1995 (5) TMI 74

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....luer at Rs. 16,04,200. On the basis of this information, the AO issued notice dt. 10th Sept., 1991 under s. 16(1) of the GT Act, 1958 (for short 'the Act') to bring to tax the deemed gift. In response thereto, the assessee submitted a return of gift-tax on 29th Jan., 1992 declaring taxable gift at nil. 3. During the course of assessment proceedings the AO discussed the issue of deemed gift with the authorised representative of the assessee. It was stated before him that none of the provisions of the GT Act were applicable to the facts of the assessee's case and, therefore, the GT proceedings may be dropped. The AO did not agree with the submissions of the authorised representative of the assessee. He brought to tax the deemed gift of Rs.....

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....st March, 1992 with the following observations: "I have gone through the order of the AO and he has nowhere in the order given the basis for holding that the consideration received by the appellant was inadequate which was much less than the market price prevailing in the market. He has, as I have said above, relied on the valuation report of the Government Valuer. Based on this report acquisition proceedings were initiated which were later on dropped. Since the AO has not brought any other material on record which show that the sale consideration was inadequate, proceedings under the GT Act cannot be sustained and accordingly the assessment under consideration is cancelled." The Revenue is aggrieved by the above decision of the CGT(A....

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.... followed the principles of natural justice as despite his request to prove the valuation report of the Government Valuer which formed the basis of initiation of the GT proceedings, the AO did not provide a copy of the said valuation report. Shri Rinwa vehemently argued that on perusal of the assessment order it would be revealed that the AO has not established that the transaction was for inadequate consideration or that the transfer was not bona fide. In the absence of such a finding, the AO was not justified in taxing the deemed gift as he did which has rightly been cancelled by the CGT(A). 6. We have considered the rival submissions and perused the material placed before us. It is now well settled that in order to invoke the provisio....