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Section 16 – The Gift Tax Act, 1958

The Gift Tax Act, 1958

 

 

16. GIFT ESCAPING ASSESSMENT. –

 

1(1) If the Assessing Officer 2has, reasons to believe] that the taxable gifts in respect of which any person is assessable under this Act (whether made by him or by any other person) have escaped assessment for any assessment year (whether by reason of under-assessment or assessment at too low a rate or otherwise), he may, subject to the other provisions of this section and section 16A, serve on such person a notice requiring him to furnish within such period, 3[***], as may be specified in the notice, a return in the prescribed form and verfied in the prescribed manner, setting forth the taxable gifts made by him or by such other person during the previous year mentioned in the notice, in respect of which he is assessable, along with such other particulars as may be required by the notice, and may proceed to assess or reassess such gifts and also any other taxable gifts in respect of which such person is assessable, which have escaped assessment and which come to his notice subsequently in the course of the proceedings under this section for the assessment year concerned (hereafter in this section referred to as the relevant assessment year); and the provisions of this Act shall, so far as may be apply as if the return were a return required under section 13:

 

Provided that where an assessment under sub-section (3) of section 15 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any taxable gift chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 13 or section 14 or in response to a notice issued under sub-section (4) of section 15 or this section or to disclose fully and truly all material facts necessary for his assessment for that assessment year :

 

4Provided further that the Assessing Officer shall, before issuing any notice under this sub-section, record his reasons for doing so.

 

Explanation : Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso.

 

(1A) No notice under sub-section (1) shall be issued for the relevant assessment year, – (a) in a case where an assessment under sub-section (3) of section 15 or sub-section (1) of this section has been made for such assessment year, –

 

(i) if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause (ii) or sub-clause (iii);

 

(ii) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year, unless the value of taxable gifts chargeable to tax which have escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year;

 

(iii) if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the value of taxable gifts chargeable to tax which have escaped assessment amounts to or is likely to amount to rupees one lakh or more for that year;

 

(b) in any other case, – (i) if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause (ii) or sub-clause (iii);

 

(ii) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year, unless the value of taxable gifts chargeable to tax which have escaped assessment amounts to or is likely to amount to rupees twenty-five thousand or more for that year;

 

(iii) if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the value of taxable gifts chargeable to tax which have escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year.

 

Explanation : For the purposes of sub-section (1) and sub-section (1A), the following shall also be deemed to be cases where taxable gifts chargeable to tax have escaped assessment, namely :-

 

(a) where no return of taxable gifts has been furnished by the assessee although the taxable gifts made by him or the taxable gifts made by any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to Gift Tax;

 

(b) where a return of taxable gifts has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the amount or value of the taxable gifts or has claimed excessive exemption or deduction in the return.

 

(1B)(a) In a case where an assessment under sub-section (3) of section 15 or sub-section (1) of this section has been made for the relevant assessment year, no notice shall be issued under sub-section (1) 5by an Assessing Officer who is below the rank of Assistant Commissioner or Deputy Commissioner, unless the Deputy Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice :

 

Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice.

 

(b) In a case, other than a case falling under clause (a), no notice shall be

issued under sub-section (1) by an Assessing Officer, who is below the rank of Deputy Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the Deputy Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.

 

(2) Nothing contained in this section limiting the time within which any proceedings for assessment or reassessment may be commenced shall apply to an assessment or reassessment to be made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 22, section 23, section 24, section 26 or section 28, 6or by a court in any proceedings under any other law.

 

Comments

 

The first appropriate remedy is to file a reply to the notices served under sub-section (1) (a). Held, in case of any grievance, further remedy of appeal is still available. Before exhausting appropriate remedies available, a writ petition challenging such notices is inappropriate; (1992) 65 Taxman 362 (DB) (P&H).

 

—————

1.  Sub-sections (1), (lA) and (1B) subs. by Act 4 of 1988, sec. 171 (a), for sub-section (1) (w.e.f. 1-4-1989).

 

2.  Subs. by Act 3 of 1989, sec. 84 (a), for “for, reasons to be recorded by him in writing, is of the opinion”.

 

3.  The words “not being less than thirty days”, omited by the Finance Act, 2003, sec. 101 (w.r.e.f. 1-4-1989).

 

4.  Ins. by Act 3 of 1989, sec. 84 (b) (w.e.f. 1-4-1989).

 

5.  Subs. by Act 12 of 1990, sec. 61 (w.e.f. 1-4-1990)

 

6.  Ins. by Act 4 of 1988, sec. 171(b) (w.e.f. 1-4-1989).

 

 

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The Gift Tax Act, 1958

 

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