1. The assessce in this appeal questions the decision of the AAC, C Range, Madras, when he dismissed the assessee's appeal by stating that the gift-tax levy on her was quite proper and justified.
2. The assessee sold her properties bearing Nos. 62, 62A, 63 and 64, Moore Street, Madras, on 6-7-1972 to a firm called A. Rafeeq Ahmed & Co., Madras, of which the assessee was the managing partner, for a sum of Rs. 1,55,000. The original assessment to gift-tax was completed on 6-11-1973 taking the total value of the gifts at Rs. 65,000. The sale of the properties attracted levy of capital gains tax. For the reason that the properties were subjected to capital gains tax, it was contended that there was no element of gift in the transaction and that, therefore, there was no gift either returned or assessed.
Subsequently, while dealing with the income-tax assessment, it appears, the valuation of these properties was referred to the Valuation Officer of the income-tax department under Section 55A of the 1961 Act. That authority had determined the fair market value of the property on the date of sale at Rs. 2,69,400. The difference between the fair market value thus determined and the declared valued came to Rs. 1,14,400.
From this difference, it was considered that the sale was made for inadequate consideration and there was a deemed gift to that extent within the meaning of Section 4(1)(a) of the Gift-tax Act, 1958 ('the Act') by the assessee to the firm and liable to gift-tax in the hands of the assessee. Therefore, proceedings to bring to tax the escaped gift were initiated and notice under Section 16(1) of the Act was issued. In response, the assessee filed a return of gift showing the original gift assessed to tax repeating the same contention that since on the sale of these properties capital gains tax had already been paid, there could be no element of gift.
3. Rejecting this contention and relying upon the decision of the Full Bench of the Kerala High Court in the case of ITO v. K.P. Varghese  91 ITR 49 and thedecision of the Andhra Pradesh High Court in the case of ITO v. Buragadda Satyanarayana  106 ITR 333, the GTO subjected the difference to the levy of gift-tax. In so doing, he adopted the fair market value of the property as reduced in appeal by the AAC to Rs. 2,47,300 so that the value of gift brought to tax as escaped gift was Rs. 92,300. Needless tosay that this was brought to tax under Section 4(1)(a).
4. Aggrieved by the decision of the GTO, an appeal was preferred to the AAC before whom more or less the same contentions were reiterated. The AAC rejected all there contentions and agreeing with the view taken by the GTO, held that under Section 4(1)(a), if the market value ascertained on known principles and available data is found to be inadequate that fact by itself would deem the difference as a deemed gift and, therefore, the levy of gift-tax was justified. It is against this order of the AAC that the present appeal has been filed before the Tribunal.
5. The learned counsel for the assessee, Shri K. Srinivasan, after taking us through the facts of the case, the orders of the authorities below and relying very strongly on the ruling of the Madras Hight Court in the case of CGT v. Indo Traders & Agencies (Madras) (P.) Ltd.  131 ITR 313, submitted that merely for the reason that the Valuation Officer had determined the fair market value of the property at a higher price than the declared consideration, it did not necessarily mean than the value determined by the Valuation Officer was the market value so as to attract the provisions of Section 4(1)(a). He submitted that there should be an attempt to evade gift-tax and that there should be a relevant enquiry. When the transaction was bonafide and when there was no attempt to evade tax, the provisions of Section 4(1)(a) would become totally inapplicable even if the consideration arrived at on the basis adopted by the Valuation Officer appeared to be more than the declared consideration. The department in this case had not shown that there was any attempt at evasion of gift-tax and that the transaction was not bona fide. The department had merely relied upon the difference in valuations to come to the conclusion, what he styled as an abrupt conclusion, that it represented the deemed gift: The department failed to see that the person who transferred the property to the firm was none other than its managing partner. It would mean that even after the sale, the assessee continues to have a share in the property. There could not, therefore, be much of a question of the assessee making a profit and in any case, this is a very relevant consideration in the test of adequacy of consideration. Judged by this test, there is adequate consideration far from there being inadequate consideration even if it is considered that the fair market value of this property was higher than the declared value. He also pointed out that the reliance placed by the department on the Kerala High Court decision in Varghese's case (supra) is no more of any consequence because that decision has been reversed by the Supreme Court in K.P. Varghese v. ITO  131 ITR 597.
6. The learned departmental representative relied upon the orders of the authorities below and made a strong plea that this is a clear case of sale for inadequate consideration and the provisions of Section 4(1)(a) were clearly attracted and that the assessee cannot seek to argue to evade the payment of gift-tax by merely stating that the valuation adopted by the Valuation Officer did not represent the market value or had become final. There is no requirement of law that can be read into Section 4(1)(a) to suggest that the motive to evade tax has to be established. Even if the transaction is bonafide, still if there is a wide variation between the market value of the property and the declared value, the difference would mean nothing but a deemed gift and the very object of enacting Section 4(1)(a) was to cover such cases of understated sales. Merely because the seller happened to be the managing partner and in that sense he had a share in the property after it became the firm's property, it did not eliminate the possibility of the assessee making or not making a profit in the sale transaction. The element of gift, thus appears at the time of sale of the property. It was because she was the managing partner, she felt compelled by several considerations to undersell the property. There was, therefore, an element of gift involved and was rightly brought to tax.
7. On a careful consideration of the arguments addressed to us and after going through the decisions cited before us and the relevant sections, we do not find any difficulty in coming to the conclusion that the department had sought to levy gift-tax on a gift that was never made. All the arguments addressed by Sri Srinivasan, learned counsel for the assessee, do show that there is no real market value in the sense the expression 'market value' has been used in Section 4(1)(o) or that there was adequate consideration for the sale at the price at which it was made.
8. In Varghese's case (supra), the Supreme Court laid down by way of reiteration, the principle that the onus of establishing that the conditions of taxability are fulfilled is always on the revenue. In that case, the Supreme Court also laid down the principle that "a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. Where the plain literal" interpretation of a statutory provision produces a manifestly absurd and unjust result which could nevei have been intended by the Legislature, the Court may madify the language used by the Legislature, or even do some violence to it, so as to achieve the obvious intention of the Legislature and produce a rational construction". Bearing in mind these principles, we are positive that the revenue has to establish the motive of evasion of tax and we are unable to see any motive involved or having been established by the department that there was an attempt to evade the payment of gift-tax. Section 4(1 )(a) lays down that- where property is transferred otherwise than for adequate consideration, the amount by which the market value of the property at the date of the transfer exceeds the value of the consideration shall be deemed to be a gift made by the transferor : The crucial words are 'otherwise than for adequate consideration' and 'market value'.
9. First of all it should be found out that the transfer had been otherwise than for adequate consideration. What Shri Srinivasan argues is that the adequate consideration spoken of in this section need not necessarily be in terms of money or money's worth received by the seller, i.e., the assessee, but it could be of various considerations including that of business consideration. The fact that she was the managing partner of the firm to which the properties were sold and, therefore, she was obliged, in order to keep the firm going, not to burden it with too much of a price, is certainly a very valid business consideration. If the firm had been burdened with, let us say, the market value of Rs. 2,47,300 as ultimately determined by the AAC, that would have been too much of a burden on the firm, which would have seriously affected the profitability of the firm. If the managing partner withdraws that amount of money from the firm, the firm's business would simply get decimated. To avoid this ruination of the firm, it is as much a concern of the managing partner in order to earn his income as to see the interests of other partners, who reposed confidence in him, are fully secured. This is, therefore, a business consideration if the property had really been sold at a lesser value.
That business consideration is an adequate consideration. It may be that this kind of thinking may not appeal or commend to the taxing authorities, but to a businessman this is a very relevant consideration. The taxing authorities have to place themselves in the shoes of the businessmen to understand the business consideration. We are, therefore, of the view that there is adequate consideration for the transfer and it is difficult to see that there is inadequate consideration leading to a deemed gift.
10. Then we come to the market value. We are not aware how the Assistant Valuation Officer has determined the market value of the property on the date of sale at Rs. 2,60,400. Maybe he has adopted the very correct principles in arriving at the market value. The very fact that it has been reduced in appeal shows that it has not been correctly determined. It is in this context that we have got to bear in mind the principle laid down by the Madras High Court in the case of Indo Traders (supra). There the Madras High Court pointed out that adequate consideration is not necessarily what is ultimately determined by someone else as market value. The Court pointed out that "unless the price was such as to shock the conscience of the Court, it would not be possible to hold that the transaction is otherwise than for adequate consideration." When the High Court was considering adequate consideration, it was considering this in relation to the market value, which are inter-related. Therefore, in order that the market value was such that it could be said that the transaction was otherwise than for adequate consideration, the price settled, i.e., the determined price, must be such as to shock the conscience of the Court. We do not receive any such shock in this case. The sum of Rs. 1,55,000 was quite decent.
Further, that was accepted as real for the levy of capital gains tax.
Still the authorities seem to think that what was determined by the Assistant Valuation Officer is ultimate and it correctly represents the market vafue with which we are unable to agree, that being a valuation given by an expert and is capable of having a great persuasive value.
But it is not final and is subject'to verification. It is in that context, we would say that that being only an expert evidence, it is entitled to such respect as an expert evidence would be entitled to and no more than that and in that view we would say that his estimate is not final. In the above case, the Madras High Court has further laid down another salutary principle, viz., that the investigation to be made under Section 4(1)(a) can only be to see whether there is any attempt at evasion of tax or whether the relevant transaction is bonafide. If the consideration which passed between the parties can be considered to be reasonable or fair, it cannot be considered to be inadequate. Therefore, the point to be determined is whether the assessee had indulged in any attempt to evade tax, whether the relevant transaction is bonafide and whether the consideration was reasonable or fair.
11. We are not in a position to say that the consideration had been unreasonable or unfair having regard to the fact that except for the value placed upon the property by the Valuation Officer, no other evidence has been brought on record to suggest that the valuation placed is unreasonable or unfair. Once we hold that there is adequate consideration, then the consideration shown cannot be said to be unreasonable or unfair ; so much for the reasonableness of the consideration.
12. Then we go to the attempted evasion of tax. Here we have to bear in mind the principle laid down by the Supreme Court in Varghese's case (supra) that the onus is on the revenue to establish that the conditions of taxability are fulfilled. Thus, the revenue has to prove that there was an attempt at evasion of tax by the assessee. Only then the revenue can be said to have fulfilled its obligation under the law to establish that the conditions laid down under Section 4(1)(a) are satisfied. In other words, what the Madras High Court lays down is that under Section 4(1)(a) contained a built-in obligation that the revenue to establish that the revenue to establish that the assessee by resorting to a transfer for inadequate consideration, has attempted to evade the payment of gift-tax. No such allegation has been made anywhere, much less any evidence to show that there was any attempt at evasion of tax. When Section 4(1)(a) opens with the adverb 'where' it means that the transfer must have been made'under certain circumstances or conditions indicating, suggesting or involving inadequate consideration. It is for this reason that the Madras High Court has laid down that before Section 4(1)(a) is applied, the revenue must show that those circumstances and conditions existed. That is to say that the onus has been placed upon the revenue to show the existence of those conditions and circumstances. Again, except the valuation report and the difference that it showed, there is no other evidence to show that the assessee had made an 'attempt to evade tax by making this transfer. Thirdly, there was nothing to show that the transaction is not bona fide. When the transaction is bonafide, when there was no attempt at evasion of tax and when the consideration passed between the parties is reasonable and fair, merely because the market value of the property transferred is higher than the declared consideration, it does not automatically mean that Section 4(1)(a) is attracted so as to confer jurisdiction on the revenue to infer that the difference is a deemed gift made by the transferor. We are, therefore, unable to agree with the revenue that there is a deemed gift within the meaning of Section 4(1)(a) in the sale made by the assessee.
13. Before we part with this matter, we may point out that the Madras Hight Court in the case cited by the assessee of Indo Traders (supra) has made the following illuminating observation : ...The relevancy of the market price as shown by the provision is only to fix the quantum of the value of the gift after it is found that the transaction was for inadequate consideration. When once the GTO assumes jurisdiction and is in a position to establish that the property has been transferred otherwise than for adequate consideration, then there is no option for him but to take the market value of the property as on the date of the transfer and compare it with the value of the consideration as shown by the parties. The difference will be deemed to be a gift made by the transferor.... (p. 322) Thus, the purpose of and object behind, the reference to the market value in Section 4(1)(a) has been explained by the Madras High Court, which is very illuminating. The market value comes into picture only when the GTO assumes jurisdiction. The GTO assumes jurisdiction only when he is able to find that the transfer has been made for inadequate consideration. Therefore, the establishment of inadequate consideration is the prime necessity and condition precedent in any given case, for Section 4(1)(a) to apply. The existence of inadequate consideration, a condition precedent for the application of Section 4(1 )(a) has not been established in this case. The Madras High Court has further laid down : ...If the Legislature had contemplated as a universal rule that the market value should alone be the criterion for testing the adequacy of consideration, the provision would have been differently worded.
The wording would then have been, 'where the property is transferred for less than its market value, then the difference between the market value and the consideration stipulated, shall be deemed to be the gift made by the transferor'....(p. 322) Thus, the Madras High Court pointed out how unsafe it would be to go merely by the market value for purpose of invoking the provisions of Section 4(1)(a) without establishing motive of evasion of tax.
14. We, therefore, reverse the orders passed by the authorities below and allow this appeal.