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Issues:
- Appeal by revenue against CGT(A) order for assessment year 1983-84 - Validity of assessment order based on deemed gift to assessee - Interpretation of Section 21A of Gift-tax Act regarding assessment on donee Analysis: The case involves an appeal by the revenue against the order of the CGT(A) for the assessment year 1983-84, challenging the cancellation of the assessment order. The revenue contended that the CIT(A) erred in canceling the assessment order, arguing that the donor allowed the assessee-company to purchase a flat at a rate lower than the market rate, constituting a gift. The assessee, a private limited company, had purchased a flat in Bombay at a lower sum than the departmental valuation, resulting in the balance being treated as a deemed gift. However, the CGT(A) canceled the assessment, citing the Assessing Officer's failure to produce records and lack of diligence in finding the donor, essential for assessing the donee under Section 21A of the Gift-tax Act. Upon hearing both parties, the ITAT Bombay-E upheld the CGT(A) order, emphasizing the nature of gift-tax as chargeable on the donor, not the donee. Section 21A of the Act allows assessment on the donee only when the donor cannot be found after diligent efforts by the Assessing Officer. The tribunal highlighted the necessity of proving due diligence in attempting to locate the donor before assessing the donee. Referring to a Calcutta High Court case, the tribunal stressed the importance of reasonable attempts to find the donor before deeming them untraceable. In this case, the Assessing Officer's uncertainty regarding the donor's assessment status and lack of efforts to trace the donee indicated an improper assumption of jurisdiction. The tribunal concluded that the primary conditions for assessing the donee under Section 21A were not met, justifying the CGT(A)'s decision to cancel the assessment. Therefore, the ITAT Bombay-E dismissed the revenue's appeal, affirming the cancellation of the assessment order.
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