Allahabad H.C : The reopening of the already completed assessment under s. 16(1)(a) of the GT Act, 1958, was valid

Counsel Appeared

V.B. Upadhya, for the Assessee : V.K. Rastogi, for the Revenue

R.K. GULATI, J.:

By a consolidated reference at the instance of Sir Padampat Singhania (HUF), Lakshmi Pat Singhania (HUF) and Kailash Pat Singhania (HUF), the Tribunal, Allahabad Bench, Allahabad, has referred the following two questions for the opinion of this Court under sub-s. (1) of s. 26 of the GT Act, 1958 (hereinafter to be referred as “the Act”) :

“1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the reopening of the already completed assessment under s. 16(1)(a) of the GT Act, 1958, was valid ?

2. Whether, on the facts and in the circumstances of the case, and on a correct interpretation of ss. 2(xii), 2(xxiv) and 4(1)(c) of the GT Act, 1958, the Tribunal was justified in holding that the amount of Rs. 2,20,474 surrendered or relinquished by letter dt. 17th Jan., 1969, was a taxable gift, the value of which was rightly added while making the reopened gift-tax assessment ?”

2. The material facts concerning the aforesaid two questions, in all the three cases, are common and identical in nature. It would, therefore, suffice for the decision of this reference, if we refer to the facts of only one of these cases, namely, in the case of Sir Padampat Singhania (HUF) (hereinafter to be referred as “the assessee”). The assessment year in dispute is 1969-70 with the corresponding accounting period ending on 18th March, 1969. After the completion of the original assessment, the GTO came to know that the assessee and the other two HUFs aforesaid had a deposit of Rs. 2,20,474 each in the books of M/s J.K. Investors (Bombay) Company Ltd. (for brief “Bombay company”) as on 31st Dec., 1968. By a joint letter dt. 17th Jan., 1969, the assessee and the other two HUFs surrendered the amounts standing to their credit in favour of the Bombay company authorising it to recoup its loss to the extent of Rs. 6,61,421.97, but these facts were not disclosed in the course of the original assessment proceedings. On gaining knowledge of the aforesaid fact, the GTO reopened the assessment of the assessee and that of the other two HUFs under s. 16(1)(a) of the Act.

The GTO rejected the assessee’s contention that the assessment could not be reopened under s. 16 (1)(a). By a reassessment order, the GTO, in addition to the taxable gift already assessed, added in the hands of the assessee an amount of Rs. 2,20,474 (being assessee’s deposit with the Bombay company and surrendered by letter dt. 17th Jan., 1969) as deemed gift. Similar assessment orders were passed in the cases of the other two HUFs also.

The assessee appealed to the CGT(A) contending that the assessment could not be reopened under s. 16(1)(a) of the Act and in the alternative the assessment order was bad on merits. The appeal was, however, dismissed affirming the reassessment order. The assessee being still aggrieved, filed a second appeal before the Tribunal which also met with the same fate. Thus the present reference.

Before the Tribunal action under s. 16(1)(a) was assailed only on one ground, namely, that there was no omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment. This contention was repelled by the Tribunal. It held that the assessee had failed to furnish necessary information concerning its deemed gift (contemplated by s. 4(c) ) in the requisite column of the gift-tax return which was filed during the course of the original assessment proceedings. Those facts were not disclosed during the course of the original proceedings. The said information, the Tribunal held, was required to be furnished in Part III-B of the gift-tax return, which was left blank and scored off by the assessee. On account of this omission, the Tribunal held there was escapement of taxable gift which was brought to tax in the reassessment proceedings. Accordingly, it confirmed the action of the GTO in reopening the assessment proceedings.

5. Sri V. B. Upadhya, learned counsel appearing for the assessee, made no serious attempt to assail the view taken by the Tribunal on the consideration that prevailed with it. The reasons are not too far to seek, to which we shall presently refer, but to continue with the arguments of learned counsel, he assailed the reopening of the assessment proceedings on an entirely fresh ground, which was neither raised nor has been dealt with by the Tribunal in its order. Learned counsel urged that the proceedings under s. 16(1)(a) could not be sustained, as the transaction in dispute did not fall within the accounting period, which in this case was from 29th March, 1968, to 18th March, 1969. He pointed out that book entries made by the Bombay company, in its account books, in pursuance of the letter of the assessee and the other two HUFs, were accorded approval by the board of directors by its resolution on 29th April, 1969, a date which fell outside the previous year relevant to the assessment year in dispute. He urged that the gift, if any, would fall for consideration in the asst. yr. 1970-71 and not in the asst. yr. 1969-70. A copy of the resolution exists in the paper book to which we were referred. It recites that the secretary of the company placed before the Board, the letter dt. 17th Jan., 1969, authorising the company to recoup its loss on disposal of the block shares in the New Kaiser-i-Hind Spg. & Wvg. Co. Ltd. to the extent of Rs. 6,61,421.97 out of the balance standing to the credit of the assessee and the other two Hindu undivided families, in the company’s account books as on 31st Dec., 1968. The concluding portion of the resolution states as under : “that the Board noted the same and approved and confirmed the necessary entry made as at 31st Dec., 1968, in the books of account of the company.”

We shall deal with this contention at the appropriate place. Reverting to the provisions of s. 16(1)(a), we may note that these provisions are similar in nature to those contained in s. 147(a) of the IT Act, 1961, and the corresponding provisions contained in s. 34(1)(a) of the Indian IT Act, 1922. The law on the subject, if we may say so, has by now been well-settled by the Supreme Court, in a series of cases decided by it. In its well known decision in Calcutta Discount Company Ltd. vs. ITO (1961) 41 ITR 191 (SC), the Supreme Court construed the phrase “omission or failure to disclose fully and truly all the material facts necessary for its assessment for that year” used in s. 34 of the Indian IT Act, 1922. It was pointed out that these words postulate a duty on every assessee to disclose fully and truly all the material facts which were necessary for its assessment. What facts would be necessary for assessment would vary from case to case. It was pointed out that in every assessment proceeding, the assessing authority would, for the purposes of computing or determining the proper tax due from an assessee, require to know all the facts which would help him in coming to the correct conclusion. In this context, it was observed that it was the duty of the assessee to disclose all primary facts including particular entries in account books, particular portions of documents, and documents and other evidence which could have been discovered by the assessing authority from the documents and other evidence. Once the assessee discharges this obligation of making a full and truthful disclosure of primary facts, its duty ended and it did not extend further. It was then for the assessing officer to decide from the primary facts before him what inferences of facts could be reasonably drawn and what legal inferences had ultimately to be drawn. These principles have again been reiterated by the Supreme Court in Indo-Aden Salt Mfg. & Trading Co. (P) Ltd. vs. CIT (1986) 58 CTR (SC) 9 : (1986) 159 ITR 624 (SC). Sec. 3 of the GT Act, which is the charging section provides that subject to the other conditions contained in this Act, there shall be charged for every assessment year commencing on and from 1st 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 at the rate or rates specified in the Schedule. Secs. 13 & 14 of the Act contemplate filing of a gift- tax return which must be filed in the prescribed form and verified in the prescribed manner. Rule 3 of the GT Rules prescribes the form of the return. It says “the return of gifts to be furnished by a person to the GTO under sub-s. ( I ) or sub-s. (2) of s. 13 or s. 14 shall be in Form A and shall be verified in the manner specified therein”. When we turn to Form A, in Part III-B thereof, an assessee is required to furnish certain information under the following caption : “Details of release, discharge, surrender, forfeiture or abandonment made by the assessee of any debt, contract or other actionable claim or of any interest in property.” Below this heading, there are four columns. In column No. 2, information sought is “full description of the release, discharge, surrender, etc.” In column No. 3, the date of the release, discharge, surrender is to be furnished and in column No. 4, the name and address of the person in whose favour the release, discharge, surrender, etc., was made are to be given. It was not disputed on behalf of the assessee that Part III-B of the return was left blank and was scored off by the assessee. The information required in Part III-B of the return, in our opinion, has a nexus with the transactions contemplated under s. 4 of the Act which may become liable to tax as “deemed gifts” in the circumstances and conditions provided in that section. What is “gift” under the Act has been defined in clause (xii) of s. 2 of the Act. By an inclusive definition in that clause, it includes transfer or conversion of any property referred in s. 4 deemed to be a gift. Under s. 4(1)(c), the value of the release, discharge, surrender, forfeiture or abandonment of any debt, contract or other actionable claim, or of any interest in the property to the extent it has not been found to the satisfaction of the GTO to be bona fide, shall be deemed to be a gift made by a person responsible for the release, discharge, surrender, abandonment, etc. Viewed in the context of these provisions, the surrender, release discharge, etc., of the debt due to the assessee from the Bombay company had a material bearing on the gift-tax assessment of the assessee. Facts concerning the transaction in dispute were, therefore, primary facts for the purposes of assessment of the assessee and were required to be mentioned in Part III-B of the gift-tax return. The obvious purpose of seeking information as contemplated in Part III-B of the return is that the assessee must disclose all transactions covered by Part III-B and it is for the Assessing Officer to finally decide whether such transactions are liable to tax or not. It is not open to the assessee for any reason whatsoever, to rufuse or to fail to disclose the transactions which may come within the four corners of the information sought in Part III-B of the return. What is relevant is that the form of gift-tax return which is prescribed by the Rules requires such information to be disclosed. Under certain circumstances, it may be possible to contend that all material facts necessary for assessment and which the assessee has to state are not exhausted by filling up the relevant column of the return alone, but we are not concerned with that question here. However, the non-supply of the information required in the prescribed form, in our opinion, will amount to nondisclosure of material facts within the meaning of s. 16(1)(a) of the Act. We are also not required in this case to go into the question whether the assessee could be absolved of its obligation to furnish the details required by the requisite column of the return if he had otherwise furnished such details during the course of the assessment proceedings as it is again the admitted case of the parties that no such information was furnished during the course of the original assessment proceedings. We do not see any reason why the assessee, who has failed to furnish the necessary information, as mentioned earlier, which is expressly required to be given in Part III-B, should be allowed to claim immunity from the charge of omission or failure to disclose the primary facts when the assessment is sought to be reopened under s. 16(1)(a) of the Act.

8. We may at this stage, refer to some pronouncements of the Supreme Court and of another High Court to support our view. In V. D. M. RM. M.RM. Muthiah Chettiar vs. CIT (I969) 74 ITR 183 (SC), a case arising under the provisions of the Indian IT Act, 1922, the Supreme Court was concerned with a case where the assessee had submitted a return of his income. In the said return, there was no specific column in which the assessee was required to give facts and information in respect of income of any other person other than the income of the assessee which was liable to be included in his total income. The assessment was completed on the basis of the said return which was sought to be reopened under s. 34(1)(a) of the said Act, on the charge that there was a failure or omission on the part of the assessee to disclose fully and truly all material facts. The assessee resisted the charge levelled against him on the ground that in the absence of any column in the return, he was not obliged to give any information that in the firm in which he was a partner, there were some other partners who were minors and the income accruing to those minors was liable to be taxed in his hands under s. 16 of the said Act. The Revenue, however, relied on certain instructions printed in the form of return in order to sustain the charge of failure or omission on the part of the assessee as contemplated under s. 34(1)(a) of the Act. This contention was repelled by the Supreme Court in the following manner : “Assuming that there were instructions printed in the Forms of return in the relevant years, in the absence of any head under which the income of the wife or minor child of a partner whose wife or a minor child was a partner in the same firm, could be shown, by not showing that income the taxpayer cannot be deemed to have failed or omitted to disclose fully and truly all material facts necessary for his assessment.”

9. In CIT vs. Smt. P.K. Kochammu Amma (1980) 19 CTR (SC) 196 : (1980) 125 ITR 624 (SC), the Supreme Court was concerned with a case arising under s. 271(1)(c) of the IT Act, 1961. There the assessee had omitted to include in her return, items of income arising to her spouse and minor daughter, in spite of there being a note in the income-tax return to that effect, although there was no specific column in the return. In this connection, the earlier decision of the Supreme Court in Muthiah Chettiar’s case (supra) was commented upon and it was observed :”It is difficult to see how the note in the prescribed form of the return could be ignored by the assessee and she could contend that, despite the note, she was not liable to show in her return the amounts representing the shares of her husband and minor daughter in the two partnership firms. The contention of the assessee, if accepted, would render the note meaningless and futile and turn it into a dead letter and that would be contrary to all recognised canons of construction.”

The decision in Muthiah Chettiar’s case (supra) was, however, not referred to a larger Bench for reconsideration since from 1st April, 1972, the form of return of income-tax prescribed by the IT Rules had undergone a change. After its amendment, a column was provided in which “income arising to spouse/minor child or any other person as referred to in Chapter V of the Act” is required to be shown separately under that column. Referring to this amended column of return, the Supreme Court observed : “……there is no longer any scope for arguing that the assessee is not bound to disclose such income in the return to be furnished by him.” In Sushila Devi Jain vs. CIT (1982) 27 CTR (Del) 48 : (1982) 138 ITR 551 (Del), the facts were that the assessee was a partner in a firm in which her two minor sons and a minor daughter were admitted to the benefits of the partnership. In Part III of the return filed by the assessee, names of the partners including minors were given and their shares were also specified; but the column which required the assessee to state the relationship of the partners to the assessee was left blank. The original assessment of the assessee was completed without including the shares of the minor children in the firm. Thereafter, in the assessments of the minor children, the ITO did not include their shares in the firm on the ground that they were liable to be included in the hands of the assessee in view of s. 64(ii) of the IT Act, 1961. When this came to the knowledge of the ITO assessing the assessee, the ITO reopened the assessment of the assessee under s. 147(a), on the charge that there was failure or omission on the part of the assessee to disclose all material facts for her assessment. The Delhi High Court upheld the action on the ground that Part III of the return prescribed under the Act of 1961 contained a column in which the assessee was required to mention the relationship amongst the various persons shown as partners. It held that the minor children were shown as partners but the column regarding relationship between the partners was not filled up. The assessee had failed to mention a very important fact which she was bound to disclose in the return made in the form prescribed under the Act. There was, therefore, failure on the part of the assessee to disclose fully material facts necessary for her assessment.

We may deal with the contention raised by learned counsel for the assessee that there was no completed gift within the previous year relevant to the assessment year in dispute so that these proceedings under s. 16(1)(a) were bad. It has been noted earlier that proceedings under s. 16(1) (a) were never challenged on this ground before the Tribunal nor had the Tribunal any occasion to consider this aspect. It is settled law that a plea which was not advanced before the Tribunal nor considered by it, cannot, for the first time, be raised in the hearing of a reference. There are, however, some exceptions to this rule. Out of them, one is, that where purely a legal argument is raised in support of a point urged before the Tribunal and no new facts are required to be investigated for its decision, then the parties may be allowed to raise such a plea for the first time in the reference proceedings. To put it differently, if a point of law is implicit or is covered by the question referred by the Tribunal and no additional facts are necessary to support that point, it may be raised for the first time in the High Court notwithstanding that it was not stated before or considered by the Tribunal. This, however, does not mean that the High Court would be entitled to entertain a new point at the reference on the basis that the question referred is general and compendious in nature. If the point raised is altogether a new point and was neither raised before the Tribunal nor considered by it nor does it arise on the findings of fact recorded by the Tribunal, such a question cannot be permitted for the first time in reference proceedings before the High Court. In CIT vs. Scindia Steam Navigation Co. Ltd. (1961) 42 ITR 589 (SC), it was held that when a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it. It was then pointed out : “A question of law might be a simple one, having its impact at one point, or it may be a complex one, trenching over an area with approaches leading to different points therein. Such a question might involve more than one aspect, requiring to be tackled from different standpoints. All that s. 66(1) requires is that the question of law which is referred to the Court for decision and which the Court is to decide must be the question which was in issue before the Tribunal. Where the question itself was under issue, there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal and it will be an overrefinement of the position to hold that each aspect of a question is itself a distinct question for the purpose of s. 66(1) of the Act. Sometimes questions are framed in such general terms that, construed literally, they might take in questions which were never in issue. In such cases, the true scope of reference will have to be ascertained and limited by what appears on the statement of the case.”

Bearing in mind these principles, we may now proceed to examine whether the assessee is entitled to raise the question argued before us. According to learned counsel for the assessee, the question with which the Tribunal was concerned was whether the proceedings under s. 16(i)(a) were validly initiated. In our opinion, the suggestion made by learned counsel is an oversimplification of the matter. As noticed earlier, the only question urged before the Tribunal was whether there was failure or omission on the part of the assessee to disclose fully and truly all material facts. The question which is now raised, cannot be considered to be a different aspect of the same question. The question whether there was a completed gift within the accounting period relevant to the assessment year in question, or whether the donee had accepted the gift within the said period, is essentially a question of fact. A perusal of the Tribunal’s order would show that the necessary facts have not been investigated in that regard. The Tribunal had no occasion to consider the question now raised.

From the Supreme Court decision in Scindia Steam Navigation’s case (supra), it is evident that a question involving different aspects of the issue that was before the Tribunal can alone be canvassed before the High Court. The important thing is that the point should have been in issue before the Tribunal. Whether there was “failure or omission” on the part of the assessee within the meaning of s. 16(1)(a) was the only issue which was argued before the Tribunal; whether there was a completed gift within the previous year is a separate question and not another aspect of the issue which was before the Tribunal. Learned counsel is not justified in saying that the question argued before us is only another aspect of the question argued before the Tribunal. There is another difficulty in the way of the assessee. From a perusal of the order of the CIT (A), we find that the question now urged before us was also raised and canvassed before him. This argument was repelled on the findings by the CIT (A). To put it in the language of the CIT, the findings recorded were to the following effect : “This contention of learned counsel is also fallacious since the necessary entries in this regard have already been made on 31st Dec., 1968, and hence on this date itself, the debt outstanding against the company in their books stood released as the account of the HUF was balanced and nothing remained payable by the company to the appellant-HUF. Mere approval of this transaction by the board of directors on 29th April, 1969, does not mean that the date of release has been shifted to that date. The appellant-HUF sent a letter to this effect on 17th Jan., 1969, to the company and, the entry having been made already on 31st Dec., 1968, the release of the debt became complete on that date and would accordingly fall in the asst. yr. 1969-70 only. The claim of the appellant here also is without any merit and is rejected.”

From the above extract, it is clear that the plea which is now sought to be raised was repelled. The decision given by the CIT (A) was not questioned before the Tribunal. On the contrary, this plea was abandoned, as we do not find any discussion on this point in the Tribunal’s order, nor is there any mention that the assessee had raised any such plea.

The assessee, having abandoned its case before the Tribunal, cannot be permitted at this stage to raise it again. As the question now canvassed does not arise out of the order of the Tribunal, we do not think it necessary to deal with it on the merits.

14. Question No. 1 is, therefore, answered in the affirmative and against the assessee.

15. This brings us to the second question referred for our opinion. The findings recorded by the Tribunal are that the transaction by which the assessee released or surrendered the amount in favour of the Bombay company was not “bona fide” and it was liable to tax as a “deemed gift” as contemplated under s. 4(c) r/w ss. 2(xii) & 2(xxiv) of the Act. The material portion of the letter dt. 17th Jan., 1979, authorising the Bombay company to recoup its loss was to the following effect : “In view of the fact that these deposits were made in the continuous process of supporting your company in holding substantial block of shares in the New Kaiser-i-Hind Spg. & Wvg. Co. Ltd. so that the three Singhania Brothers could have effective control and management over the affairs of that company and in view of the subsequent fact that the Singhania Brothers had to give up the said control and enter into an arrangement with Sri Nandlal Jalan and others for the disposal of all the J. K. holdings in that company, including yours at Rs. 10 per share causing a heavy loss to your company, we hereby authorise you to recoup your loss to the extent of Rs. 6,61,421.97 out of the balance standing to the credit of our accounts as specified above.”

16. It appears that the Bombay company was holding a block of 9,464 ordinary shares of the New Kaiser-i-Hind Spg. & Wvg. Co. Ltd. which it disposed of in its previous year ending 30th June, 1969. As a result of the said sale, it suffered a loss of Rs. 13,15,986 which was claimed as a capital loss in its assessment proceedings for the asst. yr. 1967-68. The claim was accepted by the ITO and the company was allowed to carry forward the said loss. The case set up by the assessee was that the aforesaid loss was suffered by the Bombay company on account of the assessee and the other two HUFs, the suggestion being that the Bombay company acquired the disputed shares to help the assessee and the other two HUFs, to acquire control over the affairs of the New Kaiser-i-Hind Spg. & Wvg. Co. Ltd. The transaction, according to the assessee, was genuine and bona fide inasmuch as the money due from the Bombay company was given up in order to compensate its loss which was suffered on account of the assessee and two others. The Tribunal as well as the other tax authorities repelled the assessee’s case. It held that the case set up by the assessee was an afterthought. It would be useful to refer at this stage to the findings of the Tribunal which were recorded in the following terms : “…It is not under dispute that in the assessment for the asst. yr. 1967-68, the Bombay company claimed the entire loss on sale of N. K. H. shares and the claim of loss was also allowed by the ITO. It is further not under dispute that for the asst. yrs. 1967-68 or 1968-69, the assessee-HUF did not show in its wealth-tax return any liability on account of having to recoup the Bombay company for the whole or part of the loss suffered by it on the sale of N. K. H. shares. This itself shows that the stand now taken that the assessee was under an oral obligation or under an oral agreement to recoup the Bombay company of part of the loss suffered by it on the sale of N.K.H. shares is an afterthought. No correspondence has been produced before us to show that the Bombay company claimed the whole or any part of the loss suffered by it on the sale of N.K.H. shares from the assessee-HUF. It also cannot be disputed that by the surrender or relinquishment there was a reduction in the assessee’s net wealth and consequently liability to wealth-tax and corresponding increase in the value of the assets of the Bombay company which, being a limited company, was not liable to wealth-tax. There is a lot of force in the submission of the learned Departmental Representative that the bona fides of the transaction, which is a transfer because it results in diminution of the value of the assessee’s properties and increase in the value of properties of another person as laid down by sub-cl. (d) of cl. (xxiv) of s. 2 of the GT Act has to be judged by what happened to the case of others. Taking all this into consideration and looking to the totality of the facts and circumstances, we are not satisfied that the relinquishment or abandonment of the debt due from the Bombay company by the assessee-HUF was not bona fide.” To complete the narration of facts, after the receipt of the letter dt. 17th Jan., 1969, the Bombay company addressed a letter to its Assessing Officer in its assessment proceedings for the asst. yr. 1970-71. This letter had required the Assessing Officer to reduce the capital loss already determined by him by an amount of Rs. 6,22,542.54. By the same letter, it further requested that an amount of Rs. 38,880 be assessed in its hands under s. 41(1) of the IT Act, the amount which was earlier allowed to it as an expenditure being the amount of interest paid to the assessee and the two other HUFs on their credit balances, the reason being that that amount was also surrendered as a part of Rs. 6,61,421 97.

From the above, one thing is evident that the Bombay company continued to pay interest on the interest-bearing deposits of the assessee even after it had disposed of its holding of N.K.H. shares and had suffered a loss therein. From the findings extracted above, it is also evident that the Tribunal felt that the case set up was an afterthought and not a genuine one arising in the normal course of events, inasmuch as, if the case of the assessee was genuine and true, there was no reason why the Bombay company claimed the entire loss as belonging to it. The assessee also failed to give any explanation for not claiming the liability to recoup the Bombay company for its loss in its wealth-tax returns which were filed long after the date of loss. The Tribunal also observed that no correspondence or any other material was placed before it from which it could be gathered that the Bombay company made purchases of the disputed shares at the behest of the assessee and the other two HUFs.

Learned counsel for the assessee urged that the Tribunal, while deciding the question of bona fides, has not approached the case from its correct perspective. He urged that the expression “bona fide” has not been defined under the Act and the said expression must be construed as meaning “good faith”. He referred us to sub-s. (22) of s. 3 of the General Clauses Act, 1897 (Act No. X of 1897), which defines “good faith” in the following terms : “A thing shall be deemed to be done in ‘good faith’ where it is in fact done honestly, whether it is done negligently or not.”

Learned counsel also relied upon a decision of the Supreme Court in N. Subramania Iyar vs. Official Receiver AIR 1958 SC 1.

20. While considering the first question, we have noted that, subject to other conditions provided under the Act, under s. 3 of the Act a person is liable to gift-tax in respect of the gifts made by him during a previous year. The expression “gift”, as noted earlier, is defined under s. 2(xii) of the Act and means transfer of existing property both movable or immovable by one person to another, made voluntarily and without consideration. By an artificial definition, it also ropes in and includes transfer or conversion of any property referred to in s. 4 which has been described as “deemed gift” for the purposes of the Act. The expression “transfer of property” is defined by s. 2(xxiv) of the Act and within its mischief it includes transactions as mentioned in its clauses (a) to (d). The opening part of s. 2(xxiv) and sub-clause (d) thereof read as under : “‘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…… (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.” Sec. 4, as stated earlier, deals with deemed gift. It has three clauses in it. We are concerned with cl. (c), s. 4(1), which reads as under : “4. (1) For the purposes of this Act— (c) where there is a release, discharge, surrender, forfeiture or abandonment of any debt, contract or other actionable claim or of any interest in property by any person, the value of the release, discharge, surrender, forfeiture or abandonment, to the extent to which it has not been found to the satisfaction of the GTO to have been bona fide, shall be deemed to be a gift made by the person responsible for the release, discharge, surrender, forfeiture or abandonment.”

[Citation : 172 ITR 292]