M.C. Pathak, C.J.
1. The following questions of law have been referred under Section 26(1) of the Gift-tax Act, 1958 (hereinafter referred to as 'the Act '), by the Income-tax Appellate Tribunal, Gauhati Bench (hereinafter referred to as 'the Tribunal'):
'(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessment order passed against the six sons of Shri Kumudeswar Goswami as legal representatives of Shri Kumudeswar Goswami on the basis of the six separate returns filed by the six sons was valid ?
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the gifted properties belonged exclusively to Shri Kumudeswar Goswami being his separate property ?
(iii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the gifts made by Shri Kumudeswar Goswami were assessable to gift-tax in the assessment year 1960-61 ?' The facts of the case may briefly be stated as follows :
2. The relevant assessment year is 1960-61. Kumudeswar Goswami gifted 5 bighas 2 kathas of land under six registered deeds of gift dated June 11, 1959, showing a total value of land at Rs. 1,50,000 in favour of his six sons, namely, K. Goswami, H. Goswami, 13. Goswami, D. Goswami, L. Goswami and J. Goswami. Each of the six sons got 4 1/2 kathas of land individually, the value of which was shown at 'Rs. 25,000. Kumudeswar Goswami also gifted 24 shares of Rs. 1,000 each (face value) of M/s. Bahadur Tea Co. Private Ltd. to his six sons, whose names were recorded in the books of the company on March 4, 1960, and each son thus had got 4 shares
Kumudeswar Goswami also gifted Rs. 90,000 in cash to his six sons and gave Rs. 15,000 in cash to each of them.
3. According to the Gift-tax Officer, these gifts were made by Kumudes-war Goswami to his six sons in the previous year relevant to the assessment year 1960-61 before his death. Kumudeswar Goswami died on February 17, 1961.
4. After the death of Kumudeswar Goswami on February 17, 1961, action was taken under the Gift-tax Act against the six sons of Kumudeswar Goswami as his legal representatives and notices were served under Section 13(2) of the Act. All the six sons filed separate returns as legal representatives showing equal amounts of gifts received from their deceased father. The Gift-tax Officer then issued notice under Section 15(4) of the Act and he valued 27 kathas of land at Sarania area at Rs. 7,500 per katha and thus the value of the entire area of 27 kathas was held to be Rs. 2,02,500. He also included the cash gift of Rs. 90,000 in his assessment order and also valued the 24 shares at Rs. 1,08,000 as he estimated the fair market value of each share at Rs. 4,500 on the basis of the scrutiny of the balance-sheet of the company as on December 31, 1959. Thus, the Gift-tax Officer held the total valuation of the gifted properties at Rs. 3,90,500 and the gift-tax payable was assessed as Rs. 39,575.
5. The assessee, H. Goswami, appealed against the assessment order of the Gift-tax Officer before the Appellate Assistant Commissioner of Gift-tax.
6. Before the Appellate Assistant Commissioner it was submitted on behalf of the assesses-
(i) that the gifted properties belonged to the joint Hindu family of the assessee's grandfather and that the family of the assessee was governed by the Mitakshara school of Hindu law and as such the gift deeds did not actually represent the gifts as the assessee had interest in the properties;
(ii) that the cash gifts were made on different occasions which were spread over a period of two years or more and whenever money was received from Government as compensation for the zamindari, the actual gifts were made ;
(iii) that the shares in the tea company were actually transferred in 1956 but formal transfer was effected during the year under appeal on March 4, 1960;
(iv) that the gifts of land were actually made to the sons in 1952 though a formal registered deed was executed in 1959 ; and
(v) that the valuation as shown in the deed of gifts were quite reasonable and so that should be accepted.
7. The Appellate Assistant Commissioner held, (i) that the family was governed by the Dayabhaga school of Hindu law which is the generally accepted legal position and that the gifted properties did not belong to the
joint Hindu family, (ii) that all the gifts were made in the previous year relevant to the assessment year 1960-61, and (iii) that the valuation of the land as found by the Gift-tax Officer was reasonable. Having so held, the Appellate Assistant Commissioner dismissed the appeal and confirmed the assessment made by the Gift-tax Officer.
8. Thereafter, H. Goswami, one of the assessees, filed an appeal before the Tribunal against the order of the Appellate Assistant Commissioner and the following grounds were taken before the Tribunal:
(i) that Kumudeswar Goswami was governed by the Mitakshara school of Hindu law;
(ii) that the properties settled by him on his sons were by way of family settlement of ancestral properties and, therefore, the Gift-tax Act, 1958, was not attracted ;
(iii) that 27 kathas of laud were gifted in 1952 and there was no material on record to rebut the same ;
(iv) that the valuation of the land at the flat rate of Rs. 7,500 per katha was not justified; and
(v) that the valuation of shares at Rs. 4,500 per share was also exorbitant and arbitrary.
9. During the pendency of the appeal, H. Goswami died on May 9, 1968, and on their application the legal representatives of H. Goswami were substituted in his place.
10. Thereafter, the learned counsel for the applicants, on his prayer, was allowed to take the following additional ground in the appeal:
'That the assessment proceedings having been taken without complying with the mandatory provisions of law and the conditions precedent for levying tax under the Act being not in existence in the case, the assessment was without jurisdiction.'
11. The learned Tribunal considered the additional ground and has observed that Kumudeswar Goswami died on February 17, 1961, and that the proceedings under the Act were started against the six sons of Kumu-deswar Goswami and notices were issued to them under Section 13(2) of the Act, as legal representatives, which meant that the notices were issued in view of Section 19 of the Act and thus the Tribunal held that the notices were properly issued and served on the sons of Kumudeswar Goswami as legal representatives. The Tribunal also held that the returns filed by the sons of Kumudeswar Goswami were valid returns and the Gift-tax Officer was justified in assessing the sons of Kumudeswar Goswami as his legal representatives. The Tribunal, after considering the extract of the deed of gift given in the order of the Appellate Assistant-Commissioner and other circumstances, held that the gifted properties belonged exclusively to Kumudeswar Goswami as his separate property. The Tribunal, at the
time of hearing, required the learned counsel for the appellant to produce the originals or the copies of the deeds of gifts but the learned counsel expressed his inability to produce them on the ground that they were not readily available and the learned counsel submitted that for this purpose the extracts given in the order of the Appellate Assistant Commissioner might be relied upon and, therefore, the Tribunal relied upon the extracts as found in the Appellate Assistant Commissioner's order. The Tribunal held that the gifts relating to the lands were made in 1959 on June 11, 1959, and that 24 shares of M/s. Bahadur Tea Company (P.) Ltd. were actually gifted on March 4, 1960, and not in 1956 as contended. The Tribunal also held that the cash gifts of Rs. 90,000 were also made during the assessment year 1960-61.
12. On the above facts, the above-mentioned questions of law have been referred.
13. Let us consider the second question of law first.
14. It has been submitted by Mr. S. L. Sarma, the learned counsel for the petitioners, that late Kumudeswar Goswami was governed by the Mitakshara school of Hindu law and, therefore, the learned Tribunal was not correct in holding that the gifted properties belonged exclusively to Kumudeswar Goswami being his separate property. The learned counsel has submitted that whether the family of Kumudeswar Goswami is governed by the Mitakshara law or not, has not been decided by the learned Tribunal.
15. We have considered the order of the learned Tribunal on this point. It is found that the learned Tribunal observed that it was not necessary for it to give any finding on the point whether the family was governed by the Dayabhaga school of Hindu law or by the Mitakshara school. The learned Tribunal has observed that if the family was governed by Dayabhaga law, then the property in question will necessarily be separate property of Kumudeswar Goswami. The learned Tribunal has further observed that even if a , Hindu is governed by the Mitakshara law, still he may possess separate property and sueh property may belong exclusively to him and no other member of the coparcenary, not even his male issue, acquires any interest in it by birth and that he may sell it or make a gift of it to any person he likes and it is not liable to partition and on his death intestate it passes by succession to his legal heirs and not by survivorship to the surviving coparceners. The observation of the learned Tribunal is based on paragraph 222 of Mulla's Hindu Law, fourteenth edition. Paragraph 222 reads as follows :
'222. Incidents of separate or self-acquired property.--A Hindu, even if he be jointy may possess separate property. Such property belongs exclusively to him. No other member of the coparcenary, not even his male issue, acquires any interest in it by birth. He may sell it, or he may
make a gift of it, or bequeath it by will, to any person he likes. It is not liable to partition, and, on his death intestate, it passes by succession to his heirs, and not by survivorship to the surviving coparceners.'
16. The facts of the case were considered by the learned Tribunal. It considered the extracts of the deeds of gift as quoted in the Appellate Assistant Commissioner's order and observed as follows :
'The Appellate Assistant Commissioner has given an extract of the deed of gift in para. 5 of his order dated 19-10-03. From the extract it is evident that there is a recital to the effect that in the year 1952 having decided to gift away his 'own land' situated at Silpukhuri, Gauhati, amongst his sons and daughters and having determined the share of each had delivered possession to them. Again at one place Shri Kumudeswar Goswami clearly recited that the land gifted under the deed is the land of 'his own' only and no other person has or had any right, title or interest over the same. Thus the extract as given by the Appellate Assistant Commissioner clearly goes to establish that either the property belonged to Shri Kumudeswar Goswami as the family was governed by the Dayabhaga law or if the family was governed by the Mitakshara law, then it was a separate and self-acquired property of Shri Kumudeswar Goswami in which his sons had no interest. If really the property had belonged to the joint Hindu family as a coparcenary property, then it should have been mentioned in the deed that the property belonged to the joint Hindu family. In view of the recitals in the deed of gift we are constrained to hold that the properties gifted belonged exclusively to Shri Kumudeswar Goswami. if really this had not been the position the sons of Shri Kumudeswar Goswami would not have agreed to take deeds of gift and they would have insisted on execution of a deed showing family arrangement. The learned counsel for the appellant has asserted that the deeds of gift were executed as the intention was to partition the lands and properties. It is not possible to accept this contention of the learned counsel for the appellant in view of the recitals in the deeds of gift.'
17. Thus we find that the recitals in the deeds of gift clearly show that the property in question was treated by Kumudeswar Goswarni as his own property and he gifted the same to his sons as his own property and his sons also accepted that position, inasmuch as they accepted the gifts. That being so, we hold that the learned Tribunal on the materials on record and for good reasons was justified in holding that the gifted properties belonged exclusively to Kumudeswar Goswami being his separate property. We, therefore, answer the second question in the affirmative and against the assessee.
18. Let us now consider the first question of law.
19. Kumudeswar Goswami during his lifetime made the gifts of the land in question by registered deeds of gift dated June 11, 1959. During his lifetime he also gifted 24 shares of Messrs. Bahadur Tea Co. Private Ltd to his six sons and their names were recorded in the books of the company on March 4, 1960. A cash amount of Rs. 90,000 was also gifted to his six sons. These amounts of cash gifts were shown by the sons of Kumudeswar Goswami in their returns for the assessment year 1960-61. Though it was urged before the Appellate Assistant Commissioner that these cash gifts were actually spread over a period of two years or more, no documents were produced before the Appellate Assistant Commissioner to show the actual dates of gifts. That being the position, the learned Tribunal had no other alternative than to hold that these cash gifts were also made during the relevant previous year. Thus, it has been found by the learned Tribunal that all the gifts were made during the relevant previous year to the assessment year 1960-61.
20. Before the gift-tax could be assessed, Kumudeswar Goswami died on February 17, 1961. The proceedings under the Act started against the six sons of Kumudeswar Goswami. in all the cases notices were issued to the sons under Section 13(2) of the Act, as legal representatives of Kumudeswar Goswami. The learned Tribunal has held that the notices were properly issued and served against the sons of Kumudcswar Goswami as legal representatives.
21. Section 13 of the Act reads as follows :
'13. (1) Every person who during a previous year has made any taxable gifts or is assessable in resect of the taxable gifts made by any other person under this Act shall, before the thirtieth day of June of the corresponding assessment year, furnish to the Gift-tax Officer a return in the prescribed form and verified in the prescribed manner.
(2) In the case of any person who, in the Gift-tax Officer's opinion, is assessable under this Act whether in respect of the gifts made by him or by any other person during the previous year, the Gift-tax Officer may, before the end of the relevant assessment year, serve a notice upon him requiring him to furnish within thirty days from the date of service of the notice a return of the gifts made by him or by such other person during the previous year in the prescribed manner and setting forth such other particulars as may be prescribed.
(3) The Gift-tax Officer may, in his discretion, extend the date for the delivery of the return under this section.'
22. Section 19 of the Act reads as follows :
'19. (1) Where a person dies, his executor, administrator, or other legal representative shall be liable to pay out of the estate of the deceased person, to the extent to which the estate is capable of meeting the charge.
the gift-tax determined as payable by such person, or any sum which would have been payable by him under this Act if he had not died.
(2) Where a person dies without having furnished a return under Section 13, or after having furnished a return which the Gift-tax Officer has reason to believe to be incorrect or incomplete, the Gift-tax Officer may make an assessment of the value of the taxable gifts made by such person and determine the gift-tax payable by him, and for this purpose may, by the issue of the appropriate notice which would have had to be served upon the deceased person if he had survived, require from the executor, administrator or other legal representative of the deceased person any accounts, documents or other evidence which might, under the provisions of Section 15, have been required from the deceased person.
(3) The provisions of Sections 13, 14 and 16 shall apply to an executor, administrator, or other legal representative as they apply to any person referred to in those sections.'
23. In the instant case, Kumudeswar Goswami died without having furnished a return under Section 13 of the Act, Therefore, notices were issued on the sons as legal representatives under Section 13(2) of the Act. All the six sons filed returns as the legal representatives of Kumudeswar Goswami but they also described themselves as donees in the column meant for the purpose. The Gift-tax Officer in his assessment order relating to the assessment year 1960-61 assessed the entire gifted properties as a whole showing Hareswer Goswami and others as legal representatives of Kumudeswar Goswami. The assessment proceeding was continued against the legal representatives and the Gift-tax Officer took action against the sons of Kumudeswar Goswami by virtue of Section 19 of the Act.
24. The learned Tribunal has observed that the notices were issued against all the sons of Kumudeswar Goswami and they had actually filed returns as legal representatives but they showed in the returns the gifts with which they were concerned individually and in the column meant for showing the name of the donee, they also mentioned their respective names. Under these circumstances, the learned Tribunal held that the returns filed by the sons of Kumudeswar Goswami were valid returns and the Gift-tax Officer was justified in amalgamating these returns and then assessing all the sons of Kumudcswar Goswami as legal representatives of Kumudcswar Goswami.
25. Considering the facts and circumstances of the case and the materials on record, we find that the learned Tribunal was justified in holding that the assessment order passed against the six sons of Kumudeswar Goswami as his legal representatives on the basis of the six separate returns filed by the six sons was, valid. We accordingly answer the first question, in the affirmative and against the assessee.
26.Regarding the third question of law, the learned counsel for the
petitioners has submitted that, though the deeds of gift were executed on June 11, 1959, yet the lands in question were in fact gifted in 1952 and in support of his submission the learned counsel for the assessec has relied upon the recitals in the deed of gift. In the deed of gift there is a recital by Kumudeswar Goswarni that he decided to gift in the year 1952 amongst his sons and daughters and having determined the share of each, prepared a map showing the plots and delivered possession accordingly. It has also been recited in the deed of gift that delivery of possession was given in 1952 and since then the donees had been in possession and as no registered deed of gift was executed then, this deed of gift was being executed.
27. The learned counsel has submitted that since the gift was made in 1952 it is not subject to gift-tax under the provisions of the Act of 1958. In support of his submission the learned counsel has drawn our attention to the following provisions of the Act :
'3. Subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the 1st day of April, 1958, a tax (hereinafter referred to as gift-tax) in respect of the gifts, if any, made by a person, during the previous year (other than gifts made before the 1st day of April, 1957) at the rate or rates specified in the Schedule.'
'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 of any property deemed to be a gift under Section 4.'
'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-
(a) the creation of a trust in property ;
(b) the grant or creation of any lease, mortgage, charge, easement, licence, power, partnership or interest in property ;
(c) the exercise of a power of appointment of property, vested in any person, not the owner of the property, to determine its disposition in favour of any person other than the donee of the power; and
(d) any transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person;.....'
28. The learned counsel for the assessee has submitted that the gifts made before the 1st day of April, 1957, have been excluded from the operation of Section 3 of the Act. That in the instant case the gifts were made in 1952, though there was no registered deed yet in fact the lands in question were gifted and'possession was delivered in 1952 as found in the recital of the deed of gift. That the word 'gifts' in Section 3 of the Act has to be
understood according to the definition given in Section 2(xii) of the Act, and that being so, even though gifts in the instant case were not by registered deeds of gift in 1952, these are gifts within the meaning of the definition given in Section 2(xii) of the Act and that being so, these gifts, being made before the 1st day of April, 1957, are not chargeable to gift-tax. In our opinion, this submission of the learned counsel is fallacious.
29. Under Section 123 of the Transfer of Property Act, for the purpose of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses.
30. To make a gift of immovable property, the property must be transferred and that transfer must be effected by registered instrument as provided under Section 123 of the Transfer of Property Act. Admittedly, there was no registered deed of gift with respect to the land purported to be gifted in 1952. But registered deeds of gift were executed on June 11, 1959. So the transfer by gifts in the instant case became effective in law only on June 11, 1959. No transfer by gift can be said to have taken place in respect of the lands in question prior to 1st day of April, 1957, in the absence of the registered deed of gift. These registered deeds of gift were admittedly executed and registered in 1959. That being so, the gifts under the registered deeds of gift are chargeable, to gift-tax under Section 3 of the Act. It has also been found that the transfer of 24 shares were recorded in the books of M/s. Bahadur Tea Co. Private Ltd. on March 4, 1960. The learned Tribunal also on consideration of the materials on record has found that the cash gifts of Rs. 90,000 were made during the previous year to the assessment year 1960-61. Thus, we hold that, on the facts and in the circumstances of the case, the learned Tribunal was justified in holding that the gifts made by Kumudeswar Goswami were assessable to gift-tax in the assessment year 1960-61. Accordingly, we answer the third question of law in the affirmative and against the assessee.
31. In the result, all the three questions of law are answered in the affirmative and against the assessee.
32. The reference is answered accordingly. We, however, make no order as to costs.
D. Pathak, J.
33. I agree.