Ashok Bhan, J.
1. The Commissioner of Income-tax, Haryana, Rohtak, has directed this appeal under Section 269H of the Income-tax Act, 1961, against the order passed by the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh, whereby the appeal filed by the transferee against the acquisition order passed by the Competent Authority, Rohtak, on March 51, 1979, has been set aside.
2. In pursuance of an agreement of sale dated March 25, 1975, Raja Mechanical Company Private Limited, Sadar Bazar, Delhi, transferor (hereinafter referred to as 'the transferor') transferred its free-hold property, namely, a factory shed and land comprising 5,990 square yards situate on Gurgaon-Delhi Road in Village Dudi Khera, Tehsil and District Gurgaon, to Export India Corporation (P.) Limited, New Delhi, transferee (hereinafter referred to as 'the transferee'), for a sum of Rs. 1,90,000 bya registered instrument of sale dated May 8/9, 1975. On receipt of information regarding the sale transaction, the matter of determination of the fair market value of the property was referred by the Inspecting Assistant Commissioner (Acquisition) (hereinafter referred to as 'the Competent Authority') to the Valuation Officer, under Section 269L of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). The Valuation Officer made his report to the competent authority on November 10, 1975. According to this report, the fair market value of the transferred property was Rs. 3,32,800 against the apparent consideration recorded in the instrument of transfer, namely, Rs. 1,90,000. In view of the difference between the fair market value as returned by the Valuation Officer and the apparent consideration being more than 15 per cent. than the apparent consideration recorded in the instrument of transfer, the competent authority recorded its reasons under Section 269C of the Act on November 22, 1975, and initiated proceedings under Section 269D of the Act, by publishing the notice in the Official Gazette dated December 13, 1975.
3. Both the transferor and the transferee were served with these notices, as required by law, on January 15, 1976. They appeared before the competent authority and submitted their objections to the initiation of the proceedings. These objections were supported by three reports submitted from time to time by the transferor and the transferee. The first report was from N.K. Jain and Associates, Architects, Engineers and Town Planners, New Delhi, approved valuer, dated April 19, 1978, according to which the fair market value of the transferred property was determined at Rs. 1,90,250. Later on, another report was submitted of another approved valuer, Shri T.R. Takulia, dated June 24, 1978, according to which the market value was fixed at Rs. 1,66,000 by land and building method and Rs. 1,63,000 by rent capitalisation method. Later on, a third report was submitted by Shri T.R. Takulia direct to the competent authority, according to which the market value of the subject-matter of the sale was determined at Rs. 1,66,000.
4. After detailed inquiry into the matter, the competent authority moved the Commissioner of Income-tax for approval of the proposed acquisition on March 28, 1979, and after getting the approval of the Commissioner on March 30, 1979, the acquisition order was duly passed by the competent authority on March 31, 1979, under Section 269F(6) of the Act.
5. The transferor and the transferee, being aggrieved by the order of the competent authority, filed separate appeals. So far as the appeal of the transferor was concerned, the same was found by the Income-taxAppellate Tribunal (hereinafter referred to as 'the Tribunal') to be barred by time and it was dismissed as such. So far as the appeal of the transferee was concerned, the same was accepted by the Tribunal by its impugned order dated October 30, 1979.
6. Before the Tribunal, the transferee filed two paper books during the pendency of the appeal. The first one was presented on August 28, 1979, containing 57 pages and the second one is dated September 22, 1979, which was in continuation of the earlier paper book, containing pages No. 58 to 96. The Tribunal has recorded that there was no objection from the Revenue with regard to the paper books filed by the transferee. The Tribunal held that there was no proper commencement of the proceedings under Section 269C of the Act as the material before the competent authority was not enough to hold that the fair market value of the property exceeded the apparent consideration recorded in the instrument of transfer by more than a margin of statutory percentage. The Tribunal discarded the report submitted by the Valuation Officer raid relied upon the reports submitted by the registered valuers employed by the transferee. The Tribunal also relied upon the papers given by way of two additional paper books. The Tribunal further held that the competent authority should have obtained the approval from the Commissioner of the acquisition order, passed by it and not merely a proposal sent by the competent authority to the Commissioner for acquisition of the property ; that the competent authority should have sent along with the approval its draft order to the Commissioner. It was also found by the Tribunal that the approval given by the Commissioner was mechanical and without application of mind to the facts and circumstances of the case.
7. We have heard counsel for the parties at length.
8. Under Section 269F of the Act, the competent authority has to fix the day and place for hearing the objections filed by the interested persons under Section 269E of the Act against the acquisition. Every person to . whom a notice is given has the right to be heard at the hearing of objections. If after hearing the objections, if any, and after taking into account all the relevant material on the record, the competent authority is satisfied that the immovable property to which the proceedings relate is of a fair market value exceeding twenty-five thousand rupees, the fair market value of such property exceeds the apparent consideration therefor by more than 15 per cent. of such apparent consideration and the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with such object as is referred to inClause (a) or Clause (b) of Sub-section (1) of Section 269C, then 'he may, after obtaining the approval of the Commissioner, make an order for the acquisition of the property under this chapter'. The competent authority sent a proposal to the Commissioner for acquisition of the property. Along with the proposal, the competent authority sent a copy of the Valuation Officer's report. After considering the letter of proposal and the report of the Valuation Officer, the Commissioner recorded his approval on March 30, 1979, and thereafter the competent authority passed its order under Section 269F(6) of the Act on March 31, 1979. The Tribunal concluded that the competent authority should have sent the draft order of acquisition along with the proposal and since, it was not sent, the approval given by the Commissioner was vitiated and bad in law. Further, it was found that the Commissioner has recorded his approval mechanically and without application of mind, as he had not taken into consideration the three valuation reports of the registered valuers.
9. In our view, the Tribunal has erred in recording the finding that in the absence of the proposed order of acquisition, the approval granted by the Commissioner of Income-tax is no approval in the eyes of law or would be deemed to be a mechanical approval without application of mind. Under Section 269F(G) of the Act, the competent authority, after hearing the objections and after satisfying itself that the immovable property to which the proceedings relate is of a fair market value exceeding twenty-five thousand rupees, the fair market value of such property exceeds the apparent consideration therefor by more than 15 per cent. of such apparent consideration and the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with such object as is referred to in Clause (a) or Clause (b) of Sub-section (1) of Section 269C, may, after obtaining the approval of the Commissioner, make an order of the acquisition under Chapter XX-A of the Act.
10. We have gone through the proposal sent by the competent authority, which is a detailed report highlighting all the aspects of the case. The proposal was accompanied by the report of the Valuation Officer. The Commissioner of Income-tax gave his approval to the proposal after going through the material placed before him. It is not provided in the Act that the approval has to be given to the proposed order of acquisition. The competent authority has to send its proposal to the Commissioner of Income-tax, who has to apply his mind to the proposal along with the material placed before him. If the Commissioner approves the same, thenthe competent authority can make an order for acquisition of the property. The order is not to precede the approval but to succeed after obtaining the approval. The approval is not to be given mechanically but it does not mean that the Commissioner has to record his reasons for giving approval or after hearing either the parties or their counsel. In a given case, the Commissioner of Income-tax, if he so chooses, may ask for further report from the competent authority or hear the parties to satisfy himself regarding the proposal sent by the competent authority. It is not enjoined by the statute that the Commissioner has to either give personal hearing to counsel for the parties or the parties themselves before granting his approval. The approval by the Commissioner has to be after application of mind as stated above, but all the same, it partakes the nature of an administrative action provided to ensure that the competent authority does not act ,in an arbitrary manner. This view of ours is reinforced by the fact that against the order passed by the competent authority, an appeal is provided before the Tribunal and thereafter a second appeal before the High Court, which is to be heard by not less than two judges on a question of law. The Commissioner is not to grant the approval mechanically but has to apply his mind to all the circumstances as established before the competent authority from the material and the evidence gathered, yet the Commissioner is not required to pass a reasoned order like a judicial order after hearing the parties.
11. Further, we do not agree with the findings recorded by the Tribunal that sufficient material was not there before the competent authority to form its prima facie opinion that the fair market value of the property in question exceeded the apparent consideration by more than 15 per cent. Under Section 269C, the competent authority has to form a prima facie opinion only, which is subject to the objections filed by interested persons as the final opinion is to be formed by the competent authority under Section 269F, after hearing the objections. We find from the record that there was sufficient material before the competent authority to form a prima facie opinion for the purposes of Section 269C. The report submitted by the Valuation Officer was a detailed one dealing with the land area and the superstructures standing on the land and their approximate value. It is true that there was no other material except the report of the Valuation Officer before the competent authority while forming opinion under Section 269C but it does not mean that the opinion could not be formed on the basis of the report of the Valuation Officer alone, that is a piece of evidence, which can be taken into consideration. It would depend in each case on the quality of the report submitted by the ValuationOfficer. The prima facie opinion formed under Section 269C is in the nature of a preliminary inquiry, which would be subject to the objections filed by the interested persons. So, it is held that there was sufficient material before the competent authority to form a prima facie opinion under Section 269C regarding the fair market value.
12. While recording the findings regarding the fair market value, the Tribunal relied upon various aspects, like, the three reports submitted by the registered valuers, the shape of the plot being irregular, the distance from the property to the nearest recognised school, hospital, shopping centre and railway station being 8. km., the construction on the plot being temporary, frontage of the factory building being very small and irregular, losses suffered by the transferor and the sale being a distress sale and various other factors which have been discussed in detail. The Tribunal also took into consideration various sale transactions which had taken place around the date of sale in that locality. It was determined that the land in 1977 was valued at Rs. 6 per square yard and the competent authority had erred in accepting the Valuation Officer's report that the land was valued at Rs. 10 per square yard. The findings recorded by the Tribunal regarding the fair market value at the relevant date are findings of fact which cannot be interfered with in the second appeal by the High Court as the appeal lies to the High Court under Section 2G9H of the Act on a question of law only. Counsel appearing for the Commissioner of Income-tax failed to show that the findings recorded by the Tribunal were perverse which call for an interference in the second appeal. All aspects and every piece of evidence have been taken into consideration by the Tribunal. If we interfere with the findings of fact recorded by the Tribunal in this case, it would amount to choosing one view against the other on the matter of valuation on reappreciation of evidence.
13. Counsel appearing for the Commissioner of Income-tax then contended that the Tribunal had taken into consideration voluminous fresh material produced in appeal before it in two stages ; firstly, on August 28, 1979, and then on September 22, 1979, containing nearly 100 pages ; that the Tribunal should not have taken the fresh material on record as totally new pleas were raised by the transferee regarding the sale being in the nature of distress sale and heavy losses suffered by the transferor resulting in the sale transaction ; that the Tribunal erred in basing its judgment largely on these new facts without allowing opportunity to the Department to investigate the matter afresh and that the Tribunal should have remanded the case back to the competent authority to reinvestigate the facts stated in the fresh material.
14. We find no force in this submission. The Tribunal, in its order, has recorded that the Revenue did not object to the placing on record of the fresh material by the transferee by filing two paper books ; one on August 28, 1979, containing 57 pages and the second dated September 22, 1979, in continuation of the earlier paper book, containing pages Nos. 58 to 96. In the grounds of appeal, it has not been stated that the finding recorded by the Tribunal that the Revenue did not raise any objection to the placing on record of the fresh material, was wrong. Once the Revenue chose not to oppose the placing on record of the additional material before the Tribunal, it cannot be permitted to raise that point in the second appeal. Either the Revenue should have insisted on remand of the case or should have placed its material as a counter to the fresh material placed on record by the transferee. In these circumstances, the Revenue cannot be allowed to contest this point at this stage.
15. Accordingly, on the facts, the order of the Tribunal is upheld and it is held that the competent authority did not determine the fair market value properly, keeping in view the facts and circumstances of the case. As regards the conditions provided under Clauses (a) and (b) of Sub-section (1) of Section 269C of the Act, the findings recorded by the Tribunal are correct. It is held that the consideration for transfer as agreed to between the parties has been truly stated and there was no intention on the part of the transferor or the transferee to either reduce or evade the liability to pay the taxes or conceal any income. We have set aside the order of the Tribunal on the interpretation put on Section 269F(6) of the Act with regard to the approval given by the Commissioner. It is held that the Commissioner had given his approval in accordance with law and in terms of Section 269F(6) and thereafter the competent authority passed the order.
16. Counsel appearing for the transferee raised another point that during the pendency of proceedings in the High Court, Chapter XX-A of the Act was made inapplicable in relation to transfer of any immovable property after September 30, 1986, and a new Chapter XX-C was introduced in the Act by the Finance Act, 1986, with effect from October 1, 1986. Section 266RR provides that Chapter XX-A will not apply in relation to the transfer of any immovable property after September 30, 1986. The Central Board of Direct Taxes issued Circular No. 455 (see : [1986]159ITR105(Cal) ) dated May 16, 1986, which stated that with effect from April 1, 1986, the acquisition proceedings will not be initiated under Section 269C in respect of an immovable property if the apparent consideration is Rs. 5 lakhs or less, and where acquisition proceedings have been initiated by issue of notice under Section 269D, the proceedings will be dropped if the apparentconsideration of the immovable property is below Rs. 5 lakhs, Circular No. 455 (see : [1986]159ITR105(Cal) ), dated May 16, 1986, is reproduced below :
' Circular No. 455, dated May 16, 1986.
Subject : Acquisition of immovable properties under Chapter XX-A 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 30th day of September, 1986. The Bill also proposes to insert Chapter XX-C providing for purchase by the Central Government of immovable properties in certain cases of transfer.
With a view to achieve early finalisation of proceedings under the existing Chapter XX-A of the Income-tax Act, 1961, the Board has decided that with effect from April 1, 1986, acquisition proceedings under Section 269C will not be initiated in respect of an immovable property for which the apparent consideration is Rs. 5 lakhs or less and that where 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.'
17. To appreciate the contention raised, it is necessary to state that the proceedings under Chapter XX-A of the Act were initiated against the transferor and the transferee by issuing a notice under Section 269D. The competent authority after hearing the objections filed by the transferee passed an order dated March 31, 1979, acquiring the property under Chapter XX-A of the Act. The assessee filed an appeal against the order of the competent authority before the Tribunal which was accepted by the Tribunal on October 30, 1979, against which the present appeal has been filed by the Commissioner of Income-tax, Haryana. During the pendency of the appeal, Chapter XX-C was introduced in the Act by the Finance Act, 1986, with effect from October 1, 1986. The President of India gave his assent to the Finance Act, 1986, on May 13, 1986, and the Central Board of Direct Taxes issued Circular No. 455 (see : [1986]159ITR105(Cal) ) on May 16, 1986, reproduced above. It was decided by the Central Board of Direct Taxes 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 question which falls for consideration is whether only those proceedings which are pending before the competent authority are to bedropped or the proceedings pending at any stage in appeal before the Tribunal or the second appeal before the High Court are also to be dropped in view of Circular No. 455 (see : [1986]159ITR105(Cal) ), reproduced above.
18. Counsel appearing for the Commissioner of Income-tax relied upon the decision of a Full Bench of the Kerala High Court in CIT v. Mathew M. Thomas : [1993]201ITR494(Ker) to contend that the circular was applicable to the proceedings which were pending at the initial stage before the competent authority only and not to the proceedings pending in appeal. In Mathew M. Thomas' case : [1993]201ITR494(Ker) it was held that the acquisition proceedings before the competent authority were long over and the circular contemplated dropping only those proceedings which were pending before the competent authority after their initiation in pursuance of the notice under Section 269D and not the proceedings which were pending at the appeal stage. Apart from these observations by the Bench, there is not much of discussion on the point in issue. Against Mathew M. Thomas' case : [1993]201ITR494(Ker) Special Leave Petition (Civil) No. 724 of 1993 (refer to [1993] 201 ITR 43), has been granted by their Lordships of the Supreme Court.
19. As against this, counsel appearing for the transferee placed reliance upon CIT v. Rattan Chand Sood : [1987]166ITR497(Delhi) and CIT v. Smt. Asha Devi Agarwal : [1988]169ITR400(Cal) to contend that the circular would be applicable to the proceedings pending at any stage including appeal in the High Court. In Rattan Chand Sood's case : [1987]166ITR497(Delhi) it was held by the Delhi High Court that the proceedings initiated in pursuance of the notice issued under Section 269D were subsisting in appeal and the same were liable to be dropped in view of Circular No. 455 (see : [1986]159ITR105(Cal) ) as the apparent consideration did not exceed Rs. 5 lakhs. It was held that although the competent authority had finalised the proceedings but the same were subject to the orders in appeal before the Tribunal and further appeal to the High Court.
20. In Asha Devi Agarwal's case : [1988]169ITR400(Cal) the Calcutta High Court took the same view as the Delhi High Court had taken in Rattan Chand Sood's case : [1987]166ITR497(Delhi) as Rattan Chand Sood's case : [1987]166ITR497(Delhi) was not cited before their Lordships to hold that the circular was applicable to the proceedings at the initial stage only. It was held that the circular would be applicable to the proceedings pending at the appeal stage as well. There is not much of detailed discussion on the point in issue either in the view taken by the Kerala High Court in Mathew M.Thomas' case : [1993]201ITR494(Ker) ; by the Calcutta High Court in Asha Devi Agarwal's case : [1988]169ITR400(Cal) and by the Delhi High Court in Rattan Chand Sood's case : [1987]166ITR497(Delhi) .
21. It would be useful to refer to the legislative background leading to the introduction of Chapter XX-A and thereafter of Chapter XX-C in the Act. By a legislation dated March 2, 1970, a committee of experts was constituted by the Government of India to suggest means for tackling the problems of black money, tax evasion and tax arrears. The committee was Direct Taxes Enquiry Committee, popularly known as Wanchoo Committee. The Committee submitted its interim report in the end of 1970 to the Government, recommending certain immediate measures for unearthing black money and countering tax evasion. The Government introduced the Taxation Laws (Amendment) Bill, 1971, to implement these recommendations of the Wanchoo Committee by inserting Chapter XX-A in the Act. One of the objects of the Bill, as per the Statement of Objects and Reasons appended to the Bill, was to counter evasion of tax through understatement of the value of immovable property in the sale deeds. The provisions of this Chapter empowered the Central Government to acquire any immovable property having a fair market value exceeding Rs. 25,000 in cases were the consideration declared in the instrument of transfer is less than the fair market value of the property on the date of execution of the instrument of transfer. This power was available only in cases where there were reasons to believe that the consideration agreed to between the parties has not been truly stated with a view to facilitate tax evasion by the transferor or the transferee. Proceedings could be initiated only if the fair market value exceeded the declared consideration by more than 15 per cent. of such consideration. The power to initiate proceedings for acquisition was vested in the Assistant Commissioners of Income-tax, referred to as the competent authority. The competent authority could initiate the proceedings by publication of the notice in the Official Gazette and serving the same on the transferor, transferee, person in occupation of the property and every person whom the competent authority knew to be interested in the property by affixing a copy of the notice in his office and in a conspicuous place in the locality in which the immovable property to which it relates is situate. Persons interested could file their objections under Section 269E of the Act. The competent authority, after hearing the objections, could pass an order of acquisition after obtaining the approval of the Commissioner of Income-tax. The order passed by the competent authority shall be subject to appeal before the Tribunal and second appeal to the High Court on a question of law. Where any property is acquiredunder this Chapter, the Central Government shall have to pay compensation in an amount equal to the consideration stated in the instrument of transfer plus 15 per cent. of such consideration. After the acquisition proceedings are over, under Section 269I of the Act, property vests in the Central Government and the competent authority shall authorise any person to take possession of the immovable property.
22. Evidently, the provisions of Chapter XX-A of the Act did not prove to be effective. In the Finance Bill of 1986, which ultimately resulted in the deletion of Chapter XX-A and the introduction of Chapter XX-C in the Act, it was proposed that no proceedings under Section 269C of the Act shall be initiated in respect of the property transferred after September 30, 1986. New Chapter XX-C was introduced. This Chapter contains Sections 269U to 269UO. The provisions of the new Chapter XX-C were to come into force on such date as the Central Government may, by notification in the Official Gazette, appoint and different dates may be appointed for different areas. The basic difference between Chapters XX-A and XX-C is that under Chapter XX-A, the Central Government had the power to acquire and possess any property whereas under the new. Chapter XX-C, transfer of any immovable property of a value exceeding Rs. 5 lakhs, or as may be prescribed, was prohibited except after entering into an agreement for transfer between the transferor and the transferee at least three months before the intended date of transfer. The agreement shall be reduced into writing in the form of a statement by each of the parties to such transfer. Such statement should be in a prescribed manner and should contain such particulars as may be prescribed. The statement shall be furnished to the appropriate authority constituted by the Central Government under the new Chapter, within such time as may be prescribed. Section 269UD of the Act provides that the appropriate authority after the receipt of the statement in respect of any immovable property, may, for reasons to be recorded in writing, make orders for the purchase by the Central Government of such immovable property at an amount equal to the amount of apparent consideration. Such order has to be made within a period of two months from the end of the month in which the statement in respect of such immovable property is received by the appropriate authority. The provisions of Chapter XX-C, thus, were in the nature of pre-emptive purchase by the Central Government to the proposed sale. The basic purpose of both Chapters XX-A and XX-C remained the same that is to eradicate and free the society from the menace of unaccounted money and avoidance to pay due taxes by the taxpayers.
23. The then Finance Minister, while introducing the Finance Bill of 1986, spelt out the Long-term Fiscal Policy of the Central Government, deleting Chapter XX-A and introducing the proposed Chapter XX-C, stated in Parliament as under :
'Compulsory acquisition provisions have not proved effective,--As a measure for countering evasion, the Income-tax Act at present contains a provision empowering the Government to acquire an immovable property on its sale or transfer if the consideration recorded in the transfer deed is found to be less than its estimated fair market value by more than a specified margin. These provisions have not proved to be effective and have generated a great deal of litigation and harassment. It is essential to find ways in which taxpayers would be induced to disclose the true values of their properties.
Proposed right to pre-empt in cases of understatement.--One way of tackling this problem is to confer on the Government a pre-emptive right to acquire any immovable property undergoing a transfer for consideration at a value 15 per cent. above the price or consideration stated in the transfer deed. The scope of such a provision may be limited initially to the metropolitan towns and also properties worth more than Rs. 10 lakhs. To be fair the selection will have to be based on a system of random sampling. Furthermore, the Government will be required to make full payment for any property it notifies for acquisition within 30 days of such notification. To reduce undue uncertainty in property transactions the Government's pre-emptive right of purchase will automatically lapse after 60 days of the seller's applying for the clearance certificate from the Income-tax Department for any particular property sale.'
24. Chapter XX-A was applicable to the whole of the country and to properties exceeding Rs. 25,000 in value, whereas Chapter XX-C was initially made applicable to the metropolitan towns of Bombay, Delhi, Madras and Calcutta. Selection of properties to be acquired was to be made on the basis of random sampling. Section 269UC of Chapter XX-C provides that the properties the value of which exceeded Rs. 5 lakhs were to be covered under Chapter XX-C. The value of the properties which could be acquired was to be prescribed under the Rules. Rule 48K of the Income-tax Rules, 1962, provided that the properties with an apparent consideration exceeding Rs. 10 lakhs could be acquired under Chapter XX-C. The Finance Act, 1986, was given approval by the President of India on May 13, 1986, and the Circular No. 455 (see : [1986]159ITR105(Cal) ) was issued by the Central Board of Direct Taxes (hereinafter referred to as 'the Board') on May 16, 1986, i.e., within three days.
25. Chapter XX-C was made applicable to the properties the value of which exceeded Rs. 5 lakhs. The Board taking its cue that the properties under Chapter XX-C, apparent consideration of which exceeded Rs. 5 lakhs, could be acquired, and keeping in view the statement made by the Finance Minister of India, while introducing the Finance Bill of 1986 to the effect that the compulsory acquisition proceedings under Chapter XX-A did not prove effective and had generated a great deal of litigation and harassment, issued Circular No. 455 (see : [1986]159ITR105(Cal) ) dated May 16, 1986, with an objective of achieving early finalisation of the proceedings under the existing Chapter XX-A. In order to achieve this object, it was decided that: (i) no proceedings under Section 269C will be initiated from April 1, 1986, in respect of an immovable property for which the apparent consideration is Rs. 5 lakhs or less, and (ii) where the acquisition proceedings have been initiated by issue of notification under Section 269D, the same will be dropped if the apparent consideration of the immovable property is below Rs. 5 lakhs.
26. The circular did not use any expression limiting its applicability with reference to any date of transfer of property. It was decided that with effect from April 1, 1986, no acquisition proceedings be initiated under Section 269C. Regarding the proceedings which had already been initiated by issue of notification under Section 269D, the Board decided that the proceedings will be dropped if the apparent consideration of the immovable property is below Rs. 5 lakhs.
27. Laying stress on the word initiated by issue of notice under Section 269D, counsel appearing for the Revenue contended that the applicability of the circular was limited to the proceedings pending before the competent authority at the initial stage only and not to the proceedings which were pending at the appeal stage before the Tribunal/High Court.
28. There is not much force in this contention. In the circular, no words of limitation prescribing its applicability to the proceedings at the initial stage are there. In the negative, it does not provide that it would not apply to the cases pending at the appeal stage. Under Chapter XX-A, proceedings could only be initiated by issue of notice under Section 269D. Simply by using the words 'by issue of notice under Section 269D', the Board did not mean to limit the applicability of the circular to the proceedings pending at the initial stage only. Notice under Section 269D has to precede the proceedings whether pending at the initial stage before the competent authority or before the Tribunal/High Court.
29. Counsel for the Revenue raised another argument that if the Board meant that the circular would be applicable at the appeal stage also, then the Board would have used the word 'withdrawn' and not 'dropped' in the circular because the proceedings can be dropped by the competent authority at the initial stage and the same can be withdrawn and not dropped in appeal.
30. The dictionary meaning of the word 'dropped' in the English Chambers' Dictionary is 'to lapse'. So, the intention of the Board was inconsonance and in terms of the speech made by the Finance Minister on the floor of the House while introducing the Finance Act of 1986 that the experiment under Chapter XX-A having failed, which had resulted in litigation and harassment, the Board decided either not to initiate or to drop the proceedings which were pending where the apparent consideration of the immovable property was below Rs. 5 lakhs. The circular, thus, would be applicable to the proceedings at the initial stage as well as the proceedings which were pending before the Tribunal/High Court in appeal.
31. The word 'proceedings' occurring in the circular is not qualified by the word 'initial'. Therefore, the word 'proceedings' shall include the proceedings at the appeal stage as well. Their Lordships of the Supreme Court in Garikapati Veeraya v. N. Subbiah Choudhry, : [1957]1SCR488 held as under (page 553) :
'The legal pursuit of a remedy, suit, appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding. '
32. A similar view was expressed by this court in Karnail Singh v. Jabir Singh, and Amarjit Kaur v. Pritam Singh [1974] PLJ 406.
33. In Smt. Sudesh Khanna. v. IAC of I. T. a Division Bench of this court held that the order of acquisition of the property made under Sub-section (6) of Section 269F would become final only on acquiring finality as provided under Section 269I of the Act. It was held as under (headnote) :
'Held, that, under the Explanation to Section 269-I(1), the order for the acquisition of the property made under Sub-section (6) of Section 269F would become final if the order of the Appellate Tribunal is made the subject of an appeal to the High Court under Section 269H, only upon the confirmation of the order for acquisition by the High Court. The matter was, therefore, still pending when the Act of 1976 and the press notewhich announced concessions to the persons who made voluntary disclosures, came into force. The petitioner, acting on the press note, moved the Commissioner of Income-tax in time and deposited the tax due. The issuance by the Commissioner of Income-tax on March 22, 1976, of the certificate under Section 8(2) of Act No. 8 of 1976 shows the fulfilment by the petitioner of the conditions of the press note. The tax deposited in such circumstances cannot be refunded. If the position taken up by the Department is accepted, the petitioner will be subjected to double jeopardy,'
33. Thus, proceedings once initiated will continue to have the same character until and unless they acquire finality as provided under Section 269I of the Act. In the present case as well, the proceedings which had been initiated by issue of notice under Section 269D by publication in the Official Gazette in which the competent authority had passed the order under Section 269F(6) were continuing as the second appeal was pending in the High Court under Section 269H of the Act. The proceedings had not come to an end. The proceedings in appeal would be in continuation of the proceedings which had been initiated by the competent authority by issuing notice under Section 269D of the Act.
34. Section 119 of the Act empowers the Board to issue such orders, instructions and directions to other income-tax authorities as it may deem fit for proper administration of this Act and all authorities employed in the execution of this Act are duty-bound to observe and follow such orders, instructions and directions of the Board. Provided that no such orders, instructions or directions shall be issued : (a) so as to require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner, (b) so as to interfere with the discretion of the appellate authority in exercise of its appellate functions.
35. There cannot be two opinions that every officer and person employed in the execution of the Act shall observe and follow the orders, instructions and directions of the Board. The circulars issued by the Board would, thus, be generally binding on the authorities and other persons employed in the execution of the provisions of the Act and these authorities and officers shall follow those orders, instructions and directions issued by the Board. A benevolent circular, such as Circular No. 455 (see : [1986]159ITR105(Cal) ) dated May 16, 1986, would be binding on the authorities, provided that no proceedings be initiated, or if already initiated by issue of notice under Section 269D, the same be dropped in respect of an immovable property for which the apparent consideration is Rs. 5 lakhs or less.
36. Accordingly, it is held that Circular No. 455 (see : [1986]159ITR105(Cal) ), dated May 16, 1986, would be applicable to the proceedings pending at the appeal stage as well if the apparent consideration of the immovable property is below Rs. 5 lakhs. The proceedings under Chapter XX-A are liable to be dropped on this count as well.
37. For the reasons stated above, we find no merit in this appeal and the same is dismissed with no order as to costs.