1. This appeal is by the assessee. It is against the order of the Commissioner dated 12-1-1981 passed under Section 24(2) of the Gift-tax Act, 1958 ('the Act'). By his impugned order, the Commissioner has cancelled the order of the assessment made by the GTO on 20-3-1979 under Section 15(1) of the Act. The said assessment was completed by the GTO, after accepting the assessee's return filed on 14-5-1970 for the assessment year 1970-71, disclosing a gift of Rs. 40,000 which the assessee had given to one Sri J.M. Malhotra on 24-12-1969.
2. In this connection, the GTO came to know that the assessee had sold his two-third interest (one-third each to two trusts) in an immovable property 'Ready Money House', Bombay, on 20-3-1969 for Rs. 7,00,000 and that actual value of his aforesaid interest was much more. Taking the view that the assessee was liable to be taxed on the basis of a 'deemed gift' in respect of the said sale, the GTO issued a notice under Section 16(1) of the Act on 29-9-1974, i.e., during the pendency of the proceedings for the assessment on the basis of the return filed by the assessee on 14-5-1970. Thereafter, various notices were issued.
Explanations were called for and filed and eventually on 20-3-1979, the GTO completed one more assessment in respect of deemed gifts under Section 15(5). There were thus two assessments completed by the GTO on the same date for one and the same assessment year being under Section 15(1) and Section 15(5), respectively. In the assessment completed under Section 15(5), the value of the deemed gift was determined at Rs. 28,26,000.
3. The assessee filed an appeal on 27-4-1979 against the order of the assessment under Section 15(5). However, after this date, but before the appeal was disposed of by the Commissioner (Appeals) on 11-3-1980, the Commissioner felt that the GTO's action in passing two orders of the assessments on the same date in the aforesaid manner was erroneous and prejudicial to the interests of the revenue. He issued a notice on 24-8-1979 under Section 24(2) requiring the assessee to show cause why he should not set aside the two assessments made by the GTO under Section 15(1) and Section 15(5). It appears that the Commissioner subsequently felt that his aforesaid show cause notice was vague. He cancelled the said show cause notice and intimated the assessee about it by means of a letter dated 12-10-1979. However, on the same date the Commissioner issued another notice under Section 24(2) requiring the assessee to show cause why he should not cancel the assessment made by the GTO under Section 15(1) on the ground that the said order of the assessment was erroneous and prejudicial to the interests of the revenue inasmuch as the GTO had not included the 'deemed taxable gift' in respect of the sale of his two-third interest in Ready Money House in the assessment order. The assessee was heard and submissions on his behalf were considered. Ultimately by his impugned order dated 12-1-1981 the Commissioner passed order under Section 24(2) cancelling the assessment made under Section 15(1) and directing the GTO to make a fresh assessment according to law. It is pertinent that in the meanwhile the Commissioner (Appeals) had by his order dated 11-3-1980 cancelled the order of the assessment made under Section 15(5), observing that during the pendency of the assessment proceedings, gift, deemed or real, could not be said to have escaped assessment to justify issue of a notice under Section 16(1) and a consequent assessment under Section 15(5) on the basis thereof.
4. The first contention against the impugned order of the Commissioner under Section 24(2) on behalf of the assessee, is that the Commissioner having dropped the proceedings under Section 24(2) on 12-10-1979 had no jurisdiction and/or justification for issuing a fresh notice under Section 24(2), on the basis of the same material. In our opinion, this contention on behalf of the assessee is too good to be accepted.
Firstly, there does not appear to us anything direct or implied in Section 24(2) which prohibits the Commissioner to start the proceedings under Section 24(2), more than once, subject of course to the conditions laid down in the section, including time-limit provided therefor. That apart we do agree with the learned counsel that it is a case of dropping of proceedings under Section 24(2) and/or of starting fresh proceedings under that section. To our mind it is a case where, after issuing a show cause notice under Section 24(2), the Commissioner felt that the notice was vague and not clear. He could have certainly clarified the notice by some other communication. Instead he has chosen and according to us rightly so, to cancel the first notice as distinct from dropping the proceedings and issued a fresh notice which clearly brought out why he was contemplating action under Section 24(2). The fact that when the Commissioner issued the latter notice under Section 24(2), the other assessment under Section 15(5) was existing and that the Commissioner was not proposing to cancel that order, is to our mind, not relevant at all for the following reasons, viz : 1. The said order was bad and illegal on the face of it and could therefore be treated as non est by any authority including the Commissioner.
2. The effect of the order of the Commissioner (Appeals) dated 11-3-1980 cancelling the said order of the assessment under Section 15(5) is that, it could be taken by any authority at any time that no assessment under Section 15(5) was ever made particularly when the said order is final, the department having accepted it.
In the circumstances we do not find any merit in this contention of the assessee.
5. Another contention on behalf of the assessee in this regard has been that the Commissioner could not rely on the valuation report dated 24-9-1968 particularly when the said report was not found acceptable by the Commissioner (Appeals) in the assessee's WT appeals for the assessment years 1966-67 to 1971-72. It is pointed out that the Commissioner (Appeals) passed his aforesaid order on 14-3-1980 which has been accepted by the department and that the said order was before the Commissioner in the present case when he passed his impugned order under Section 24(2) on 12-1-1981. The departmental representative has, on the other hand, invited our attention to the fact that it is not as if the Commissioner (Appeals) found the valuation report absolutely unreliable or undepend-able. What has happened is that some persons had certain rights of some kind and/or interest over the property which were not taken into account by the valuer while valuing the said property and it was for this reason that the Commissioner (Appeals) set aside the orders of the GTO and directed that the assessment should be completed after getting the said property revalued having regard to the assessee's right, title and interest in the property. Our attention is also invited to the impugned order of the Commissioner who has not, according to the departmental representative, directed the GTO to adopt the valuation report as such. According to the departmental representative, the Commissioner has also in his impugned order directed the GTO to consider inclusion of the deemed taxable gifts in the computation of the assessee's taxable gifts which will naturally include the question of valuation of the deemed gifts. Here again we do not find any merit in the submissions made on behalf of the assessee.
No doubt, ordinarily the GTO will go by the valuation of the valuer.
All the same, however, when the assessment has been set aside with a direction to make it afresh, it will be open to him to get a second valuation report as directed by the Commissioner (Appeals) in connection with the assessee's wealth-tax relating to the assessment years 1966-67 to 1971-72. We, thus, do not find anything wrong in the impugned order of the Commissioner on this account.
6. Next contention raised by Shri Dastur, the learned counsel for the assessee is that when the Commissioner was reviewing an order of the assessment passed by the GTO under Section 15(1), he has no alternative but to direct that the fresh assessment should also be completed under Section 15(1). In other words, his submission is that when an assessment is made under Section 15(1) and the Commissioner exercising his powers under Section 24(2), cancels the assessment and directs the GTO to make a fresh assessment, but fresh assessment would also have to be made under Section 15(1) so much so that it has got to be an assessment accepting the assessee's return. This contention is also, according to us, too good to be accepted Once the assessment is cancelled by the Commissioner, no assessment remains and the fresh assessment can be completed by the GTO depending upon the circumstances of each case under Section 15(1), or Section 15(3) or even Section 15(4). This contention is therefore rejected.
7. The last contention raised on behalf of the assessee is that the 'deemed gift', if any, as a result of sale, of the assessee's two-third interest in the immovable property Ready Money House, Bombay, is not taxable in the assessment year 1970-71 as the sale was not complete during the previous year. It was stated that: i. the two deeds of conveyance were registered in next financial year; ii. the assessee had offered surplus on account of the sale to be taxed as capital gains in his return filed on 30-3-1974 for the assessment year 1971-72; and iii. at one stage the Commissioner had felt that the surplus was taxable to capital gains in the assessment year 1970-71 and had in fact issued a show cause notice under Section 263 which was eventually dropped on 25-3-1975.
Accordingly, it is urged that the so-called deemed gift was not assessable in the assessment year and, therefore, the Commissioner was not justified in cancelling the order of the assessment made under Section 15(1) and in directing the GTO to make a fresh assessment according to law after including the deemed gift.
8. The departmental representative has, on the other hand, strongly relied on the impugned order of the Commissioner. It is pointed out that when the Commissioner has set aside the order of the assessment, it would be open to the assessee to contend before the GTO that the deemed gifts, if any, are not assessable in the assessment year 1970-71 and, therefore, the impugned order of the Commissioner cannot be held bad on account of this contention. On merits it is pointed out that the deeds of conveyance were executed on 23-10-1969 and were presented to the Registrar for registration on 19-11-1969. Inviting our attention to the fact that both the dates fall within the previous year, the departmental representative has relied on Section 47 of the Indian Registration Act, 1908 ('the Registration Act') for the proposition that once a document is registered the registration takes the effect from the date on which the document was executed. For this purpose the departmental representative placed reliance on a Supreme Court decision in the case of CIT v. Bhurangya Coal Co.  34 ITR 802.
9. In reply Shri Dastur has strongly relied on the Gujarat High Court decision in the case of Darbar Shivrajkumar v. CGT  131 ITR 647 and the two Supreme Court decisions in the cases of Ram Saran Lall v.Mst. Domini Kuer AIRHiralal Agrawal v. Rampadarath Singh  1 SCR 328 where Section 47 of the Registration Act, it is stated, was considered and explained. Reliance is placed on the Supreme Court decision in the case of Alapati Venkataramiah v. CIT  57 ITR 185 to show that the observation of the Supreme Court in Bhurangya Coal Co. (supra) was in a different context and that the Supreme Court has all along taken a view that the sale of an immovable property is complete only on the execution and registration of deed of conveyance and not before.
10. Before we proceed to consider the rival contentions, it may be stated, that the two deeds of conveyance in this case though executed on 23-10-1969 and presented for registration to the Registrar on 19-11-1969, were actually registered on 13-10-1970 and 10-11-1970, respectively.
11. There can be no dispute that gifts made by a person on or after 1-4-1958 are chargeable to gift-tax as laid down under Section 3 of the Act and that 'gift' defined in Section 2(xii) of the Act is 'transfer' by one person to another of existing movable or immovable property, etc. However, when and in what circumstances the 'transfer' of an immovable property is or can be said to be complete has not been defined or indicated in the Act. It is for this reason that both the assessee and the department have placed reliance upon the provisions relating to the transfer of an immovable property under the general law, i.e., the Transfer of Property Act, 1882 and the Registration Act, 1908. Again, there is no dispute that in case of a gift, whether actual or deemed, in respect of the immovable property, gift-tax would be attracted only on the completion of the transfer of the property and not before. However, the dispute between the parties is mainly as regards the interpretation of Section 47 of the Registration Act, it being common ground that registration of the deed of conveyance is a must in the case of transfer of immovable property.
12. In this connection, it may be mentioned that documents conveying immovable property are compulsorily registrable under Section 17 of the Registration Act. Section 23 of that Act provides that such a document has to be presented for registration before the proper officer, within four months from the date of its execution. Section 47 of the Registration Act as stated earlier, provides that a registered document shall operate from the time from which it would have commenced to operate, if no registration thereof had been required or made and not from the time of its registration. Thus, if one is to proceed on the basis of first impression, it can be held that the transfer or the sale of an immovable property is complete on the date of execution if the sale document has been executed and presented for registration as laid down in Sections 17 and 23 of the Registration Act and has eventually been registered as laid down in Sections 59, 60 and 61 of the Registration Act.
13. However, as submitted by Shri Dastur, the learned counsel for the assessee, the said issue had come up for consideration before their Lordships of the Supreme Court in the case of Ram Saran's case (supra) where it was held by majority that: Under Section 54 of the Transfer of Property Act sale of tangible immovable property of the value of rupees 100 and upwards can be made only by a registered instrument. The registration under the Registration Act is not complete till the document to be registered has been copied out in the records of the Registration office as provided in Section 61 of that Act. Section 47 of the Registration Act has nothing to do with the completion of the registration and therefore nothing to do with the completion of sale when the instrument is one of sale. A sale which is admittedly not completed until the registration of the instrument of sale is completed cannot be said to have been completed earlier because by virtue of Section 47 the instrument by which it is effected, after it has been registered, commences to operate from an earlier date. AIR 1926 All.
548; 95 Ind. Cas 138, overruled.
As pointed out by the departmental representative, this decision apparently makes Section 47 of the Registration Act otiose. But at best it represents the minority view in the aforesaid decision which remains a minority view only. The minority judges have themselves observed : The principles underlying Sections 61(2) and 47 are not divergent.
It is not as if, that any delay by the registering officer which might take place owing to the pressure of work in his office or for other reason, has any effect on the rights of parties, quod their property or the time from when the deed operates, or as regards the effectiveness of the transaction,...not as if, documents executed on different dates, the parties intending them to operate at different times, have their intentions modified, if not nullified by the action or inaction of the registering officer, or any delay that might take place in his office. A contention that though the Muslim law of sale is superseded by the Transfer of Property Act and the Registration Act, but yet the provision contained in Section 47 of the Registration Act is inapplicable to determine when a sale effected by a registered instrument should be complete could not be sustained on any principle or logic, or of course on any rule of interpretation of statutes. In our opinion, no distinction is possible to be drawn between a sale which is effective and one which is complete since they are merely different forms of expressing the same concept and for the same reason between the time from when a sale becomes effective and when it should be held to be complete....
If, therefore, Section 47 of the Registration Act should apply to determine the time from which the registered document should have effect or, in other words, the time from which the sale should be held to be complete, the intention of the parties would be the crucial and only test. That has to be gathered by reference to the document itself read in the light of the surrounding circumstances, with however a proviso that if the document were clear and its terms explicit, no evidence to contradict them would be admissible....
More or less, the majority view in the above case has been taken by their Lordships of the Supreme Court in the case of Hiraial Agarwal (supra). In any event the decision of the Gujarat High Court in the case of Darbar Shivrajkumar (supra) is a direct decision under the Act where, applying the principle laid down in the aforesaid two decisions of the Supreme Court, it was held that : On a combined reading of Sections 122 and 123 of the Transfer of Property Act, 1882, it is evident that a transaction of a gift of immovable property would be complete only by executing a registered document subject to other conditions being fulfilled. The transaction would not be complete and a gift in the eye of law cannot be made by the donor to the donee prior to the registration of the document by which the gift was made. The title of the transferee does not relate back to the date of the execution of the gift deed. Therefore, the liability to pay tax on the gift must be determined as on the date on which the gift deed was registered under Section 47 of the Registration Act, 1908 and not the date on which the deed of gift was executed. (p. 647) It is true that the case before the Gujarat High Court was that of a direct gift and not of a deemed gift and, therefore, the High Court was concerned with the interpretation of Sections 122 and 123 of the Transfer of Property Act. However, neither there is any suggestion nor are we aware of any distinction between the completion of gift in respect of the immovable property and the transfer of property arising out of sale of an immovable property. In the circumstances, we hold that the ratio of the Gujarat High Court decision in Darbar Shivrajkumar's case (supra) squarely covers the dispute before us.
Accordingly, we have no hesitation in holding that the sale, i.e., the transfer of the immovable property, in this case, was completed in the subsequent assessment year only.
14. As regards the Supreme Court decision in the case of Bhurangya Coal Co. (supra) which was relied upon by the departmental representative, on going through the decision carefully, we find that the dispute between the parties in that case was relating to the completion of transfer in respect of movable property and not immovable property. In fact, both the parties had agreed that the title to the immovable property covered by the sale deed had passed during the previous year.
In the circumstances, the observations of their Lordships that the title of the immovable property covered by the sale deed passed to the transferee on the date it was executed have to be read in the particular context. In any event, in the subsequent decision of the Supreme Court in the case of Alapati Venkataramiah (supra) their Lordships have clearly and unambiguously held that the title to the land and building and plant and machinery and electrical fittings permanently embedded thereon could not pass to the company till the conveyance was executed and registered. Having regard to the above discussion, we have no difficulty in holding that the sale of the immovable property was not completed during the previous year and, therefore, the question of taxing the assessee to gift-tax on account of 'the deemed gift' arising on account of the aforesaid sale will not arise for consideration in this year. Accordingly, we hold that the order of the assessment dated 20-3-1979 passed by the GTO under Section 15(1), was not erroneous and prejudicial to the interest of revenue.
The impugned order of the Commissioner is, therefore, cancelled.