M.M. Mahajan vs Gift Tax Officer

S.S. Sodhi, J.—The challenge in this bunch of writ petitions is to the notice issued by the Gift-tax Officer to the petitioners on March 18, 1985, u/s 16(1)(a) of the Gift-tax Act, 1958.

The matter here pertains to the assessment year 1977-78. All the petitioners were partners of the firm, Messrs. Mahajan International. On December 31, 1986, in pursuance of an agreement for sale entered into between the parties, Mahajan International sold the running business of this firm with all its assets and liabilities to Panipat Foods Limited for a sum of Rs. 20,21,767.68. The Inspecting Assistant Commissioner held the market value of the business of the firm to be more than 15 per cent, of the consideration shown in the sale deed for the transfer of the business, the fair market value" as assessed by the Inspecting Assistant Coqnmis-sioner being Rs. 69,26,000.

The sale price of the business of the assessee-firm was credited to the accounts of the partners of the firm, that is, the petitioners. Later, when the fair market value was assessed by the Inspecting Assistant Commissioner at Rs. 69,26,000, the difference between the price as shown in the sale deed and that as assessed by the Inspecting Assistant Commissioner was sought to be taxed as a deemed gift u/s 4(1)(a) of the Gift-tax Act, 1958, and as no return had been filed under the said Act, the impugned notice u/s 16(1)(a) thereof was issued to all the petitioners. It is this notice that is now sought to be challenged in these writ petitions on various grounds primarily on the plea that the notice had been issued without jurisdiction.

The petitioners are, however, confronted with the preliminary objection that they have available to them an alternative remedy under the Gift-tax Act, 1958, which provides for a first and then a second appeal against any assessment orders as may be framed against them, and therefore, the present writ petitions are not maintainable. This is indeed an objection that must prevail. ,A plain reading of the provisions of the Gift-tax Act would show that it is open to the petitioners to seek their appropriate remedy by filing a reply to the notice served upon them and if they are aggrieved by any order that may be passed thereon, they have available to them the further remedy of appeal. Such being the circumstances, no occasion is provided here for entertaining the present writ petitions. The petitioners are, accordingly, relegated to their alternative remedies under the Act.

These writ petitions are, accordingly, hereby dismissed. In the circumstances, however, there will be no order as to costs.