Gift-tax revision upheld where undervaluation and inadequate enquiry justified setting aside the assessment for fresh proceedings.

Revisionary power under the Gift-tax Act was upheld where the assessment was erroneous and prejudicial to revenue because the Gift-tax Officer accepted the assessee's old investment figure without enquiring into fair market value on the date of gift. The Commissioner had set aside the assessment only for fresh enquiry, with an opportunity for the assessee to rebut the material, rather than enhancing the assessment on the valuation report. In that setting, prior supply of the valuation report was not required before the revisional order, and no breach of natural justice was found. The challenge to the revision therefore failed.

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Issues: Whether the Commissioner was justified in exercising revisionary powers under section 24(2) of the Gift-tax Act, 1958 to set aside the gift-tax assessment on the ground of undervaluation and lack of proper enquiry, and whether the order was vitiated for want of supply of the valuation report or breach of natural justice.

Analysis: The Commissioner did not enhance the assessment on the basis of the valuation report but set aside the assessment for fresh enquiry after giving the assessee an opportunity to rebut the material. The assessment order was found to be erroneous and prejudicial to the interests of the revenue because the Gift-tax Officer had accepted the assessee's actual investment under an old agreement as the value of the gifted property without making the necessary enquiry into fair market value as on the date of gift. In such circumstances, the absence of prior supply of the valuation report did not invalidate the revisional order, since the assessee would have a full opportunity before the Gift-tax Officer in the fresh assessment proceedings.

Conclusion: The revision under section 24(2) was valid, there was no breach of natural justice, and the assessee's challenge to the Commissioner's order failed.

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