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Issues Involved:
1. Validity of reopening the completed assessment under section 16(1)(a) of the Gift-tax Act, 1958. 2. Taxability of the amount surrendered or relinquished as a taxable gift under sections 2(xii), 2(xxiv), and 4(1)(c) of the Gift-tax Act, 1958. Issue-wise Detailed Analysis: 1. Validity of Reopening the Completed Assessment: The court examined whether the reopening of the assessment under section 16(1)(a) of the Gift-tax Act, 1958, was justified. The Tribunal held that the assessee failed to disclose necessary information regarding the deemed gift in the original gift-tax return, leading to the escapement of taxable gift. The assessee did not furnish the required details in Part III-B of the return, which was left blank and scored off. This omission was deemed a failure to disclose material facts necessary for assessment, thus validating the reopening of the assessment. The court referenced the Supreme Court's rulings in *Calcutta Discount Company Ltd. v. ITO* and *Indo-Aden Salt Mfg. & Trading Co. P. Ltd. v. CIT*, which established that an assessee must disclose all primary facts necessary for assessment. The court held that non-disclosure of the information required in the prescribed form amounts to non-disclosure of material facts under section 16(1)(a). The court also cited cases like *V. D. M. Rm. M. Rm. Muthiah Chettiar v. CIT* and *CIT v. Smt. P. K. Kochammu Amma*, supporting the view that failure to provide required information in the return justifies reopening the assessment. The assessee's argument that the transaction did not fall within the accounting period was rejected. The court noted that this plea was not raised before the Tribunal and could not be introduced at this stage. The court emphasized that a new point not argued before the Tribunal cannot be raised in reference proceedings unless it is a legal argument requiring no new facts. 2. Taxability of the Amount Surrendered or Relinquished: The court examined whether the amount of Rs. 2,20,474 surrendered by the assessee was a taxable gift under sections 2(xii), 2(xxiv), and 4(1)(c) of the Gift-tax Act, 1958. The Tribunal found that the transaction by which the assessee released or surrendered the amount in favor of the Bombay company was not bona fide and was liable to tax as a deemed gift. The Tribunal noted that the Bombay company claimed the entire loss on the sale of shares and continued to pay interest on the deposits, indicating that the assessee's claim of an oral obligation to recoup the loss was an afterthought. The court referred to section 4(1)(c) of the Act, which deems the value of any release, discharge, surrender, forfeiture, or abandonment of any debt, contract, or other actionable claim as a gift unless it is found to be bona fide. The Tribunal's findings that the transaction was not bona fide were binding, and the court could not re-evaluate the evidence. The court also addressed the assessee's argument that the transaction was done in good faith under section 70 of the Indian Contract Act, but found no evidence that the assessee enjoyed any benefit from the disputed shares. The court concluded that the Tribunal's findings were based on a consideration of evidence and relevant facts, and thus, the transaction was liable to gift-tax. Conclusion: The court answered both questions in the affirmative, against the assessee. The reopening of the assessment under section 16(1)(a) was valid due to the non-disclosure of material facts. The amount surrendered was a taxable gift as the transaction was not bona fide. The Department was entitled to costs assessed at Rs. 300.
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