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TMI Blog1997 (11) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... nees who were minors, or to the guardian of the minors. He also found that on the respective dates of the alleged gifts, the cash balances were only Rs. 9,130, Rs. 11,810 and Rs. 6,810 which were insufficient to make valid gifts and the-assessee had not made any attempt to deliver the amounts to the donees and therefore, he held that there were no valid gifts at all. He included the sum of Rs. 36,000 in the wealth-tax assessments for the said assessment years. The assessee preferred appeals before the Appellate Assistant Commissioner against the orders of assessment. The Appellate Assistant Commissioner noticed that gift-tax was levied in respect of the above gifts, and, therefore, it is not open to the Wealth-tax Officer to challenge the validity of the gifts and levy tax once again under the provisions of the Wealth-tax Act causing jeopardy to the assessee, He further held that the provisions of section 4(5A) of the Wealth-tax Act which was introduced only with effect from April 1, 1976, have no restrospective operation and, therefore, the amounts cannot be included in the net wealth of the assessee. Aggrieved by the order of the Appellate Assistant Commissioner, the Revenue pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) of the Act, the Wealth-tax Officer has the jurisdiction to go into the question of validity of the gifts made by the transfer of books entries and since the gift-tax was levied, it is not open to the Wealth-tax Officer to include the same amount in the hands of the assessee. He relied upon the decision of this court in the case of K V. Iyer v. CIT [1995] 215 ITR 461, and the decision of the Supreme Court in the case of CWT v. Hashmatunnisa Begum [1989] 176 ITR 98. He further submitted that the Gift-tax Act, Wealth-tax Act and Income-tax Act are all integrated tax codes and when a tax has been levied under any one of the provisions, it is not permissible for the Revenue to invoke other provisions of the Acts as per the decision of the Supreme Court in the case of K P. Varghese v. ITO [1981] 131 ITR 597. Mr. C. V. Rajan, learned counsel for the Revenue submitted that the provisions of section 4 of the Act were not invoked as the gifts were not valid gifts, and it is open to the Wealth-tax Officer to include the amount in the hands of the assessee. He also submitted that since the provisions of section 4 of the Act were not invoked, the proviso to section 4(1)(a) of the Act has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and submitted that this court in K. V Iyer v. CIT [1995] 215 ITR 461, held that where an assessee is subjected to gift-tax and the gift-tax has been charged on the said gifts for any assessment year commencing after March 31, 1964, but before April 1, 1972, the amount is entitled to be excluded from the wealth-tax. We are of the view that the decision relied upon by learned counsel for the assessee has no application to the facts of the case. It is not a case of application of section 4 of the Wealth-tax Act by which the asset in the hands of the transferee is included in the hands of the assessee. On the other hand, it is a case where the gifts were held to be void and because of the voidness of the gifts, the amount is included in the hands of the assessee on the ground that there was no transfer of assets by the assessee in favour of the minor children. It is well established that a pre-requisite condition for the applicability of sub-section (1) of section 4 of the Wealth-tax Act is a valid transfer of the assets in favour of the specific persons and when there is no transfer at all the question of applicability of section 4 of the Wealth-tax Act does not arise and, conseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was chargeable under the provisions of the Act. The next submission of Mr. Janarthana Raja, learned counsel for the assessee, is that only after the introduction of sub-section (5A) of section 4 of the Act, it is open to the Wealth-tax Officer to go into the question of the validity of the gifts by book entries. We are of the view that the powers of the Wealth-tax Officer to include the amount in question are derived from the powers of assessment conferred on him under the relevant provisions of the Wealth-tax Act and sub-section (5A) of section 4 of the Act is an enabling provision for inclusion in the net wealth of the assessee where the assessee fails to prove before the Assessing Officer that the money was actually delivered to the donees. The fact that the credit entry was not made during the assessment year would not prevent the officer from exercising his powers of assessment vested under him under the relevant provisions of the Act. Therefore, we are not able to accept the contention of learned counsel for the assessee that the Wealth-tax Officer has no power to determine the question whether there was a valid gift or not. The next question that arises is whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of any evidence to show that the donees have accepted the gifts, the gifts cannot be regarded as valid gifts even to the extent of cash available with the donor on the respective dates, when the book entries were made. However, we are unable to accept the contention of learned counsel for the Revenue. The fact that the cash to the extent mentioned above was available with the assessee is not disputed before us. It is also relevant to notice that when the donor made gifts by book entries in her own books of account, the donees were minor children and the assessee in pursuance of her own book entries had expressed her intention of a valid gift not only by making necessary entries and filed gift-tax return which was also accepted by the Gift-tax Officer. The fact that the donor has filed the gift-tax return and paid the gift-tax clearly shows that she has divested herself the money in question at least to the extent it was available in her own accounts. Therefore, we hold that the view of the Appellate Tribunal that there is nothing to show that the donees have accepted the gifts and the donor had divested the money was arrived at without appreciation of the full facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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