M.C. PATHAK, C.J. - (1.) THE following questions of law have been referred under section 26(1) of the Gift-tax Act, 1958 (hereinafter referred to as "the Act"), by the Income-tax Appellate Tribunal, Gauhati Bench (hereinafter referred to as "the Tribunal") : "(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessment order passed against the six sons of Shri Kumudeswar Goswami as legal representatives of Shri Kumudeswar Goswami on the basis of the six separate returns filed by the six sons was valid ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the gifted properties belonged exclusively to Shri Kumudeswar Goswami being his separate property ? (iii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the gifts made by Shri Kumudeswar Goswami were assessable to gift-tax in the assessment year 1960-61 ?"
(2.) THE facts of the case may briefly be stated as follows : THE relevant assessment year is 1960-61. Kumudeswar Goswami gifted 5 big has 2 kathas of land under six registered deeds of gift dated June 11, 1959, showing a total value of land at Rs. 1,50,000 in favour of his six sons, namely, K. Goswami, H. Goswami, B, Goswami, D. Goswami, L. Goswami and J. Goswami. Each of the six sons got 4 and half kathas of land individually, the value of which was shown at Rs. 25,000. Kunudeswar Goswami also gifted 24 shares of Rs. 1,000 each (face value) of M/s. Bahadur Tea Co. Private Ltd., to his six sons, whose names were recorded in the books of the company on March 4, 1960, and each son thus had got 4 shares Kumudeswar Goswami also gifted Rs. 90,000 in cash to his six sons and gave Rs. 15,000 in cash to each of them. According to the Gift-tax Officer, these gifts were made by Kumudeswar Goswami to his six sons in the previous year relevant to the assessment year 1960-61 before his death. Kumudeswar Goswami died on February 17, 1961. After the death of Kumudeswar Goswami on February 17, 1961, action was taken under the GIft-tax Act against the six sons of Kumudeswar Goswami as his legal representatives and notices were served under section 13(2) of the Act. All the six sons filed separate returns as legal representatives showing equal amounts of gifts received from their deceased father. The Gift-tax Officer then issued notice under section 15(4) of the Act and he valued 27 kathas of land at Sarania area at Rs. 7,500 per Katha and thus the value of the entire area of 27 kathas was held to be Rs. 2,02,500. He also included the cash gift of Rs. 90,000 in his assessment order and also valued the 24 shares at Rs. 1,08,000 as he estimated the fair market value of each share of Rs. 4,500 on the basis of the scrutiny of the balance-sheet of the company as on December 31, 1959. Thus, the Gift-tax Officer held the total valuation of the gifted properties at Rs. 3,90,500 and the gift-tax payable was assessed as Rs. 39,575. The assessee, H. Goswami, appealed against the assessment order of the Gift-tax Officer before the Appellate Assistant Commissioner of Gift-tax. Before the Appellate Assistant Commissioner it was submitted on behalf of the assessee - (i) that the gifted properties belonged to the joint Hindu family of the assessees grandfather and that the family of the assessee was governed by the Mitakshara school of Hindu law and as such the gift deeds did not actually represent the gifts as the assessee had interest in the properties; (ii) that the cash gifts were made on different occasions which were spread over a period of two years or more and whenever money was received from Government as compensation for the zamindari, the actual gifts were made; (iii) that the shares in the tea company were actually transferred in 1956 but formal transfer was effected during the year under appeal on March 4, 1960; (iv) that the gifts of land were actually made to the sons in 1952 though a formal registered deed was executed in 1959; and (v) that the valuation as shown in the deed of gifts were quite reasonable and so that should be accepted. The Appellate Assistant Commissioner held, (i) that the family was governed by the Dayabhaga school of Hindu law which is the generally accepted legal position and that the gifted properties did not belong to the joint Hindu family, (ii) that all the gifts were made in the previous year relevant to the assessment year 1960-61, and (iii) that the valuation of the land as found by the Gift-tax Officer was reasonable. Having so held, the Appellate Assistant Commissioner dismissed the appeal and confirmed the assessment made by the Gift-tax Officer. Thereafter, H. Goswami, one of the assesses, filed an appeal before the Tribunal against the order of the Appellate Assistant Commissioner and the following grounds were taken before the Tribunal; (i) that Kumudeswar Goswami was governed by the Mitakshara school of Hindu law; (ii) that the properties settled by him on his sons were by way of family settlement of ancestral properties and, therefore, the Gift-tax Act, 1958, was not attracted; (iii) that 27 kathas of land were gifted in 1952 and there was no material on record to rebut the same; (iv) that the valuation of the land at the flat rate of Rs. 7,500 per katha was not justified; and (v) that the valuation of shares at Rs. 4,500 per share was also exorbitant arbitrary. During the pendency of the appeal, H. Goswami died on May 9, 1968, and on their application the legal representatives of H. Goswami were substituted in his place.
(3.) THEREAFTER, the learned counsel for the applicants, on his prayer, was allowed to take the following additional ground in the appeal : "That the assessment proceedings having been taken without complying with the mandatory provisions of law and the conditions precedent for levying tax under the Act being not in existence in the case, the assessment was without jurisdiction." The learned Tribunal considered the additional ground and has observed that Kumudeswar Goswami died on February 17, 1961, and that the proceedings under the Act were started against the six sons of Kumudeswar Goswami and notices were issued to them under section 13(2) of the Act, as legal representatives, which meant that the notices were issued in view of section 19 of the Act and thus the Tribunal held that the notices were properly issued and served on the sons of Kumudeswar Goswami as legal representatives. The Tribunal also held that the returns filed by the sons of Kumudeswar Goswami were valid returns and the Gift-tax Officer was justified in assessing the sons of Kumudeswar Goswami as his legal representatives. The Tribunal, after considering the extract of the deed of gift given in the order of the Appellate Assistant Commissioner and other circumstances, held that the gifted properties belonged exclusively to Kumudeswar Goswami as his separate property. The Tribunal, at the time of hearing, required the learned counsel for the appellant to produce the originals or the copies of the deeds of gifts but the learned counsel expressed his inability to produce them on the ground that they were not readily available and the learned counsel submitted that for this purpose the extracts given in the order of the Appellate Assistant Commissioner might be relied upon and, therefore, the Tribunal relied upon the extracts as found in the Appellate Assistant Commissioners order. The Tribunal held that the gifts relating to the lands were made in 1959 on June 11, 1959, and that 24 shares of M/s. Bahadur Tea Company (P). Ltd. were actually gifted on March 4, 1960, and not in 1956 as contended. The Tribunal also held that the cash gifts of Rs. 90,000 were also made during the assessment year 1960-61. On the above facts, the above-mentioned questions of law have been referred. Let us consider the second question of law first. ;