CBDT circular bars acquisition proceedings where apparent consideration is below the prescribed threshold under Chapter XX-A.

Acquisition proceedings initiated under Chapter XX-A of the Income-tax Act were to be dropped where the apparent consideration of the immovable property fell below the limit prescribed in CBDT Circular No. 455 dated 16.05.1986. The circular directed that proceedings already initiated under section 269D be discontinued in such cases, and the position was supported by earlier binding precedent approved by the Supreme Court. As the property was sold for an apparent consideration below Rs. 5 lakhs, the notice initiating acquisition proceedings could not survive and was quashed.

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Issues: Whether proceedings for acquisition of immovable property initiated under Chapter XX-A of the Income-tax Act, 1961 were liable to be quashed in view of CBDT Circular No. 455 dated 16.05.1986 where the apparent consideration was below Rs. 5 lakhs.

Analysis: The property was sold for an apparent consideration of Rs. 1,25,000. CBDT Circular No. 455 provided that acquisition proceedings already initiated under section 269D were to be dropped where the apparent consideration of the immovable property was below Rs. 5 lakhs. The court also noted that the principle had already been accepted in earlier binding precedent and approved by the Supreme Court. Since the factual position brought the case within the circular, the notice initiating proceedings could not survive.

Conclusion: The acquisition proceedings were liable to be dropped and the notice under section 269D(1) was quashed in favour of the assessee.

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