1. The Income-tax Appellate Tribunal Delhi Bench 'A' (hereinafter called the Tribunal) has referred the following two questions for the opinion of this Court under Section 26(1) of the Gift Tax Act, 1958 (hereinafter called the Act):--
'(1) Whether on the facts and In the circumstances of the case, the Income-tax Appellate Tribunal was competent to entertain and decide any objection to the Gift Tax Act. 1958 being ultra vires or unconstitutional in regard to certain provisions contained in it?
(2) Whether on the facts and in the circumstances of the case, the Gift Tax Act, 1958 is ultra vires the powers of the Parliament and unconstitutional in so far as it purported to impose tax on gifts of land and building?'
2. The facts stated in the statement of the case submitted by the Tribunal are that Madan Mohan assessee gifted one bungalow situate at Jaipur to his wife and three sons during the accounting period ending on 31st March, 1963. The Gift Tax Officer, B Ward, Jaipur taxed the value of gift at Rs. 91,250 by his order dated 30th November, 1963. Before him the question was raised that the provisions of the Act were ultra vires in so far as they purported to tax the gift on land and building because this subject fell under entry 18 read with entry 49 of List II (State List) of Seventh Schedule to the Constitution. This argument was negatived by the Gift Tax Officer. The assessee went in appeal to the Appellate Assistant Commissioner and the same contention was raised before him, but it was rejected by him also.
The assessee then went in appeal to the Tribunal. Before the Tribunal it was objected to by the Department that the question regarding constitutional validity of the provisions of the Act could not be raised before the Tribunal and should not have been raised before the Gift Tax Officer or the Appellate Assistant Commissioner or the Tribunal. The Tribunal took the view that it was constituted not under the Act but under the provisions of the Indian Income-tax Act, and therefore it had power to entertain this question. The Tribunal then examined the constitutional validity of the provisions of the Gift Tax Act so far as it related to taxing the gift of immovable property and it came to the conclusion that the provisions of the Gift Tax Act imposing tax on the gift of land and buildings were ultra vires of the powers of the Parliament. Therefore it set aside the order of the Gift Tax Officer taxing the assessee. On the application filed by the Commissioner of Gift Tax, this reference has been made referring the aforesaid two questions to this Court.
3. It has been held in a number of cases by their Lordships of the Supreme Court that the authorities under the taxing statute are not concerned with the validity of the taxing provisions and the question of ultra vires is foreign to the scope of their jurisdiction. Reference in this connection may be made to C. T. Senthilnathan Chettiar v. State of Madras : 67ITR102(SC) , K. S. Venkataraman v. State of Madras. : 60ITR112(SC) , and Commr. of Income-tax, Madhya Pradesh, Nagpur and Bhandara v. Straw Products Ltd. : 60ITR156(SC) .
4. It is however urged that the Tribunal was not constituted under the Act but it was constituted under the Indian Income-tax Act and as it was not created under the Act, it was not in any way debarred from entering into the question of constitutional validity of the provisions of the Act.
5. 'Appellate Tribunal' has been defined under Section 2(ii) of the Act as the Appellate Tribunal constituted under Section 252 of the Income-tax Act. 'Appellate Assistant Commissioner' has been defined under Section 2(1) as a person empowered to exercise the powers of Appellate Assistant Commissioner of Gift Tax under Section 8. Gift Tax Officer has been defined under Section 2(xiii) as the Income-tax Officer authorised to perform the functions of a Gift Tax Officer under Section 7. Section 7 says that 'Every Income-tax Officer having jurisdiction or exercising powers as such under the Income-tax Act in respect of any person shall perform the functions of a Gift Tax Officer under this Act in respect of that person.' This section therefore clothes the Income-tax Officer with the powers of a Gift Tax Officer under the Act, but it is under the Act that the office of a Gift Tax Officer is created. An officer who functioned under the Income-tax Act has no doubt been authorised to perform the functions of a Gift Tax Officer, but none-the-less the Gift Tax Officer is the creature of the Act. The position about the Appellate Assistant Commissioner of Gift Tax is much more clear. Here the Board which means the Central Board of Direct Taxes constituted under the Central Board of Revenue Act, 1963 has been empowered to empower as many officers as it thinks fit to exercise under the Act the functions of the Appellate Assistant Commissioner of Gift Tax, Thus under the Statute an authority has been authorised to create the Appellate Assistant Commissioners of Gift Tax. They are thus the creatures of the Act.
6. Under Section 23(1) an assessee objecting to an order passed by the Appellate Assistant Commissioner under the section mentioned therein could appeal to the Appellate Tribunal within the period mentioned therein, and the scope of appeal as mentioned in Section 23 is that the assessee can only raise objections with regard to the orders passed by the Appellate Assistant Commissioner. Now, if the Gift Tax Officer or the Appellate authority namely the Appellate Assistant Commissioner could not entertain any objection with regard to vires of the Act, the assessee also could not raise any objection with regard to the vires of the Act before the Tribunal and thus when the Tribunal could not entertain any objection with regard to the vires of the Act, it could not make any reference to this Court, raising any question in which vires of the Act is to be answered. In this connection we may again refer to the decision of their Lordships of the Supreme Court in : 67ITR102(SC) wherein it has been pointed out in connection with the provisions of the Income-tax Act that when a point cannot be raised before the Income-tax authorities, neither the High Court nor the Supreme Court can go into these Questions in a revision or reference from the decision of those authorities. The same must be the position in a case under the Act. When an assessee under the Act cannot raise the question of vires of the Act before the Gift Tax Officer and the Appellate Assistant Commissioner, he cannot raise that question before the Tribunal.
7. In view of the aforesaid discussion, our answer to the first question is in the negative. In view of this answer we need not decide question No. 2. The questions are answered accordingly. No order as to costs.