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Issues:
Reopening of assessment for valuation of gifted shares under Gift-tax Act, applicability of rule 1D of Wealth-tax Rules, validity of reassessment under section 16(1)(b) of the Gift-tax Act. Analysis: The case involved the reassessment of the value of gifted shares by the Gift-tax Officer for the assessment year 1974-75. The assessee had gifted 4,000 shares to individual trusts, and the original assessment valued the shares at Rs. 121 per share. The Gift-tax Officer reopened the assessment based on a circular that disallowed a 15% deduction given in the original assessment. The Commissioner of Income-tax (Appeals) held that the Officer could not adopt a different valuation method during reassessment and canceled the reassessment, stating there was no jurisdiction to reopen the completed assessment. The Revenue appealed to the Appellate Tribunal, which, following a previous order, found the reopening of assessment invalid. The Tribunal referred the question of law to the High Court, questioning the validity of canceling the reassessment. The High Court, considering previous judgments, noted that rule 1D of the Wealth-tax Rules applied to valuation for gift-tax purposes, entitling the assessee to a 30% discount. However, as the Gift-tax Officer had originally allowed only a 15% deduction, which the assessee did not challenge, that part of the order became final. The High Court held that since the Wealth-tax Rules applied to determine the assessable gift for gift-tax purposes, there was no underassessment in the original assessment justifying the reassessment under section 16(1)(b) of the Gift-tax Act. Consequently, the Court found no error of law in the Appellate Tribunal's decision that the reassessment was invalid. The Court answered the question of law in favor of the assessee, with no order as to costs.
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