Section 269UB — Appropriate Authority

CHAPTER XX-C — PURCHASE BY CENTRAL GOVERNMENT OF IMMOVABLE PROPERTIES IN CERTAIN CASES OF TRANSFER

Section 269UB — Appropriate authority

Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise

Status: Historic / spent. Chapter XX-C was inserted by the Finance Act, 1986 and brought into force area-wise under section 269U; by section 269UP it does not apply to any transfer of immovable property effected on or after 1 July 2002. The pre-emptive-purchase machinery is therefore dormant. The section is reproduced and annotated in full for completeness of the Treatise.

Finance Act, 2026: No amendment. The Finance Act, 2026 does not touch any provision of Chapter XX-C (sections 269U to 269UP).

Mechanism: Empowers the Central Government to constitute appropriate authorities and define their local limits; prescribes the three-member composition (two senior Income-tax Service officers and one senior Central Engineering Service officer) and the rules for territorial jurisdiction.

Litigation profile: Jurisdiction/constitution provision; challenges arose as collateral attacks on want of jurisdiction or improper constitution.

A. COMMENTARY

Function

Section 269UB constitutes the adjudicating body of the Chapter. The appropriate authority is a three-member collegium — two members of the Indian Income-tax Service, Group A (of the rank of Commissioner or above) and one member of the Central Engineering Service, Group A (of the rank of Chief Engineer or above). The engineering member was a deliberate design choice: because the Chapter turns on valuation of immovable property, technical valuation expertise was built into the very composition of the authority.

Territorial jurisdiction

Sub-section (3) fixes which authority acts in respect of a given property by reference to local limits, with a rule (and Board rules under section 295) for property falling within the jurisdiction of more than one authority, and an Explanation deeming society/company-rights property to be situate where the land or building is. Only a duly constituted authority, acting within its allotted local limits, can validly exercise the powers under sections 269UC to 269UL; a defect of constitution or territorial competence goes to jurisdiction.

Candour

There is no substantial body of merits law on section 269UB as such. Its significance is structural — the three-member, valuation-competent composition was repeatedly relied on by the Supreme Court in C.B. Gautam as part of the reason the scheme could be sustained, since orders were made by a high-powered, expert body rather than a single officer.

B. STATUTORY TEXT (verbatim)

Reproduced verbatim from the Income-tax Act, 1961, as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no change to Chapter XX-C). Page-header/footer artefacts of the source PDF have been removed; wording, clause-lettering and punctuation are unaltered.

Appropriate authority.

269UB. (1) The Central Government may, by order, publish in the Official Gazette,—

(a) constitute as many appropriate authorities, as it thinks fit, to perform the functions of an appropriate authority under this Chapter ; and

(b) define the local limits within which the appropriate authorities shall perform their functions under this Chapter.

(2) An appropriate authority shall consist of three persons, two of whom shall be members of the Indian Income-tax Service, Group A, holding the post of Commissioner of Income-tax or any equivalent or higher post, and one shall be a member of the Central Engineering Service, Group A, holding the post of Chief Engineer or any equivalent or higher post.

(3) In respect of any function to be performed by an appropriate authority under any provision of this Chapter in relation to any immovable property referred to in section 269UC, the appropriate authority referred to therein shall,—

(a) in a case where such property is situate within the local limits of the jurisdiction of only one appropriate authority, be such appropriate authority ;

(b) in a case where such property is situate within the local limits of the jurisdiction of two or more appropriate authorities, be the appropriate authority empowered to perform such functions in relation to such property in accordance with the rules made in this behalf by the Board under section 295.

Explanation.—For the purposes of this sub-section, immovable property being rights of the nature referred to in sub-clause (ii) of clause (d) of section 269UA in, or with respect to, any land or any building or part of a building which has been constructed or which is to be constructed shall be deemed to be situate at the place where the land is situate or, as the case may be, where the building has been constructed or is to be constructed.

C. AUTHORITIES

Candour rule: section 269UB is a constitution/jurisdiction provision with little direct authority. The decision below explains the importance the Supreme Court attached to the authority's expert composition.

Composition of the authority as a safeguard

C.B. Gautam v. Union of India (1993) 199 ITR 530 / 110 CTR 179 / 65 Taxman 440 / (1993) 1 SCC 78 (SC)

Court / Bench Supreme Court of India; decided 17 November 1992 (test case transferred from the Delhi High Court).

Issue Constitutional validity of Chapter XX-C, and whether a pre-emptive purchase order under section 269UD can be made without affording the parties a hearing and without recording reasons.

Held The Chapter was upheld in substance, but the Court read into it the principles of natural justice: a reasonable opportunity to show cause must be given to the intending purchaser and seller before an order under section 269UD is made, and the order must record reasons. Pre-emptive purchase can be resorted to only where there is significant undervaluation of about 15 per cent or more, raising a rebuttable presumption of an attempt to evade tax. The words 'free from all encumbrances' in section 269UE(1) were read down so as not to defeat bona fide tenants and encumbrancers in possession.

Relevance The foundational decision for the entire Chapter. It governs sections 269UA, 269UC, 269UD, 269UE and 269UF and is the source of the hearing-and-reasons discipline applied throughout. (Followed Kraipak v. UOI AIR 1970 SC 150 and Olga Tellis v. Bombay Municipal Corpn. (1985) Suppl. 2 SCR 51.)