COMMISSIONER OF GIFT TAX Vs. PALANIAPPA TRANSPORTS

JUDGEMENT

(1.) THE Tribunal has held that payments shown as commission payments to other firms had, in fact, not been made and those amounts had also been included in the wealth of the assessee and subjected to wealth-tax. It was in the light of that finding of the Tribunal, which i was also the finding of the CGT(A), the Tribunal has set aside the assessment to gift-tax. Even according to the Revenue, there was no gift at all, the amount shown as having been credited to the accounts of the associated firms and individuals having at all times remained with the assessee and having also been taxed as part of the net wealth of the assessee. Though the assessee had claimed that the payments had been made, that claim had also been disallowed and the amount shown as having been credited to the accounts of the associated firms was included in the assessment of the assessee, THE Revenue's contention that the assessee had agreed, as part of the settlement to subject itself to gift-tax on the amount credited to the accounts of the associated firms, even though those amounts had at all times remained with the assessee and no gift had been accepted by the alleged donees, was therefore, rejected by the Tribunal as offering a sufficient basis for sustaining the assessment to gift-tax when in fact there was no gift at all. THE Tribunal has rightly held that the Revenue cannot subject the assessee to tax even when the assessee had not been a party to any transaction which would render it liable for tax by making the assessee file a return as part of the settlement for certain assessment years. It is one thing to disallow the amount claimed by the assessee as expenditure and treating the payment as not having been made, but quite another thing altogether to regard the amounts not paid as having been gifted and subject the assessee to tax on the transactions which had not taken place at all. We, therefore, answer the questions referred to us for the asst. yrs. 1966-67 to 1973-74 regarding the justification for the Tribunal's order and settling aside the assessment to gift-tax despite the fact that the assessee had filed the gift-tax returns as part of the assessment for some of the assessment years, in favour of the assesses and against the Revenue.