1986 (12) TMI 69 - AT - Income Tax

Summary

Issues:
- Appeal against order of Competent Authority under s. 269F(6) of the IT Act, 1961 for property acquisition.

Analysis:
1. The property in question was jointly owned by three individuals with a 1/3rd share each. The total apparent consideration for the property was Rs. 6 lacs, with each transferor selling their share for Rs. 2 lacs. The transferees, totaling five individuals, received an aggregate apparent consideration of Rs. 1,20,000 each. The apparent consideration for each individual, whether transferor or transferee, was below Rs. 5 lacs. This fact was crucial in the subsequent legal proceedings.

2. The counsel for the transferees cited Circular No. 455 issued by the Central Board of Direct Taxes, stating that acquisition proceedings would not be initiated for properties with an apparent consideration of Rs. 5 lacs or less. The counsel argued that since the apparent consideration in this case was below Rs. 5 lacs, the transferees should benefit from the circular, and the Competent Authority's order should be quashed. The Departmental Representative contested this, stating that the circular applied only to proceedings before the Competent Authority and not the Tribunal.

3. The Tribunal referred to a similar case, Smt. Lal Devi vs. IAC, where it was held that appellate proceedings are a continuation of proceedings before the Competent Authority. The Tribunal affirmed that it had the authority to consider the circular of the Board in appeals. The Tribunal viewed the circular as beneficial and administrative, applicable to all pending proceedings, whether before the assessing authority or the appellate authority. Consequently, the Tribunal quashed the order of the Competent Authority based on the circular's provisions.

4. Given the precedent set in prior cases and the administrative nature of the circular, the Tribunal decided to cancel the order of the Competent Authority in the present case as well. The Tribunal emphasized that since the Competent Authority's order was quashed due to the circular, there was no need to delve into the merits of that order at that stage.

5. As a result of the Tribunal's decision to cancel the Competent Authority's order in light of the circular from the Central Board of Direct Taxes, all three appeals by the transferees were allowed, bringing the legal proceedings to a close without further examination of the original order's merits.