Commissioner of Gift Tax vs A. Jawahar Palaniappan

R. Jayasimha Babu, J.—After having heard counsel at some length and also after having perused the records placed before us by learned

counsel for the Revenue. We are satisfied that there are no questions of law which require our consideration and which can be said to have arisen

out of the order of the Tribunal.

Admittedly, the proceeding against the assessee was initiated long after the completion of the year in which the alleged gift was made, the shares

which are said to have been sold for inadequate consideration having been transferred on March 24, 1983. The assessee had not filed any return

under the Gift-tax Act for that year and there was no proceeding in respect of the assessee which had culminated in an order u/s 15(3) or 15(1) of

the Gift-tax Act. The notice that was issued u/s 16 was only issued on December 10, 1990. That notice could only have been issued u/s 16(1B)(b)

of the Act. That provision reads as under :

(b) In a case, other than a case falling under Clause (a), no notice shall be issued under Sub-section (1) by an Assessing Officer, who is below the

rank of Deputy Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the Deputy Commissioner is

satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice"".

The pre-condition for the initiation of proceedings u/s 16(1B)(b) of the Act is the satisfaction of the Deputy Commissioner on the reasons

recorded by the Assessing Officer that the case is a fit one for the issue of that notice under the provision.

The records relating to the notice have been placed before us. It is seen from a perusal of the records that the Deputy Commissioner had not,

after examining the reasons recorded by the Assessing Officer, formed the opinion that it was a fit case for issue of notice. The Assessing Officer

has taken it on himself and decided that it is a fit case for issue of notice. That was wholly insufficient for invoking Section 16(1B)(b) of the Act. In

cases, where proceedings were commenced four years after the end of the relevant assessment year and where no order had been made u/s 15(3)

of the Act, Parliament has expressly provided that such proceedings can only be initiated on the satisfaction of the Deputy Commissioner and not

of any authority below that level.

The Tribunal has rightly held that the proceedings initiated by the Assessing Officer were illegal. We do not see any error in the order of the

Tribunal having regard to the statutory provision, the facts on record and also the facts which we have gathered from a perusal of the records

which have been placed before us by learned counsel for the Revenue.

The tax case petition, is, therefore, dismissed.