Section 16. Gift escaping assessment

16. Gift escaping assessment. —[4] [(1) If the Assessing Officer[5] [has reasons to believe] that the taxable gifts in respect of which any person is assessable under this Act, (whether made by him or by any other person) have escaped assessment for any assessment year (whether by reason of under-assessment 1. Ins. by Act 3 of 1989, s. 83 (w.e.f. 1-4-1989). 2. Ins. by Act 36 of 1989, s. 32 (w.e.f. 1-4-1989). 3. Ins. by Act 49 of 1991, s. 86 (w.e.f. 1-10-1991). 4. Subs. by Act 4 of 1988, s. 171, for sub-section (1) (w.e.f. 1-4-1989). 5. Subs. by Act 3 of 1989, s. 84, for "for reasons to be recorded by him in writing, is of the opinion" (w.e.f. 1-4-1989). or assessment at too low a rate or otherwise), he may, subject to the other provisions of this section and section 16A, serve on such person a notice requiring him to furnish within such period,[1] * as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner, setting forth the taxable gifts made by him or by such other person during the previous year mentioned in the notice, in respect of which he is assessable, along with such other particulars as may be required by the notice, and may proceed to assess or re-assess such gifts and also any other taxable gifts in respect of which such person is assessable, which have escaped assessment and which come to his notice subsequently in the course of the proceedings under this section for the assessment year concerned (hereafter in this section referred to as the relevant assessment year); and the provisions of this Act shall, so far as may be, apply as if the return were a return required under section 13 : Provided that where an assessment under sub-section (3) of section 15 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any taxable gift chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 13 or section 14 or in response to a notice issued under sub-section (4) of section 15 or this section or to disclose fully and truly all material facts necessary for his assessment for that assessment year : 2[Provided further that the Assessing Officer shall, before issuing any notice under this sub-section, record his reasons for doing so.] Explanation .—Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. (1A) No notice under sub-section (1) shall be issued for the relevant assessment year,— (a) in a case where an assessment under sub-section (3) of section 15 or sub-section (1) of this section has been made for such assessment year,— (i) if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause (ii) or sub-clause (iii); (ii) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year, unless the value of taxable gifts chargeable to tax which have escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year; (iii) if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the value of taxable gifts chargeable to tax which have escaped assessment amounts to or is likely to amount to rupees one lakh or more for that year; (b) in any other case,— (i) if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause (ii) or sub-clause (iii) ; (ii) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year, unless the value of taxable gifts chargeable to tax which have escaped assessment amounts to or is likely to amount to rupees twenty-five thousand or more for that year ; 1. The words "not being less than thirty days" omitted by the Act 32 of 2003, s. 101, (w.e.f. 1-4-1989). 2. Ins. by Act 3 of 1989, s. 84 (w.e.f. 1-4-1989). (iii) if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the value of taxable gifts chargeable to tax which have escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year. Explanation .—For the purposes of sub-section (1) and sub-section (1A), the following shall also be deemed to be cases where taxable gifts chargeable to tax have escaped assessment, namely :— (a) where no return of taxable gifts has been furnished by the assessee although the taxable gifts made by him or the taxable gifts made by any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to gift-tax; (b) where return of taxable gifts has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the amount or value of the taxable gifts or has claimed excessive exemption or deduction in the return. (1B) (a) In a case where an assessment under sub-section (3) of section 15 or sub-section (1) of this section has been made for the relevant assessment year, no notice shall be issued under sub-section (1)[1] [by an Assessing Officer, who is below the rank of[2] [Assistant Commissioner or Deputy Commissioner], unless the[3] [Joint Commissioner] is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice] : section has been made for the relevant assessment year, no notice shall be issued under Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. (b) In a case, other than a case falling under clause (a), no notice shall be issued under sub-section (1) by an Assessing Officer, who is below the rank of[3] [Joint Commissioner], after the expiry of four years from the end of the relevant assessment year, unless the[3] [Joint Commissioner], is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.] (2) Nothing contained in this section limiting the time within which any proceedings for assessment or reassessment may be commenced shall apply to an assessment or reassessment to be made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 22, section 23, section 24, section 26 or section 28[4] [or by a court in any proceedings under any other law]. 5 6 [ 16A . Time limit for completion of assessment and re-assessment. — [(1) No order of assessment shall be made under section 15 at any time after the expiry of[7] [two years] from the end of the assessment year in which the gifts were first assessable : 8[Provided that,— (a) where the gifts were first assessable in the assessment year commencing on the 1st day of April, 1987, or any earlier assessment year, such assessment may be made on or before the 31st day of March, 1991; (b) where the gifts were first assessable in the assessment year commencing on the 1st day of April, 1988, such assessment may be made on or before the 31st day of March, 1992.] 1. Subs. by Act 12 of 1990, s. 61, for "except by an Assessing Officer of the rank of Assistant Commissioner or Deputy Commissioner" (w.e.f. 1-4-1990). 2. Subs. by Act 21 of 1998, s. 76, for "Assistant Commissioner" (w.e.f. 1-10-1998). 3. Subs. by s. 76, ibid ., for "Deputy Commissioner" (w.e.f. 1-10-1998). 4. Added by Act 4 of 1988, s. 171 (w.e.f. 1-4-1989). 5. Ins. by Act 41 of 1975, s. 112 (w.e.f. 1-10-1975). 6. Subs. by Act 4 of 1988, s. 172, for sub-section (1) and (2) (w.e.f. 1-4-1989). 7. Subs. by Act 13 of 1989, s. 31, for "one year" (w.e.f. 1-4-1989). 8. Subs. by s. 31, ibid ., for the proviso (w.e.f. 1-4-1989). (2) No order of assessment or re-assessment shall be made under section 16 after the expiry of two years from the end of the financial year in which the notice under sub-section (1) of that section was served : Provided that,— (i) where the notice under clause (a) of sub-section (1) of section 16 was served during the financial year commencing on the 1st day of April, 1985, or the 1st day of April, 1986, such assessment or re-assessment may be completed on or before the 31st day of March, 1990 ; (ii) where the notice under clause (b) of sub-section (1) of section 16 relates to the assessment for the assessment year commencing on the 1st day of April, 1985, or the 1st day of April, 1986, such assessment or re-assessment may be completed on or before the 31st day of March, 1990, or the expiry of two years from the end of the financial year in which such notice was served, whichever is later. Explanation .—References to section 16 in the proviso shall be construed as references to that section as it stood before its amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988).] (3) Notwithstanding anything contained in sub-sections (1) and (2), an order of fresh assessment in pursuance of an order passed on or after the 1st day of April, 1975, under section 22, section 23 or section 24, setting aside or cancelling an assessment, may be made at any time before the expiry of[1] [two years] from the end of the financial year in which the order under section 22 or section 23 is received by the[2] [Chief Commissioner or Commissioner] or, as the case may be, the order under section 24 is passed by the Commissioner : pursuance of an order passed on or after the 1st day of April, 1975, under section 22, section 23 or 3[Provided that where the order setting aside or cancelling the assessment was passed during the financial year commencing on the 1st day of April, 1985, or the 1st day of April, 1986, the order of fresh assessment may be made on or before the 31st day of March, 1990.] (4) The provisions of sub-sections (1) and (2) shall not apply to the assessment or re-assessment made on the assessee in consequence of, or to give effect to, any finding or direction contained in an order under section 22, section 23, section 24, section 26 or section 28 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act and such assessment or reassessment may, subject to the provisions of sub-section (3), be completed at any time. Explanation 1. —In computing the period of limitation for the purposes of this section— (i) the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be reheard under the proviso to section 38, or (ii) the period during which the assessment proceeding is stayed by an order or injunction of any court, shall be excluded: 4[Provided that where immediately after the exclusion of the aforesaid time or period, the period of limitation referred to in sub-sections (1), (2) and (3) available to the Assessing Officer for making an order of assessment or re-assessment, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly.] 1. Subs. by Act 4 of 1988, s. 172, for "four years" (w.e.f. 1-4-1989). 2. Subs. by s. 161, ibid ., for "Commissioner" (w.e.f. 1-4-1988). 3. The proviso ins. by s. 171, ibid. (w.e.f. 1-4-1989). 4. The proviso ins. by Act 49 of 1991, s. 87 (w.e.f. 27-9-1991). Explanation 2 .—Where, by an order referred to in sub-section (4), any gift is excluded from the taxable gifts for an assessment year in respect of an assessee, then, an assessment of such gift for another assessment year shall, for the purposes of sub-section (2) of section 16 and this section, be deemed to be one made in consequence of, or to give effect to, any finding or direction contained in the said order.] 1[16B. Interest for defaults in furnishing return of gifts. — (1) Where a return of gifts for any assessment year under sub-section (1) of section 13 or section 14, or in response to a notice under clause (i) of sub-section (4) of section 15, is furnished after the 30th day of June of such year, or is not furnished, the assessee shall be liable to pay simple interest at the rate of two per cent. for every month or part of a month comprised in the period commencing on the 1st day of July of the assessment year, and,— assessment year under sub-section (1) of section 13 or section 14, or in response to a notice under (a) where the return is furnished after the 30th day of June ending on the date of furnishing of the return; or (b) where no return has been furnished, ending on the date of completion of the assessment under sub-section (5) of section 15, on the amount of tax payable on the taxable gifts as determined[2] [under sub-section (1) of section 15 or] on regular assessment. 3[ Explanation 1 .—In this sub-section, "tax payable on the taxable gifts as determined under sub-section (1) of section 15" shall not include the additional gift-tax, if any, payable under section 15.] Explanation 2 .—Where in relation to an assessment year the assessment is made for the first time under section 16, the assessment so made shall be regarded as a regular assessment for the purposes of this section. 2[ Explanation 3 .—In this sub-section, "tax payable on the taxable gifts as determined under sub-section (1) of section 15 or on regular assessment" shall, for the purposes of computing the interest payable under section 14B, be deemed to be tax payable on the taxable gifts as declared in the return.] (2) The interest payable under sub-section (1) shall be reduced by the interest, if any, paid under section 14B towards the interest chargeable under this section. (3) Where the return of gifts for any assessment year, required by a notice under sub-section (1) of section 16 issued[2] [after the determination of taxable gifts under sub-section (1) of section 15 or] after the completion of an assessment under sub-section (3) or sub-section (5) of section 15 or section 16, is furnished after the expiry of the time allowed under such notice, or is not furnished, the assessee shall be liable to pay simple interest at the rate of two per cent. for every month or part of a month comprised in the period commencing on the day immediately following the expiry of the time allowed as aforesaid, and,— (a) where the return is furnished after the expiry of the time aforesaid, ending on the date of furnishing the return; or (b) where no return has been furnished, ending on the date of completion of the re-assessment under section 16, on the amount by which the tax on the taxable gifts determined on the basis of such re-assessment exceeds the tax on the taxable gifts as determined[2] [under sub-section (1) of section 15 or] on the basis of the earlier assessment aforesaid. 4* * * * * 1. Ins. by Act 4 of 1988, s. 173 (w.e.f. 1-4-1989). 2. Ins. by Act 3 of 1989, s. 85 (w.e.f. 1-4-1989). 3. Subs. by s. 85, ibid ., for Explanation 1 (w.e.f. 1-4-1989).