TaxTMI 
TaxTMI 
2005 (1) TMI 324
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.... were cancelled and therefore there were no valid transfers and any valid gifts. The Assessing Officer rejected the contentions of the assessee and completed the gift-tax assessment holding that the first set of transactions amounted to gift of properties. In first appeal, the CGT (Appeals) held that the transfers made by the assessee at the first instance were not complete and the consequent gifts were not absolute and therefore, there cannot be a case of proper gift. The CGT (Appeals) held that, therefore, the gift-tax assessment was not valid. The assessment was accordingly cancelled. 3. The Revenue is aggrieved and therefore the appeal before us. The grounds raised by the Revenue in this appeal read as below: 1. The order of the CIT(A)-IV, Cochin canceling the gift-tax assessment order is against law, facts and circumstances of the case. The CIT (Appeals) should have held that there was a valid gift as there is a voluntary transfer effected by registered documents duly attested. The gift was accepted by the donee during the lifetime of the donor as is evidenced by mutation effected in the donee's favour in village office records. 2. There was no happening of a specifie....
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.... the life time of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void.' Unless there is acceptance there can be no gift. In the judgment relied on by the learned counsel for the appellant in (1996) c2CTC 150 (cited supra), there is a reference to the decision reported in Venkatasubbamma v. Narayanaswami AIR 1954 Mad. 215. If there is acceptance of the gift after execution of the deed, even though the registration was postponed to a later date, the gift would become irrevocable. The fact that the deed was executed and registered would not make it irrevocable, if in fact there was no acceptance by the donee, either before registration but after execution or even after registration. What the law requires is acceptance of the gift after its execution though the deed may not be registered. Anterior negotiations or talks about the transfer of property by way of gift would not amount to acceptance of the transfer of the property by gift. Acceptance may be implied but the facts relied on to draw an inference of acceptance must be acts of positive conduct on the part of the donee or persons acting on his behalf and not merely passive acqu....
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....ng the rival submissions and considering the submissions of the authorized representative of the assessee that the cancellation of the gifts made by deeds executed by the assessee was not an after thought to avoid tax liability because the cancellation deed in fact was anterior to the notice issued under section 16(1) and also on the basis of the submission that the Tribunal had not considered the facts brought on record by the learned first appellate authority vide para 2, page 8, which reads as under: 'In the deed of transfer she has not signed accepting the gift, the assessing officer states in page 5 of the assessing order that Miss Sunitha Kurian has made application for transfer of documents as reflected in the transfer deed in, village records also. On going through case records I do not find any basis for such an observation by the Assessing Officer. There is no document where Miss Sunitha Kurian has signed. The Assessing Officer has not collected any copy of application by Miss Sunitha Kurian to village officer to transfer of property in her name. As such the Assessing Officer's observation is only a matter of conjecture and not a finding based on concrete evidence. In ....
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....d to accept the second set of registered documents, by which the assessee stated that those gifts were subsequently cancelled by him. 13. And now, what is a gift? A gift must be the unconditional transfer of an existing property in favour of another person and free of consideration. Acceptance of the gift also is a must. Nobody can thrust upon gifts on others. While the facts of a particular case are considered in the light of the above legal position, we should give more importance to the pith and substance of that transaction, rather than the ornamental format of that transaction. In the present case, who are the parties to the transaction? The assessee and his daughter. The assessee is the father and guardian. Daughter was unmarried at that time. She was a student. She was dependent on her father. In such circumstances, what is the reason to presume that the assessee's daughter had exercised her free will and had involved in the transaction in a conscious manner and had accepted the gifts from her father. So long as she is dependent on the assessee and as she was a student at that time, it is too exaggerated to believe that the assessee might have sought a formal consent from....
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....ir and in accordance with law. 19. In the result, the appeal filed by the Revenue is dismissed and the Cross-objection is allowed. Order accordingly. Per Mahavir Singh, Judicial Member. - I have the benefit of going through the proposed order of my learned brother Hon'ble Accountant Member in this case. Despite my best efforts and great persuasion to myself I have not been able to agree with the conclusion as arrived at by my learned brother. The reasons for the same are incorporated in the present order of mine which is as under. 2.1 The respondent-assessee executed seven gift deeds for conveyance of properties in favour of his daughter during the previous year 1993-94 relevant to the assessment year 1994-95. That the total value of the properties under consideration was Rs. 13,26,700 as per the value given in the gift deeds. The details of immovable properties transacted by gift deeds are available in the gift-tax assessment order as well as the order of the first appellate authority and the same is being reproduced as under: ------------------------------------------------------------------------- Date Document No. ....
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....e-started on 23-3-1999 by issuing fresh notice. In spite of this notice, the assessee did not file any return of gift. Subsequently, the Assessing Officer issued notices for framing the assessment of gift. Before the Assessing Officer, the assessee raised various submissions like the gift is not complete as the donee has not accepted the gift and the donor has already cancelled the gift deeds. The assessee submitted the details of cancellation, which are as under: ------------------------------------------------------------------------ Extent of land Document value Date of cancellation Document Number ------------------------------------------------------------------------ 15.0 cents. Rs. 1,87,600 8-5-1997 2057 10.0 cents. Rs. 1,50,000 29-7-1997 3215 10.0 cents. Rs. 1,99,900 8-7-19....
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....r dated 27-2-2004. This paragraph is already reproduced by my learned brother in his proposed order at page 6, so to avoid duplicity I am not reproducing the same again. 4.1 During the course of hearing, the Department was represented by Shri K.K. John, the learned Departmental Representative and he relied on the paper book containing pages 1 to 23. The documents relied on by the learned Departmental Representative are as under: 1. Argument Notes 2. Copy of relevant pages of Registration Act, 1908 3. Copy of Village Officer's letter No. 18/2001 4. Copy of gift deed 5. Copy of Assessing Officer's letter dated 12-8-2003 6. Copy of letter and relevant pages of Village Office registers 7. Copy of order sheet of Income Tax file for assessment year 1996-97 8. Copy of relevant pages from Transfer of Property Act The assessee was represented by the learned counsel Shri R. Krishna Iyer, who also relied on the papers containing extracts from Transfer of Property Act, 6th Edition Sanjiva Row's. He also relied on the following case laws: 1. CGT v. R. Kesavan Nair [1974] 96 ITR 365 (Ker.) 2. Pankajakshiamma v. Chandramathiamma 2001 (1) Ker. LJ. 438 3. CIT ....
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.... schedule property is valued at Rs. 1,99,000 (Rupees One lakh Ninety Nine Thousand) only." 4.3 Again, a letter written by the Village Officer, Athirampuzha to the ITO, Ward-II, Kottayam, dated 12-8-2003 is further being reproduced along with the revenue records of State Government submitted by the Village Officer to the Income-tax Officer, as it is: "Translation of Page - 17. No: 274/03 Village Office, Athirampuzha Dated 12/8/03. The Income tax officer, Ward-2, Kottayam Sir, Sub.:- Gift-tax Assessments - Sri P.J. Kurian -Palakunnel, Athirampuzha, Ref:- Your Office letter Income-tax Officer Wd-2/KTM/K-1154/2003-04, dated 23/7/03. As requested for in the above referred letter photocopy of Pokkuvaravu Application register showing the submission of Pokkuvaravu Application by Smt. Sunitha Kurian, d/o P.J. Kurian, Palakunnel, Athirampuzha, and copy of daily collection register (Receipt No. 435/92, dated 29/10/99 for payment of Pokkuvaravu, fees Rs. 4 in Sub-Division (not clear), and Rs. 20, P.V. Charges) is sent herewith. Yours faithfully Sd/- Village Officer, Athirampuzha." (Seal) Translation of page - 18 Only relevant column - underlin....
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....p; Padinjarekarayil 516/3 Sunitha Kurian D/o. Kurian Palakunnel Father, Kurian -do- ------------------------------------------------------------------------------ Translation of page No. 19 ------------------------------------------------------------------------------....
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....; -do- 5. 00 ------------------------------------------------------------------------------- 5.1 It is seen from these documents that the donor has gifted the properties in favour of his daughter out of love and affection. This gift deed further states that all the rights and interests in the properties of the assessee are being exclusively and entirely handed over to the donee. In this way, the donor transferred all the rights and ownership to the donee as gift vide gift deed. The words of the gift deed are very crucial which read as under: "I hereby transfer all my rights & ownership and give the same to you as gift vide document executed. I hereby fully agree that from today onwards Sunitha Kurian will have and hold the scheduled properties and pay the government taxes in your name and take pattayam and have rights of transaction an enjoyments forever." 52. From the revenue records of the Village Officer, it is seen that document No. 3531 which is a registered gift deed dated 8-10-1993 and on the basis of this gift deed the donee applied for mutation of this property in her favour in the revenue records and the reve....
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.... appellant's daughter can be attached with any importance for the purpose of gift tax only if the mutation had taken place at the instance of the donee. This has not been proved beyond doubt by the Assessing Officer at all. The appellant's daughter has also given an affidavit stating that she had not accepted the gift nor taken possession of the property. Though this affidavit per se cannot decide the issue, the submissions in the affidavit deserve acceptance in conjunction with the other facts of the case." Finally, the CGT (Appeals) held as under: "5. Apart from my above observations, one pertinent issue will be as to whether Gift Tax Act can have a concept of 'transfer' that is independent of Transfer of Property Act. In other words, can the definition of the word 'gift' in the Gift Tax Act be wider than the definition of 'gift' in the Transfer of Property Act? This interesting question arose in the case of Sirehmal Nawalakha decided by the Supreme Court reported in 251 ITR 108. In this case, the Supreme Court has clearly held that in Gift Tax matters, the general law did not stand abrogated and the requirement of applying the provisions of the Transfer of Property Act and....
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.... context otherwise requires,- Section 2(viii): 'donee' means any person who acquires any property under a gift, and, where a gift is made to a trustee for the benefit of another person, includes both the trustee and the beneficiary; Section 2(xii): 'gift' means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money's worth, and [includes the transfer or conversion of any property referred to in section 4, deemed to be a gift under that section]; Section 2(xxiv): 'transfer of property' means any disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property and without limiting the generality of the foregoing, includes-" 6.2 The definition of gift as provided in sections 122 and 123 of the T.P. Act, reads as under: "122. 'Gift defined'--'Gift' is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. Acceptance when to be made. Such acceptance must be made during the lifetime of the ....
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....meaning as: acquire: 1. To gain, to get as one's own (by one's own exertions or qualities). 2. To receive, to come into possession.' This connotes that the person concerned should have a positive mental attitude 'to gain', 'to get as one's own, to receive or to come into possession of. Moreover, under section 29 of the Gift-tax Act, the donee can be called upon to pay the tax if the Assessing Officer is of the opinion that the same cannot be recovered from the donor. It does not seem to be that the intention of the Legislature was to make a person liable for tax in respect of a transaction which he does not agree to or even repudiates. If such an argument is accepted, the result will be that the donee can be made liable for tax even in cases where he repudiates the gift, for the taxable event arises on the donor executing the gift deed. The question of acceptance of the gift by the donee is closely related to the question whether the donor has perfected the gift on his part. It is a well-accepted principle of law that a conveyance takes effect only if the interest created thereby vests in the transferee, and such vesting can never take place without the transferee's consent and con....
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.... also agreed that from that day onwards the donee will have and hold the scheduled properties and pay the Government taxes in her name and taken pattayam and have rights of transaction and enjoyment for ever. In view of this registered gift deed, the mutation of property was done on the application of the donee which is evident from the copies of the revenue records supplied by the Village Officer, Athirampuzha of the land revenue Department of the State Government. Here, I do not agree with the finding of the C.G.T. (Appeals) that, all the requirements of the T.P. Act cannot be held to be met by virtue of the fact that the acceptance of the gift by the donee has not been established beyond doubt by the Assessing Officer. After effecting the transfer on the basis of gift deeds, the donee has also paid land revenue tax in respect of the properties under reference which is very clearly evident from the revenue records. In view of this, I have no hesitation in holding that the donee has accepted the gift. There is no other requirement under the T.P. Act and no other legal formalities to be left to execute the mutation effecting in favour of the donee. In the revenue register, it is a ....
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....a transaction which he does not agree to, or even repudiates. It is a well-accepted principle of law that a conveyance including a gift takes effect only if the interest created thereby vests in the transferee, and such vesting can never take place without the transferee's consent and concurrence." Even the Hon'ble Kerala High Court decision's facts are entirely different from the facts of the present case in hand. In this case, the mutation of the property on the basis of gift deed has been done in the revenue records and that also on the basis of application from the donee as it is evident from the letter of the Village Officer which has already been reproduced in earlier paragraphs. 6.7 In view of these facts and legal aspects, I am of the view, as regard to the first issue, that the gift is complete and accepted by the donee and acceptance and transfer is complete. 7. Now coming to the second issue, in respect of cancellation of gift deed, in the G.T. Act, there is no provision as regards to the cancellation or revocation of gift. The G.T. Act is silent on the revocation of gift and if, gift is made, whether it can be cancelled, there is no specific requirement or conditi....
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....ould be suspended or revoked. (b) A gift may also be revoked in any of the cases (save want or failure of consideration) in which if it were a contract, it might be revoked e.g., when the gift is made undue influence, coercion, fraud or misrepresentation. But in the present case in hand, it is very clear that there is no such condition in the gift deed for revocation or impossibility. It is also clear from the gift deed that the donor has not imposed any condition which puts an end to the gift. The condition must be made at the time of gift and the donor cannot impose such condition after the gift is absolute. In the absence of such condition, the donor has no power for revocation of the gift. 7.2 Now I have drawn my strength on conditional gift from Halsbury's Laws of England, Third Edition, Volume 18, page 389 which is as follows: "Gifts may be made subject to conditions either precedent or subsequent. A condition precedent is one to be performed before the gift takes effect. A condition subsequent is one to be performed after the gift had taken effect, and, if the condition is unfulfilled, will put an end to the gift; but, if a condition subsequent is void, the gift rem....
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....against the above that the Revenue has come before the Tribunal in the impugned appeal in GTA No. 06/Coch./2002. This appeal was heard and disposed of by the Tribunal along with the cross objection through its order dated 30-10-2003. The Tribunal held the view that the Commissioner of Gift-tax (Appeals) was not correct in his conclusion that the transfers were not complete and the gifts were not absolute. Accordingly, the Tribunal vacated the order passed by the CGT(A) and restored the gift-tax assessment order passed by the assessing authority. The appeal filed by the Revenue was allowed and the cross objection filed by the assessee was dismissed. 5. Thereafter the assessee filed a rectification petition in M.P. No. 46 (Coch.)/2003 on 14-11-2003. The Tribunal found that it has not considered the decision of the Hon'ble Madras High Court in R. Jamuna Bhai v. M.A. Anusuya AIR 2001 Mad. 392. The Tribunal also found that in the Village Officer's letter addressed to the Assessing Officer, there was no mention regarding any application put in by Miss Sunitha Kurian for transfer of properties in her name. The Tribunal felt that the matter required reconsideration on the basis of the f....
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....3(II) OF THE GIFT-TAX ACT, 1958 READ WITH SECTION 255(4) OF THE INCOME-TAX ACT, 1961 Per Dr. O.K. Narayanan A.M. - As there is a difference of opinion between the Accountant Member and the Judicial Member, the matter is being referred to the President of the Income Tax Appellate Tribunal with a request that the following question may be referred to a Third Member. "Whether in the facts and the circumstances of the case and where the assessee had executed seven Deeds of Conveyance of properties in favour of his daughter during the period from 8-10-1993 to 17-2-1994, relevant to the assessment year 1994-95, and whereas, later on, the assessee has cancelled those conveyances by registering Cancellation Deeds in 1997, the Assessing Officer is justified in law in framing an assessment under the Gift-tax Act, 1958, for the assessment year 1994-95?" ORDER UNDER SECTION 23(II) OF THE GIFT-TAX ACT, 1958 READ WITH SECTION 255(4) OF THE INCOME-TAX ACT, 1961 Per Shri Mahavir Singh, J.M. - On a difference of opinion between the Members of the Bench in the above-mentioned case, following two questions are being referred to the Hon'ble President of the Income Tax Appellate Tribunal wi....
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....representative of the assessee. I have also examined orders of learned Brothers in the light of material available on record. 4. The facts of the case are that one Shri P.J. Kurian r/o Palakunnel House, Athirampuzha allegedly gifted his properties to his daughter Miss Sunitha Kurian through separate deeds executed and registered with Sub-Registrar. All the above Deeds related to immovable properties. It is further stated that Miss Sunitha Kurian also got mutation entered in the revenue records in her name on the basis of above Deeds by paying the prescribed mutation fee. The Donor however, thought that gifts made through the Gift Deeds were incomplete and he was entitled to revoke the gifts. With above purpose in view the assessee donor executed Revocation Deeds and registered the same with Sub-Registrar on 8-5-1997; 29-7-1997; 8-7-1997; 8-7-1997; 8-7-1997; 8-5-1997 & 8-5-1997 respectively. The assessee also claimed that he all along continued to be in possession and control of the property gifted and exercised all rights of ownership. 5. The Assessing Officer after coming to know of above Gift Deeds initiated proceedings under Gift-tax Act to bring to charge the value of pro....
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....s been made by the donee herself in respect of the properties so transferred. For effecting the transfer in the village records consequent upon the transfer deed itself, the transferee who is to make an application to the village officer to effect the transfer reflected as per the transfer deed. Clearly, in this case the donee Ms. Sunitha Kurian has made application for transfer of documents as reflected in the transfer deed in the village records also. This shows that the donee in this case, Ms. Sunitha Kurian has given her concurrence or accepted the gift by her action in filing an application in village office for effecting transfer. Hence, any argument that the donee has not accepted the gift is of no avail Therefore, the argument that 'the donee has not accepted the gift and so the gift has not become complete' is not at all correct and hence it is rejected. A copy of the letter of the village officer is annexed to this assessment order." Thereafter the Assessing Officer concluded as under: "I have gone through the deeds of transfer effecting the gift by the assessee I have also verified the location of the property, its importance, the market value of properties with a ....
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....sp; -------------- Gift-tax @ 30% Rs. 3,81,510 Less: Deduction under section 18A (stamp duty paid) Rs. 29,410 Balance tax Rs. 3,52,100 Add: Interest under section 16B Rs. 5,70,402 &....
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....nd circumstances of the case, the learned CGT (Appeals) held that no valid gift was made by the assessee. He held as under: "4. ...I have carefully considered the elaborate reasoning given by the Gift-tax Officer as well as the vehement arguments put forward on behalf of the appellant. I am of the view that the submissions made on behalf of the appellant merit favourable consideration for the following reasons:- '(1) The gift made by the appellant as between 8-10-1993 and 17-2-1994. The cancellation deeds are dated between 8-5-1997 and 29-7-1997. The notice under section 16(1) was issued on 27-4-1998. The proceedings initiated by this notice were dropped due to insufficient time given to the appellant in the notice. The proceedings were restarted by issue of fresh notice under section 16(1) on 23-9-1998. This means that the gift deeds as well as cancellation deeds had been made much before the initiation of gift-tax proceeds. Hence, the cancellation deeds cannot be taken as an act of after-thought to avoid gift-tax liability. It also means that the gifts had been revoked and had become void at the time of the initiation of proceedings by the Assessing Officer. The Assessing O....
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.... 'Miss Sunitha Kurian has made application for transfer of documents as reflected in the transfer deed in the village records also.' On going through the case record, I do not find any basis for such a observation by the Assessing Officer. There is no document where Miss Sunitha Kurian had signed. The Assessing Officer also has not collected any copy of application by Miss Sunitha Kurian to the Village Officer for transfer of property in her name. As such, the Assessing Officer's observation is only a matter of conjecture and not a finding based on concrete evidence. In the Village Officer's letter addressed to the Assessing Officer also, there is no mention regarding any application made by Miss Sunitha Kurian for transfer of the property in her name. The certificate only mentions about the transfer and not as to who made the application for the transfer. All these make the Assessing Officer's observation that Miss Sunitha Kurian has accepted the gift as hollow and unsubstantiated. (3) Paramount importance has been attached to the issue of consent by the donee in the Kerala High Court decision in the case of R. Kesavan Nair [96 ITR 365]. In this case the court opined as under: ....
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....llation deed which has been duly acted upon by the Sub-Registrar. The registration of the cancellation deed by the Sub-Registrar goes to prove that legally there was nothing wrong as per the Registration Act to re-transfer the property on account of revocation of the gift by the appellant. The re-transfer of the property in the appellant's name is evidenced by the documents such as Land tax certificates, encumbrance certificate etc. (copies filed before me) wherein the appellant has been shown as the owner on dates 8-2-2001, 6-10-1998 and 9-2-2001. These dates are much beyond the original transfer deeds which are held as completed gift deeds by the Assessing Officer. The re-transfer of the property as evidenced by these documents confirm the fact that overall there was no gift that took place that was liable to tax under the Gift-tax Act. (6) The Assessing Officer seems to be nonplussed as to how a gift deed executed on a stamp paper worth Rs. 5,000 could be cancelled by a cancellation deed executed on a stamp paper worth Rs. 100. This is not a relevant matter to the issue. The stamp duty for various types of deeds are fixed by the Government and the quantum of the stamp duty pa....
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....rned Accountant Member has held that the impugned order is required to be confirmed. After taking note of the grounds raised by the revenue in their appeal before the Tribunal and the background of the case, the decision of Hon'ble Madras High Court in the cases of R. Jamuna Bhai v. M.A. Anusuya AIR 2001 Mad. 392; Chennupati Venkatasubbamma v. Nelluri Narayanaswami AIR 1954 Mad. 215 as also observations in the recalled order dated 27-2-2004, the learned AM upheld the order of the CGT(A). His findings are summarized as under:- (1) That the gift in question was not accepted by the donee. (2) That entire transaction i.e., execution of deed as well as cancellation deeds should be read together. Transaction cannot be evaluated in a piecemeal fashion. So either both the set of documents should be accepted or both of them should be rejected. The Assessing Officer was not justified in holding that the assessee made gift of properties to his daughter and at the same time, refused to accept cancellation deeds through which gift was cancelled. (3) The AO did not go into the intention of the assessee in making and in cancelling the gift. (4) There was no evidence to show that the a....
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....ed hereinbefore was justified. (3) That after considering order of the learned CGT(A) the learned JM framed the following two questions for decision in his proposed order:- 1. Whether the gift is complete, as the property is transferred in the revenue records on the basis of registered gift deed and on the basis of application submitted by the donee. 2. Whether the cancellation of gift deeds subsequently alter the character of the gift, as the gift deeds are unconditional and the Transfer of Property Act, 1882 (hereinafter referred to as T.P. Act) permits revocation of gift if the gift is conditional only. There is no provision as regards to the cancellation of gift deeds in the GT Act." To answer about questions, learned Judicial Member again referred to the Gift Deeds, held them to be unconditional, total and complete in favour of the donee. Further donee had applied for mutation in the revenue record on the basis of above deeds which was made as applied. Therefore, on facts of the case and in the light of relevant provision of Gift-tax Act; Transfer of Property Act; Comments by Authors Chaturvedi & Pithisaria (Volume 9 Fourth Edition) (relevant portion of statutory p....
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....tion of cancellation of gifts did not arise. The learned DR also laid emphasis on the mutation in the revenue record on the basis of gift deeds. Mutation was primarily important to establish existence and completeness of gifts. The learned DR also referred to the written submissions filed by him in the Paper Book which comprises of pages 1 to 28 with the following details:- 1. Argument Notes. 2. Copy of relevant pages of Registration Act, 1908. 3. Copy of Village Officer's letter No. 19/2001. 4. Copy of Gift deed - in vernacular. 5. Copy of Assessing Officer's letter dated 12-8-03. 6. Copy of letter and relevant - in vernacular pages of Village Officer registers. 7. Copy of order sheet of Income-tax filed for A.Y. 1996-97. 8. Copy of relevant pages from transfer of Property Act. 9. English Translation of pages 12, 14, 15, 17, 18 & 19 of Paper book submitted at the time of earlier hearing. 10. Copy of written submissions made on 17-3-04 at the time of hearing in M.P. filed by assessee. The learned DR emphasized that execution of registered deeds coupled with mutation in the revenue record entered at the instance of the donee fully established that gifts....
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....onee' of the deed is the daughter of the assessee and because of the love and affection towards the daughter is the only consideration for the transfer of the properties by way of gift. This is very clear from the wordings of the document that the only consideration for the transfer of the property by way of gift is love and affection' of the father, the assessee in this case, to his daughter, the 'donee' in this case. The document further states that the entire rights and interests in the properties of the assessee is being exclusively and entirely handed over in favour of the donee. In the documents of transfer, the assessee is asking the donee to take possession and ownership of the property, effect transfer in Government documents, pay tax thereon in her name etc. etc. The assessee also continues to state that the donee will have complete right for further transfers of the property now transferred while enjoying the property as her absolute property." About acceptance of gift and on mutation of entries in the revenue's record, the AO has observed as under:- "The assessee has in his letter dated 28-10-1999 further argues that the gift is not complete unless it is accepted ....
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.... of the letter of the village officer is annexed to this assessment order." In the light of above observations, the AO held that gift was complete, and was accepted by the donee who had applied for mutation in the revenue record, paid mutation fees and other taxes and thus had given her concurrence and acceptance to the gifts and therefore, objection of the assessee that gift was not complete is not of much avail. The AO also held that cancellation deeds were invalid and of no legal consequences. These were rejected as an afterthought also. Accordingly the assessment under the Gift-tax Act was made and the assessee was required to pay tax on gifted property of value of Rs. 13,26,700 which after exemption was taken at Rs. 12,71,700. The basic tax was worked out at Rs. 3,52,100 to which interest of Rs. 5,70,402 was added under section 16B of the Gift-tax Act. (The findings of the AO are accepted by the learned JM). 15. The assessee impugned above assessment in appeal before the CGT(A) who accepted the claim of the assessee that no gift-tax could be levied on gifts made by the assessee. The relevant portion of the order of the learned CGT(A) has already been extracted above. ....
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.... not have been the intention of the Legislature to make a person liable for tax in respect of a transaction which he does not agree to, or even repudiates. It is a well-accepted principle of law that a conveyance including a gift takes effect only if the interest created thereby vests in the transferee, and such vesting can never take place without the transferee's consent and concurrence." Similarly in the case of Pankajakshiamma v. Chandramathiamma 2001(1) Ker. LJ. 438, the Hon'ble Kerala High Court observed as under:- "It is also relevant to note that the first defendant has not signed the document as an attestor. The document was not presented for registration by the first defendant. Kunjikutty Amma herself went to the office of the scribe and got the document back. DW2 stated that she was not aware of the document till the same was handed over to her. The plaintiff's case is that in spite of the execution of the document, Kunjikutty Amma was taking the yield from the properties. The tree climber has deposed that Kunjikutty Amma was taking the income from the properties till her death. There is absolutely nothing on record to show that the first defendant has obtained pos....
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....aintiff to give the documents of title relating to the suit property. From this the learned counsel wanted to draw the conclusion that custody of the title deed would show acceptance. However, in the evidence she has stated that. [Vernacular matter omitted - Ed.] Therefore, even with regard to custody of title deeds the evidence and the pleadings are unsatisfactory. But it must be remembered that it is Arunachalam who ought to have accepted the settlement deed for the settlement deed to come into effect. On the date of the settlement deed Ajit Kumar's right was still depending upon Arunachalam not having any natural children of his own. If a son or daughter had been born to Arunachalam, then the clause in the settlement in favour of Ajit Kumar would have no effect. Therefore, what is crucial in this case is acceptance by Arunachalam for the gift deed to come into effect. There is not an iota of evidence to show that Arunachalam had accepted the gift. In the absence of pleadings and other evidence I do not think this Court sitting in second appeal can draw inference merely from the fact that Arunachalam must have stood by at the time of the registration of Ex. A1 and arrive at th....
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....eedings are taken to fix the liability relating to payment of land revenue/tax relating to the land subject-matter of mutation. Mutation proceedings can be relied upon only as a collateral evidence to corroborate other material on record. But proposition that mutation does not create any right or interest or no presumption of truth is attached to the revenue record, does not have much relevance in this case. The mutation proceedings taken before the Village Officer were important as it is very significant in this case as to who made application for effecting mutation in the revenue record on the basis of gift deeds. This is highly controversial matter in this case. (2) Considerable arguments were advanced relating to proceedings before the Registration authorities under the Registration Act. In my opinion, no title would pass if document required to be registered under section 17 of Registration Act is not registered as per the statutory provision. The authorities under the Registration Act cannot examine whether the transferor in the document has a good and perfect title in the property or not. It is none of their business to enquire into question of title. The argument that re....
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....n favour of his daughter Sunitha Kurian as per deed Nos. 639/94, 3494/93, 655/94, 3531/93, has been mutated in her favour as per this office Thandaper Nos. 5915 of Reshring Block No. 27. I may also inform that Sy. No. 43/2, referred to in the letter cited is not in the possession of P.J. Kurian or Sunitha Kurian. Further solvency particulars may be ascertained from Taluk Office, Kottayam." It is evident from the underlined portion that the Assessing Officer did ask about possession/transfer of possession on mutation based on documents but this was not confirmed by the Village Officer. The Assessing Officer had positively asked about insolvency of the donor/donee. Having regard to importance attached by him to the filing of application by Ms. Kurian, it is unthinkable that the Assessing Officer will not seek information on the above application. That is why the letter written by the Assessing Officer is important. Proceeding further, it is clear from record that the Village Officer did not mention that Sunitha Kurian had made any application for effecting mutation or that she had herself produced gift deeds before the Village Officer in mutation proceedings. Yet a finding to the ....
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....oncurrence or that she had made application to Village Officer. In the above circumstances the learned CGT(A) took the affidavit of the donee into consideration. 22. On the facts of the case, the CGT(A) was fully justified in considering affidavit of the donee relating to the findings recorded by the Assessing Officer based on no material. After all how was the assessee to rebut a positive finding that Sunitha Kurian made an application to the Village Officer to mutate revenue record in her favour when it was assessee's claim that no such action was done by the donee? How negative onus could be discharged when no such application was made? The same could only be done on oath and through an affidavit. There is no other way to discharge the negative onus. There is further no material on record to show that the Assessing Officer during the assessment proceedings had put page 11 to the assessee to rebut although the same was used against the assessee in retaining a finding in the assessment order. Therefore, admission of affidavit in this case was fully justified. 23. The revenue authorities collected further material in proceedings before the ITAT and placed them at page Nos. 18....
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....egard to the application received for effecting transfer of properties. As per this register at Sl. No. 463, Smt. Sunitha Kurian, daughter of Shri P.J. Kurian residing at Palakkunnel House, Athirampuzha, is the applicant for effecting the transfer of properties in her name. Also, the Village Officer has furnished copy of the ledger maintained in her office with regard to the fees remitted for effecting the transfer, which is dated 29-10-1993 receipt No. 92. As per the details in this register also the payment was effected by Smt. Sunitha Kurian only. Copies of the letter dated 12-8-2003 from the Village Officer along with the copies of the register referred above are enclosed herewith for presentation before the Hon'ble Appellate Tribunal for deciding the case. It is reported by the Village Officer that the applications in original are not traceable in her office since it is relating to periods of 10 years back. However, it is felt that the evidences now collected and sent herewith are adequate to uphold the gift-tax assessment order." 25. Above justification for not placing important evidence on record, has to be taken with a pinch of salt. In the assessment order, the Assessin....