1982 (5) TMI 57 - AT - Income Tax

Assessment Year Deemed Gift Immovable Property Movable Property Valuation Report Wealth Tax

Issues Involved:
1. Jurisdiction of the Commissioner to issue a fresh notice under section 24(2) after dropping the initial proceedings.
2. Reliance on the valuation report dated 24-9-1968.
3. Scope of the Commissioner's authority to direct fresh assessment under section 15(1).
4. Taxability of the deemed gift in the assessment year 1970-71.

Detailed Analysis:

Jurisdiction of the Commissioner to Issue Fresh Notice under Section 24(2):
The first contention raised by the assessee was that the Commissioner, having dropped the proceedings under section 24(2) on 12-10-1979, lacked the jurisdiction and/or justification to issue a fresh notice under section 24(2) based on the same material. The Tribunal found this contention unmeritorious. It was observed that nothing in section 24(2) prohibits the Commissioner from initiating proceedings under this section more than once, provided the conditions and time limits specified in the section are met. The Tribunal distinguished between the cancellation of the first notice due to vagueness and the initiation of fresh proceedings with a clarified notice, finding the latter action appropriate and within the Commissioner's authority.

Reliance on the Valuation Report Dated 24-9-1968:
The assessee argued that the Commissioner should not have relied on the valuation report dated 24-9-1968, especially since it was not accepted by the Commissioner (Appeals) in the Wealth Tax appeals for the assessment years 1966-67 to 1971-72. The Tribunal noted that the Commissioner (Appeals) had not found the valuation report entirely unreliable but had directed revaluation considering certain rights and interests not accounted for initially. The Tribunal agreed with the departmental representative that the Commissioner, in his impugned order, did not direct the GTO to adopt the valuation report as such but to consider the inclusion of deemed taxable gifts in the computation of the assessee's taxable gifts. Thus, the Tribunal found no error in the Commissioner's reliance on the valuation report.

Scope of the Commissioner's Authority to Direct Fresh Assessment under Section 15(1):
The assessee contended that when the Commissioner cancels an assessment under section 15(1) and directs a fresh assessment, the fresh assessment should also be completed under section 15(1). The Tribunal rejected this contention, stating that once the assessment is cancelled, no assessment remains, and the GTO can complete the fresh assessment under section 15(1), 15(3), or 15(4), depending on the circumstances of each case.

Taxability of the Deemed Gift in the Assessment Year 1970-71:
The final contention was that the deemed gift resulting from the sale of the assessee's two-third interest in the immovable property 'Ready Money House' was not taxable in the assessment year 1970-71, as the sale was not complete during the previous year. The Tribunal examined the relevant legal provisions and judicial precedents, including section 47 of the Indian Registration Act, 1908, and the Supreme Court decisions in Ram Saran Lall v. Mst. Domini Kuer and Hiralal Agarwal v. Rampadarath Singh. It was concluded that the sale of the immovable property was completed only upon the registration of the deeds of conveyance on 13-10-1970 and 10-11-1970, respectively, in the subsequent financial year. Consequently, the deemed gift was not assessable in the assessment year 1970-71.

Conclusion:
The Tribunal held that the order of the assessment dated 20-3-1979 passed by the GTO under section 15(1) was not erroneous and prejudicial to the interest of revenue. The impugned order of the Commissioner was cancelled, and the appeal was allowed.

← Previous Next →