Binding CBDT circular required dropping pending Chapter XXA acquisition proceedings where notice had issued and consideration stayed below the threshold.

CBDT Circular No. 455 issued under section 119 directed that acquisition proceedings already initiated under Chapter XXA, where notice under section 269D had been issued and the apparent consideration was below Rs. 5 lakhs, had to be dropped. The Tribunal treated the circular as binding on the Competent Authority and the Commissioner, and held that prior remand did not take the matter outside its scope because no final acquisition order had been made. On the facts noted, each sale deed reflected Rs. 1,20,000, and the threshold remained unmet, so the acquisition order was quashed.

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Issues: Whether the acquisition proceedings under Chapter XXA could continue after remand when the apparent consideration of the transferred property was below Rs. 5 lakhs and notice had already been issued under section 269D of the Income-tax Act, 1961, in the light of CBDT Circular No. 455 dated 16th May, 1986.

Analysis: The Circular issued under section 119 of the Income-tax Act, 1961 directed that where acquisition proceedings had already been initiated by notice under section 269D and the apparent consideration was below Rs. 5 lakhs, the proceedings were to be dropped. The Tribunal held that the case, after the earlier orders of remand, stood at the stage of initiated proceedings without a final acquisition order and therefore fell within the Circular. The Circular was binding on the Competent Authority and the Commissioner, and the fact that the matter had been remitted earlier did not take it outside the scope of the Board's direction. The apparent consideration in each sale deed was Rs. 1,20,000, and even taken together it remained below the threshold.

Conclusion: The Circular applied and the Competent Authority was bound to drop the proceedings. The acquisition order was quashed.

Ratio Decidendi: A beneficial CBDT circular issued under section 119 of the Income-tax Act, 1961 is binding on the revenue authorities and must be applied to pending acquisition proceedings under Chapter XXA where notice under section 269D has been issued and the apparent consideration is below the prescribed limit.

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