COMMISSIONER OF INCOME-TAX Vs. UNITED FARMS

JUDGEMENT

(1.) THE Commissioner of Income-tax, Patiala, has filed this appeal under Section 269h of the Income-tax Act, 1961 (hereinafter referred 'to as "the Act"), against the order of the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh, dated November 26, 1987, whereby the appeal filed by the transferee against the acquisition order passed by the competent authority has been set aside.

(2.) TWO transferors, namely, Rupinder Kaur, wife of Gurbir Inder Singh, and Gurbir Inder Singh son of Suchet Singh, sold their agricultural land measuring 86 kanals 6 marlas situated at Village Sultanpur and a farm house thereon along with fruit trees to United Farms, Village Sultanpur, Tehsil Kharar, for a consideration of Rs. 5 lakhs. The Inspecting Assistant Commissioner of Income-tax, Acquisition Range, Ludhiana (hereinafter referred to as "the competent authority"), after issuing notice to the transferors and the transferee initiated the proceedings for acquiring the land under Chapter XX-A of the Act. Several objections were raised by the transferee against the acquisition of the property. One of the pleas taken was that the Central Board of Direct Taxes had issued Circular No. 455 (see [1986] 159 ITR (St.) 105), dated May 16, 1986, whereby it was directed that with a view to achieve early finalisation of the proceedings under the existing Chapter XX-A of the Act, the Board had decided that with effect from April 1, 1986, the acquisition proceedings under Section 269c will not be initiated in respect of any immovable property for which the apparent consideration was Rs. 5 lakhs or less and that where the acquisition proceedings have been initiated by issue of notice under Section 269d, the proceedings will be dropped if the apparent consideration of the immovable property is below Rs. 5 lakhs. The other submission was that since there were two transferors in this case, the apparent consideration in the case of portion of each of the transferors would be less than Rs. 5 lakhs and, therefore, the competent authority was not justified in initiating the acquisition proceedings under Section 269c of the Act and ordering acquisition of the property. The plea of the transferee was not accepted by the competent authority. It was held that the market value of the property was assessed at Rs. 10,98,900 as against the apparent consideration of Rs. 5 lakhs which pointed out a difference of 120 per cent. which was much in excess of 25 per cent. of difference between the apparent consideration of the market value. Taking that to be a conclusive proof that the apparent consideration for transfer as agreed to between the parties had not been truly stated in the instrument of transfer, the property was ordered to be acquired.

(3.) In this case, admittedly, the apparent consideration was Rs. 5 lakhs. Proceedings for acquisition of the property were to be dropped if the apparent consideration was less than Rs. 5 lakhs. The circular issued by the Board is binding on the Department. The contention of the Revenue that the circular issued by the Board would not apply to the properties regarding which acquisition proceedings had already been initiated, cannot be accepted in view of the judgment of this court in CIT v. Export India Corporation (P.) Ltd. [1996] 219 ITR 461. It was held that the Board did not mean to limit the applicability of the circular to the proceedings pending at the initial stage only. The word "proceedings" occurring in the circular was not qualified by the word "initial" and, therefore, the word "proceedings", shall include the proceedings at the appeal stage as well. The circular did not use any expression limiting its applicability with reference to any date of transfer of the property. No proceedings were to be initiated after the date of issuance of the circular and if any proceedings had been initiated by issue of notice under Section 269d, the same were to be dropped, if the apparent consideration of the immovable property was below Rs. 5 lakhs. Following the dictum of this court in CIT v. Export India Corporation (P.) Ltd. [19961 219 ITR 461, it is held that in view of Circular No. 455 (see [1986] 159 ITR (St.) 105), dated May 16, 1986, issued by the Board, acquisition proceedings against the assessee are liable to be dropped.