1985 (3) TMI 313 - HC - Income Tax

Summary

Issues:
1. Validity of jurisdiction based on the timing of notice issuance.
2. Obligation to follow circular instructions issued by the Board.
3. Legality of fair market value determination by the Tribunal and the Inspecting Assistant Commissioner.

Issue 1: Validity of Jurisdiction

The case involved appeals against an order by the Income Tax Appellate Tribunal reversing the Inspecting Assistant Commissioner's order for property acquisition under Chapter XX-A of the Income-tax Act, 1961. The main contention was the timing of notice issuance under section 269D of the Act. The Tribunal allowed an additional ground challenging the jurisdiction of the Inspecting Assistant Commissioner due to premature notice issuance. The High Court, citing a previous case, held that allowing the additional ground was an error of law, invalidating the Tribunal's decision and upholding the Inspecting Assistant Commissioner's order.

Issue 2: Obligation to Follow Circular Instructions

The parties disputed whether authorities under the Act were bound by circular instructions issued by the Central Board of Direct Taxes after the enactment of the Voluntary Disclosure of Income and Wealth Act, 1976. The circular specified conditions under which acquisition proceedings could be dropped. The High Court acknowledged the binding nature of the circular on all authorities under the Act. Considering the pending applications under the 1976 Act, the court set aside previous orders and directed the Inspecting Assistant Commissioner to await the Commissioner's decision before proceeding with the acquisition process.

Issue 3: Legality of Fair Market Value Determination

Regarding the determination of fair market value, the High Court emphasized the need to consider the Commissioner's decision and the applicability of the 1976 Act. The court held that any determination of fair market value should align with established principles. Consequently, the High Court set aside the findings of the Tribunal and the Inspecting Assistant Commissioner on this matter. The court allowed the appeals, remitted the cases to the Inspecting Assistant Commissioner, and directed a reassessment based on the Commissioner's decision and relevant legal provisions.

In conclusion, the High Court addressed the issues of jurisdiction, compliance with circular instructions, and fair market value determination in a meticulous manner, ensuring that the legal principles and procedural requirements under the Income-tax Act were upheld.