Revisional power over gift-tax exemption claims can justify further enquiry where facts suggest a colourable device.

Revisional jurisdiction under the Gift-tax Act extends to calling for further enquiry where an assessment appears to grant exemption without examining surrounding circumstances. In this matter, the exemption claim was based on gifts said to have been made in Jammu and Kashmir, but the admitted flow of funds, account openings, cheque issuances to trusts, and rapid rerouting of amounts raised concern about a possible colourable device. The Commissioner was entitled to look beyond the assessment record to verify whether the order was erroneous and prejudicial to revenue, and the assessment could be set aside for fresh consideration after proper enquiry.

---

---

Issues: Whether the Commissioner could invoke revisional jurisdiction under section 24(2) of the Gift-tax Act, 1958 by making enquiries beyond the Gift-tax Officer's record and whether the assessment granting exemption under section 5(1)(ii)(a) of the Gift-tax Act, 1958 required interference for want of enquiry into the surrounding circumstances.

Analysis: The assessment granted exemption on a claim that the gifts were made in Jammu and Kashmir. On the admitted sequence of events, the funds were moved from Ahmedabad to Srinagar, accounts were opened there, cheques were issued to multiple trusts, and the amounts were quickly routed back. The Gift-tax Officer accepted the claim without examining the surrounding circumstances or the possibility of a colourable device. In revisional proceedings, the Commissioner was entitled to call for such enquiry as was necessary to satisfy himself whether the assessment was erroneous and prejudicial to the interests of revenue. The power of revision was not confined to a mechanical inspection of the assessment record where further enquiry was required to test the correctness of the exemption.

Conclusion: The Commissioner's exercise of revisional power was valid, and the direction to make fresh assessment after further enquiry was upheld against the assessee.

Final Conclusion: The assessment order was validly set aside for fresh consideration, and the exemption claim was left to be examined afresh after proper enquiry.

Ratio Decidendi: Where the assessment record discloses circumstances suggesting that a claimed tax exemption may rest on a colourable device or incomplete enquiry, the revisional authority may lawfully require further investigation and set aside the assessment if it is erroneous and prejudicial to revenue.

---