1974 (2) TMI 23 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the notice issued under section 16(1) of the Gift-tax Act.
2. Interpretation of "information" under section 16(1)(b) of the Gift-tax Act.
3. Whether the audit report constitutes "information" under section 16(1)(b).

Issue-wise Detailed Analysis:

1. Validity of the notice issued under section 16(1) of the Gift-tax Act:
The petitioner challenged the validity of the notice issued by the Gift-tax Officer under section 16(1) of the Gift-tax Act, which required her to file a fresh return for the assessment year 1968-69. The Gift-tax Officer issued this notice on the grounds that the taxable gift had escaped assessment. The petitioner argued that there was no concealment or under-assessment on her part as the original assessment was based on an approved valuer's report.

2. Interpretation of "information" under section 16(1)(b) of the Gift-tax Act:
The core issue was whether the notice could be said to have been validly issued under section 16(1)(b) of the Act. Section 16(1)(b) allows the Gift-tax Officer to reassess a taxable gift if he has "information" that leads him to believe that the gift has escaped assessment. The court emphasized that for action under section 16(1)(b), two conditions must be satisfied: (1) the Gift-tax Officer should receive "information" after the original assessment, and (2) this "information" should lead to a reasonable belief that the taxable gift has escaped assessment.

3. Whether the audit report constitutes "information" under section 16(1)(b):
The Gift-tax Officer contended that the audit report from the Inspecting Assistant Commissioner constituted "information" under section 16(1)(b). However, the court noted that "information" must mean "instruction or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment." Mere change of opinion does not constitute "information." The court found that the letter from the Inspecting Assistant Commissioner was a general opinion not supported by any data and was opposed to the view of an approved valuer. Therefore, it did not meet the criteria for "information" under section 16(1)(b).

Conclusion:
The court concluded that there was no "information" in the possession of the Gift-tax Officer that could justify the belief that any taxable gift had escaped assessment. Consequently, the condition precedent for exercising jurisdiction under section 16(1)(b) was not satisfied. The petition was allowed, and the notice dated February 15, 1972, issued by the Gift-tax Officer was quashed and set aside. The respondent was ordered to pay the costs of the petition to the petitioner.

Petition allowed.