Substituted service and valuation findings: prior settlement barred the jurisdictional challenge, while land valuation remained a factual issue.

An assessee who accepted in settlement that gift-tax proceedings were validly initiated and would not be challenged except on valuation could not later attack substituted service of notice or the assumption of jurisdiction under section 16(1) of the Gift-tax Act, 1958; the prior acceptance of the factual basis for service by affixation made the challenge untenable. The Tribunal therefore erred in quashing the assessment for want of valid service. On valuation, findings that the lands were agricultural and that the declared value was justified were supported by revenue records, official material and the date of gift, and were purely factual. No referable question of law arose on that issue.

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Issues: (i) Whether the assessee could, despite the settlement and acceptance of the proceedings as validly initiated, challenge the validity of substituted service of notice and the assumption of jurisdiction under section 16(1) of the Gift-tax Act, 1958. (ii) Whether the findings that the gifted lands were agricultural lands and that the assessee's declared valuation was justified gave rise to a referable question of law.

Issue (i): Whether the assessee could, despite the settlement and acceptance of the proceedings as validly initiated, challenge the validity of substituted service of notice and the assumption of jurisdiction under section 16(1) of the Gift-tax Act, 1958.

Analysis: The assessee had accepted in the settlement that the gift-tax proceedings were validly initiated and would not be challenged except on valuation. The factual basis recorded for service by affixation had thus been accepted, and the Revenue was not required to adduce further evidence to sustain the order authorising substituted service. The defect found by the Tribunal in the order under Order V, Rule 20 of the Code of Civil Procedure, 1908 could not survive once the underlying factual finding of evasion of service stood concluded by the settlement.

Conclusion: The challenge to substituted service was not open to the assessee, and the Tribunal was not justified in quashing the assessment for want of valid service; the issue was answered against the assessee and in favour of the Revenue.

Issue (ii): Whether the findings that the gifted lands were agricultural lands and that the assessee's declared valuation was justified gave rise to a referable question of law.

Analysis: The Tribunal's conclusion on the agricultural nature of the land and its valuation was based on the award of the Land Acquisition Collector, khasra girdwari, revenue records, official statements, affidavits, and the date of gift. The relevant valuation date was the date of gift, and later acquisition-related developments could not displace that factual determination. The findings were thus supported by evidence and were purely factual in character.

Conclusion: No referable question of law arose on valuation, and the Revenue's petition on that aspect was dismissed; the issue was answered in favour of the assessee.

Final Conclusion: The Revenue succeeded on the jurisdictional/service issue, while the assessee succeeded on the valuation issue, resulting in a partial success for both sides with no order as to costs.

Ratio Decidendi: Where an assessee has accepted the validity of proceedings and the factual basis for substituted service, a later challenge to that service cannot succeed on the ground of want of material; and a valuation determination resting on evidence of the land's character and the relevant date of gift is a finding of fact not ordinarily giving rise to a referable question of law.

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