1990 (8) TMI 180 - AT - Income Tax

Bonus Shares, Long-term Capital Assets, Market Value, Profit On Sale, Short-term Capital Gains

Summary

Issues Involved:
1. Timeliness of the appeal.
2. Service of the order under Section 269F(6) of the IT Act.
3. Fair market value determination by the Competent Authority.
4. Applicability of CBDT Circular No. 455 and Instruction No. 1793.

Detailed Analysis:

1. Timeliness of the Appeal:
The appeal was filed by the transferee on 20-6-1988, which was 521 days beyond the prescribed time limit. The transferee argued that the order was served on 20-5-1988, and the appeal was filed within 30 days. However, the Department contended that the order was served on 11-12-1986. The Tribunal held that the appeal was time-barred by 521 days as the order was indeed served on 11-12-1986.

2. Service of the Order under Section 269F(6) of the IT Act:
The transferee claimed that the order was not properly served as it was delivered to Pardeep Kumar, who was neither an employee nor authorized to receive the order. The Department argued that the order was sent by registered post to the proper address and received by Pardeep Kumar, thus presuming proper service under Section 27 of the General Clauses Act. The Tribunal concluded that the presumption of proper service was not rebutted by the transferee's evidence, which included affidavits from Brij Mohan Singh and a letter from the Dy. CIT(A). The Tribunal relied on the Calcutta High Court decision in CIT v. Malchand Surana, which held that service is presumed even if the notice was delivered to an unauthorized person.

3. Fair Market Value Determination by the Competent Authority:
The Competent Authority determined the fair market value of the property at Rs. 13,45,800 based on the Valuation Officer's report. The transferee challenged this valuation but did not make any submissions on this ground during the hearing. The Tribunal noted that the issue was not pressed during the appeal.

4. Applicability of CBDT Circular No. 455 and Instruction No. 1793:
The transferee argued that the acquisition proceedings should be dropped based on CBDT Circular No. 455, which was modified by Instruction No. 1793, raising the threshold from Rs. 5 lakhs to Rs. 10 lakhs. The Tribunal noted that Circular No. 455 was inapplicable as the apparent consideration was Rs. 9 lakhs. Instruction No. 1793, effective from 11-8-1988, could not be applied retrospectively to the order passed on 2-12-1986. The Tribunal held that the benefit of the instruction could not be extended to the transferee.

Conclusion:
The Tribunal dismissed the appeal as time-barred and found no merit in the submissions regarding the service of the order and the applicability of the CBDT circular and instruction.