TMI Blog1987 (11) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,20,474 surrendered or relinquished by letter dated January 17, 1969, was a taxable gift, the value of which was rightly added while making the reopened gift-tax assessment ?" 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 March 18, 1969. After the completion of the original assessment, the Gift-tax Officer came to know that the assessee and the other two Hindu undivided families aforesaid had 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 December 31, 1968. By a joint letter dated January 17, 1969, the assessee and the other two Hindu undivided families 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 section 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 March 29, 1968, to March 18, 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 Hindu undivided families, were accorded approval by the board of directors by its resolution on April 29, 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 assessment year 1970-71 and not in the assessment year 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 dated January 17, 1969, authorising the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely to be drawn. These principles have again been reiterated by the Supreme Court in Indo-Aden Salt Mfg. Trading Co. P. Ltd. v. CIT [1986] 159 ITR 624. Section 3 of the Gift-tax 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 April 1, 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. Sections 13 and 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 Gift-tax Rules prescribes the form of the return. It says " the return of gifts to be furnished by a person to the Gift-tax Officer under sub-section (1) or sub-section (2) of section 13 or section 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed 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 non-disclosure of material facts within the meaning of section 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 disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... although there was no specific column in the return. In this connection, the earlier decision of the Supreme Court in Muthiah Chettiar's case [1969] 74 ITR 183 was commented upon and it was observed (p. 629): " 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 [1969] 74 ITR 183 (SC) was, however, not referred to a larger Bench for reconsideration since from April 1,1972, the form of return of income-tax prescribed by the Income-tax Rules had undergone a change. After its amendment, 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 Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s settled law that a plea which was not advanced before the Income-tax Appellate 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 by 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 canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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[1961] 42 ITR 589, 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 section 16(1)(a) was the only issue which was argued before the Tribunal : whether there was 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 perusal of the order of the Commissioner of Income-tax (Appeals), we find that the question now urged before us was also raised and canvassed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 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 June 30, 1969. As 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 assessment year 1967-68. The claim was accepted by the Income-tax Officer and the company was allowed to carry forward th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operties and increase in the value of properties of another person as laid down by sub-clause (d) of clause (xxiv) of section 2 of the Gift-tax 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-Hindu undivided family was not bona fide." To complete the narration of facts, after the receipt of the letter dated January 17, 1969, the Bombay company addressed a letter to its assessing officer in its assessment proceedings for the assessment year 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 section 41(1) of the Income-tax 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 Hindu undivided families on their credit balances, the reason being that that amount was also surrendered as a part of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion " transfer of property " is defined by section 2(xxiv) of the Act and within its mischief it includes transactions as mentioned in its clauses (a) to (d). The opening part of section 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 Iimiting 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." Section 4, as stated earlier, deals with deemed gift. It has three clauses in it. We are concerned with clause (c), section 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 Gift-tax Officer to have been bona fide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction appear other than what it was in reality. The object of inserting the words " bona fide " in section 4(1)(c) was to provide for exemption from tax liability in respect of a transaction which is real and genuine. The use of the expression " good faith " in the context of the aforesaid provision conveys the absence of intent to deceive. The expression " bona fide " has been used in several enactments and its meaning has to be gathered in the context in which it is used and in relation to the transaction in question. In Stroud's Judicial Dictionary of Words and Phrases, 4th edition, several decided cases on bona fide have been referred to. It is said that the equivalent of this phrase is " honesty ", (Per Bramwell [1893] 1 QB 522. In Wharton's Law Lexicon it is said: "Bona fide " means good faith, implying the absence of all fraud, unfair dealing or acting, whether it consists in simulation or dissimulation. We have seen earlier that the Tribunal, after considering the totality of the circumstances, has held that the transaction was an afterthought and thus not bona fide. The argument of learned counsel for the assessee that bona fide is synonymous with the phrase " g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties and they are not entitled to go behind the facts of the Tribunal in the statement. When the question referred to the High Court speaks of on the facts and circumstances of the case, it means on the facts and circumstances found by the Tribunal and not on the facts and circumstances as may be found by the High Court." Considering the findings recorded by the Tribunal, on the material placed before it, we are not prepared to hold that the conclusions drawn by the Tribunal are not sustainable. Learned counsel for the assessee made an attempt to question the findings recorded by the Tribunal. In view of the decision in Manna Ramji's case [1972] 86 ITR 29 (SC) and in the absence of any specific question challenging the findings recorded by the Tribunal, it is not open to this court to go into that question, and we refrain ourselves from doing so. In any case, it is settled law that where the findings of the Tribunal are based on a consideration of evidence and relevant facts, it is not open in reference proceedings to prefer one view to another view of factual appreciation by the High Court (Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC)). During the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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