1984 (12) TMI 101 - AT - Wealth-tax

Tribunal emphasizes real delivery not mandatory for gift under Wealth Tax Act

The Tribunal set aside the previous orders and directed a fresh assessment by the Wealth Tax Officer regarding a gift made by an individual to her minor ... - Issues:Assessment of gift made by an individual to her minor nephews through book entries without physical delivery of money. Applicability of section 4(5A) of the Wealth Tax Act, 1957 to gifts made before its enactment. Verification of genuineness of the gift and the need for evidence of delivery. Impact of previous assessments on the treatment of the gift as genuine.Analysis:The judgment revolves around the assessment of a gift made by an individual to her minor nephews through book entries without physical delivery of money. The Wealth Tax Officer (WTO) found the gift to be not genuine due to lack of evidence of delivery to the donees. The Appellate Tribunal noted that section 4(5A) of the Wealth Tax Act, 1957 does not mandate physical delivery but requires real and effective delivery. The Tribunal emphasized that the provision should not be applied retrospectively to gifts made before its enactment.The Tribunal referred to the judgment of the Delhi High Court in Indian Glass Agency case, highlighting the distinction between gifts evidenced by book entries in the donor's own books versus those in a third party's books. The judgment emphasized that additional evidence beyond book entries may be required to establish the genuineness of a gift. The Tribunal clarified that the requirement of 'actual' delivery in section 4(5A) should be interpreted to mean real and effective delivery, not necessarily physical transfer of money.Regarding the impact of previous assessments on the gift's genuineness, the Tribunal noted that the WTO did not investigate the sufficiency of cash balance in the donor's account or her control over the transferred amount. The Tribunal highlighted that previous assessments or self-serving statements by the assessee cannot alone establish the genuineness of a gift. The judgment emphasized that the department should verify the facts independently to determine the authenticity of the gift.Ultimately, the Tribunal set aside the orders of the Appellate Assistant Commissioner and the WTO, directing a fresh assessment by the WTO considering the observations made in the judgment. The appeals were allowed for statistical purposes, indicating a procedural victory for the assessee without a substantive decision on the genuineness of the gift.