TMI Blog2005 (1) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 specified event agreed upon by the donor and donee that the gifts can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 acquiescence such as standing by when the deed was executed or was regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed 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 the village officer's letter addressed to Assessing Officer also, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 his daughter for all the above transactions and the assessee's daughter might ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Amount Rs. Extent of land Re-Survey No. ------------------------------------------------------------------------- 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions of the assessee, on the basis of evidence adduced before him, by passing a speaking order and accordingly assessed the value of these properties transferred by way of gift deeds and charged gift-tax. Aggrieved, the assessee preferred an appeal before the C.G.T. (Appeals). The C.G.T. (Appeals), after hearing the assessee, cancelled the gift-tax assessment and he put forth the reasoning for cancellation of the assessment in his order. Aggrieved, the revenue preferred this second appeal before the Tribunal and raised three effective grounds of appeal. The grounds raised are already reproduced by my learned brother in his proposed order, so to avoid duplicity I am not reproducing the same again. The assessee has also come to the Tribunal by way of cross objection. 3. The appeal and cross objection were heard and disposed of by the Tribunal vide its order dated 30-10-2003. The Hon'ble Bench of the Tribunal reached at the conclusion that the transfer was complete and the gift was absolute, making the assessee's case falling under the purview of the Gift-tax Act and in view of this, the order of the Assessing Officer was restored. Aggrieved, the assessee filed a Misc. Petition on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kanjiramnilkum Kalayil Joseph, Padinijarubhagam Kara. The property of 10 cents mentioned in Schedule I below is included in property purchased by me from Tellakam Karayil, Chemmacherilaya Maruthumala Chacko Abraham others vide document No. 2544 of 1978, of Ettumannor Sub-Registrar's office Book No. 1, Volume 323, pages 321 to 324. -Page-14- The property of 15 cents mentioned in Schedule 11 below is included in property purchased by me from Kulavelil Mariamma alias Maryamma vide document No. 3008 of 1978, Book Number 1, volume 327, pages 301 to 303, and is held by me directly by paying taxes and with all freedom and free from any encumbrances and the scheduled property is included in Thandaper Number 4666 Sunitha Kurian is my eldest daughter. On the basis of my affection towards you as daughter, and on account of your dependence on me and for your educational needs and as your share and for your daily needs the 25 cents mentioned below as Number 1 and Number 2 including all trees therein, I hereby transfer all my rights and ownership. -Page - 15 - And give the same to you as gift vide document executed. I hereby fully agree that from today onwards Sunitha Kurian will have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unnel Father, Kurian -do- ------------------------------------------------------------------------------ Translation of page No. 19 ------------------------------------------------------------------------------- 1 2 3 4 5 6 7 ------------------------------------------------------------------------------- Date of Receipt Not clear Not clear Name of Details Rs. Ps. collection Number person who remitted. ------------------------------------------------------------------------------- 29-10-93 92 435 P.V. 463/93 SD 4. 00 Palakunnel charge Sunitha Kurian -do- -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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... daram 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" 5.3 The C.G.T. (Appeals) has created doubt vide paragraph 4 of his order which reads as under: "(4) No doubt, the property has been transferred in the name of the appellant's daughter in the village office records. The mutation in her favour also finds a mention in the letter written by the Village Officer to the Assessing Officer. However, this alone does not constitute a 'transfer' for the gift-tax purposes. As per the commentary of Sanjiva Row on Transfer of Property Act 6th Edition-page 126 para 13), 'mutation or change of name in the revenue records does not itself operate as a transfer. It is only evidence of transfer'. Thus the mutation in the Village Office records in favour of the 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 affi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing exclusively and entirely handed over to the donee. In this way, the donor transferred all his rights and ownership to the donee as gift vide gift deeds. Further, from the revenue records of the Village Officer, it is seen that the donee vide document No. 3531 which has registered gift deed applied for mutation as is clearly indicated from the letter of the Village Officer, who has submitted the copies of land revenue records along with this letter and further, I have also reproduced the same in the above paragraphs. On these facts, I want to analyze the position of G.T. Act as well as the T.P. Act. In this regard I have to discuss the provisions of section 2(viii), 2(xii) and 2(xxiv) of the G.T. Act as well as the provisions of section 122 of the T.P. Act. The definition of gift as provided in section 2(viii), (xii) (xxiv) of the G.T. Act are as under: "Section 2. Definitions - In this Act, unless the 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 transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transfer of Property Act, 1882, section 2(xii) of the Gift-tax Act does not specifically refers to the acceptance of the gift by the donee. In other words, the element of acceptance of the gift by the donee is lacking in the definition of the expression 'gift' in section 2(xii) of the Gift-tax Act, whereas under section 122 of the Transfer of Property Act, 1882, that element is also present. On a comparison of the phraseology of the two provisions, one may argue that in order to constitute a valid gift under the Gift-tax Act, it is not essential that the donee should have accepted the gift. Such an argument cannot be accepted especially in view of the definition of 'donee' [section 2(viii) as a person who acquires any property under a gift]. 'The meaning of the word 'acquire' as given in Chambers' Twentieth Century Dictionary is 'to gain; to attain to'; Shorter Oxford English Dictionary gives the 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. Mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of sections 122 and 123 of the T.P. Act, I have seen that the acceptance by the donee or on his behalf is a mandatory condition in the provisions of section 122 of the T.P. Act and further as regards to the effecting of transfer by registered instrument signed by or on behalf of the donor and attested by at least two witnesses is also mandatory in the provisions of section 123 of the T.P. Act. The essential elements of the gift are: 1. The absence of consideration. 2. The Donor. 3. The Donee. 4. The subject-matter. 5. The transfer. 6. The acceptance. Going through these essential elements, it is seen that the acceptance is an essential element and as in the present case the gift deeds executed by the donor in favour of the donee clearly states that he has transferred all the rights and ownership and given the same to the donee as gift vide document executed and he has 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re and could be accepted on its behalf. In this case, mutation is complete in the transaction of the property and there is no question of non-acceptance. In view of this, I have no hesitation in holding that the transfer is complete in view of the provisions of sections 122 and 123 of the T.P. Act. 6.6 I, humbly following the Hon'ble Apex Court in the case law cited above, state that the facts of this case are entirely different from the case before the Hon'ble Apex Court. Before the Hon'ble Apex Court, the issue was as regards to the registration of documents. Here, all the requirements complying with the provisions of the T.P. Act as well as the Registration Act have been fulfilled. The Hon'ble Kerala High Court in the case of CGT v. R. Kesavan Nair [1974] 96 ITR 365 has held that "It could 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." E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no transfer and no gift unless and until the condition is fulfilled. Revocation under the first paragraph of this section depends upon the donor and the donee at the time of acceptance agreeing to a condition subsequent which puts an end to the gift. The condition must be made at the time, the donor cannot impose such a condition after the gift is absolute. And further more such a condition must be expressed. In the absence of such condition the donor has no power for revocation. In view of the provisions of section 126 of the T.P. Act, the condition cannot depend upon the will of the donor and a gift revocable at pleasure is no gift at all. This provision provides only two conditions where a gift can be revoked and which are as under: (a) When the donor and donee have agreed that on the happening of a specified event (not depending upon the will of the donor) the gift should 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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds in 1997. He recalled the properties to himself. Both the set of deeds were executed before the Sub-Registrar. 2. The Gift-tax Officer held the view that the assessee had conveyed the properties through the first set of documents executed by him, in favour of his daughter. The case of the assessee was that the documents were subsequently cancelled and the conveyances were recalled and therefore there were no valid proceedings and any valid gifts. The Assessing Officer rejected the contention of the assessee and completed the assessment under the Gift-tax Act, 1958. 3. In first appeal, the Commissioner of Gift-tax (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 gift-tax assessment. The CIT(A) cancelled the gift-tax assessment. 4. It is 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 corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which amounted to gifts by the assessee to his daughter. On the basis of the entries of mutations made by the Village Officer in the village records, the Judicial Member came to the finding that the transfer of properties made by the assessee through the first set of documents were accepted by the assessee's daughter and therefore the gifts have become complete. 9. The Judicial Member further held that the gift made by the assessee was not a conditional one as envisaged in section 126 of the Transfer of Property Act and the donor, the assessee, had no power of revocation. He held that the cancellation deeds executed by the assessee are therefore invalid documents. He upheld the contention of the Revenue and allowed the appeal filed by the Revenue by dismissing the cross objection of the assessee. 10. Therefore the difference of opinion. ORDER UNDER SECTION 23(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 follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case, the gift is complete, as the property stands transferred in revenue records on the basis of registered gift deeds on an application submitted by the donee? 2. Whether, on the facts and in the circumstances of the case, the subsequent cancellation of the gift deeds are valid in view of provisions of the Gift-tax Act, 1958 and the provisions of section 126 of the Transfer of Property Act, 1882, as the gift deeds are unconditional?" 2. In my considered opinion, the question that would cover the controversy is: "Whether on the facts and in the circumstances of the case the learned CIT (Appeals) is justified in cancelling the gift-tax assessment made on the assessee?" 3. I shall proceed to consider and dispose of above question. I have heard Shri K.K. John, the learned Departmental Representative and Shri R. Krishna Iyer the learned 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 regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llage records also to make the transfer complete. Then only, the transferee can effect payment of land tax in her favour in respect of the property so transferred. In this case, I have made verification with the concerned Village Office and it is informed by the Village Officer, Athirampuzha in his letter No. 18/2001 that transfer has been effected in respect of properties comprised in his territorial area which are under consideration in this assessment order. After effecting the transfer in the village documents in favour of the donee in this case, land tax has also been paid by the donee, Smt. Sunitha Kurian in respect of the properties under reference. In respect of certain properties lying in the territorial area of Village Officer, Ettumanoor also, transfer has been effected in the village records in favour of the donee and also payment of land tax has 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 9,22,502 Less: Tax paid Nil -------------- Balance payable Rs. 9,22,502" -------------- The assessee impugned above assessment in appeal before the Commissioner of Gift-tax (CGT) (Appeals) and contended that gifts allegedly made were never accepted by the Donee. The assessee also challenged the findings that mutation on the basis of alleged gift deeds were got made in the revenue records by the donee. Affidavit of the Donee to the above effect was placed before the learned CGT (Appeals). The assessee further relied upon the revocation deeds to contend that averments therein were equally important. 7. After considering facts and 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 fav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Even if one of these conditions is not fulfilled, the gift cannot be deemed to have been executed. In the present case, there is no doubt regarding the satisfaction of condition (i) since the appellant has voluntarily executed the transfer deeds. Regarding condition (iii) also, there cannot be any doubt regarding the attestation since the Registrar has accepted the validity of the transfer and the registration has been done in the name of appellant's daughter. That leaves only condition No. (ii), namely, the issue of acceptance by the donee for a closer examination by me. In this case, the Assessing Officer has no evidence to prove that the appellant's daughter had accepted the gifts. In the deed of transfer, she has not signed accepting the gift. The Assessing Officer states in page 5 of the assessment order that '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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tself operate as a transfer. It is only evidence of transfer. Thus the mutation in the village office records in favour of the appellants 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. (5) The facts of non-acceptance of the gift by appellant's daughter is also clear from the fact that she has not disputed the re-transfer of the property to her father by the cancellation 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 suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt's case not falling under the purview of the Gift-tax Act. Hence the Gift Tax assessment made in the appellant's case is hereby cancelled." 8. The Revenue being aggrieved came up in appeal before the Appellate Tribunal against the order of the learned CGT(A). The assessee filed a cross objection. The learned Members of Cochin Bench heard the appeal and confirmed the order of CGT (Appeals) vide their decision dated 30-10-2003. However on the request of the assessee the aforesaid order was recalled under section 35 of the Gift-tax Act read with section 254(2) of IT Act vide order dated 27-2-2004 and appeal was fixed for fresh hearing. During the course of fresh hearing and disposal of appeal, the difference arose between the Members. The learned Members have expressed their views as under: 9. The learned 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned JM are as under:- "(1) On examination of gift deeds and mutation made thereof, reply of Village Officer dated 12-8-2003 as also translation of pages 18 and 19 (representing translation of Registers maintained by the Village Officer), the learned JM held that properties were gifted by the assessee to his daughter out of love and affection. All rights and interest in properties were entirely and exclusively handed over to the donee who was to hold the properties and pay Government Taxes. (2) That the donee on the basis of gift deed dated 8-10-1993 had applied for mutation of the property in her favour in the revenue record and revenue department made necessary transfers in their record as per evidence produced by the revenue. The learned JM accordingly held that finding of the AO reproduced 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal, drew my attention to the dates of gifts and dates of cancellation. He argued that the assessee was not assessed under the Income-tax Act prior to assessment year 1991-92. However, all the returns for assessment years 1991-92 to 1994-95 were filed on 6-8-1997. In this connection, the learned DR drew my attention to order-sheet entry dated 29-11-1996 wherein the AO recorded reasons under section 148 of the I.T. Act, for issuing notices for assessment years 1995-96 and 1996-97. Taking wind of above action, the assessee was prompted to execute cancellation deeds to avoid levy of the Gift-tax. In this background, no importance should be attached to cancellation deeds. Moreover, gifts being complete in all respect as pointed out by the learned JM in the proposed order under reference, question 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven careful thought to the rival submissions and examined them in the light of material available on record. The revenue in its Paper Book has included copy of one of gift deeds in vernacular. They were also required to give complete and correct English translation of the same but I find that some extracts of one of Gift deeds have been placed on record. In the situation I would like to go by what is stated by the Gift-tax Officer in the impugned order about the gift deeds: "On going through these documents, it could be seen that the assessee had intended to transfer the above properties by way of gift in favour of his daughter. The assessee was having absolute right over the properties transferred. The reason for the transfer has been stated as since Sunitha Kurian, the 'donee' 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the gift deed, observed as under: "(ii) The contention for the department that, in order to constitute a gift under the Gift-tax Act, it is not essential that the donee should have accepted the gift, because the element of acceptance of the gift by the donee is lacking in the definition of 'gift' in section 2(xii) of the Gift-tax Act, is not correct. Section 2(viii) of the Act defines a 'donee' as a person who acquires any property under a gift. This connotes that the person concerned should have a positive mental attitude to receive or to come into possession of the property. Moreover, under section 29 of the Gift-tax Act, the donee can be called upon to pay the tax if the Gift-tax Officer is of the opinion that the same cannot be recovered from the donor. It could 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the donee or persons acting on his behalf and not merely passive acquiescence, such as standing by when the deed was executed or was registered' This shows that mere standing by when the deed was executed or registered will not be sufficient to prove acceptance. It is true as pointed out by the learned counsel for the appellant that it was extremely probable that Arunachalam was standing besides his father Varadaiya Chetty when Ex. A1 was registered. But that alone will not amount to acceptance. The learned counsel for appellant submitted that the title deeds were with the appellant, so this should prove delivery and acceptance. Even regarding the title deeds in the plaint the appellant had averred that Varadaiya Chetty had insisted and prevailed upon the plaintiff 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsider. However, before dealing with above controversy, I would deal with minor controversies between the parties on which arguments were advanced- (1) What is the effect of mutation in the revenue record? According to the Assessing Officer, village documents are fundamental documents with regard to immovable properties and their ownership. However, according to the assessee, mutation in the revenue record is not of much value. In my considered opinion a presumption of truth is attached to entries in the revenue record under the Land Revenue Code of States. In the absence of evidence to the contrary, revenue entries can be relied upon for deciding question of ownership and possession. But mutation as such does not create any right, title or interest. The proceedings 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 pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties in question was never delivered to the donee. He further did not controvert the claim of the assessee that original documents were with him and not with the donee. This was in spite of enquiries made by him from the Village Officer. Neither the donor nor the donee were examined. 20. The Assessing Officer wrote to the Village Officer enquiring about the mutation proceedings as per his letter No. 1154, dated 2-2-2001. Copy of the above letter has not been placed before the Tribunal although it was very relevant as to what exact information was sought by the Assessing Officer. The Village Officer as per his reply No. 18/2001 had stated as under.- "Referring to the letter cited, I may inform that land comprised in survey Nos. 516/5, 516/3 transferred in 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 port ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record when order dated 28-3-2002 was passed by the CGT(A). The other documents referred to by the learned JM were collected by the revenue authorities subsequent to the passing of the impugned order and are 'additional evidence'. 21. Having regard to the finding recorded by the Assessing Officer about the acceptance of gift by the donee and about her filing an application for getting mutation effected in her name, the assessee filed an affidavit of the donee denying that she had taken possession or had filed any application before the Village Officer for getting mutation effected in her name. Even otherwise it was contended that there was no evidence to support of the finding of the Assessing Officer that gift was accepted and donee gave consent and concurrence 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 appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer to the Departmental Representative. The said letter on page 16 of the Paper Book of the revenue, reads as under:- "As required by you over telephone I had deputed my inspector to the Village Office, Athirampuzha to collect a copy of application furnished before the Village Officer for effecting the transfer of properties in the village records with reference to the gift of immovable properties effected by Shri P.J. Kurian, Palakunnel House, Athirampuzha in favour of his daughter Smt. Sunitha Kurian. In this regard, the request was made to the Village Officer by letter dated 23-7-2003 through my inspector. The Village Officer has, by her letter No. 274/3 dated 12-8-2003, furnished copy of the register maintained in her office with regard 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 19 are all additional evidence being produced for the first time in the second appeal. There is no request from Revenue under Rule 29 of the Income-tax Rules seeking permission of the Tribunal to place these additional material on record. There is no order of ITAT admitting these documents as additional material. In the absence of any request/order admitting above documents into evidence, I have doubt that these can be read in evidence. The learned Accountant Member did not refer to these documents at all whereas the learned Judicial Member in his proposed order has relied upon these documents. In my considered opinion the documents could not be read in evidence unless these were properly and legally brought on record and therefore the learned JM is not correct in relying upon these documents. Assuming for the sake of argument that these documents have been properly brought on record and are to be read in evidence, they do not advance the case of the Revenue. Pages 18 and 19 are only copies of entries in some registers maintained by the Village Officer relating to applications filed before him and fees collected by him. These registers are not part of Revenue record to which pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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