2015 (10) TMI 1004 - AT - Income Tax

Validity of assessment under Gift Tax act - period of limitation - contention of the counsel that the AO must have made a fresh assessment within the time limit prescribed u/s 16A(3) of the GT Act, 1958 and not an assessment or re-assessment that is referred to under the provisions of section 16A(4) of the GT Act, 1958 - whether case is time barred u/s 16A(3) of the GT Act, 1958? - Held that - CGT(A) having received the order on 27-05-1999, ought to have passed the order before 31-03-2004 whereas the order has been passed on 31-03-2006, which is beyond the period of limitation imposed u/s 16A(3) of the GT Act, 1958. The order of CGT(A) is null and void and the assesee s appeal is allowed.

Summary

Issues involved:
1. Validity of the assessment order passed by the Commissioner of Gift Tax (CGT) for the assessment year 1981-82.
2. Compliance with the provisions of Section 16A(3) of the Gift Tax Act, 1958 regarding the time limit for passing fresh assessment orders.

Issue 1: Validity of the assessment order by CGT:
The case involved a dispute regarding the gift tax liability of the assessee, who was a daughter of late Maharaja of Mysore Sri J.C.Wadiyar. The assessing authority determined the assessee's share in the HUF properties following a partition suit filed by a co-parcener. The revenue contended that the assessee had a share in the properties of the HUF and the minor HUF of late Sri J.C.Wadiyar, leading to a deemed gift due to surrendering of shares. The matter was taken to the Appellate Tribunal, which set aside the assessment for fresh consideration. The CGT upheld the tax liability, leading to the appeal by the assessee challenging the order on various grounds, including the assessment being beyond the time limit prescribed under the Act.

Issue 2: Compliance with Section 16A(3) of the Gift Tax Act:
The appeal raised concerns regarding the time limit for passing fresh assessment orders under Section 16A(3) of the Gift Tax Act. The counsel for the assessee argued that the order passed by the CGT was beyond the limitation imposed by this section. The Tribunal noted that the order should have been passed before a specific date, as per the provisions of Section 16A(3). It was observed that the CGT failed to pass a fresh assessment order within the prescribed time limit, despite the direction given by the Tribunal earlier. Consequently, the Tribunal declared the order of the CGT as null and void, allowing the appeal filed by the assessee.

In conclusion, the Appellate Tribunal, in this case, found that the assessment order passed by the CGT was invalid due to non-compliance with the time limit specified under Section 16A(3) of the Gift Tax Act. The appeal by the assessee was allowed on this ground, emphasizing the importance of adhering to statutory provisions while conducting assessments.