Indirect gift transfers and revisional power under tax law were upheld where original assessment ignored material transactions.

Transfers structured as an indirect device to secure the statutory benefit or avoid the operation of section 9(2) of the Agricultural Income-tax Act, 1950 were treated as not independent and unconnected where the two gift documents were found to benefit the wife and minors. Because the original assessments had not considered these material transactions, suo motu revision under section 34 was justified. The revisional conclusion that the gifts fell within the mischief of section 9(2) was upheld, and the Revenue's position prevailed.

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Issues: Whether the gifts under documents Nos. 210 and 211 of 1972 were independent and unconnected so as to fall within section 9(2) of the Agricultural Income-tax Act, 1950, and whether the exercise of suo motu revision under section 34 was justified.

Analysis: The agricultural income-tax assessments had been completed initially without considering the effect of the two gift documents. The Deputy Commissioner found that the transfers were structured to benefit the wife and minors and operated as an indirect method of attracting the mischief of section 9(2) of the Act. Since the relevant transactions were not considered at the original assessment stage, the invocation of revisional power under section 34 was held to be justified. The Court declined to go beyond the referred question and accepted the Deputy Commissioner's conclusion that the transfers were not independent or unconnected for the purpose of the statutory provision.

Conclusion: The question was answered in the negative. The gifts were held not to be independent and unconnected for the purpose of section 9(2), and the revisional action under section 34 was upheld, in favour of the Revenue and against the assessee.

Ratio Decidendi: Where a transfer is found to be an indirect device to secure the statutory benefit or to avoid the operation of a taxing provision, revisional interference is justified if the original assessment failed to consider the material transaction.

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