Deemed gift tax requires independent proof of inadequate consideration, not just higher stamp-duty valuation.

A transfer of property cannot be treated as a deemed gift under section 4(1)(a) of the Gift-tax Act merely because the registration authorities adopted a higher value for stamp-duty purposes. The administrative stamp-duty value, without an independent enquiry into the true market value, adequacy of consideration, or bona fides of the transaction, is insufficient to invoke the deeming provision. The Revenue must independently establish that consideration was inadequate or that the transfer lacked bona fides before taxability can arise. On this basis, the difference between the declared consideration and the registration value was not taxable as a gift.

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Issues: Whether the transfer of property could be brought to tax as a deemed gift under section 4(1)(a) of the Gift-tax Act, 1958 on the basis of the value adopted by the registration authorities for stamp duty purposes.

Analysis: The assessment was founded solely on the value fixed by the registration authorities, without any independent enquiry into the true market value of the property, the adequacy of the consideration, or the bona fides of the transaction. The record did not disclose the basis on which the registration value was fixed, and such administrative valuation was held to be unsuitable as the sole foundation for invoking the deeming provision. The principle applied was that the Revenue bears the burden of establishing taxability and that market value for registration or stamp-duty purposes does not, by itself, prove that consideration was inadequate or that the transfer was not bona fide.

Conclusion: The provision was not attracted, and the addition treating the difference as taxable gift was unsustainable. The assessee succeeded.

Ratio Decidendi: A transfer cannot be treated as a taxable gift under section 4(1)(a) merely because the registration authorities have adopted a higher value for stamp-duty purposes; the Revenue must independently establish inadequacy of consideration or lack of bona fides.

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