9911796707
TMI Blog1988 (5) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... : "All that piece and parcel of land together with the house, ground and premises thereon including all trees, shrubs, waters, water courses, drains, all structures and fixtures walls on all sides including the compound wall with all the electric installations light, bulbs, shades, fans, pumps and motors and all the rights by way or air light ways, easements, advantages and appurtenances to the same forming premises No. 20 (No. 7). Lake First Cross Street, Nungambakkam, Madras 34 bounded on the north by N. Srinivasa Rao's house, east by M. G. Balu's house, sough by the aforesaid street and west by T. Manivanna Iyengar's house with an extent of 2383 square feet and comprised in resurvey No. 590/5 in Nungambakkam village, Collector's certificate No. 6890 situate in the municipal division No. 55 and situated within registration district of Madras South and registration sub-district of.... " Schedule-B in Document No. 869 of 1982 read as under : "Undivided half share in the land in the Schedule-A property and the first floor building thereon. In witness whereof the above named vendor has set her hand and signature on the day, month and year first above written." Schedule-B in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the transferee has placed stress on the fact that the present was a case where the "apparent consideration" was less that Rs. 5 lakhs in respect of which proceedings had been initiated by the issue of notice under sec. 269D and, therefore, such proceedings were to be dropped and the Competent Authority was precluded from passing the order of acquisition dt. 29-1-1988. 5. Inasmuch as, the objection raised based on the Circular of the Board went to the very root of the matter, we adjourned the case so that the learned Departmental Representative could have time to take necessary instructions. Before we go to the arguments of the parties, it is necessary to briefly recount the background of this case. 6. In the present case, originally an order of acquisition had been passed on 27-3-1985. This order was the subject of appeal to the Tribunal and the matter was decided by the order of the Tribunal in IT (Acq.) A. No. 4/85, dated 30th October, 1985. The said order forms Annexure-A to this order because the full facts have been set out therein. At this stage we would point out that the date of the acquisition order as mentioned in the first paragraph of the order of the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority to re-do the case in accordance with and in the true spirit of the directions of the Tribunal contained in the earlier order of the Tribunal dated 30-10-1985. The present order passed by the Competent Authority is a sequel to this. 7. From the facts set out aforesaid, it is clear that when the Competent Authority passed the original order on 27-3-1985, the Circular of the 16th May, 1986 had not been issued and even the Finance Bill of 1986 had not been introduced. It was by this Bill that the provisions of sec. 269RR were introduced by which the chapter relating to acquisition proceedings (Chapter XX-A), it was stated, would not apply to transfer of immovable property made after 30-9-1986. When the Tribunal decided the matter on 30-10-1985 also neither the Finance Bill of 1986 had been introduced nor had the Board's Circular been issued. When the Competent Authority passed the order for the second time on 31-3-1986, still the Circular of the Board of 16th May, 1986 had not been issued and the Finance Act of 1986 had not yet received the assent of the President. By the time the Tribunal came to decide the appeal for the second time on 29-7-1986, the Circular of the Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evision by the Commissioner against orders prejudicial to the interest of Revenue passed by the Income-tax Officer under revision by the Commissioner against orders prejudicial to the interests of Revenue passed by the Income-tax Officer under the Act of 1922 when there was no saving clause like that in the Act of 1961 [sec, 263(3)] that the period of limitation would not apply to orders passed to give effect to the findings of the Tribunal, etc., to make a fresh order. The decision of the Supreme Court was that the time limits applied only where the Commissioner suo motu initiated action for revision and not to those cases where orders were passed to give effect to appellate decisions because any contrary interpretation would not advance the case of justice. According to the Supreme Court, what was set out in sec. 263(3) was only declaratory of the position as it always stood. The Supreme Court hale that the consequential order which would be passed by the Commissioner would not be barred by limitation not because on setting aside of the Commissioner's order by the Tribunal the date of the original order of the CIT stood restored as the crucial date but because the interpretation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be re-done, or 31-3-1986 which was the date of the second order because such order also stood set aside to be re-done by the orders of the Tribunal referred to. 12. This brings us to the second argument of the learned Departmental Representative. The learned Departmental Representative submitted that there is a difference between an acquisition proceeding which is pending after initiation by issue of notice under sec. 269D and prior to the passing of the acquisition order for the first time, and an acquisition proceeding which is to be re-done in pursuance of an order of an appellate authority seeing aside the case to be re-done after holding that the initiation of proceeding was valid. This contention was posed by the learned counsel for the assessee who submitted that there was no difference. 13. In the present case, by the order of the Tribunal dated 30-10-1985, the Tribunal expressly upheld the validity of initiation of proceedings and the notice issued. The Tribunal thereafter set aside the findings of the Competent Authority and directed the Competent Authority after giving a full and fair opportunity of being heard to all parties concerned "to pass such orders as war ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstrument of transfer with the object of facilitating of reduction or evasion of he liability of the transferor or transferee to pay tax or pay tax or for concealing any income or asset. These provisions have not proved effective and generated a great deal of litigation and harassment. In view of the aforesaid, it is proposed to provide that no proceedings under section 269C of this Chapter shall be initiated in respect of the properties transferred after 30th September, 1986. As a consequential measure, section 276AA of the Act is proposed to be omitted. These amendments shall take effect from 1st October, 1986." Therefor, the provisions relating to acquisition in all cases become inapplicable for transfers after 30th September, 1986. The Central Board of Direct Taxes by its Circular dated 16th May, 1986, which bears repetition, stated as under : "Circular No. 455, dated 16th May, 1986. Subject : Acquisition of immovable properties under Chapter XXA of Income-tax Act, 1961 - Guidelines-Regarding. The Finance Bill, 1986, has proposed that no proceedings shall be initiated under section 269C of the Income-tax Act, 1961, in respect of a property transferred after the 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from such construction. It is now well settled as a result of two decisions of this court, one in Navnit Lal C. Javeri v. K. K. Sen, AAC [1965] 56 ITR 198 and the other that circulars issued by the CBDT under s. 119 of the Act are in Ellerman Lines Ltd. v. CIT [1971] 82 ITR 913 binding on all officers and persons employed in the execution of the Act even if they deviate from the provisions of the Act." The Supreme Court has categorically stated that the circulars issued by the Board are binding on all officers and persons employed in the execution of the Act even if they deviate from the provisions of the Act. Such is the law as laid down by the Supreme Court as far as the beneficial circulars are concerned. Adverting specifically to acquisition matters and circulars issued thereunder, the High Court of Karnataka in the case of B. M. Marappa v. IAC [1986] 160 ITR 642 (the circular was a different one than the one under consideration), observed us under : "Sri Srinivasan contends for affirming the acquisition without reference to the circular of the Board issued during the pendency of these appeals before this court. When the Tribunal and the Inspecting Assistant Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty has reason to believe that the apparent consideration was lower than the market value by specified percentages, etc. (See section 269C). The belief has to be bona fide one. The adequacy of the reasons of course may not be justiciable. This aspect has been dealt with elaborately in our original order dated 30th October, 1985. Therefore, proceedings in all cases where notice under sec. 269D had been validly issued have arisen because the Competent Authority had reason to believe that there was under-statement. When the Circular says that in such cases where the apparent consideration is less than Rs. 5 lakhs, the proceedings are to be dropped, it would apply to all cases where the final order has not yet been passed. It would not matter, that in some cases no investigation may have been done, and in some other cases investigations may have reached a point of finality short of passing the final order. In all matters, the Competent Authority has no option but to drop the proceedings, if the apparent consideration was less than Rs. 5 lakhs, if the Competent Authority has not passed his final order when the Circular of the Board came into effect. No distinction can be made between one ..... X X X X Extracts X X X X X X X X Extracts X X X X
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