Section 173 - Insertion of new section 16B - Direct Tax Laws (Amendment) Act, 1987

173. Insertion of new section 16B. After section 16A of the Gift-tax Act, the following section shall be inserted, namely :- 16B. Interest for defaults in furnishing return of gifts. (1) Where a return of gifts for any assessment year under sub-section (1) of section 13 or section 14, or in response to a notice under clause (i) of sub-section (4) of section 15, is furnished after the 30th day of June of such year, or is not furnished, the assessee shall be liable to pay simple interest at the rate of two per cent. for every month or part of a month comprised in the period commencing of the 1st day of July of the assessment year, and,- (a) where the return is furnished after the 30th day of June ending on the date of furnishing of the return; or (b) where no return has been furnished, ending on the date of completion of the assessment under sub-section (5) of section 15, on the amount of tax payable on the taxable gifts as determined on regular assessment. Explanation 1 .- In this sub-section and sub-section (3), tax payable on the taxable gifts as determined on regular assessment shall not include the additional gift-tax, if any, payable under section 18B. Explanation 2 .- Where in relation to an assessment year the assessment is made for the first time under section 16, the assessment so made shall be regarded as a regular assessment for the purposes of this section. (2) The interest payable under sub-section (1) shall be reduced by the interest, if any, paid under section 14B towards the interest chargeable under this section. (3) Where the return of gifts for any assessment year, required by a notice under sub-section (1) of section 16 issued after the completion of an assessment under sub-section (3) or sub-section (5) of section 15 or section 16, is furnished after the expiry of the time allowed under such notice, or is not furnished, the assessee shall be liable to pay simple interest at the rate of two per cent. for every month or part of a month comprised in the period commencing on the day immediately following the expiry of the time allowed as aforesaid, and,- (a) where the return is furnished after the expiry of the time aforesaid, ending on the date of furnishing the return; or (b) where no return has been furnished, ending on the date of completion of the reassessment under section 16, on the amount by which the tax on the taxable gifts determined on the basis of such reassessment exceeds the tax on the taxable gifts as determined on the basis of the earlier assessment aforesaid. Explanation-In this sub-section, tax on the taxable gifts determined on the basis of the reassessment under section 16 shall not include the additional gift-tax, if any, payable under section 18B. (4) Where, as a result of an order under section 22 or section 23 or section 24 or section 26 or section 28 or section 34, the amount of tax on which interest was payable under this section has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and,- (i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under section 31 and the provisions of this Act shall apply accordingly, and (ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. (5) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years. .