Central Board Direct Taxes Circular No. 455 applies to all pending proceedings without finality under section 269-I

The SC held that Circular No. 455 dated May 16, 1986, issued by the Central Board Direct Taxes applies to all pending proceedings that have not attained finality under section 269-I of the Act. The Full Bench's contention that the circular was inapplicable because acquisition proceedings concluded by March 31, 1981 order was rejected. The court determined that proceedings without finality remain subject to the circular's provisions regardless of when initial orders were passed.

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Issues:
- Applicability of a circular issued by the Central Board of Direct Taxes under the Income-tax Act to ongoing acquisition proceedings.
- Interpretation of the circular in relation to proceedings pending at the appellate stage.
- Determination of whether the circular supplants statutory provisions or complements them.

Analysis:
The case involved the appellants who purchased lands with buildings, leading to an acquisition order by the Inspector of Income-tax. The appellants appealed to the Tribunal, which canceled the proceedings. Subsequently, the Revenue appealed to the High Court under section 269H. During the appeal, Chapter XX-C was introduced in the Income-tax Act, making Chapter XX-A inapplicable post-September 30, 1986. A circular issued by the Central Board of Direct Taxes stated that acquisition proceedings for properties below Rs. 5 lakhs would not be initiated after April 1, 1986. The High Court referred the matter to a Full Bench to decide if the circular could supplant statutory provisions. The Full Bench held the circular inapplicable as the acquisition proceedings had concluded earlier. The appellants appealed this decision.

The Supreme Court delved into the legislative background, highlighting the purpose of Chapter XX-A to prevent tax evasion through undervaluation of property. With the introduction of Chapter XX-C in 1986, properties exceeding Rs. 5 lakhs required a transfer agreement three months before the intended transfer date. The Court emphasized that the circular aimed to expedite proceedings for properties under Rs. 5 lakhs. It cited previous judgments emphasizing that "proceedings" included appellate stages, rejecting the Full Bench's narrow interpretation. The Court referenced decisions from Delhi, Punjab and Haryana, Patna, and Madras High Courts supporting the circular's applicability to ongoing proceedings.

Ultimately, the Supreme Court allowed the appeal, holding that Circular No. 455 issued by the Central Board of Direct Taxes applied to all pending proceedings not finalized under the Act. The Court disagreed with the Full Bench's restrictive view, aligning with other High Court judgments. The decision clarified that the circular's beneficial intent extended to ongoing acquisition proceedings, ensuring a streamlined resolution process.

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