MANAKLAL MOTILAL AGRAWAL Vs. COMMISSIONER OF GIFT TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Indore, has made this reference under Section 26(1) of the Gift-tax Act, seeking our opinion on the following question:

(2.) THE facts out of which this question arose are very simple. Applicant, Manaklal Motilal Agarwal, was carrying on the business of plying passenger buses for the last many years. On August 21, 1968, he converted this proprietary business into a partnership business transferring 25% share to his son, Jawaharlal, and 12.5% each to Arvind Kumar and Subhas-chandra. Gift-tax proceedings were initiated by the GTO under Section 16 of the G.T. Act. In response to the notice the assessee filed a nil return and contended that the transaction did not amount to a gift. THE GTO estimated the value of the gift at Rs. 2,26,100 and assessed it accordingly. On appeal, the Commissioner of Income-tax (Appeals) held that the transaction amounted to a gift and the assessee was liable to pay gift-tax thereon. He, however, found that the GTO did not afford proper opportunity to the assessee for valuation of the assets and calculation of the goodwill. He, accordingly, set aside the assessment and remanded the case to the GTO to make a fresh assessment after giving full opportunity of being heard to the assessee.

(3.) WE, therefore, hold that, on the facts and circumstances of the case, the Appellate Tribunal was right in holding that Commissioner (Appeals) had the power as well as justification to set aside the GTO's order and remand the case to him instead of quashing his order.