C.I.T PATIAL vs. GURPAL
What did the High Court hold?
The High Court dismissed the appeal filed by the Revenue. The Court found no merit in the Revenue's submissions. The Tribunal's reliance on CBDT Circular No. 455 was upheld. The Court clarified that the circular provided that proceedings under Section 269F(6) would not be initiated in respect of an immovable property where the apparent consideration was ₹5 lacs or less. While a subsequent part of the circular mentioned dropping proceedings already initiated if the value was below ₹5 lacs, the Court interpreted the intention of the circular to be for dropping proceedings where the apparent consideration is ₹5 lacs or less. Since the admitted consideration in this case was ₹5 lacs, the Court found no illegality in the Tribunal's order accepting the assessee's appeal. The operative direction was the dismissal of the Revenue's appeal.
What were the facts?
The Revenue (Commissioner of Income Tax, Patiala) is in appeal against an order dated 2.11.1987 passed by the Income Tax Appellate Tribunal (Tribunal). The Tribunal had accepted an appeal filed by the assessee, Gurpal Singh. The case involved information received from the Sub-Registrar, Chandigarh, indicating that the respondent purchased House No. 510, Sector 33-B, Chandigarh, for ₹5 lacs, while its fair market value was ₹8.45 lacs. Consequently, a notice was issued to the respondent under Section 269F(6) of the Income Tax Act, 1961, proposing to approve the acquisition of the house. The Tribunal's decision was based on CBDT Circular No. 455 dated 16.5.1986.
What were the issues?
1. Whether the Tribunal erred in relying on CBDT Circular No. 455 dated 16.5.1986 to hold that no proceedings for acquisition of the property could be initiated, despite proceedings having already commenced? Assessee's Contention: The Tribunal accepted the assessee's appeal, holding that in terms of CBDT Circular No. 455 dated 16.5.1986, no proceedings for acquisition of the property could be initiated. Revenue's Contention: The reliance on the aforesaid circular was misplaced because proceedings had already been initiated. The circular, according to the revenue, permitted dropping proceedings only if the value of the property was less than ₹5 lacs, whereas in this case, the value was ₹5 lacs.
Which sections of the Income-tax Act were involved?
Section 269F(6)
AI-generated summary — verify with the full judgment below
(1) In the High Court of Punjab & Haryana at Chandigarh ITA No. 1 of 1988 (O&M) Date of decision: 10.9.2010 Coram: Hon'ble Mr. Justice Adarsh Kumar Goel Hon'ble Mr. Justice Rajesh Bindal Present: Mr. Tajender K. Joshi, Advocate for the appellant. Rajesh Bindal J. The revenue is in appeal against the order dated 2.11.1987 passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (hereinafter to be referred as “the Tribunal”) in I.T. (Acq) No. 10/Chandi/87. Briefly the facts are that on an information received from Sub- Registrar, Chandigarh, that House No. 510, Sector 33-B, Chandigarh, was purchased by the respondent for ` 5 lacs whereas the fair market value thereof was ` 8.45 lacs, a notice was issued to the respondent under Section 269 F (6) of the Income Tax Act, 1961 (for short, “the Act”) approving the acquisition of the house. The Tribunal accepted the appeal filed by the assessee holding that in terms of CBDT Circular No. 455 dated 16.5.1986, no proceedings in the matter for acquisition of property could be initiated. Learned counsel for the appellant submitted that reliance on the aforesaid circular was totally misplaced considering the fact that proceedings had already been initiated and the same could be dropped if the value of the property was less than ` 5 lacs whereas in the present case the value of the property was ` 5 lacs. After hearing learned counsel for the appellant, we do not find any merit in the submissions made. The circular provides that the proceedings under Section 269 F(6) of the Act will not be initiated in respect of an immovable property of which the apparent consideration was ` 5 lacs or less. It is only that in the subsequent line where the direction was for dropping of the proceedings already initiated that it was mentioned that the value of the property should be below ` 5 lacs which is in contradiction to the spirit of the circular. The intention seems to be for dropping the proceedings where the apparent consideration is ` 5 lacs or less. Admittedly in the present case the consideration was ` 5 lacs.
(2) Considering the aforesaid fact, we do not find that any illegality has been committed by the learned Tribunal in accepting the appeal filed by the respondent. Accordingly, the appeal filed by the revenue against the order of the Tribunal is dismissed being devoid of merits. (Rajesh Bindal) Judge 10.9.2010 (Adarsh Kumar Goel) vs Judge
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