Valuation enquiry failure can justify revision; non-supply of a report is not fatal where fresh hearing follows.

Failure to make necessary enquiry into the valuation of gifted property can render an assessment erroneous and prejudicial to the revenue, justifying revision under section 24(2) of the Gift-tax Act, 1958. Here, the assessment accepted the assessee's old investment cost as market value without adequate investigation despite the time gap and possible appreciation, so revisional jurisdiction was properly invoked for fresh enquiry. Non-supply of the valuation report did not vitiate the revisional order because it was not used to make an immediate enhancement, and the assessee was to be heard in the de novo proceedings. The revisional order was sustained.

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Issues: (i) Whether the Commissioner's revisional order was vitiated for want of supply of the valuation report and breach of natural justice; (ii) Whether the original assessment was erroneous and prejudicial to the interests of the revenue for failure to make proper enquiry into the valuation of the gifted property, justifying action under section 24(2) of the Gift-tax Act, 1958.

Issue (i): Whether the Commissioner's revisional order was vitiated for want of supply of the valuation report and breach of natural justice.

Analysis: The Commissioner did not use the valuation report to enhance the assessment straightaway. He relied on it only to examine whether the Gift-tax Officer had properly applied his mind, and he expressly directed that the assessee be given an opportunity to meet the report in the fresh assessment proceedings. Since the order merely set aside the assessment and did not conclude the valuation controversy against the assessee, the non-supply of the report at that stage did not amount to denial of natural justice.

Conclusion: The revisional order was not invalid on the ground of breach of natural justice.

Issue (ii): Whether the original assessment was erroneous and prejudicial to the interests of the revenue for failure to make proper enquiry into the valuation of the gifted property, justifying action under section 24(2) of the Gift-tax Act, 1958.

Analysis: The assessment accepted the assessee's actual investment under an old agreement as the fair market value without adequate enquiry, despite the long interval before the gift and the evident possibility of rise in value. The failure to make a proper valuation enquiry rendered the assessment prima facie erroneous and prejudicial to the revenue. The revisional power could validly be exercised because the Commissioner was entitled to direct a fresh enquiry where the original assessment lacked necessary investigation into the market value question.

Conclusion: The Commissioner was justified in invoking revisional jurisdiction under section 24(2) of the Gift-tax Act, 1958.

Final Conclusion: The revisional order was sustained, and the assessee's challenge failed because the assessment was found to have been completed without the necessary enquiry into valuation.

Ratio Decidendi: An assessment may be treated as erroneous and prejudicial to the interests of the revenue where the assessing authority fails to make necessary enquiries on a material issue, and a revisional order setting aside such assessment for fresh enquiry is not vitiated merely because a subsequent valuation report was not supplied before the order was passed, so long as the assessee is afforded an opportunity in the de novo proceedings.

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