Section 269UI — Powers of the Appropriate Authority

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

Section 269UI — Powers of the 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: Confers on the appropriate authority, for the purposes of the Chapter, all the powers that an income-tax authority of the rank of Principal Chief Commissioner / Chief Commissioner / Principal Commissioner / Commissioner has under section 131 (discovery, inspection, enforcing attendance, compelling production of evidence, etc.).

Litigation profile: Machinery/powers provision; no significant independent merits litigation.

A. COMMENTARY

Borrowed investigative powers

Section 269UI equips the appropriate authority with the section 131 powers of a senior income-tax authority — the powers of a civil court in respect of discovery and inspection, enforcing the attendance of persons and examining them on oath, compelling the production of books and documents, and issuing commissions. These are the investigative tools the authority needs to find the true facts about a transaction's value before deciding whether to pre-empt.

Why the section is needed

The pre-emptive-purchase decision is fact-intensive and time-bound; without compulsory powers to gather evidence of comparable sales, the real relationship of the parties, and the true terms of the bargain, the authority could not discharge its function within the statutory window. Section 269UI supplies that machinery by reference, rather than re-enacting it.

Candour

The section is purely empowering and has generated no separate body of merits law. Its exercise is disciplined by the same natural-justice requirements the Supreme Court read into the Chapter in C.B. Gautam — powers of enquiry must be used fairly and the material gathered put to the party before it is used against him.

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.

Powers of the appropriate authority.

269UI. The appropriate authority shall have, for the purposes of this Chapter, all the powers that a Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income-tax has for the purposes of this Act under section 131.

C. AUTHORITIES

Candour rule: section 269UI is an empowering provision with no direct authority; the decision below supplies the fairness discipline that governs the exercise of its powers.

Fairness in the exercise of enquiry powers

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.)