BIRESWAR SARKAR Vs. GIFT TAX OFFICER

JUDGEMENT

(1.) In this writ application, the writ petitioner has challenged the notice issued under Section 16 of the Gift-tax Act, 1958 (referred to as "the Act"). By the impugned notice, the Gift-tax Officer has sought to assess the petitioner under the Act in respect of the assessment year 1982-83.

(2.) The respondents had disclosed their reasons recorded for the issuance of the impugned notice on December 1, 1987. In that notice, the Gift-tax Officer has said that by an agreement dated March 27, 1982, the petitioner had sold his business which he was carrying on under the name and style of "B. Sarkar Johuri" to a private limited company known as B. Sarkar Johuree Private Limited. By that agreement, the petitioner was to receive a sum of Rs. 3,29,567.09 being the book value of the petitioner's assets from the company. It is further stated that the petitioner was "interested from both sides" and that consequently the sale was made at a consideration less than the market price. According to the Gift-tax Officer, the value of assets over liabilities was reduced by a sum of Rs. 68,20,761. The difference between the actual consideration and the market value being considerable, the petitioner was liable to pay gift-tax in respect of such difference under Section 4(1)(a) of the Act. Additionally, a part of the consideration under the agreement for the sale of the assets by the petitioner to the company, a sum of Rs. 94,567 which was to have been received by the petitioner had not been so received. This was also treated as a deemed gift.

(3.) It appears that on January 28, 1983, the petitioner filed a return for the assessment year 1982-83 in response to the notice under Section 16(1). In the return the taxable gift was shown as nil.