The circular issued by the Board on May 16, 1986, is applicable to the impugned proceedings.

1. This common judgment shall dispose of Income-tax Appeals Nos. 4 and 5 of 1982.

2. These appeals arise out of the judgment of the Income-tax Appellate Tribunal (hereinafter referred to as "the ITAT") delivered on September 10, 1981. Shri Gobind Ram, son of Damodar Dass and Shri Hari Shanker, son of Shri Babu Lal, purchased a building situated at Narnaul from Shri Om Parkash, son of Shri Moti Lal Aggarwal, for a consideration of Rs. 35,000 as per sale deed registered at No. 77 dated April 24, 1973, with the Sub-Registrar, Narnaul. The building is having a land area of about 5,000 sq. yards and it consists of a number of rooms being used as godown and factories and,ten shops facing a road of about 10 ft. wide. It is a single-storeyed building.

3. A reference under Section 269L of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), was made to the Valuation Officer, Income-tax Department, Rohtak. The Assistant Valuation Officer, Income-tax Department, Rohtak, vide his report dated December 27, 1973, determined the fair market value of the property at Rs. 39,257 on the "rent capitalisation" method as the whole of the property was in the occupation of the tenants. There were 30 tenants in this property at the time of transfer. The Assistant Valuation Officer, in his report mentioned that Shri Hari Ram and Shri Laxmi Narain Gupta were ready to purchase this property for Rs. 60,000. Some of the tenants were also ready to purchase the portions under their possession. It has further been reported that if the property could be divided into plots, there is a possibility of getting more value which is estimated to be nearly Rs. 1 lakh. As the difference between the apparent consideration and the fair market value was more than 15 per cent., proceedings for the acquisition of the said property, as per the provisions of Sections 269C and 269D were initiated. The fair market value of the property was determined at Rs. 75,000, The Inspecting Assistant Commissioner ,of Income-tax passed the order for the acquisition of the property.

4. The respondent filed the appeal before the Income-tax Appellate Tribunal, New Delhi, who came to the conclusion that the valuation of the property by capitalisation of the net annual value would be Rs. 39,257 and that on that basis, the difference between the fair market value and the apparent consideration of Rs. 35,000 did not exceed 15 per cent. It also held that the offers by other people long after the property was sold have no meaning. The order of the Income-tax Appellate Commissioner was held to be erroneous. The Income-tax Appellate Tribunal, therefore, allowed the appeals and cancelled the order of acquisition of the property. The Department being aggrieved by the said order filed these appeals before this court.

5. When the appeals came up for arguments, a short question was argued before us and the appeals could be disposed of on this short question only. The question argued before us was whether by the issuance of Circular No. 455 (see [1986] 159 ITR (St.) 105) of May 16, 1986, the appellant could maintain the acquisition of property. The circular issued is as below :

"Circular No. 455, dated May 16, 1986. Subject: Acquisition of immovable properties under Chapter XX-A of the Income-tax Act, 1961-Guidelines-Regarding. The Finance Bill, 1986, has proposed that no proceedings shall be initiated under Section 269C of the Income-tax Act, 1961, in respect of a property transferred after the 30th day of September, 1986. The Bill also proposes to insert Chapter XX-C providing for purchase by the Central Government of immovable properties in certain cases of transfer. With a view to achieve early finalisation of proceedings under the existing Chapter XX-A of the Income-tax Act, 1961, the Board has decided that with effect from April 1, 1986, acquisition proceedings under Section 269C will not be initiated in respect of an immovable property for which the apparent consideration is Rs.