MADHAVAKRISHNAN K Vs. COMMISSIONER OF GIFT TAX

JUDGEMENT

(1.) IN this reference under S. 26(1) of the GT Act, the following questions have been referred :

(2.) THE GTO started proceedings under S. 16(1) of the GT Act, on the basis that by reason of the omission or failure on the part of the assessee to make a return under S. 13 in respect of the taxable gift made by him, the taxable gift has escaped assessment. In response to the notice, Paramayee Ammal, the donor, filed a return on 29th Jan., 1971. She stated : "I have given agricultural lands to my daughter, Srimati Lakshmi Ammal, in May, 1956. I have not gifted any property to anybody later. I am not liable under the GT Act.'' The donor died on 4th April, 1971, and her son, Madhavakrishnan Pillai, was brought on record as her legal representative. He wanted the donee also to be brought in as legal representative. Accordingly, the donee was given a notice and she appeared and contended that there was no gift at all in the relevant previous year, i.e., for the asst. year 1967 -68. The GTO had before him a compromise decree passed in O.S. No. 42 of 1966, dt. 18th April, 1966. It was contended for the assessee that the compromise decree did not create any interest in any immovable property and that it merely declared the pre -existing rights of the donee. It was admitted by the donee that there was no written document in her favour of the year 1956. She claimed to be in possession of the properties since 1956.

(3.) THE assessee appealed to the AAC. The contention before him also was that there was no taxable gift in the assessment year under consideration and that the lands had been gifted even in the year 1956 when the GT Act had not been enacted. The AAC rejected these contentions. He pointed out that the patta had not been transferred in the donee's favour and that she had been recognized by the Agrl. ITO only after the decree was passed in the suit mentioned above and that, therefore, the title to the property was obtained by the donee only in the year 1966. He, therefore, confirmed the assessment to gift -tax.