SIR HIRJI CAWASJI JEHANGIR Vs. FIRST GIFT TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
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T.D. Sugla, President -
(1.) THIS appeal is by the assessee. It is against the order of the Commissioner dated 12-1-1981 passed under Section 24(2) of the Gift-tax Act, 1958 ('the Act'). By his impugned order, the Commissioner has cancelled the order of the assessment made by the GTO on 20-3-1979 under Section 15(1) of the Act. The said assessment was completed by the GTO, after accepting the assessee's return filed on 14-5-1970 for the assessment year 1970-71, disclosing a gift of Rs. 40,000 which the assessee had given to one Sri J.M. Malhotra on 24-12-1969.
(2.) In this connection, the GTO came to know that the assessee had sold his two-third interest (one-third each to two trusts) in an immovable property 'Ready Money House', Bombay, on 20-3-1969 for Rs. 7,00,000 and that actual value of his aforesaid interest was much more. Taking the view that the assessee was liable to be taxed on the basis of a 'deemed gift' in respect of the said sale, the GTO issued a notice under Section 16(1) of the Act on 29-9-1974, i.e., during the pendency of the proceedings for the assessment on the basis of the return filed by the assessee on 14-5-1970. Thereafter, various notices were issued. Explanations were called for and filed and eventually on 20-3-1979, the GTO completed one more assessment in respect of deemed gifts under Section 15(5). There were thus two assessments completed by the GTO on the same date for one and the same assessment year being under Section 15(1) and Section 15(5), respectively. In the assessment completed under Section 15(5), the value of the deemed gift was determined at Rs. 28,26,000.
The assessee filed an appeal on 27-4-1979 against the order of the assessment under Section 15(5). However, after this date, but before the appeal was disposed of by the Commissioner (Appeals) on 11-3-1980, the Commissioner felt that the GTO's action in passing two orders of the assessments on the same date in the aforesaid manner was erroneous and prejudicial to the interests of the revenue. He issued a notice on 24-8-1979 under Section 24(2) requiring the assessee to show cause why he should not set aside the two assessments made by the GTO under Section 15(1) and Section 15(5). It appears that the Commissioner subsequently felt that his aforesaid show cause notice was vague. He cancelled the said show cause notice and intimated the assessee about it by means of a letter dated 12-10-1979. However, on the same date the Commissioner issued another notice under Section 24(2) requiring the assessee to show cause why he should not cancel the assessment made by the GTO under Section 15(1) on the ground that the said order of the assessment was erroneous and prejudicial to the interests of the revenue inasmuch as the GTO had not included the 'deemed taxable gift' in respect of the sale of his two-third interest in Ready Money House in the assessment order. The assessee was heard and submissions on his behalf were considered. Ultimately by his impugned order dated 12-1-1981 the Commissioner passed order under Section 24(2) cancelling the assessment made under Section 15(1) and directing the GTO to make a fresh assessment according to law. It is pertinent that in the meanwhile the Commissioner (Appeals) had by his order dated 11-3-1980 cancelled the order of the assessment made under Section 15(5), observing that during the pendency of the assessment proceedings, gift, deemed or real, could not be said to have escaped assessment to justify issue of a notice under Section 16(1) and a consequent assessment under Section 15(5) on the basis thereof.
(3.) THE first contention against the impugned order of the Commissioner under Section 24(2) on behalf of the assessee, is that the Commissioner having dropped the proceedings under Section 24(2) on 12-10-1979 had no jurisdiction and/or justification for issuing a fresh notice under Section 24(2), on the basis of the same material. In our opinion, this contention on behalf of the assessee is too good to be accepted. Firstly, there does not appear to us anything direct or implied in Section 24(2) which prohibits the Commissioner to start the proceedings under Section 24(2), more than once, subject of course to the conditions laid down in the section, including time-limit provided therefor. That apart we do agree with the learned counsel that it is a case of dropping of proceedings under Section 24(2) and/or of starting fresh proceedings under that section. To our mind it is a case where, after issuing a show cause notice under Section 24(2), the Commissioner felt that the notice was vague and not clear. He could have certainly clarified the notice by some other communication. Instead he has chosen and according to us rightly so, to cancel the first notice as distinct from dropping the proceedings and issued a fresh notice which clearly brought out why he was contemplating action under Section 24(2). THE fact that when the Commissioner issued the latter notice under Section 24(2), the other assessment under Section 15(5) was existing and that the Commissioner was not proposing to cancel that order, is to our mind, not relevant at all for the following reasons, viz :
1. THE said order was bad and illegal on the face of it and could therefore be treated as non est by any authority including the Commissioner.
2. THE effect of the order of the Commissioner (Appeals) dated 11-3-1980 cancelling the said order of the assessment under Section 15(5) is that, it could be taken by any authority at any time that no assessment under Section 15(5) was ever made particularly when the said order is final, the department having accepted it.
In the circumstances we do not find any merit in this contention of the assessee.;
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