The correct passive form of the given sentence is It is proposed to build a dam for irrigation purposes.

The active voice of the sentence is They propose to build a dam for irrigation purposes. This sentence is in the simple present tense, which is used to describe an action that is happening now or that is happening repeatedly. The passive voice of the sentence is formed by putting the subject of the active sentence after the verb "to be" and the past participle of the main verb. In this case, the subject of the active sentence is "they" and the main verb is "propose." The past participle of "propose" is "proposed." So, the passive form of the sentence is It is proposed to build a dam for irrigation purposes.

The other options are incorrect because:

• Build a dam for irrigation purposes. is in the imperative mood, which is used to give commands or make requests.
• For the irrigation purposes a dam has been built. is in the active voice, not the passive voice.
• Irrigation dam is built. is in the simple present tense, while the original sentence is in the simple present tense.
• They propose to build a dam for irrigation purposes. is the active voice of the original sentence, not the passive voice.