When a property is sold in a public auction held by the Government Department, there is no possibility for not setting forth the true market value in the instrument, and therefore, there is no justification for the registering officer to insist on the payment of deficit stamp duty.

1. This appeal is filed as against the order dated 17.11.2008 passed by the respondent in Proceedings No.26164/N5/2005, whereby the respondent has fixed the market value of the subject property at Rs.25,02,915/- on the basis of Rs.3,400/- per sq.ft. and directed the appellant to pay the deficit stamp duty.

2. The case of the appellant, in brief, is as follows:

The subject property, namely, land bearing door No.4, Bishop Garden Extension, Raja Annamalaipuram, Chennai, measuring to an extent of 2 acres 11 grounds 792 sq.ft. together with the buildings thereon, comprised in O.S.No.11, R.S.No.39598/1, C.C.No.28 of Mylapore Revenue Division, Mylapore-Triplicane Taluk, Chennai District, originally belonged to M/s.Spencer & Company Limited, Chennai and they purchased the same from Mr.Stanley Wilson Edwards and his wife Esther Marjorie Edwards in and by an absolute sale deed dated 18.09.1957, registered as Document No.3070/1957 on the file of Registrar of Madras-Chingleput. They also applied for ceiling clearance and the Urban Land Ceiling Authorities issued a certificate that their holdings are not affected by the provisions of the Tamil Nadu Urban Land (Ceiling and Regulation), Act, 1978, vide Proceedings dated 28.12.1990. Subsequently, on 27.07.1995, M/s. Spencer

Company Limited entered into an agreement with M/s.Sterling Horticulture and Research Limited for sale of the said property for an apparent consideration of Rs.19.75 lakhs. In accordance with the provisions of Chapter II-C of the Income Tax Act, 1961, the parties to the said agreement duly filed a statement in Form 37-I of the Income Tax Rules for scrutiny/issuance of a No Objection Certificate by the appropriate authority, Income Tax Department, by their application dated 19.08.1995. During the course of proceedings of the issuance of pre-emptive purchase order, a show cause notice dated 02.11.1995 was issued to the transferor and transferee, namely, M/s.Spencer & Co.Ltd., Madras and M/s.Sterling Horticulture and Research Limited.

3. Subsequently, for the reason recorded by the appropriate authority in their pre-emptive purchaser order dated 27.11.1995 under section 269 (UD(1) of the Income Tax Act, 1961 and in exercise of the powers vested by the Act, the Government of India decided to purchase the property for a consideration equal to the apparent consideration stated in the said agreement of sale and under section 269(UE(1) of the Income Tax Act, the property vested absolutely with the Central Government free from all encumbrances. Consequent to the order passed by the appropriate authority, the Income Tax Department in terms of Order dated 27.11.1995, took possession of the subject property. Questioning the acquisition of the property by the appropriate authority, the transferee, namely, M/s.Sterling Horticulture and Research Limited filed W.P.No.16777 of 1995 for quashing the order of appropriate authority dated 7.11.1995; but the said writ petition was dismissed by this court on 11.02.1997 holding that the appropriate authority, functioning under the Income Tax Act, was well within the authority to acquire such property. Aggrieved over the said order, a writ appeal was also filed in W.A.No.245 of 1997 and the same was also dismissed on 03.11.2000.

Aggrieved over the same, SLP was filed before the Hon'ble Supreme Court, which was also dismissed and thus, the order of the appropriate authority was confirmed.

4. Thereafter, the property was put up for sale in public auction by the Commissioner of Income Tax, Headquarters Office of the Chief Commissioner of Income Tax-II, Chennai- 34. In the said auction, the Managing Director of the appellant firm participated and successfully completed the bid for Rs.22.15 crores, which was accepted by the Income Tax Department on behalf of the Central Government and the purchase consideration was remitted by the appellant to the vendor on various dates. Consequently, the sale deed was also executed in favour of the appellant o