Binding CBDT circulars and pending voluntary disclosure applications required remand in acquisition proceedings under income-tax law.

Service of notice under section 269D(2) before publication in the Official Gazette was held not to vitiate jurisdiction or invalidate the acquisition order, as the objection was governed by earlier controlling reasoning. The binding CBDT circular, however, had to be followed in light of pending applications under the Voluntary Disclosure of Income and Wealth Act, 1976. Because that later statutory development could affect the acquisition process, the appellate and acquisition orders were set aside and the matter remanded for fresh consideration after the Commissioner's decision, in accordance with the circular. The challenge to the validity of Chapter XX-A and the rejected jurisdictional objection could not be reopened.

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Issues: (i) Whether service of notice under section 269D(2) before publication of the notice in the Official Gazette vitiated the jurisdiction of the Inspecting Assistant Commissioner and the acquisition order made under Chapter XX-A of the Income-tax Act, 1961. (ii) Whether the acquisition proceedings had to be regulated in accordance with the binding circular issued by the Central Board of Direct Taxes in light of the applications made under the Voluntary Disclosure of Income and Wealth Act, 1976.

Issue (i): Whether service of notice under section 269D(2) before publication of the notice in the Official Gazette vitiated the jurisdiction of the Inspecting Assistant Commissioner and the acquisition order made under Chapter XX-A of the Income-tax Act, 1961.

Analysis: The objection based on the sequence of service and publication was treated as covered by an earlier decision on materially similar facts. The Tribunal had accepted the additional ground and invalidated the acquisition order on that basis, but the controlling reasoning applied in the earlier case was held to govern the present appeals as well.

Conclusion: The Tribunal was in error in invalidating the acquisition order on this ground; the objection failed.

Issue (ii): Whether the acquisition proceedings had to be regulated in accordance with the binding circular issued by the Central Board of Direct Taxes in light of the applications made under the Voluntary Disclosure of Income and Wealth Act, 1976.

Analysis: The Board's circular was held to be binding on all authorities under the Act. Since the appellants had stated that applications under the 1976 Act were pending before the Commissioner, the acquisition proceedings could not appropriately be concluded without awaiting the Commissioner's decision. The proper course was to set aside the existing orders and require reconsideration in the light of the Commissioner's order and the applicable legal position.

Conclusion: The acquisition proceedings had to be regulated in accordance with the circular, and the matter was required to be reconsidered after the Commissioner's decision.

Final Conclusion: The appellate orders and the acquisition order were set aside and the matters were sent back for fresh consideration in accordance with the Commissioner's decision under the 1976 Act and the binding circular, while the challenge to the validity of Chapter XX-A and the already rejected jurisdictional objection was not permitted to be reopened.

Ratio Decidendi: Binding departmental circulars issued under statutory authority must be given effect by income-tax authorities and appellate courts, and later events affecting the statutory framework may justify remand for reconsideration in accordance with the governing circular and pending proceedings.

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