BAI AIMAI GUSTADJI KARAKA Vs. GIFT TAX OFFICER

JUDGEMENT

(1.) THE petitioner is an assessee owning an immovable property situate in Ahmedabad. The property consists of a plot of land admeasuring 5,484 square yards on which there are twelve superstructures. The superstructures occupy nearly 40 per cent of the said plot of land. The remaining 60 per cent of the said plot of land is not built upon. During the relevant year of account corresponding to the asst. year 1968 69, the assessee made a gift to the extent of two third interest in the said property in favour of her two relatives. The gift was effected by a registered deed which was executed on 2nd Dec., 1967, and the value of the entire property which was the subject matter of the gift was therein put at Rs. 2,17,000. In due course, the petitioner furnished to the GTO having jurisdiction in the matter a return in the prescribed form in which the taxable gift was valued at Rs. 1,34,667. This figure was arrived at by computing the value of the two third interest on the basis of the value of the entire property as shown in the gift deed and by deducting from the said amount a sum of Rs. 10,000 in view of the statutory exemption given under S. 5(2) of the GT Act, 1958 (hereinafter referred to as "the Act "). It appears that the GTO was not satisfied with the return and he, therefore, issued a notice under S. 15(2) on the assessee directing her to produce evidence in support of the return. The assessee accordingly produced before the GTO the report dt. 11th July, 1968, of a Government approved valuer valuing the entire property in question as on 31st March, 1968. The approved valuer valued the superstructures and the land upon which they were constructed together at Rs. 4,69,476. It may be stated that 60 per cent of the open land comprised in the property in question which was not built upon was not taken into consideration by the approved valuer while evaluating the property since, in his opinion, it had "no value as it is used for passages, car parking, etc". The GTO accepted the report and accordingly valued the taxable gift at Rs. 3,13,000. After deducting from the said amount a sum of Rs. 10,000 being the amount of the statutory exemption, he determined the value of the taxable gift at Rs. 3,03,000 and assessed gift tax accordingly. This order of assessment was made on 3rd Oct., 1970.

(2.) ON 15th Feb., 1972, the GTO served upon the petitioner a notice under S. 16(1) of the Act requiring her to file a fresh return in the prescribed form in respect of the abovementioned gift. The GTO stated in the notice that he had reasons to believe that the taxable gift had escaped assessment and that he, therefore, proposed to initiate reassessment proceedings. On 6th April, 1972, the petitioner wrote to the GTO stating that she had filed an approved valuer's report in the course of the original assessment proceedings as required by the GTO and that the assessment was finalised on the basis of the said report. In these circumstances, submitted the petitioner, there was no concealment or underassessment and she presumed that the reopening of the case appeared to have been decided upon "at the instance of audit instruction" and requested the GTO to let her know whether her presumption was correct. The GTO by his letter dt. 17th April, 1972, informed the petitioner that her case had been "rightly and legally reopened" under S. 16 and directed the petitioner to file the gift tax return and co operate with the Department in finalising her reopened assessment. The petitioner has, thereupon, filed the present petition challenging the validity of the notice under S. 16(1) issued by the GTO.

(3.) IN the submission of the GTO, the information gathered from the audit report amounted to "information" within the meaning of s. 16(1)(b) of the Act giving jurisdiction to the GTO to assess or reassess the assessee in respect of any taxable gift which had escaped assessment. It would thus appear that the stand of the GTO in the affidavit filed in opposition to the petition was that the impugned notice was issued both under S. 16(1)(a) and 16(1)(b) of the Act. We may state, however, that at the hearing of this petition Mr. K. H. Kaji, learned advocate appearing on behalf of the Revenue, has relied only upon the provisions of S. 16(1)(b) and tried to support the notice only on the basis of the said provisions. According to Mr. Kaji the letter dt. 7th Dec., 1970, which is annexure " A" to the affidavit in opposition of the GTO, amounted to "information" in consequence of which the GTO had reason to believe that taxable gift had escaped assessment and he particularly relied upon the following portion of the said letter which, in his submission, amounted to "information" within the meaning of S. 16(1)(b):