CHANDIGARH BENCH INSPECTING ASSTT. SMT. LAL DEVI v. COMMISSIONER OF INCOME TAX October 29, 1986 JUDGMENT RAM RATTAN, A.M. This appeal by transferee is directed against order of Competent Authority (The IAC of IT (Acq) Range, Ludhiana) passed under s. 269F (6) of IT Act, 1961, acquiring property comprising in House No. XIX. 1387-184E situated in Kitchlew Nagar, Ludhiana, admeasuring 258.60 sq. yds. purchased by transferee for apparent consideration of Rs. 92,000 vide two sale deeds No. 6128 of 25th Sept., 1984 and 6944 of 29th Oct., 1984 of Rs. 46,000 each. ld. counsel for assessee has placed in paper book copy of circular issued by CBDT bearing No. 455 (F. No. 316-38-85-WT) dt. 16th May, 1986 stating that Board has decided that w.e.f. 1st April, 1986 acquisition proceedings under s. 269C will not be initiated in respect of any immovable property for which apparent consideration is Rs. 5 Lakhs or less and that where acquisition proceedings have been initiated by issue of notice under s. 269D, proceedings will be dropped if apparent consideration of immovable property is below Rs. 5 lakhs. Referring to this circular he urged that in case of transferee apparent consideration being Rs. 92,000 was below Rs. 5 lakhs and, therefore, she was entitled to benefit of above circular of Board and urged that order of Competent Authority be annulled. He submitted that appellate proceedings are continuation of original proceedings and rehearing of matter and, therefore, Tribunal was competent to take cognizance of above circular of CBDT. Reliance in this connection was placed on judgment of Hon'ble Punjab High Court in Ramlal vs. Rajaram & Anr. reported in Vol.IXII-1960 PLR291. He further contended relying on judgment of Allahabad High Court in CIT vs. Raj Narain Tewari 1978 CTR (All) 6: (1978) 113 ITR 163 (All) that appellate Court or authority has same power as Court or authority in first instance. Even on this account, he contended that Tribunal had jurisdiction to take cognizance of above circular of Board and drop proceedings. He further placed reliance on judgment of Hon'ble Supreme Court of India in CIT vs. McMillan and Co. (1958) 33 ITR 182 (SC) for similar proposition. He further submitted that beneficial circulars of CBDT were binding on Revenue in administration or implementation of Act, even though such circulars clearly deviated from provisions of Act. Reliance in this connection was placed on judgment of Hon'ble Supreme Court in case of K.P. Verghese vs. ITO (1981) 24 CTR (SC) 358: (1981) 131 ITR 557 (SC). Shri R.K. Bali, Learned Senior Departmental Representative, on other hand, placing reliance on judgment of Madras High Court in A.L.A. Firm vs. CIT (1976) 102 ITR 622 (Mad) has contended that judicial power to ITO and for that matter of Tribunal cannot be controlled by any circular that may be issued by Central Board. He also referred to judgment of Hon'ble Supreme Court in J.K. Synthetics Ltd. vs. CBDT 1972 CTR (SC) 252: (1972) 83 ITR 335 (SC) where it has been held that Central Board is not competent to give directions regarding exercise of any judicial powers by its subordinate authorities much less Tribunal which is not authority subordinate to CBDT. He, therefore, urged that said circular should be ignored and submitted that this circular was applicable from 1st April, 1986 and also where proceedings were pending before IAC (Acquisition) and not Tribunal. We have given our very careful consideration to rival submissions. It is true that acquisition proceedings have terminated so far as IAC (Acquisition) is concerned but appeal is pending before us. Their Lordships of Punjab High Court in case of Ramlal Rajaram and Anr. referred to above, in para 11 of report have held "that appeal is continuation of original proceedings and rehearing of matter. amending Act, therefore, must be given effect to not only in fresh suits filed or suits pending but also in those cases in which appeals are pending and not have been decided." In Raj Narain Tewari's case referred to above, Allahabad High Court has held "It is well settled that appellate Court or authority has same power as Court or authority of same instance. Though ITO had exercised his discretion in particular way, it was open to Tribunal to substitute its discretion for that of ITO." This is also view taken by Hon'ble Supreme Court of India in McMillan and Co. (1958) 33 ITR 182 (SC). From above authorities it therefore, transpires that appellate proceedings are continuance of proceedings before assessing authority. What assessing authority could do can be done by appellate authority. contention of Revenue, on other hand, is that CBDT is not competent to give directions regarding exercise of any judicial powers by its subordinate authorities as held by Supreme Court in India in J.K. Synthetics Ltd. (supra). In this connection we may point that above judgment relate to directions issued by CBDT which are not in accordance with law and tend to interfere with judicial discretion of authorities and are against interest of assessees. Madras High Court judgment relied upon by ld. departmental representative that circulars that are contemplated by s. 119 of IT Act are in regard to administrative aspect and cannot extend to judicial aspect of administration. Here also we would like to add that these observations are with regard to such instructions which are against interest of assessee. circular issued by Board is administrative in nature and even Madras High Court has said Board can issue such administrative circulars. Their Lordships of Supreme Court in case of K.B. Verghese (1983) 131 ITR 597 (SC) (supra) have clearly held that beneficial circulars of CBDT are binding on Revenue in administration or implementation of Act. At page 614 of report their Lordships have observed thus: "It is clear that circular of kind which was issued by Board would be binding on all officers and persons employed in execution of Act under s. 5(8) of Act. This circular pointed out to all officers that it was likely that some of companies might have advanced loans to their shareholders as result of genuine transactions of loans, and idea was not to affect such transactions and not to bring them within mischief of new provision. directions given in that circular clearly deviated from provisions of Act, yet this Court held that circular was binding on ITOs. two circulars of CBDT, referred to above, must, therefore, be held to be binding on Revenue in administration or implementation of sub-s. (2) and this sub-sections must be read as applicable only to cases where there is understatement of consideration in respect of transfer." From above transactions of Hon'ble Supreme Court it is clear that even though circulars clearly deviated from provisions of Act, circulars were held to be binding on ITO. This proposition laid down by Hon'ble Supreme Court is in respect of beneficial circulars and not circulars which are against interest of assessee. From above discussions it is amply clear that appellate proceedings are continuation of proceedings before assessing authority. appellate authority can do what assessing authority can do. circular issued by CBDT is beneficial circular and administrative in nature. It is applicable to all pending proceedings whether before assessing authority or appellate authority by virtue of above decisions. Tribunal, therefore, has jurisdiction to take cognizance of CBDT circulars in cases where appeals are pending before it. In view of above circular of CBDT, we vacate order of IAC (Acquisition) thereby dropping proceedings initiated against assessee. We have taken similar view in case of Shri Rai Sahib Ludhiana vs. IAC of Income-tax, Acquisition Range, Ludhiana, vide our order dt. 25th July, 1986 in IT Acq. Appeal No. 10 of 1986. Since we have vacated order of IAC in view of circular of CBDT referred to above, we do not consider it necessary at this stage to go into merits of order passed by Competent Authority. In result, appeal is allowed. *** SMT. LAL DEVI v. INSPECTING ASSTT. COMMISSIONER OF INCOME TAX