Pending acquisition proceedings under Chapter XX-A only: later circular could not reopen completed income-tax acquisition matters.

Circular No. 455 dated 16 May 1986 under Chapter XX-A of the Income-tax Act applied only to acquisition proceedings that were still pending before the competent authority. It directed non-initiation of section 269C proceedings, and dropping of section 269D notices, where the apparent consideration did not exceed the stated limit. Because the acquisition order and the appellate order had already been completed before the circular was issued, there was no pending proceeding to which the circular could attach. The circular was therefore held inapplicable on those facts, and the broader question of its binding force was left undecided.

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Issues: Whether Circular No. 455 dated 16 May 1986 applied to acquisition proceedings under Chapter XX-A of the Income-tax Act, 1961 that had already culminated in an order of the competent authority and an appellate order, and whether the question regarding the binding nature of the circular required adjudication.

Analysis: The circular directed that, from 1 April 1986, acquisition proceedings under section 269C would not be initiated where the apparent consideration was Rs. 5 lakhs or less, and that proceedings already initiated by notice under section 269D would be dropped if the apparent consideration was below that limit. The proceedings in the present matter had been completed long before the circular was issued: the competent authority had passed its order, and the appeal before the Tribunal had also been disposed of. The circular contemplated pending proceedings under section 269D before the competent authority, but no such proceeding was pending here. On that basis, the circular was held to have no application to the case, and the larger question of its binding force did not arise for decision.

Conclusion: Circular No. 455 dated 16 May 1986 did not apply to the completed acquisition proceedings, and the question of its binding effect was left undecided.

Final Conclusion: The reference was not answered on merits, as the circular was found inapplicable to the facts and the matter was left to be taken up before the Division Bench.

Ratio Decidendi: An administrative circular governing the dropping or non-initiation of acquisition proceedings applies only where the relevant proceedings are still pending before the competent authority; it cannot be invoked to reopen or terminate proceedings already concluded.

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