RANGAPALLI BASAMMA Vs. GIFT TAX OFFICER HINDUPUR

JUDGEMENT

(1.) The petitioner is the widow of late Sri Siddappa of Gorantla who dies on 23-11-1961. Late Siddappa left behind him his widow, the petitioner his daughter Gowramma by a deceased wife, and his permanently kept mistress Mudiramma. About five years prior to his death Siddappa made a gift of Rs. 1,38,000.00, Rs. 69,000.00 to T. M. Nagaraju son of Bhagirathamma, Daughter of the petitioner and Rs. 69,000.00 to Mallikarjunappaa and Vaiswanadhapa, sons of Gowramma. Bhagirthmma predeceased her father. By a will dated 10-6-1957 Siddappa bequeathed the properties mentioned in the A Schedule annexed to the will to Gowramma with limited interest and thereafter to her sons, properties mentioned in the B Schedule to the petitioner with limited interest and thereafter to her daughter and her daughters sons and the properties mentioned in the C Schedule to Mudiramma with absolute rights. After the death of Siddappa the Assistant Controller of Estate Duty passed an order dated 8-10-64 treating the petitioner as the accountable person and determining the net value of the estate at Rs. 2,08,354.00 . The Assistant Controller treated the sum of Rs. 1,38,000.00 as an asset of the estate on the ground that the gifts of cash to the grandsons were not bona fide gifts because no gift tax was paid thereon. On 8-3-65 the Assistant Controller issued notices to the petitioner Gowramma and Mudiramma calling upon them to pay the proportionate estate duty which he determined at Rs. 5430-96 in the case of Gowramma, Rs. 5405-52 in the case of the petitioner and Rs. 167 in the case of Mudiramma. Meanwhile the accountable person, namely the petitioner, preferred an appeal to the appellate Controller of estate Duty objecting to the inclusion of the sum of Rs. 1,38,000/- in the estate of the deceased. The appellate Controller allowed the appeal on 24-8-65 and held that the amount could not be treated as an asset of the estate. The Department preferred an appeal to the Income-tax Appellate Tribunal. The Tribunal rejected the appeal by its order dated 16-6-67. The Tribunal upheld the gifts as true and valid. The Tribunal also relied on the circumstance that the will D/- 10-6-57 made no reference to the cash of Rs. 1, 38,000.00 and inferred therefrom that the amount of cash had ceased to be part estate of Sidappa. After the disposal of the appeal by the appellate Controller and during the pendency of the Department appeal before the Appellate Tribunal the Gift Tax Officer, Hindupur issued notices to the petitioner under Section 16(1) of the Gift Tax Act intimating her that a gift which was assessable to tax for the assessment year 1958-59 had escaped assessment and proposing to assess the said gift. The petitioner thereupon filed the present application for the issue of a Writ of Mandamus to prohibit the Gift Tax Officer form taking proceeding in pursuance of these notices.

(2.) The petitioner alleged in the affidavit filed in support of the Writ Petition that there were three legal representatives of the deceased Siddappa, herself, Gowramma and Mudiramma and that the Gift Tax Officer issued a notice under Section 16(1) of the Gift Tax Act only to her and not to the other two legal representatives. She therefore stated that the notice issued to her was bad in law. The Gift Tax Officer filed a counter-affidavit referring to the fact that in the estate duty proceedings the petitioner was treated as the accountable person and stating that he had no knowledge of nay other legal representatives of the deceased except the petitioner. According to him, there was no satisfactory reason to believe that there were other legal representatives of the deceased apart form the petitioner. he put the petitioner to strict proof of the allegation that there were other legal representatives. To say the least, the counter-affidavit of the Gift Tax Officer is very unsatisfactory. It was his duty to make an enquiry regarding the existence of legal representatives other than the petitioner if not before issuing the notice to the petitioner, at least after the petitioner file the present Writ Petition making an express allegation that there were other legal representatives. to say that he had no satisfactory reason to believe that there were other legal representatives, is only to pretend to be blind to glaring facts. In his counter-affidavit the Gift Tax Officer referred to the proceedings of the Assistant Controller of Estate Duty, the appellate Controller of estate Duty and the appellate Tribunal. The order of the Appellate Tribunal referred tot he will executed by late Siddappa where in he referred to his daughters, grandchildren and his mistress, apart from the petitioner. The Assistant Controller of Estate Duty had made an order apportioning the duty payable between the petitioner, (and Mudiramma?).

(3.) In the face of these facts we do not see how the Gift Tax Officer could venture the statement that he had no knowledge that there were other legal representatives and that there was no satisfactory reason to believe that there were other legal representatives. It can only mean that the mean that the Gift Tax Officer was in different and did not care to enquire into the question as to who were the legal representatives of Siddappa and to acquaint himself with the necessary and relevant facts. Sri Ananta Babu, learned counsel for the Department tried to urge that even if here were other legal representatives, there was nothing to indicate that the Gift Tax Officer was in a position to know who the others were or that there were other legal representatives in existence on the date of the issue of notice. We are not a little surprised at this argument because if notices were issued to the petitioner. Gowramma and Mudiramma by the Assistant Controller of Estate Duty apportioning the duty between them and if the reason for the notice of the Gift Tax Officer was the infructuous attempt of the Assistant Controller to levy estate duty we see no reason why the Gift Tax Officer should have assumed that the petitioner alone was alive and that the other were not.