SMT. JIJEEBAI SHINDE v. COMMISSIONER OF GIFT-TAX
[Citation -1984-LL-0921-3]

Citation 1984-LL-0921-3
Appellant Name SMT. JIJEEBAI SHINDE
Respondent Name COMMISSIONER OF GIFT-TAX
Court ITAT
Relevant Act Income-tax
Date of Order 21/09/1984
Judgment View Judgment
Keyword Tags land acquisition officer • reasonable opportunity • wealth-tax assessment • statutory obligation • condition precedent • valid assessment • fresh assessment • married daughter • market value • estate duty • sales tax • gift-tax
Bot Summary: On the death of Smt. Lilabai Matkar on December 27, 1971, the applicant, Smt. Jijeebai Shinde, filed gift-tax returns on May 30, 1972, and an order under section 15(3) of the Act was passed by the Gift-tax Officer on March 30, 1979. While the matter was fixed for hearing before the Commissioner of Gift-tax at Bhopal on March 28, 1981, a request made by the assessee's advocate for an adjournment for a fortnight was rejected and by an order passed on March 30, 1981, the Commissioner of Gift-tax set aside the order of assessment passed by the Gift- tax Officer and directed him to make a fresh assessment according to law. The assessee preferred an appeal before the Tribunal, which stands dismissed by order dated June 15, 1982. It is contended by him that no order of assessment could be deemed to have been made unless the same is served on the assessee in accordance with law, as no such order or copy of the same was ever communicated to the assessee; and that the order of the Commissioner of Gift-tax under section 24(2) of the Act is without jurisdiction and bad in law for want of fulfilment of the condition precedent for assumption of jurisdiction. Shri Chaudhary invited our attention to the case of CIT v. Mahabir Prasad Poddar 1974 93 ITR 215 and contended that communication of the order passed by the assessing authority to the assessee is a must. Learned counsel for the Revenue contends that on a plain reading of section 15 of the Act, it does not provide for communication of the assessment order to the assessee. His further contention is that at any rate the assessee had acquired knowledge of the assessment order at least when proceedings under section 24(2) of the Act had been initiated.


JUDGMENT JUDGMENT judgment of court was delivered by V. D. GYANI J.-This is reference under section 26 of Gift-tax Act, 1958 (hereinafter referred to as "the Act"), made by Income-tax Appellate Tribunal, Indore, at instance of assessee, referring following question of law for answer of this court: "Whether, on facts and in circumstances of case, Tribunal was right in holding that CGT had jurisdiction to set aside alleged order of assessment even though it was not served on assessee, when order could not be said to exist unless communicated to party?" Facts necessary for answering this question are that late Smt. Lilabai Matkar made gift of house bearing municipal No. 5, Ramlaxman Bazar, Indore, to her married daughter, Smt. Jijeebai Shinde, by registered gift deed dated April 28, 1971. value of property was declared at Rs. 22,000. By another gift deed dated April 28, 1971, late Smt. Lilabai Matkar gifted house at Sirpur to Shri Chandrakant Shinde and in gift deed, this house was valued at Rs. 3,000. On death of Smt. Lilabai Matkar on December 27, 1971, applicant, Smt. Jijeebai Shinde, filed gift-tax returns on May 30, 1972, and order under section 15(3) of Act was passed by Gift-tax Officer on March 30, 1979. Commissioner reopened same with these observations: "Thus impugned assessment has resulted in underassessment. assessment made by GTO on March 30, 1979, under s. 15(3) is, therefore, erroneous and prejudicial to interests of Revenue within meaning of s. 24(2) of G. T. Act, 1958. I, therefore, set aside said order of assessment passed by GTO and direct him to make fresh assessment according to law after giving assessee reasonable opportunity of being heard." It appears that thereafter Gift-tax Commissioner, finding that Gift- tax Officer had accepted taxable gift at Rs. 20,000 and Rs. 3,000, respectively, although value of houses had been shown at Rs. 22,000 and Rs. 3,000, with note that market value was being ascertained from valuer, issued notice under section 24 of Act stating therein that aforesaid house properties had been agreed to be assessed at Rs. 84,855 in wealth-tax assessment and for purposes of estate duty assessment on death of donor, Smt. Lilabai Matkar, value of two properties was shown at Rs. 69,750. On these grounds, Commissioner of Gift-tax issued notice dated March 18, 1981, under section 24(2) of Act. This notice was served on assessee on March 21, 1981. While matter was fixed for hearing before Commissioner of Gift-tax at Bhopal on March 28, 1981, request made by assessee's advocate for adjournment for fortnight was rejected and by order passed on March 30, 1981 (annexure-A), Commissioner of Gift-tax set aside order of assessment passed by Gift- tax Officer and directed him to make fresh assessment according to law. assessee preferred appeal before Tribunal, which stands dismissed by order dated June 15, 1982. Thereafter, by application, assessee sought reference to this court and Tribunal has referred following question of law for our answer: " Whether, on facts and in circumstances of case, Tribunal was right in holding that CGT had jurisdiction to set aside alleged order of assessment, even though it was not served on assessee when order could not be said to exist unless communicated to party? " Shri Chaudhary, learned counsel for assessee, contends that action of Commissioner of Gift-tax was bad in law and without jurisdiction, as according to him, assessment order, which was sought to be set aside by Commissioner was itself non est. It is contended by him that no order of assessment could be deemed to have been made unless same is served on assessee in accordance with law, as no such order or copy of same was ever communicated to assessee; and that order of Commissioner of Gift-tax under section 24(2) of Act is without jurisdiction and bad in law for want of fulfilment of condition precedent for assumption of jurisdiction. To substantiate his argument, learned counsel has placed reliance on Raja Harish Chandra Raj Singh v. Land Acquisition Officer, AIR 1961 SC 1500, Mohamed Sulaiman & Co. v. Dy. Commr. of Comml. Taxes [1964] 15 STC 593 (Mad), Babulal Banwarilal v. CST [1984] 17 Vikraya Kar Nirnaya 63 and CIT v. Oriental Rubber Works [1984] 145 ITR 477 (SC). In case of Raja Harish Chandra, AIR 1961 SC 1500, their Lordships of Supreme Court were interpreting sections 12 and 18 of Land Acquisition Act. Section 12 of Land Acquisition Act relates to making of award by Collector, which if accepted by owner of land or person interested therein, would not necessitate any further proceedings. If, however, award made under section 12 of Land Acquisition Act is not acceptable, section 18 of said Act gives statutory right to owner or person interested in land acquired to have question of compensation determined by court. While dealing with these provisions, their Lordships of Supreme Court observed that necessary concomitant of making of award must also involve communication thereof to party concerned. It was in this context that their Lordships made following observations (p. 1503): " Thus considered, date of award cannot be determined solely by reference to time when award is signed by Collector or delivered by him in his office: it must involve consideration of question as to when it was known to party concerned, either actually or constructively. " case of Babulal Banwarilal deals with suo motu power of revision under section 39(2) of M. P. General Sales Tax Act, 1958, wherein it has been held by this court that where Sales Tax Officer has failed to pass any order imposing or refusing to impose penalty, it was not open to Additional Commissioner to exercise power under section 39(2) of suo motu revision for imposing penalty. In case of CIT v. Oriental Rubber Works [1984] 145 ITR 477 (SC), their Lordships of Supreme Court, while considering statutory obligation of Revenue to communicate to assessee not merely Commissioner's approval but also reasons recorded by authorised officer or Income-tax Officer on basis of which approval has been obtained, particularly where books and documents of assessee seized in search conducted pursuant to authorisation issued under sub-section (1) of section 132 of Income-tax Act, 1961, are retained beyond period of 180 days from date of seizure, have held (p. 483): " It is true that sub-section (8) does not in terms provide that Commissioner's approval or recorded reasons on which it might be based should be communicated to concerned person but in our view since person concerned is bound to be materially prejudiced in enforcement of his right to have such books and documents returned to him by being kept ignorant about factum of fulfilment of either of conditions, it is obligatory upon Revenue to communicate Commissioner's approval as also recorded reasons to person concerned. In absence of such communication, Commissioner's decision according his approval will not become effective. " Shri Chaudhary invited our attention to case of CIT v. Mahabir Prasad Poddar [1974] 93 ITR 215 (Cal) and contended that communication of order passed by assessing authority to assessee is must. In this case, their Lordships of Calcutta High Court were considering implication of section 132(8) of Income-tax Act, 1961, relating to grant of approval for retention of account books beyond stipulated period of 180 days and it was held that approval order must be communicated to assessee. Their Lordships observed as follows (head note): " order made by authority under statutory provision does not become effective and valid until it is served upon party affected. It is possible for Commissioner to give his approval to proposal for retention of books any number of times and for any length of period subject to limitation in proviso to sub-section (8). Against each order of approval made by Commissioner, person legally entitled to books has statutory right under sub-section (10) to apply to Board for return of books to him. This statutory right would be completely denied to party legally entitled to books if he is not told when order of approval was made and for what length of time. Assuming that person legally entitled to books is different from person from whose custody books were seized, Income-tax Department's obligation will be fully discharged if approval of Commissioner is communicated to person from whose custody books were seized. " This decision has further been affirmed by their Lordships of Supreme Court in case of CIT v. Oriental Rubber Works [1984] 145 ITR 477. Thus, principle, which could be deduced from these authorities is essential requirement of communication of order passed by assessing authority to assessee concerned. It is not in dispute that assessment order dated March 30, 1979, was not served on assessee at least till time Commissioner of Gift-tax initiated proceedings under section 24(2) of Act. It is thus clear that there was no valid assessment order communicated to assessee in existence so as to entitle Commissioner to invoke jurisdiction under section 24(2) of Act and exercise powers of suo motu revision therein. Learned counsel for Revenue contends that on plain reading of section 15 of Act, it does not provide for communication of assessment order to assessee. His further contention is that at any rate assessee had, in fact, acquired knowledge of assessment order at least when proceedings under section 24(2) of Act had been initiated. Therefore, action under section 24(2) of Act cannot be assailed by assessee. If this contention of learned counsel were to be accepted, it would result in deprivation of valuable right of appeal by assessee. It was suggested by learned counsel for Revenue that net effect of order passed by Commissioner of Gift-tax is nothing but reassessment. This suggestion also cannot be accepted in view of limitations prescribed by sub- section (2) of section 16A of Act. In view of foregoing discussion, our answer to question referred is in negative, in favour of assessee and against Department. There shall be no order as to costs. *** SMT. JIJEEBAI SHINDE v. COMMISSIONER OF GIFT-TAX
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