, DJ 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6053 of 
1998. 
From the Judgment and Order dated 17.12.97 of the Delhi High Court B 
in C.W.P. No. 5613 of 1993. 
Dr. Gauri Shankar, T.L.V. Iyer, Ranbir Chandra, Ashok K. Srivasatava, 
B.V. Balramdas and Ms. Sushma Suri for the Appellants. 
R~P. Bhatt, P.K. Jain, M.A. Khan and M.P. Bansal for the Respondents. C 
The Judgment of the Court was delivered by 
RAJENDRA BABU, J. Pursuant to an agreement entered into on August 
28, 1993 the property comprised in A-3, East ofKailash, New Delhi measuring 
306 sq. mts. is agreed to be sold for Rs.70 lakhs. The Appropriate Authority D 
in exercise of the powers under Chapter XX-C of the Income Tax Act, 1961 
considered that there is under-statement of value of the property on the basis 
of that property comprised in E-326, East of Kai lash, New Delhi had been 
agreed to be sold for Rs.51 lakhs under an agreement dated May 23, 1993. 
While the salvage value of the sale instance property referred to in the notice E 
was considered at about Rs.55,000, the value of the subject property was 
taken at about Rs.93,000. It was contended that the value of the building on 
property E-326, East of Kailash, New Delhi as on the date of agreement 
would be Rs. I 0 lakhs and that is to be taken into consideration while working 
out the land value and also the fact that the subject property is surrounded 
by jhuggi jhompri as compared to property comprised in E-326, East of F 
Kailash, New Delhi which faces Greater Kailash-1, on the one side, and 
Nehru Place, on the other, and that the size of the plot of the subject property 
was bigger [while the subject proper!)' is measuring about 300 sq. mts., the 
sale instance property is measuring about 167 sq. mts.]. It is also contended 
that the value of the properties which are in C, D and E Blocks of East of G 
Kailash, New Delhi is higher as compared to the value of the property in 
Block A. The Appropriate Authority rejected the contentions raised on behalf 
of the seller [respondents herein] and proceeded to order acquisition of the 
property. While in the High Court, it was noticed that the show cause notice 
had indicated the salvage value of the property at Rs.93,000, but in the 
impugned order it was taken at about Rs.9.92 lakhs, for coming to the H 
368 
SUPREME COURT REPORTS (2001] SUPP. 1 S.C.R. 
A conclusion that the fair market value was beyond the permissible 15 per ce
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