Jurisdiction under section 21A of the Gift-tax Act depends on inability to trace the donor after due diligence.

Section 21A of the Gift-tax Act permits assessment of a donee only where the Assessing Officer, after due and reasonable diligence, cannot find the donor for service of notice under section 13(2) or section 16. That jurisdictional condition is mandatory and must be established before proceeding against the donee. On the stated facts, no sufficient effort to trace the donor was shown and the inability to find the donor was not demonstrated, so the statutory basis for assuming jurisdiction was absent. The resulting assessment on the donee was therefore invalid, and cancellation of the assessment was upheld.

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Issues: Whether the Assessing Officer could validly assume jurisdiction to assess the donee under section 21A of the Gift-tax Act in the absence of a finding that the donor could not be found after due and reasonable diligence.

Analysis: Gift-tax is chargeable on gifts made by the donor, and section 21A applies only when the Assessing Officer, after using all due and reasonable diligence, cannot find the donor for the purposes of service of notice under section 13(2) or section 16. The statutory precondition is jurisdictional and must be satisfied by the Assessing Officer before proceeding against the donee. On the facts, the Assessing Officer had not shown any proper effort to trace the donor and had not established that the donor could not be found. The attempt to proceed against the assessee was therefore not supported by the mandatory statutory conditions.

Conclusion: The assessment on the donee was not validly assumed under section 21A of the Gift-tax Act and the cancellation of the assessment was upheld in favour of the assessee.

Ratio Decidendi: Proceedings against a donee under section 21A of the Gift-tax Act are permissible only when the Assessing Officer has, after due and reasonable diligence, been unable to find the donor; absent that jurisdictional condition, the assessment on the donee is invalid.

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