Assessment year cannot be shifted for gift-tax where the same sale transaction was already taxed as capital gains in the correct prior year.

For gift-tax purposes, a valuation report obtained under section 15(6) could not be treated as material to reopen or shift a deemed gift into assessment year 1993-94 when the underlying sale transaction had already been assessed to capital gains in assessment year 1992-93. Because the transaction was found to have occurred in the earlier previous year and tax had already been levied and paid, there was no basis to characterise the same transaction again in a later assessment year as an escaped deemed gift. The defect was substantive, not merely procedural, since it affected the very assessment year and the validity of the reopening basis.

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Issues: Whether, for the purpose of gift-tax, a valuation report obtained under section 15(6) of the Gift-tax Act, 1958, could be treated as material to form a belief under section 16(1) of the Act that a deemed gift had escaped assessment in assessment year 1993-94, when the underlying sale transaction had already been assessed to capital gains in assessment year 1992-93.

Analysis: The sale transaction of the property was found to have taken place in the previous year relevant to assessment year 1992-93, and capital gains tax had already been levied and paid on that transaction. On that footing, the same transaction could not be shifted to assessment year 1993-94 for the purpose of treating the alleged undervaluation as a deemed gift. The Tribunal erred in treating the defect in calling for the valuation report as merely procedural, since the real error went to the substance of the assessment year itself. Once the transaction was already accepted in assessment year 1992-93, there was no basis to invoke gift-tax for the same transaction in assessment year 1993-94.

Conclusion: The question was answered in the negative, in favour of the assessee and against the Revenue. The Tribunal's order was set aside and the appeal was allowed.

Ratio Decidendi: The same transaction cannot be subjected to tax in a different assessment year on a new characterisation when its year of occurrence has already been determined and taxed in the correct prior year; a mistake that alters the very assessment year is substantive, not procedural.

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