COMMISSIONER OF INCOME TAX vs. JASBIR KAUR BHATIA

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA ITA No.51 of 2007 Along with WTA No. 1 of 2008 Judgment reserved on: 5.8.2011 Date of decision: 12.08.2011 ------------------------------------------------------------------------------------------------------------ Commissioner of Income Tax (in both cases) ….Appellants -versus- Smt.Jasbir Kaur Bhatia ( in both cases) ….Respondents Coram The Hon’ble Mr. Justice Deepak Gupta, Judge. The Hon’ble Mr. Justice Sanjay Karol, Judge. Whether approved for reporting?1 No For the Appellant(s).: Mrs. Vandana Kuthiala, Advocate. For the Respondents: Mr.Ramakant Sharma, Advocate. Deepak Gupta, J. 1. These appeals are being disposed of by a single judgment since identical questions of fact and law are involved in the same. For decision of these cases, reference may be made to the substantial question of law framed in ITA No.51 of 2007 which reads as follows: “Whether on the facts and in the circumstances of the case, the ITAT was correct in cancelling the assessment of gift made u/s 15(3) read with Section 16(1) of the Gift-tax Act on the ground that the notice issued u/s 16(1) of the Act had not been issued to all the legal heirs of the assessee and was not in conformity with section 19 of the Act, and was therefore defective, illegal and without jurisdiction?” 1 Whether the reporters of the local papers may be allowed to see the Judgment? yes 2 2. Briefly stated the facts of the case are that a survey under Section 133A of the Income Tax Act was carried out in the business premises known as M/s.Giani Ka Dhaba, Dharampur owned by Kuldeep Singh Bhatia husband of the assessee Smt.Jasbir Kaur Bhatia. During the course of this survey it was found that the assessee owned a residential flat at Mani Majra and she claimed that it was gifted to her by her mother Smt.Gurcharan Kaur who had expired on 20.1.1999. The case set up is that the flat was purchased in the year 1994 by the mother in the name of the assessee from the Chandigarh Housing Board. It was also alleged that the entire sale consideration of the flat was paid by the mother during the period 1994- 1999. 3. The Assessing Officer considered this to be a case of deemed gift under Section 4 of the Gift-tax Act and issued notice under Section 16(1) of the Act to the assessee since the donor i.e. mother of the assessee had already expired. Surprisingly, the notice did not specify that it was addressed to the assessee in the capacity of her being the legal heir of the owner. The assessee filed return on 10.1.2005 and declared nil gift. It would also be pertinent to mention that during the assessment proceedings the assessee claimed that this property had been inherited by her and was 3 not a gift. The Assessing Officer rejected these contentions and held that the amount of Rs.2,40,000/- paid by the assessee’s mother to the Chandigarh Housing Board after the allotment of the flat represented a taxable gift and accordingly passed the