THE GIFT-TAX ACT, 1958 
______ 

ARRANGEMENT OF SECTIONS 

SECTIONS 

1. Short title, extent and commencement. 

2.  Definitions. 

______ 

CHAPTER I 

PRELIMINARY 

CHAPTER II 

CHARGE OF GIFT-TAX AND GIFTS SUBJECT TO SUCH CHARGE 

3. Charge of gift-tax. 

4. Gifts to include certain transfers. 

5. Exemption in respect of certain gifts. 

6. Value of gifts, how determined. 

6A. [Omitted.]. 

CHAPTER III 

GIFT-TAX AUTHORITIES 

7. Gift-tax authorities and their jurisdiction. 

7A. [Omitted.]. 

7AA. [Omitted.]. 

7B. [Omitted.]. 

8. Control of gift-tax authorities. 

8A. [Omitted.]. 

9. Instructions to subordinate authorities. 

9A. [Omitted.]. 

10. Jurisdiction of Assessing Officers and power to transfer cases. 

11. [Omitted.]. 

11A. [Omitted.]. 

11AA. [Omitted.]. 

11B. [Omitted.]. 

12. [Omitted.]. 

* Subject to verification and confirmation by the Administrative ministry. 

1 

 
 
 
 
 
 
 
 
SECTIONS 

12A. Power of Chief Commissioner or Commissioner and of Joint Commissioner to make enquiries 

under this Act. 

CHAPTER IV 

ASSESSMENT 

13. Return of gifts. 

14. Return after due date and amendment of return. 

14A. Return by whom to be signed. 

14B. Self-assessment. 

15. Assessment. 

16. Gift escaping assessment. 

16A. Time limit for completion of assessment and re-assessment. 

16B. Interest for defaults in furnishing return of gifts. 

17. Penalty for failure to furnish returns, to comply with notices and concealment of gifts, etc. 

17A. Penalty for failure to answer questions, sign statements, furnish information, allow inspections, 

etc. 

18. Rebate on advance payments. 

18A. Credit for stamp duty paid on instrument of gift. 

CHAPTER V 

LIABILITY TO ASSESSMENT IN SPECIAL CASES 

19. Tax of deceased person payable by legal representative.  

19A. Assessment of persons leaving India. 

20. Assessment after partition of a Hindu undivided family. 

21. Liability in case of discontinued firm or association of persons. 

21A.  Assessment of donee when the donor cannot be found. 

CHAPTER VI 

APPEALS, REVISIONS AND REFERENCES 

22.  Appeal to the Deputy Commissioner (Appeals) from orders of Assessing Officer. 

22A. [Omitted.]. 

23. Appeal to the Appellate Tribunal. 

24. Powers of Commissioner to revise orders of subordinate authorities. 

2 

 
 
 
 
SECTIONS 

25. Appeal to the Appellate Tribunal from orders of enhancement by Chief Commissioner or 

Commissioner. 

26. Reference to High Court. 

27. Hearing by High Court. 

28. Appeal to Supreme Court. 

28A. Tax to be paid notwithstanding reference, etc. 

28B. Definition of High Court. 

CHAPTER VII 

PAYMENT AND RECOVERY OF GIFT-TAX 

29.  Gift-tax by whom payable. 

30. Gift-tax to be charged on property gifted. 

31. Notice of demand. 

32. Recovery of tax and penalties. 

33. Mode of recovery. 

CHAPTER VIIA 

REFUNDS 

CHAPTER VIII 

MISCELLANEOUS 

33A. Refunds. 

34. Rectification of mistakes. 

35. Prosecution. 

35A. Offences by companies.  

35B. Offences by Hindu undivided families. 

35C. Section 360 of the Code of Criminal Procedure, 1973, and the Probation of Offenders            

Act, 1958, not to apply. 

35D. Presumption as to culpable mental state. 

35E. Proof of entries in records or documents. 

36. Power regarding discovery, production of evidence, etc. 

37. Power to call for information. 

38. Effect of transfer of authorities on pending proceedings. 

39. Computation of period of limitation. 

40. Service of notice.   

3 

 
 
 
SECTIONS 

41.  [Omitted.]. 

41A.  Publication of information respecting assessees. 

41B. Disclosure of information respecting assessees. 

41C. Return of gifts, etc., not to be invalid on certain grounds. 

42.  Bar of suits in civil court. 

43. Appearance before gift-tax authorities by authorised representatives. 

43A.   Appearance by registered valuer in certain matters. 

44.   Agreement for avoidance or relief of double taxation with respect to gift-tax. 

44A. Rounding off of taxable gifts. 

44B. Rounding off of tax, etc. 

45. Act not to apply in certain cases. 

46.  Power to make rules. 

46A. Power to make exemption, etc., in relation to certain Union territories. 

47.  Power to remove difficulties. 

SCHEDULE I.  

SCHEDULE II. 

4 

 
 
THE GIFT-TAX ACT, 1958 

ACT NO. 18 OF 1958 

[15th May, 1958.] 

An Act to provide for the levy of gift-tax. 

BE it enacted by Parliament in the Ninth Year of the Republic of India as follows :— 

CHAPTER I 

PRELIMINARY 

1. Short title, extent and commencement. — (1) This Act may be called the Gift-tax Act, 1958. 

(2) It extends to the whole of India except the State of Jammu and Kashmir*. 

(3) It shall be deemed to have come into force on the 1st day of April, 1958. 

2.  Definitions. — In this Act, unless the context otherwise requires,— 

 1* 

   * 

* 

          *  

      * 

2[(ii) “Appellate  Tribunal”  means  the  Appellate  Tribunal  constituted  under  section  252  of  the 

Income-tax Act; 

(iii)  “assessee”  means a  person  by  whom  gift-tax  or  any  other sum  of  money  is  payable  under 

this Act, and includes— 

(a)  every person in respect of whom any proceeding under this Act has been taken for the 
determination of gift-tax payable by him or by any other person or the amount of refund due to 
him or such other person; 

(b)  every person who is deemed to be an assessee under this Act; 

(c)  every person who is deemed to be an assessee in default under this Act; 

3[(iiia)  “Assessing  Officer”  means  the  4[Assistant  Commissioner or  Deputy  Commissioner] or 
the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders 
issued  under  sub-section  (1)  or  sub-section  (2)  of  section  120  or  any  other  provision  of  the               
Income-tax  Act  which  apply  for  the  purposes  of  gift-tax  under  section  7  of  this  Act,  and  also  the  
5[Joint Commissioner] who is directed under clause (b) of sub-section (4) of the said section 120 to 
exercise or perform all or any of the powers and functions conferred on or assigned to the Assessing 
Officer under that Act;] 

       (iv)  “assessment” includes reassessment; 

* Subject to verification and confirmation by the Administrative ministry. 
1. Clause (i) omitted by Act 4 of 1988, s. 162 (w.e.f. 1-4-1988). 
2. Subs. by Act 53 of 1962, s. 2, for clauses (ii), (iii) and (iv) (w.e.f. 1-4-1963). 
3. Ins. by Act 4 of 1988, s. 162 (w.e.f. 1-4-1988). 
4. Subs. by Act 21 of 1998, s. 76, for “Assistant Commissioner” (w.e.f. 1-10-1998).  
5. Subs. by s. 76, ibid., for “Deputy Commissioner” (w.e.f. 1-10-1998). 
*. Vide notification No. S.O. 3912(E), dated 30th October, 2019, this Act is made applicable to the Union territory of Jammu and 

Kashmir and the Union territory of Ladakh.   

5 

 
    
 
 
   
 
                                                           
 
(iva)  “assessment year” means the period of twelve months commencing on the 1st day of April 

every year;] 

(v)  “Board” means the  1[Central Board of Direct Taxes constituted under the Central Boards of 

Revenue Act, 1963 (54 of 1963)]; 

2[(va) “charitable  purpose”  includes  relief  of  the  poor,  education,  medical  relief,  and  the 

advancement of any other object of general public utility 3***;] 

4* 

5 * 

* 

* 

* 

* 

          * 

                   * 

          * 

                   * 

6[(vii)  the  expressions  “company”,  “Indian  company”  and  “company  in  which  the  public  are 
substantially interested” shall have the meanings respectively assigned to them under section 2 of the 
Income-tax Act;] 

7 * 

* 

* 

          * 

                   * 

(viii)  “donee”  means  any  person  who  acquires  any  property  under  a  gift,  and,  where  a  gift  is 

made to a trustee for the benefit of another person, includes both the trustee and the beneficiary; 

           (ix)  “donor” means any person who makes a gift; 

            (x)  “executor” means an executor or administrator of the estate of a deceased person; 

8[(xi)  the  expressions  “firm”,  “partner”  and  “partnership”  shall  have  the  meanings  respectively 

assigned to them under section 2 of the Income-tax Act;] 

(xii)  “gift” means the transfer by one person to another of any existing  movable or immovable 
property made voluntarily and without consideration in money or money’s worth, and 9[includes the 
transfer or conversion of any property referred to in section 4, deemed to be a gift under that section]. 

10[Explanation.—A transfer of any building or part thereof referred to in clause (iii), clause (iiia) 
or clause (iiib) of section 27 of the Income-tax Act by the person who is deemed under the said clause 
to be the owner thereof made voluntarily and without consideration in money or money’s worth, shall 
be deemed to be a gift made by such person;] 

11* 

* 

* 

         *   

         * 

1. Subs. by Act 54 of 1963, s. 5 for “Central Board of Revenue constituted under the Central Board of Revenue Act, 1924” 

(w.e.f. 1-1-1964).  

2. Ins. by Act 53 of 1962, s. 2 (w.e.f. 1-4-1963). 
3. The words “not involving the carrying on of any activity for profit” omitted by Act 67 of 1984, s. 71 (w.e.f. 1-4-1984).   
4. Clause (vi) omitted by Act 4 of 1988, s. 162 (w.e.f. 1-4-1988). 
5. Clause (via) omitted by s. 162, ibid. (w.e.f. 1-4-1988). 
6. Subs. by s. 162, ibid., for clause (vii) (w.e.f. 1-4-1988). 
7. Clause (viia) omitted by s. 162, ibid. (w.e.f. 1-4-1988). 
8. Subs. by s. 162, ibid., for clause (xi) (w.e.f. 1-4-1989). 
9.  Subs.  by  Act  32  of  1971,  s.  37,  for  “includes  the  transfer  of  any  property  deemed  to  be  a  gift  under  section  4”                    

(w.e.f. 1-4-1972). 

10. Ins. by Act 11 of 1987, s. 90 (w.e.f. 1-4-1988). 
11. Clause (xiii) omitted by Act 4 of 1988, s. 162 (w.e.f. 1-4-1989). 

6 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
         
 
                                                           
1[(xiv) “Income-tax Act” means the Income-tax Act, 1961 (43 of 1961);] 

2* 

3* 

4* 

* 

* 

* 

* 

*    

*    

                    * 

        * 

        * 

* 

* 

* 

5[(xvib) “legal  representative”  has  the  meaning  assigned  to  it  in  clause  (11)  of  section  2 of  the 

Code of Civil Procedure, 1908 (5 of 1908);] 

 6* 

* 

*    

        * 

* 

(xviii)  “person” includes a Hindu undivided family or a company or an association or a body of 

individuals or persons, whether incorporated or not; 

       (xix)  “prescribed” means prescribed by rules made under this Act; 

       (xx)  “previous year”, in relation to any assessment year— 

(a)  in  the  case  of  an  assessee 7[having  no  source  of  income,  profits  or  gains  or]  having  a 

source  of  income,  profits  or  gains  in  respect  of  which  there  is  no  previous  year  under  the               
Income-tax  Act,  means  the  twelve  months  ending  on  the  31st  day  of  March  immediately 
preceding the assessment year; 

8* 

* 

* 

* 

                     * 

(c)  in the case of any other assessee, means the previous year as defined in 9[section 3] of the 

Income-tax Act if an assessment were to be made under that Act for that year : 

10[Provided that where a person who has not been assessed under this Act for any assessment 

year  makes  a  gift  on  a  date  which  does  not  fall  within  a  previous  year  as  defined  in                   
sub-clause (a) 11*** or sub-clause (c), the previous year shall be the twelve months ending on the 
31st day of March immediately preceding the assessment year; 

 12*                           * 

    * 

* 

                    *] 

(xxi)  “principal  officer”,  used  with  reference  to  a  company  or  any  association  of  persons, 

means— 

 (a)  the secretary and treasurer, manager, managing agent, managing director or agent of the 

company or association; or 

 (b)  any person connected with the management of the affairs of the company or association 
upon whom the 13[Assessing Officer] has served a notice of his intention of treating him as the 
principal officer thereof; 

1. Subs. by Act 53 of 1962, s. 2, for clause (xiv) (w.e.f. 1-4-1963). 
2. Clause (xv) omitted by Act 4 of 1988, s. 162 (w.e.f. 1-4-1989).   
3. Clause (xvi) omitted by, s. 162, ibid. (w.e.f. 1-4-1989).   
4. Clause (xvia) omitted by, s. 162, ibid. (w.e.f. 1-4-1989).   
5. Ins. by Act 53 of 1962, s. 2 (w.e.f. 1-4-1963). 
6. Clause (xvii) omitted by Act 4 of 1988, s. 162 (w.e.f. 1-4-1989). 
7. Ins. by Act 12 of 1959, s. 27 (w.e.f. 1-4-1959).  
8. Sub-clause (b) omitted by Act 4 of 1988, s. 162 (w.e.f. 1-4-1989). 
9. Subs. by Act 53 of 1962, s. 2, for “clause (11) of section 2” (w.e.f. 1-4-1963). 
10. Ins. by Act 12 of 1959, s. 27 (w.e.f. 1-4-1959). 
11. The words “or sub-clause (b)” omitted by Act 4 of 1988, s. 162 (w.e.f. 1-4-1989).   
12. The Second proviso omitted by s.162, ibid, (w.e.f. 1-4-1989). 
13. Subs. by s. 161, ibid., for “Gift-tax Officer” (w.e.f. 1-4-1988).  

7 

 
 
                  
 
 
 
 
                  
 
 
 
 
 
                  
 
 
 
 
 
                  
 
 
 
 
 
 
 
 
 
  
 
 
 
                                                           
(xxii)  “property” includes any interest in property, movable or immovable; 

(xxiii)  “taxable gifts” means gifts chargeable to gift-tax under this Act; 

1[(xxiiia) territories to which this Act extends shall be deemed to include the Union territories of 

Dadra and Nagar Haveli, Goa, Daman and Diu, and Pondicherry— 

(a)  as respects any period for the purposes of section 5; and 

(b)  as  respects  any  period  included  in  the  previous  year,  for  the  purposes  of  making  any 
assessment  for  the  assessment  year  commencing  on  the  1st  day  of  April,  1963,  or  for  any 
subsequent year;] 

(xxiv)  “transfer  of  property”  means  any  disposition,  conveyance,  assignment,  settlement, 
delivery, payment or other alienation of property and, without limiting the generality of the foregoing, 
includes— 

(a)  the creation of a trust in property; 

(b)  the  grant  or  creation  of  any  lease,  mortgage,  charge,  easement,  licence,  power, 

partnership or interest in property; 

(c)  the  exercise  of  a  power  of  appointment 2[(whether  general,  special  or  subject  to  any 
restrictions as to the persons in whose favour the appointment may be made)] of property vested 
in any person, not the owner of the property, to determine its disposition in favour of any person 
other than the donee of the power; and 

(d)  any  transaction  entered  into  by  any  person  with  intent  thereby  to  diminish  directly  or 
indirectly  the  value  of  his  own  property  and  to  increase  the  value  of  the  property  of  any  other 
person; 

(Appeals)”,  “Director”, 4[“Additional  Director  of 

3[(xxv)  the  expressions  “Chief  Commissioner”,  “Director  General”,  “Commissioner”, 
“Commissioner 
Income-tax”,  “Additional 
Commissioner  of  Income-tax”,  “Additional  Commissioner  of  Income-tax  (Appeals)”, “5[Joint  
Director”]] 6[“Joint Commissioner”], “Deputy Commissioner (Appeals)”, 7[“Assistant Commissioner 
or  Deputy  Commissioner”],  “Income-tax  Officer”,  “Tax  Recovery  Officer”  and  “Inspector  of       
Income-tax” shall have the meanings respectively assigned to them under section 2 of the Income-tax 
Act.] 

CHAPTER II 

CHARGE OF GIFT-TAX AND GIFTS SUBJECT TO SUCH CHARGE 

3. Charge of gift-tax.  —  8[(1)] Subject to the other provisions contained in this Act, there shall be 
charged for every  9[assessment year] commencing on and from the 1st day of April, 1958, 10[but before 
the 1st day of April, 1987,] a tax (hereinafter referred to as gift-tax) in respect of the gifts, if any, made by  

1.  Ins.  by  The  Taxation  Laws  (Extension  to  Union  Territories)  Regulation,  1963  (3  of  1963),  by  s.  3  and  the  Schedule               

(w.e.f. 1-4-1963). 

2. Ins. by Act 44 of 1980, s. 42 (w.e.f. 1-4-1980). 
3. Ins. by Act 4 of 1988, s. 162 (w.e.f. 1-4-1988). 
4. Ins. by Act 32 of 1994, s. 54 (w.e.f. 1-6-1994). 
5. Subs. by Act 21 of 1998, s. 76 for “Deputy Director” (w.e.f. 1-10-1998). 
6. Subs. by s. 76, ibid., for “Deputy Commissioner” (w.e.f. 1-10-1998). 
7. Subs. by s. 76, ibid., for “Assistant Commissioner” (w.e.f. 1-10-1998). 
8. Section 3 renumbered as sub-section (1) thereof by Act 23 of 1986, s. 41 (w.e.f. 1-4-1987).   
9. Subs. by Act 53 of 1962, s. 3, for “financial year” (w.e.f. 1-4-1963).  
10. Ins. by Act 23 of 1986, s. 41 (w.e.f. 1-4-1987). 

8 

                                                           
a person during the previous year (other than gifts made before the 1st day of April, 1957), at the rate or 
rates specified in 1[Schedule I]. 

 2[(2) 3[Subject  to  the  other  provisions  (including  provisions  for  the  levy  of  additional  gift-tax) 
contained in this Act], there shall be charged for every assessment year commencing on and from the 1st 
day of April, 1987, gift-tax in respect of the gifts, if any, made by a person during the previous year, at the 
rate of thirty per cent. on the value of all taxable gifts.] 

4[(3) Notwithstanding anything contained in sub-section (2), the provisions of this Act shall cease to 
apply and shall have no effect whatsoever in respect of any gift made on or after the 1st day of October, 
1998.] 

4. Gifts to include certain transfers. — 5[(1)] For the purposes of this Act,— 

(a )  where  property  is  transferred  otherwise  than  for  adequate  consideration,  the  amount  by 
which  the 6[value  of  the  property  as  on  the  date  of  the  transfer  and  determined  in  the  manner  laid 
down in Schedule II,] exceeds the value of the consideration shall be deemed to be a gift made by the 
transferor : 

7[Provided that  nothing  contained  in  this  clause  shall  apply  in  any  case  where  the  property  is 
transferred to the Government or where the value of the consideration for the transfer is determined or 
approved by the Central Government or the Reserve Bank of India;] 

(b)  where property is transferred for a consideration which, having regard to the circumstances of 
the case, has not passed or is not intended to pass either in full or in part from the transferee to the 
transferor, the amount of the consideration which has not passed or is not intended to pass shall be 
deemed to be a gift made by the transferor; 

(c)  where there is a release, discharge, surrender, forfeiture or abandonment of any debt, contract 
or  other  actionable  claim  or  of  any  interest  in  property  by  any  person,  the  value  of  the  release, 
discharge,  surrender,  forfeiture  or  abandonment  to the  extent to  which it  has  not  been  found  to the 
satisfaction of the 8[Assessing Officer] to have been bona fide, shall be deemed to be a gift made by 
the person responsible for the release, discharge, surrender, forfeiture or abandonment; 

(d)  where a person absolutely entitled to property causes or has caused the same to be vested in 
whatever  manner  in  himself  and  any  other  person  jointly  without  adequate  consideration  and  such 
other person makes an appropriation from or out of the said property, the amount of the appropriation 
used for the benefit of the person making the appropriation or for the benefit of any other person shall 
be deemed to be a gift made in his favour by the person who causes or has caused the property to be 
so vested; 

9[(e)  where  a  person  who  has  an  interest  in  property  as  a  tenant  for  a  term  or  for  life  or  a 
remainderman surrenders or relinquishes his interest in the property or otherwise allows his interest to 
be  terminated  without  consideration  or  for  a  consideration  which  is  not  adequate,  the  value  of  the 
interest so surrendered, relinquished or allowed to be terminated or, as the case may be, the amount 

1. Subs. by Act 3 of 1989, s. 79, for “the Schedule” (w.e.f. 1-4-1989).   
2. Ins. by Act 23 of 1986, s. 41 (w.e.f. 1-4-1989).  
3. Subs. by Act 4 of 1988, s. 163, for “Subject to the other provisions contained in this Act” (w.e.f. 1-4-1989).  
4.  Ins. by Act 21 of 1998, s. 75 (w.e.f. 1-1-1998). 
5. Section 4 renumbered as sub-section (1) thereof by Act 32 of 1971, s. 37 (w.e.f. 1-4-1972). 
6. Subs. by Act 49 of 1991, s. 84, for “market value of the property at the date of the transfer” (w.e.f. 1-4-1992). 
7. The Proviso ins. by Act 25 of 1975, s. 29 (w.e.f. 1-4-1974). 
8. Subs. by Act 4 of 1988, s. 161, for “Gift-tax officer” (w.e.f. 1-4-1988). 
9. Ins. by Act 44 of 1980, s. 42 (w.e.f. 1-4-1980). 

9 

                                                           
by which such value exceeds the consideration received, shall be deemed to be a gift made by such 
person.] 

1[(2) Where, in the case of an individual being a member of a Hindu undivided family, any property 
having  been  the  separate  property  of  the  individual  has  been  converted  by  the  individual  into  property 
belonging  to  the  family  through  the  act  of  impressing  such  separate  property  with  the  character  of 
property belonging to the family or throwing it into the common stock of the family (such property being 
hereafter  in  this  sub-section  referred  to  as  the  converted  property),  then,  notwithstanding  anything 
contained in any other provision of this Act or any other law for the time being in force, for the purpose of 
computation of the taxable gifts made by the individual, the individual shall be deemed to have made a 
gift of so much of the converted property as the members of the Hindu undivided family other than such 
individual would be entitled to, if a partition of the converted property had taken place immediately after 
such conversion.] 

5.  Exemption  in  respect  of  certain  gifts.  — (1)  Gift-tax  shall  not  be  charged  under  this  Act  in 

respect of gifts made by any person— 

(i)  of immovable property situate outside the territories to which this Act extends; 

(ii)  of movable property situate outside the said territories unless the person— 

(a)  being an individual, is a citizen of India and is ordinarily resident in the said territories, or 

(b)  not  being  an  individual,  is  resident  in  the  said  territories,  during  the  previous  year  in 

which the gift is made; 

2[(iia)  being an individual who is not resident in India, to any person resident in India, of foreign 
currency or other foreign exchange as defined respectively, in clause (c) and clause (d) of section 2 of 
the  Foreign  Exchange  Regulation  Act,  1947  (7  of  1947),  remitted  from  a  country  outside  India  in 
accordance  with  the  provisions  of  the  said  Act  and  any  rules  made  thereunder,  during  the  period 
commencing on the 26th day of October, 1965, and ending on the 28th day of February, 1966, or such 
later  date  as  the  Central  Government  may,  by  notification  in  the  Official  Gazette,  specify  in  this 
behalf. 

Explanation. —For the purposes of this clause, the expression “resident in India” shall have the 

meaning assigned to it in the Income-tax Act;] 

3[(iib)  being  a  person  resident  outside  India,  out  of  the  moneys  standing  to  his  credit  in  a            

Non-resident  (External)  Account  in  any  bank  in  India  in  accordance  with  the  provisions  of  the 
Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder. 

 Explanation. —For the purposes of this clause, “person resident outside India” has the meaning 

assigned to it in clause (q) of section 2 of the Foreign Exchange Regulation Act, 1973 (46 of 1973); 

(iic)  being  a  citizen  of  India,  or  a  person  of  Indian  origin,  who  is  not  resident in  India,  to  any 
relative of such person in India, of convertible foreign exchange remitted from a country outside India 
in accordance with the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and 
any rules made thereunder. 

Explanation. —For the purposes of this clause and clause (iid),— 

(a)  a person shall be deemed to be of Indian origin if he or either of his parents or any of his 

grand-parents was born in undivided India; 

1. Ins. by Act 32 of 1971, s. 37 (w.e.f. 1-4-1972). 
2. Ins. by Act 13 of 1966, s. 41 (w.e.f. 1-4-1966). 
3. Ins. by Act 14 of 1982, s. 38 (w.e.f. 1-4-1983). 

10 

                                                           
(b)  “convertible  foreign  exchange”  means  foreign  exchange  which  is  for  the  time  being 
treated  by  the  Reserve  Bank  of  India  as  convertible  foreign  exchange  for  the  purposes  of  the 
Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder; 

(c)  “relative”  has  the  meaning  assigned  to  it  in  clause  (41)  of  section  2  of  the  Income-tax 

Act; 

(d) “resident of India” shall have the meaning assigned to it in the Income-tax Act;] 

 (iid)  being  a  citizen  of  India  or  a  person  of  Indian origin,  who is  not  resident  in  India,  to  any 
relative of such person in India of property in the form of 1[any foreign exchange asset as defined in 
clause (b) of section 115C of the Income-tax Act];] 

2[(iie)  being an individual who is a non-resident Indian, once out of the moneys standing to his 
credit  in  an  account  opened  and  operated  in  accordance  with  the  Non-resident  (Non-repatriable) 
Rupee Deposit Scheme, 1992. 

Explanation. —For  the  purposes  of  this  clause,  “non-resident  Indian”  shall  have  the  meaning 

assigned to it in clause (e) of section 115C of the Income-tax Act;] 

(iii)  of property in the form of savings certificates issued by the Central Government, which that 

Government, by notification in the Official Gazette exempts from gift-tax; 

3* 

            * 

                           *        

                           * 

         *   

4[(iiib) of property in the form of Special Bearer Bonds, 1991;] 

5[(iiic) 6[being an individual or a Hindu undivided family, of property in the form of such Capital 
Investment Bonds] as the Central Government may, by notification in the Official Gazette, specify in 
this  behalf  subject  to  a  maximum  of  rupees  ten  lakhs  in  value  in  the  aggregate  in  one  or  more 
previous years : 

Provided that the exemption conferred by this clause shall be available only to a person who has 

initially subscribed to the said bonds;] 

7[(iiid)  being an individual or a Hindu undivided family, of property in the form of such Relief 
Bonds, as the Central Government may, by notification in the Official Gazette, specify in this behalf 
subject to a maximum of rupees five lakhs in value in the aggregate in one or more previous years : 

Provided that the exemption conferred by this clause shall be available only to a person who has 

initially subscribed to the said Bonds;] 

8[(iiie) being  an  individual who  is a  non-resident  Indian, 9[of  property  in the form  of  the  bonds 

specified under sub-clause (iid) of clause (15) of section 10 of the Income-tax Act: 

Provided that] where an individual, who is a non-resident Indian in any previous year in which 
the  bonds  are  acquired,  becomes  a  resident  in  India  in  any  subsequent  year,  the  provisions  of  this 
clause shall apply in respect of the gifts of property referred to in this clause in such subsequent year 
or any year thereafter. 

1. Subs. by Act 12 of 1983, s. 42, for certain words (w.e.f. 1-4-1984).  
2. Ins. by Act 38 of 1993, s. 41 (w.e.f. 1-4-1993). 
3. Clause (iiia) omitted by Act 23 of 1986, s. 42 (w.e.f. 1-4-1987). 
4. Ins. by Act 7 of 1981, s. 7 (w.e.f. 12-1-1981).  
5. Ins. by Act 14 of 1982, s. 38 (w.e.f. 1-4-1983). 
6. Subs. by Act 12 of 1983, s. 42 for “of property in the form of such Capital Investment Bonds” (w.e.f. 1-4-1983).   
7. Ins. by Act 26 of 1988, s. 67 (w.e.f. 1-4-1988). 
8. Ins. by Act 3 of 1989, s. 80 (w.e.f. 1-4-1989). 
9. Subs. by Act 49 of 1991, s. 85, for certain words (w.e.f. 1-4-1991).  

11 

 
  
                                                           
Explanation. —For the purposes of this clause, the expressions— 

1* 

* 

* 

        * 

      * 

(b) “non-resident Indian” shall have the meaning assigned to it in clause (e) of section 115C 

of the Income-tax Act;] 

(iv)  to  the  Government  or  any  local  authority 2[or  any  authority  referred  to  in  clause  (20A)  of 

section 10 of the Income-tax Act ;] 

(v)  to any institution or fund established  3[or deemed to be established] for a charitable purpose 

to which the provisions of  4[section 80G] of the Income-tax Act apply ; 

5[(va)  (i)  to  such  temple,  mosque,  gurdwara,  church  or  other  place  as  has  been  notified  by  the 
Central  Government  for  the  purposes  of  6[clause  (b)  of  sub-section  (2)  of  section  80G  of  the          
Income-tax Act] ; or 

(ii)  by way of settlement on trust, of property, the income from which, according to the deed 
of settlement, is to be used exclusively in connection with the temple, mosque, gurdwara, church 
or other place specified therein and notified as aforesaid ;] 

7* 

                        *  

           *  

      * 

               *    

(vii)  to  any  relative  dependent  upon  him  for  support  and  maintenance,  on  the  occasion  of  the 
marriage of the relative, subject to a maximum of rupees 8[one hundred thousand]  in value in respect 
of the marriage of each such relative ; 

9* 

10* 

                       *  

                        *  

(x)  under a will ; 

(xi)  in contemplation of death ; 

     * 

     * 

* 

* 

* 

* 

(xii)  for  the  education  of  his  children,  to  the  extent  to  which  the  gifts  are  proved  to  the 
satisfaction of the 11[Assessing Officer] as being reasonable having regard to the circumstances of the 
case ; 

(xiii)  being  an  employer,  to  any  employee  by  way  of  bonus,  gratuity  or  pension  or  to  the 
dependants  of  a  deceased  employee,  to  the  extent  to  which  the  payment  of  such  bonus,  gratuity  or 
pension is proved to the satisfaction of the 11[Assessing Officer] as being reasonable having regard to 
the  circumstances  of  the  case  and  is  made  solely  in  recognition  of  the  services  rendered  by  the 
employee; 

12* 

                        *  

     * 

* 

* 

1. Clause (a) omitted by Act 49 of 1991, s. 85 (w.e.f. 1-4-1991). 
2. Ins. by Act 66 of 1976, s. 28 (w.e.f. 1-4-1977).  
3. Ins. by Act 21 of 1973, s. 21 (w.e.f. 1-4-1974).  
4. Subs. by Act 32 of 1971, s. 37, for “section 88” (w.e.f. 1-4-1968).  
5. Ins. by Act 10 of 1965, s. 71 (w.e.f. 1-4-1965). 
6. Subs. by Act 43 of 1971, s. 37, for “sub-section (6) of section 88 of the Income-tax Act, 1961” (w.e.f. 1-4-1968).   
7. Clause (vi) omitted by 23 of 1986, s. 42 (w.e.f. 1-4-1987). 
8. Subs. by Act 32 of 1994, s. 55, for “thirty thousand” (w.e.f. 1-4-1995).  
9. Clause (viii) omitted by 23 of 1986, s. 42 (w.e.f. 1-4-1987). 
10. Clause (ix) omitted, s. 42, ibid, (w.e.f. 1-4-1987). 
11. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988).  
12. Clause (xiv) omitted by 23 of 1986, s. 42 (w.e.f. 1-4-1987). 

12 

  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
(xv)  to  any  person  in  charge  of  any  such Bhoodan or Sampattidan movement  as  the  Central 

Government may, by notification in the Official Gazette, specify. 

1* 

                        *  

     * 

* 

* 

2[(1A)  Any  reference  in  clause (v) 3***  of sub-section (1) to charitable purpose in  relation  to  a  gift 
made on or after the 1st day of April, 1964, shall be construed as not including a purpose the whole or 
substantially the whole of which is of a religious nature.] 

(2)  Without  prejudice  to  the  provisions  contained  in  sub-section  (1),  gift-tax  shall  not  be  charged 
under this Act in respect of gifts made by any person during the previous year, subject to a maximum of 
rupees 4[thirty thousand] in value. 

5* 

                          * 

     * 

 * 

* 

Explanation.—For the purposes of this section,— 

(a)  an  individual  shall  be  deemed  to  be  ordinarily  resident  in  the  territories  to  which  this  Act 
extends  during  the  previous  year  in  which  the  gift  is  made  if  during  that  year  he  is  regarded  as  a 
resident  but  not  as  not  ordinarily  resident 6[within the  meaning  of  section  6  of  the  Income-tax  Act, 
subject to the modification that references in that section to India shall be construed as references to 
the territories to which this Act extends] ; 

(b)  a Hindu undivided family, firm or other association of persons shall be deemed to be resident 
in  the  territories  to  which  this  Act  extends  during  any  previous  year  unless,  during  that  year,  the 
control and management of its affairs was situated wholly outside the said territories ; 

(c)  a company shall be deemed to be resident in the territories to which this Act extends during 

the previous year, if— 

 (i)  it is a company formed and registered under the Companies Act, 1956 (1 of 1956), or is 

an existing company within the meaning of that Act ; or 

 (ii) during that year, the control and management of that company was situated wholly in the 

said territories ; 

(d)  “gifts made in contemplation of death” has the same meaning as in section 191 of the Indian 

Succession Act, 1925 (39 of 1925). 

 7[6. Value of gifts, how determined. — (1) Subject to the provisions of sub-section (2), the value of 
any property, other than cash, transferred by way of gift shall, for the purpose of this Act, be its value as 
on the date on which the gift was made and shall be determined in the manner laid down in Schedule II. 

(2)  Where  a  person  makes  a  gift  which  is  not  revocable  for  a  specified  period,  the  value  of  the 
property  gifted  shall  be  the  capitalised  value  of  the  income  from  such  property  during  the  period  for 
which the gift is not revocable.] 

6A. [Aggregation of gifts made during a certain period.] — Omitted by the Finance Act, 1986 (23 of 

1986), s. 43 (w.e.f. 1-4-1987).  

1. Clause (xvi) omitted by 23 of 1986, s. 42, (w.e.f. 1-4-1987). 
2. Ins. by Act 15 of 1965, s. 21 (w.e.f. 1-4-1964).  
3. The words, brackets and figures “or clause (vi)”omitted by Act 23 of 1986, s. 42 (w.e.f. 1-4-1987). 
4. Subs. by Act 38 of 1993, s. 41, for “twenty thousand” (w.e.f. 1-4-1994).   
5. Sub-section (3) omitted by 23 of 1986, s. 42 (w.e.f. 1-4-1989). 
6. Subs. by Act 53 of 1962, s. 4, for “in the taxable territories with the meaning of the income-tax Act” (w.e.f. 1-4-1963).  
7. Subs. by Act 3 of 1989, s. 81, for section 6 (w.e.f. 1-4-1989). 

13 

 
 
 
 
 
 
 
 
 
 
 
                                                           
CHAPTER III 

GIFT-TAX AUTHORITIES 

1[7. Gift-tax  authorities  and  their  jurisdiction.  —The  income-tax  authorities  specified  in                  

section 116 of the Income-tax Act shall be the gift-tax authorities for the purposes of this Act and every 
such authority shall exercise the powers and perform the functions of a gift-tax authority under this Act in 
respect of any person within his jurisdiction, and for this purpose his jurisdiction under this Act shall be 
the same as he has under the Income-tax Act by virtue of orders or directions issued under section 120 of 
that Act (including orders or directions assigning concurrent jurisdiction) or under any other provision of 
that Act. 

Explanation.—For the purposes of this section, the gift-tax authority having jurisdiction in relation to 
a  person  who  has  no  income  assessable  to  income-tax  under  the  Income-tax  Act  shall  be  the  gift-tax 
authority having jurisdiction in respect of the area in which that person resides. 

7A.  [Powers  of  Commissioner  respecting  specified  areas,  cases,  persons,  etc.]  —  Omitted  by  the 

Direct Tax Laws (Amendment) Act, 1988 (4 of 1988), s. 165 (w.e.f. 1-4-1988). 

7AA.  [Concurrent  jurisdiction  of  Inspecting  Assistant  Commissioner  and  Gift-tax  Officer.]  — 

Omitted by s. 165, ibid. (w.e.f. 1-4-1988). 

7B. [Power to transfer cases.]— Omitted by s. 165, ibid. (w.e.f. 1-4-1988). 

8. Control of gift-tax authorities. —Section 118 of the Income-tax Act and any notification issued 
thereunder  shall  apply  in  relation  to  the  control  of  gift-tax  authorities  as  they  apply  in  relation  to  the 
control  of  the  corresponding  income-tax  authorities,  except  to  the  extent  to  which  the  Board  may,  by 
notification in the Official Gazette, otherwise direct in respect of any gift-tax authority. 

8A. [Commissioners of gift-tax Appeals.] — Omitted by the Direct Tax Laws (Amendment) Act, 1988 

(4 of 1988), s. 165 (w.e.f. 1-4-1988). 

9. Instructions  to  subordinate  authorities.  —  (1)  The  Board  may,  from  time  to  time,  issue  such 
orders,  instructions  and  directions  to  other  gift-tax  authorities  as  it  may  deem  fit  for  the  proper 
administration of this Act, and such authorities and all other persons employed in the execution of this 
Act shall observe and follow such orders, instructions and directions of the Board : 

Provided that no such orders, instructions or directions shall be issued— 

(a)  so  as  to  require  any  gift-tax  authority  to  make  a  particular  assessment  or  to  dispose  of  a 

particular case in a particular manner ; or 

(b)  so as to interfere with the discretion of the Deputy Commissioner (Appeals) or Commissioner 

(Appeals) in the exercise of his appellate functions. 

(2) Without prejudice to the generality of the foregoing power,— 

(a)  the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and 
efficient management of the work of assessment and collection of revenue, issue, from time to time 
(whether by way of relaxation of any of the provisions of sections  2[13, 14, 15, 16, 16B,] 17 and 34 
or  otherwise),  general  or  special  orders  in  respect  of  any  class  of  cases,  setting  forth  directions  or 
instructions  (not  being  prejudicial  to  assessees)  as  to  the  guidelines,  principles  or  procedures  to  be 

1. Subs. by Act 4 of 1988, s. 164, for sections 7, 8, 9 and 10 (w.e.f. 1-4-1988).   
2. Subs. by Act 12 of 1990, s. 59, for “15, 16” (w.e.f. 1-4-1990). 

14 

                                                           
followed by other gift-tax authorities in the work relating to assessment or collection of revenue or 
the initiation of proceedings for the imposition of penalties and any such order may, if the Board is of 
opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed 
manner for general information ; 

(b)  the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship 
in any case or class of cases, by general or special order, authorise any gift-tax authority, not being a 
Deputy Commissioner (Appeals) or Commissioner (Appeals) to admit an application or claim for any 
exemption, deduction, refund or any other relief under this Act after the expiry of the period specified 
by  or  under  this  Act  for  making  such  application  or  claim  and  deal  with  the  same  on  merits  in 
accordance with law.] 

9A.  [Directors  of  Inspection.]  —  Omitted  by  the  Direct  Tax  Laws  (Amendment)  Act,  1988                    

(4 of 1988), s. 165 (w.e.f. 1-4-1988). 

10.  Jurisdiction  of  Assessing  Officers  and  power  to  transfer  cases.  —  (1)  The  provisions  of 
sections 124 and 127 of the Income-tax Act shall, so far as may be, apply for the purposes of this Act as 
they  apply  for  the  purposes  of  the  Income-tax  Act,  subject  to  the  modifications  specified  in                    
sub-section (2). 

(2) The modifications referred to in sub-section (1) shall be the following, namely :— 

(a)  in section 124 of the Income-tax Act,— 

(i)  in  sub-section  (3),  references  to  the  provisions  of  the  Income-tax  Act  shall  be 

construed as references to the corresponding provisions of the Gift-tax Act ; 

(ii)  sub-section (5) shall be omitted ; 

(b) in  section  127  of  the  Income-tax  Act,  in  the Explanation below  sub-section 1[(4)] 
references to proceedings under the Income-tax Act shall be construed as including references to 
proceedings under the Gift-tax Act.] 

11. [Inspector of Gift-tax.] — Omitted by the Direct Tax Laws (Amendment) Act, 1988 (4 of 1988), s. 

165 (w.e.f. 1-4-1988). 

11A.  [Commissioner  competent  to  perform  any  function  or  functions.]  —  Omitted  by  s.  165,  ibid. 

(w.e.f. 1-4-1988). 

11AA. [Gift-tax Officer competent to perform any function or functions.] — Omitted by s. 165, ibid. 

(w.e.f. 1-4-1988). 

11B. [Control of gift-tax authorities.] — Omitted by s. 165, ibid. (w.e.f. 1-4-1988). 

12. [Gift-tax authorities to follow orders, etc., of the Board.] — Omitted by s. 165, ibid. (w.e.f. 1-4-

1988). 

2[12A. Power  of 3[Chief  Commissioner  or  Commissioner] and  of  4[  5[Joint  Commissioner]  to 
make  enquiries  under  this  Act.  —  The 3[Chief  Commissioner  or  Commissioner]  and  the 4[  5[Joint 
Commissioner] shall be competent to make any enquiry under this Act, and for this purpose, shall have 
all the powers that an 6[Assessing Officer] has under this Act in relation to the making of enquiries.] 

1. Subs. by Act 3 of 1989, s. 82, for “(5)” (w.e.f. 1-4-1988).  
2. Ins. by Act 53 of 1962, s. 9 (w.e.f. 1-4-1963).  
3. Subs. by Act 4 of 1988, s. 161, for “Commissioner of Gift-tax” (w.e.f. 1-4-1988).   
4. Subs. by s. 161, ibid., for “Inspecting Assistant Commissioner of Gift-tax” (w.e.f. 1-4-1988). 
5. Subs. by Act 21 of 1998, s. 76, for “Deputy Commissioner” (w.e.f. 1-10-1988). 
6. Subs. by Act 4 of 1988, s. 161, ibid., for “Gift-tax Officer” (w.e.f. 1-4-1988).  

15 

                                                           
CHAPTER IV 

ASSESSMENT 

13.  Return of gifts. — 1[(1) Every person who during a previous year has made any taxable gifts, or 
is assessable in respect of the taxable gifts made by any other person under this Act, which, in either case, 
exceeded the maximum amount not chargeable to gift-tax, shall, on or before the 30th day of June of the 
corresponding assessment year, furnish a return of such gifts in the prescribed form and  verified in the 
prescribed manner and setting forth such other particulars as may be prescribed. 

(2)  Notwithstanding anything contained in any other provision of this Act, a return which shows the 
amount of taxable gifts below the maximum amount which is not chargeable to tax shall be deemed never 
to have been furnished : 

Provided that  this  sub-section  shall  not  apply  to  a  return  furnished  in  response  to  a  notice  under 

section 16.] 

2* 

   * 

 * 

 * 

   * 

3[14. Return after due date and amendment of return. — If any person has not furnished a return 

within  the  time  allowed  under  sub-section  (1)  of  section  13  or  by  a  notice  issued  under  clause  (i)  of               
sub-section  (4)  of  section  15,  or  having  furnished  a  return  discovers  any  omission  or  wrong  statement 
therein, he may furnish a return or a revised return, as the case may be, at any time before the expiry of 
one  year  from  the  end  of  the  relevant  assessment  year  or  before  the  completion  of  the  assessment, 
whichever is earlier : 

Provided that— 

(a)  where such return or revised return relates to the assessment year commencing on the 1st day 
of April, 1987, or any earlier assessment year, it may be furnished at any time up to and inclusive of 
the 31st day of March, 1990 or before the completion of the assessment, whichever is earlier; 

(b)  where such return or revised return relates to the assessment year commencing on the 1st day 
of April, 1988, it may be furnished at any time up to and inclusive of the 31st day of March, 1991, or 
before the completion of the assessment, whichever is earlier.] 

4[14A. Return by whom to be signed. — The return made under section 13 or section 14 shall be 

signed and verified— 

5[(a) in the case of an individual,— 

(i)  by the individual himself ; 

(ii)  where  he  is  absent  from  India,  by  the  individual  himself  or  by  some  person  duly 

authorised by him in this behalf ; 

(iii)  where he is mentally incapacitated from attending to his affairs, by his guardian or any 

other person competent to act on his behalf ; and 

(iv)  where, for any other reason, it is not possible for the individual to sign the return, by any 

person duly authorised by him in this behalf : 

1. Subs. by Act 4 of 1988, s. 166, for sub-sections (1) and (2) (w.e.f. 1-4-1989). 
2. Sub-section (3) omitted by s. 166, ibid. (w.e.f. 1-4-1989). 
3. Subs. by s. 167, ibid., for section 14 (w.e.f. 1-4-1989).  
4. Ins. by Act 53 of 1962, s. 11 (w.e.f. 1-4-1963). 
5. Subs. by Act 4 of 1988, s. 168, for clause (a) (w.e.f. 1-4-1989). 

16 

 
 
 
 
 
 
 
 
                                                           
Provided that  in  a  case  referred  to  in  sub-clause  (ii)  or  sub-clause  (iv),  the  person  signing  the 
return  holds  a  valid  power  of  attorney  from  the  individual  to  do  so,  which  shall  be  attached  to  the 
return ;] 

(b)  in  the  case  of  a  Hindu  undivided  family,  by  the  karta,  and,  where  the  karta  is  absent  from 
India  or  is  mentally  incapacitated  from  attending  to  his  affairs,  by  any  other adult  member  of  such 
family ; 

1[(c)  in the case of a company, by the managing director thereof or where  for any unavoidable 
reason such managing director is not able to sign and verify the return, or where there is no managing 
director, by any director thereof : 

2[Provided that where the company is not resident in India, the return may be signed and verified 
by a person who holds a valid power of attorney from such company to do so, which shall be attached 
to the return : 

Provided further that,— 

(a)  where  the  company  is  being  wound  up,  whether  under  the  orders  of  the  court  or 
otherwise, or where any person has been appointed as the receiver of any assets of the company, 
the return shall be signed and verified by the liquidator referred to in sub-section (1) of section 
178 of the Income-tax Act ; 

(b)  where the management of the company has been taken over by the Central Government 
or any State Government under any law, the return of the company shall be signed and verified by 
the principal officer thereof ;] 

(d)  in  the  case  of  a  firm,  by  the  managing  partner  thereof  or  where  for  any  unavoidable 
reason  such  managing  partner  is  not  able  to  sign  and  verify  the  return,  or  where  there  is  no 
managing partner as such, by any partner thereof, not being a minor ;] 

(e) in  the  case  of  any  other  association,  by  any  member  of  the  association  or  the  principal 

officer thereof ; and 

(f) in the case of any other person, by that person, or by some person competent to act on his 

behalf.] 

3[14B. Self-assessment. — (1) Where any tax is payable on the basis of any return furnished under 
section 13 or under section 14 or in response to a notice under clause (i) of sub-section (4) of section 15 
or under section 16, after taking into account the amount of tax, if any, already paid under any provision 
of this Act, the assessee shall be liable to pay such tax, together with interest payable under any provision 
of  this  Act  for  any  delay  in  furnishing  the  return,  before  furnishing  the  return  and  the  return  shall  be 
accompanied by proof of payment of such tax and interest. 

Explanation.—Where  the  amount  paid  by  the  assessee  under  this  sub-section  falls  short  of  the 
aggregate  of  the  tax  and  interest  as  aforesaid,  the  amount  so  paid  shall  first  be  adjusted  towards  the 
interest payable as aforesaid and the balance, if any, shall be adjusted towards the tax payable. 

(2)  After  the  regular  assessment  under  section  15  has  been  made,  any  amount  paid  under                 

sub-section (1) shall be deemed to have been paid towards such regular assessment. 

(3) If any assessee fails to pay the whole or any part of such tax or interest or both in accordance with 
the  provisions  of  sub-section  (1),  he  shall,  without  prejudice  to  any  other  consequences  which  he  may 

1. Subs. by Act 41 of 1975, s. 111, for clauses (c) and (d) (w.e.f. 1-4-1976). 
2. The provisos added by Act 4 of 1988, s. 168 (w.e.f. 1-4-1989). 
3. Ins. by s. 169, ibid. (w.e.f. 1-4-1989). 

17 

                                                           
incur, be deemed to be an assessee in default in respect of the tax or interest or both remaining unpaid and 
all the provisions of this Act shall apply accordingly.] 

1[(4)  The  provisions  of  this  section  shall  apply  in  respect  of  assessment  for  the  assessment  year 

commencing on the 1st day of April, 1989 and subsequent assessment years.] 

2[15. Assessment.  —  (1)  (a)  Where  a  return  has  been  made  under  section  13  or  section  14  or  in 

response to a notice under clause (i) of sub-section (4),— 

(i)  if any tax or interest is found due on the basis of such return after adjustment of any amount 
paid  by  way  of  tax  or  interest,  an  intimation  shall  be  sent  to  the  assessee  specifying  the  sum  so 
payable,  and  such  intimation  shall  be  deemed  to  be  a  notice  issued  under  section  31  and  all  the 
provisions of this Act shall apply accordingly ; and 

(ii)  if any refund is due on the basis of such return, it shall be granted to the assessee : 

Provided that  in  computing  the  tax  or  interest  payable  by,  or  refundable  to  the  assessee,  the 

following adjustments shall be made in the taxable gifts declared in the return, namely :— 

(i)  any  arithmetical  errors  in  the  return,  accounts  or  documents  accompanying  it  shall  be 

rectified; 

(ii)  any  exemption  or  deduction,  which,  on  the  basis  of  the  information  available  in  such 
return, accounts or documents is prima facie admissible but which is not claimed or made in the 
return, shall be allowed; 

(iii)  any  exemption  or  deduction  claimed  or  made  in  the  return,  which,  on  the basis  of the 
information available in such return, accounts or documents, is prima facie inadmissible, shall be 
disallowed: 

3[Provided further that where adjustments are made under the first proviso, an intimation shall be sent 
to  the  assessee,  notwithstanding  that  no  tax  or  interest  is  found  due  from  him  after  making  the  said 
adjustments:] 

4[  5[Provided also]  that  an  intimation  for  any  tax  or  interest  due  under  this  clause  shall  not  be  sent 
after the expiry of two years from the end of the assessment year in which the gifts were first assessable.] 

(b) Where as a result of an order made under 3[sub-section (3) or sub-section (5) of this section or] 
section 16 or section 22 or section 23 or section 24 or section 26 or section 28 or section 34 relating to 
any earlier assessment year and passed subsequent to the filing of the return referred to in clause (a), there 
is any variation in the exemption or deduction claimed or made in the return, and as a result of which,— 

(i)  if any tax or interest is found due, an intimation shall be sent to the assessee specifying the 
sum  so  payable,  and  such  intimation  shall  be  deemed  to  be  a  notice  of  demand  issued  under      
section 31 and all the provisions of this Act shall apply accordingly; and 

(ii)  if any refund is due, it shall be granted to the assessee: 

Provided that  an  intimation  for  any  tax  or  interest  due  under  this  clause  shall  not  be  sent  after  the 

expiry of four years from the end of the financial year in which any such order was passed. 

1. Ins. by Act 36 of 1989, s. 31 (w.e.f. 1-4-1989).  
2. Subs. by Act 4 of 1988, s. 170, for section 15 (w.e.f. 1-4-1989). 
3. Ins. by Act 36 of 1989, s. 32 (w.e.f. 1-4-1989). 
4. Ins. by Act 3 of 1989, s. 83 (w.e.f. 1-4-1989). 
5. Subs. by Act 36 of 1989, s. 32, for “provided further” (w.e.f. 1-4-1989).  

18 

                                                           
1[(1A) (a) Where in the case of any person, the taxable gift, as a result of the adjustments made under  
2[the first proviso] to clause (a) of sub-section (1), exceeds the taxable gift declared in the return by any 
amount, the Assessing Officer shall,— 

(i)  further  increase  the  amount  of  tax  payable  under  sub-section  (1)  by  an  additional  gift-tax 
calculated at the rate of twenty per cent. of the tax payable on such excess amount and specify the 
additional gift-tax in the intimation to be sent under sub-clause (i) of clause (a) of sub-section (1); 

(ii)  where  any  refund  is  due  under  sub-section  (1),  reduce  the  amount  of  such  refund  by  an 

amount equivalent to the additional gift-tax calculated under sub-clause (i). 

(b)  Where  as  a  result  of  an  order  under  section  22  or  section  23  or  section  24  or  section  26  or                 

section  28  or  section  34,  the  amount  on  which  additional  gift-tax  is  payable  under  clause  (a)  has  been 
increased or reduced, as the case may be, the additional gift-tax shall be increased or reduced accordingly, 
and,— 

(i)  in a case where the additional gift-tax is increased, the Assessing Officer shall serve on the 

assessee a notice of demand under section 31; 

(ii)  in  a  case  where  the  additional  gift-tax  is  reduced,  the  excess  amount  paid,  if  any,  shall  be 

refunded. 

Explanation.—For the purposes of this sub-section, “tax payable on such excess amount” means the 
difference  between  the  tax  on  the  taxable  gift  and  the  tax  that  would  have  been  chargeable  had  such 
taxable gift been reduced by the amount of adjustments.] 

3[(1B) Where an assessee furnishes a revised return under section 14 after the issue of an intimation, 
or the grant of refund, if any, under sub-section (1) of this section, the provisions of sub-sections (1) and 
(1A) of this section shall apply in relation to such revised return and— 

(i)  the intimation already sent for any gift-tax, additional gift-tax or interest shall be amended on 

the  basis  of  the  said  revised  return  and  where  any  amount  payable  by  way  of  gift-tax,  additional              
gift-tax or interest specified in the said intimation has already been paid by the assessee then, if any 
such amendment has the effect of— 

(a)  enhancing  the  amount  already  paid,  the  intimation  amended  under  this  clause  shall  be 
sent to  the  assessee  specifying  the  excess  amount  payable  by  him  and  such  intimation  shall  be 
deemed to be a notice of demand issued under section 31 and all the provisions of this Act, shall 
apply accordingly; 

(b)  reducing,  the  amount  already  paid,  the  excess  amount  paid  shall  be  refunded  to  the 

assessee; 

(ii)  the  amount  of  the  refund  already  granted  shall  be  enhanced  or  reduced  on the  basis  of  the 

said revised return and where the amount of refund already granted is— 

(a)  enhanced, only the excess amount of refund due to the assessee shall be paid to him; 

(b)  reduced,  the  excess  amount  so  refunded  shall  be  deemed  to  be  the  tax  payable  by  the 
assessee  and  an  intimation  shall  be  sent  to  the  assessee  specifying  the  amount  so  payable,  and 
such  intimation  shall  be  deemed  to  be  a  notice  of  demand  issued  under  section  31  and  all  the 
provisions of this Act, shall apply accordingly: 

Provided that an assessee, who has furnished a revised return under section 14 after the service 
upon  him  of  the  intimation  under  sub-section  (1)  of  this  section,  shall  be  liable  to  pay  additional      

1. Ins. by Act 3 of 1989, s. 83 (w.e.f. 1-4-1989). 
2. Subs. by Act 36 of 1989, s. 32, for “the proviso” (w.e.f. 1-4-1989).  
3. Ins. by Act 12 of 1990, s. 60 (w.e.f. 1-4-1989). 

19 

                                                           
gift-tax in relation to the adjustments made under the first proviso to clause (a) of sub-section (1) and 
specified  in  the  said  intimation,  whether  or  not  he  has  made  the  said  adjustments  in  the  revised 
return.] 

(2) 1[Where a return has been made under section 13 or section 14 or in response to a notice under 
clause (i) of sub-section (4) of this section, the Assessing Officer shall, if he] considers it necessary or 
expedient to ensure that the assessee has not omitted to disclose any taxable gift or has not understated the 
amount or value of any such gift or has not under-paid the tax in any manner,  2[serve on the assessee] a 
notice  requiring  him,  on  a  date  to  be  specified  therein,  either  to  attend  at  the  office  of  the  Assessing 
Officer  or  to  produce,  or  cause  to  be  produced  there,  any  evidence  on  which  the  assessee  may  rely  in 
support of the return : 

3[Provided that  no  notice  under  this  sub-section  shall  be  served  on  the  assessee  after  the  expiry  of 

twelve months from the end of the month in which the return is furnished.] 

(3) On the date specified in the notice issued under sub-section (2) or, as soon afterwards as may be, 
after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer 
may require on specified points, and after taking into account all relevant material which he has gathered, 
the Assessing Officer shall, by order in writing, assess the value of taxable gifts made by the assessee and 
determine the sum payable by him on the basis of such assessment. 

(4) For the purposes of making an assessment under this Act, the Assessing Officer may serve, on any 
person who has made a  return under section 13 or section 14 or in whose case the time allowed under    
sub-section (1) of section 13 for furnishing the return has expired, a notice requiring him, on a date to be 
specified therein,— 

(i)  where such person has not made a return 4[within the time allowed under sub-section (1) of 
section 13], to furnish a return of the taxable gifts made by him or of the taxable gifts made by any 
other  person  in  respect  of  which  he  is  assessable  under  this  Act  during  the  previous  year,  in  the 
prescribed form and verified in the prescribed manner and setting forth such other particulars as may 
be prescribed, or 

(ii)  to  produce  or  cause  to  be  produced  such  accounts,  records  or  other  documents  as  the 

Assessing Officer may require. 

(5) If any person,— 

(a)  fails to make the return required under sub-section (1) of section 13 and has not made a return 

or a revised return under section 14, or 

(b)  fails to comply with all the terms of a notice issued under sub-section (2) or sub-section (4), 

the Assessing  Officer, after taking into account all relevant material which he has gathered, shall, after 
giving  such  person  an  opportunity  of  being  heard, estimate  the  value  of taxable  gifts  to the  best  of  his 
judgment and determine the sum payable by such person on the basis of such assessment : 

Provided that  such  opportunity  shall  be  given  by  the  Assessing  Officer  by  serving  a  notice  calling 
upon the person to show cause on a date and time to be specified in the notice, why the assessment should 
not be completed to the best of his judgment: 

Provided further that it shall not be necessary to give such opportunity in a case where a notice under 

sub-section (4) has been issued prior to the making of the assessment under this sub-section. 

1. Subs. by Act 36 of 1989, s. 32, for “In a case referred to in sub-section (1), if the Assessing Officer” (w.e.f. 1-4-1989).  
2. Subs. by s. 32, ibid., for “he shall serve on the assessee” (w.e.f. 1-4-1989). 
3. Subs. by Act 49 of 1991, s. 86, for the proviso (w.e.f. 1-10-1991). 
4. Subs. by Act 12 of 1990, s. 60, for “before the end of the relevant assessment year” (w.e.f. 1-4-1990). 

20 

                                                           
(6) Notwithstanding anything contained in section 6, for the purpose of making an assessment under 
this  Act, 1[where  under  the  provisions  of  section  6  read  with  Schedule  II,  the  fair  market  value  of  any 
property transferred by way of gifts is to be taken into account in such assessment,] the Assessing Officer 
may refer the valuation of such property to the Valuation Officer,— 

(a)  in a case where the value of the property as returned is in accordance with the estimate made 
by a registered valuer, if the Assessing Officer is of opinion that the value so returned is less than its 
fair market value ; 

(b)  in any other case, if the Assessing Officer is of opinion— 

(i)  that the fair market value of the property exceeds the value of the property as returned by 
more than such percentage of the value of the property as returned or by more than such amount 
as may be prescribed in this behalf; or 

(ii)  that  having  regard  to  the  nature  of  the  property  and  other  relevant  circumstances,  it  is 

necessary so to do, 

and  where  any  such  reference  is  made,  the  provisions  of  sub-sections  (2),  (3),  (4),  (5)  and  (6)  of        
section  16A,  clauses  (ha)  and  (i)  of  sub-section  (1)  and  sub-sections  (3A)  and  (4)  of  section  23,                         
sub-section  (5)  of  section  24,  section  34AA,  section  35  and  section  37  of  the  Wealth-tax  Act,  1957           
(27 of 1957), shall, with the necessary modifications, apply in relation to such reference as they apply in 
relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. 

Explanation.—In  this  sub-section,  “Valuation  Officer”  has  the  same  meaning  as  in  clause  (r)  of 

section 2 of the Wealth-tax Act, 1957 (27 of 1957).] 

2[(7) Where a regular assessment under sub-section (3) or sub-section (5) is made,— 

(a)  any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been 

paid towards such regular assessments; 

(b)  if  no  refund  is  due  on  regular  assessment  or  the  amount  refunded  under  sub-section  (1) 
exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded 
shall  be  deemed  to  be  tax  payable  by  the  assessee  and  the  provisions  of  this  Act  shall  apply 
accordingly. 

(8) The provisions of this section, except those of sub-section (6), as they stood immediately before 
their  amendment  by  the  Direct  Tax  Laws  (Amendment)  Act,  1987  (4  of  1988),  shall  apply  to  and  in 
relation  to  any  assessment  for  the  assessment  year  commencing  on  the  1st  day  of  April,  1988,  or  any 
earlier assessment year and references in this section to the other provisions of this Act shall be construed 
as references to those provisions as for the time being in force and applicable to the relevant assessment 
year.] 

3[Explanation.—An intimation sent to the assessee under sub-section (1) or sub-section (1B) shall be 

deemed to be an order for the purposes of sub-section (1) of section 24.] 

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). 

21 

                                                           
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). 

22 

                                                           
(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] : 

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[16A. Time limit for completion of assessment and re-assessment. —6[(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). 

23 

                                                           
(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 : 

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  re-
assessment 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). 

24 

                                                           
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,— 

(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). 
4. The Explanation omitted by s. 85, ibid, (w.e.f. 1-4-1989). 

25 

 
 
 
 
 
 
 
 
                                                           
(4)  Where,  as  a  result  of  an  order  under  section  22  or  section  23  or  section  24  or  section  26  or            

section  28  or  section  34,  the  amount  of  tax  on  which  interest  was  payable  under  this  section  has  been 
increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and,— 

(i)  in a case where the interest is increased, the Assessing Officer shall serve on the assessee a 
notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall 
be deemed to be a notice under section 31 and the provisions of this Act shall apply accordingly, and 

(ii)  in a case where the interest is reduced, the excess interest paid, if any, shall be refunded. 

(5)  The  provisions  of  this  section  shall  apply  in  respect  of  assessments  for  the  assessment  year 

commencing on the 1st day of April, 1989 and subsequent assessment years.] 

1[17. Penalty  for  failure  to  furnish  returns,  to  comply  with  notices  and  concealment  of                    

gifts,  etc.—  (1)  If  the 2[Assessing  Officer], 3[Deputy  Commissioner  (Appeals)], 4[Commissioner 
(Appeals),] 5[Chief  Commissioner  or  Commissioner]  or  Appellate  Tribunal,  in  the  course  of  any 
proceedings under this Act, is satisfied that any person— 

6* 

        * 

    * 

    * 

    * 

(b)  has 7*** failed to comply with a notice under sub-section (2) or sub-section (4) of section 15; 

or 

(c)  has  concealed  the  particulars  of  any  gift  or  deliberately  furnished  inaccurate  particulars 

thereof, he or it may, by order in writing, direct that such person shall pay by way of penalty— 

 8*   

     * 

  * 

            * 

    * 

9[(ii)  in the cases referred to in clause (b), in addition to the amount of gift-tax payable by 

him,  a  sum  which  shall  not  be  less  than  one  thousand  rupees,  but  which  may  extend  to                  
twenty-five thousand rupees for each such failure;] 

(iii)  in the cases referred to in clause (c), in addition to any gift-tax payable by him, a sum 
which shall not be less than twenty per cent. but which shall not exceed one and half times the 
amount of the tax, if any, which would have been avoided if the return made by such person had 
been accepted as correct: 

10[Provided that in the cases referred to in clause (b), no penalty shall be imposable if the person 

proves that there was a reasonable cause for the failure referred to in that clause.] 

11[Explanation.—Where any adjustment is made in the taxable gifts declared in the return under 
the  proviso  to  clause  (a)  of  sub-section  (1)  of  section  15  and additional  gift-tax  charged  under  that 
section, the provisions of this sub-section shall not apply in relation to the adjustments so made.] 

1. Subs. by Act 53 of 1962, s. 14, for Section 17 (w.e.f. 1-4-1963). 
2. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988). 
3. Subs. by s. 161, ibid., for “Appellate Assistant Commissioner” (w.e.f. 1-4-1988).  
4. Ins. by Act 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978). 
5. Subs. by Act 4 of 1988, s. 161, for “Commissioner” (w.e.f. 1-4-1988). 
6. Clause (a) omitted by Act 3 of 1989, s. 86 (w.e.f. 1-4-1989). 
7. The words “without reasonable cause” omitted by Act 46 of 1986, s. 40 (w.e.f. 10-9-1986). 
8. Clause (i) omitted by Act 3 of 1989, s. 86 (w.e.f. 1-4-1989). 
9. Subs. by s. 86, ibid., for clause (ii) (w.e.f. 1-4-1989). 
10. Subs. by s. 86, ibid., for the proviso (w.e.f. 1-4-1989). 
11. Ins. by s. 86, ibid. (w.e.f. 1-4-1989). 

26 

 
 
 
 
 
 
 
 
 
 
 
    
 
                                                           
 
(2)  No  order  imposing  a  penalty  under  sub-section  (1)  shall  be  made  unless  the  assessee  has  been 

heard or has been given a reasonable opportunity of being heard. 

1[(3) No order imposing a penalty under sub-section (1) shall be made,— 

        (i)  by the Income-tax Officer, where the penalty exceeds ten thousand rupees; 

  (ii)  by  the  2[Assistant  Commissioner or  Deputy  Commissioner]  where  the  penalty  exceeds 

twenty thousand rupees,  

except with the prior approval of the 3[Joint Commissioner.] 

(4)  A 4[Deputy  Commissioner  (Appeals)], 5[a  Commissioner  (Appeals),  a 6[Chief  Commissioner  or 
Commissioner] or the Appellate Tribunal] on making an order under this section imposing a penalty, shall 
forthwith send a copy of the same to the 7[Assessing Officer].] 

8[(5) No order imposing a penalty under this section shall be passed— 

(i)  in a case where the assessment to which the proceedings for imposition of penalty relate is the 
subject-matter of an appeal to the Deputy Commissioner (Appeals) or Commissioner (Appeals) under 
section 22 or an appeal to the Appellate Tribunal under sub-section (2) of section 23, after the expiry 
of  the  financial  year  in  which  the  proceedings,  in  the  course  of  which  action  for  the  imposition  of 
penalty has been initiated, are completed, or six months from the end of the month in which the order 
of the Deputy Commissioner (Appeals) or the Commissioner (Appeals) or, as the case may be, the 
Appellate Tribunal is received by the Chief Commissioner or Commissioner, whichever is later; 

(ii)  in a case where the relevant assessment is the subject-matter of revision under sub-section (2) 
of section 24, after the expiry of six months from the end of the month in which such order of revision 
is passed; 

(iii)  in  any  other  case,  after  the  expiry  of  the  financial  year  in  which  the  proceedings,  in  the 
course of which action for the imposition of penalty has been initiated, are completed, or six months 
from  the  end  of  the  month  in  which  action  for  imposition  of  penalty  is  initiated,  whichever  period 
expires later. 

Explanation.—In computing the period of limitation for the purposes of this section,— 

(i)  the  time  taken  in  giving  an  opportunity  to  the  assessee  to  be  reheard  under  the  proviso  to 

section 38; and 

 (ii)  any period during which a proceeding under this section for the levy of penalty is stayed by 

an order or injunction of any court, 

shall be excluded. 

(6) The  provisions  of this  section  as  they  stood  immediately  before  their  amendment  by  the  Direct 
Tax  Laws  (Amendment)  Act,  1989  (3  of  1989)  shall  apply  to  and  in  relation  to  any  assessment  for  the 
assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in 

1. Subs. by Act 3 of 1989, s. 86, for sub-section (3) (w.e.f. 1-4-1989). 
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. Subs. by Act 4 of 1988, s. 161 for “An Appellate Assistant Commissioner” (w.e.f. 1-4-1988). 
5. Subs. by Act 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978). 
6. Subs. by Act 4 of 1988, s. 161 for “Commissioner” (w.e.f. 1-4-1988). 
7. Subs. by s. 161, ibid., “Gift-tax Officer” (w.e.f. 1-4-1988). 
8. Ins. by Act 3 of 1989, s. 86 (w.e.f. 1-4-1989). 

27 

                                                           
this section to the other provisions of this Act shall be construed as references to those provisions as for 
the time being in force and applicable to the relevant assessment year.] 

1[17A. Penalty  for  failure  to  answer  questions,  sign  statements,  furnish  information,  allow 

inspections, etc. — (1) If a person,— 

(a)  being  legally  bound  to  state the  truth  of  any  matter touching  the  subject  of his assessment, 
refuses to answer any question put to him by a gift-tax authority in the exercise of his powers under 
this Act; or 

(b)  refuses to sign any statement made by him in the course of any proceedings under this Act, 

which a gift-tax authority may legally require him to sign; or 

(c)  to  whom  a  summons  is  issued  under  sub-section  (1)  of  section  36,  either  to  attend  to  give 
evidence or produce books of account or other documents at a certain place and time, omits to attend 
or produce the books of account or documents at the place and time, 

he shall pay, by way of penalty, a sum which shall not be less than five hundred rupees but which may 
extend to ten thousand rupees for each such default or failure : 

Provided that  no  penalty  shall  be  imposable  under  clause  (c)  if  the  person  proves  that  there  was 

reasonable cause for the said failure. 

(2) If a person fails to furnish in due time any statement or information which such person is bound to 
furnish to the Assessing Officer under section 37, he shall pay, by way of penalty, a sum which shall not 
be less than one hundred rupees but which may extend to two hundred rupees for every day during which 
the failure continues : 

Provided that no penalty shall be imposable under this sub-section if the person proves that there was 

reasonable cause for the said failure. 

(3) Any penalty imposable under sub-section (1) or sub-section (2) shall be imposed— 

(a)  in  a  case  where  the  contravention,  failure  or  default  in  respect  of  which  such  penalty  is 
imposable occurs in the course of any proceeding before a gift-tax authority not lower in rank than a 
2[Joint Director]  or a 3[Joint Commissioner], by such gift-tax authority; 

(b)  in any other case, by the 2[Joint Director] or the  3[Joint Commissioner]. 

(4) No order under this section shall be passed by any gift-tax authority referred to in sub-section (3) 
unless  the  person  on  whom  penalty  is  proposed  to  be  imposed  has  been  heard  or  has  been  given  a 
reasonable opportunity of being heard in the matter by such authority. 

Explanation.—In  this  section,  “gift-tax  authority”  includes  a  Director  General,  Director, 2[Joint 
Director],  4[Assistant  Director or  Deputy  Director]  or  Valuation  Officer  while  exercising  the  powers 
vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the 
matters specified in sub-section (1) of section 36.] 

5[18. Rebate  on  advance  payments.  —  If  a  person  making  a  taxable  gift  pays  into  the  treasury 
within fifteen days of his making the gift any part of the amount of tax due on the gift calculated at rates 

1. Subs. by Act 3 of 1989, s. 87, for section 17A (w.e.f. 1-4-1989). 
2. Subs. by Act 21 of 1998, s. 76, for “Deputy Director” (w.e.f. 1-10-1998). 
3. Subs. by s. 76, ibid., for “Deputy Commissioner” (w.e.f. 1-10-1998). 
4. Subs. by s. 76, ibid., for “Assistant Director” (w.e.f. 1-10-1998). 
5. Subs. by Act 41 of 1975, s. 115, for section 18 (w.e.f. 1-4-1976). 

28 

                                                           
specified in the Schedule 1[or at the rate specified in sub-section (2) of section 3], he shall, at the time of 
assessment under section 15, be given credit— 

(i)  for the amount so paid; and 

(ii)  for a sum equal to one-ninth of the amount so paid, so however, that such sum shall in no 

case exceed one-tenth of the tax due on the gift. 

Explanation.—If  a  person  makes  more  than  one  taxable  gift  in  the  course  of  a  previous  year,  the 
amount of tax due on any one of such gifts shall be the difference between the total amount of tax due on 
the aggregate value of all the taxable gifts so far made, including the taxable gift in respect of which tax 
has  to  be  paid,  calculated  at  the  rates  specified  in  the  Schedule  or,  as  the  case  may  be 2[at  the  rate 
specified in sub-section (2) of section 3], and the total amount of tax on the aggregate value of all the gifts 
made during that year, excluding the taxable gift in respect of which tax has to be paid, calculated at the 
rates  specified  in  the  Schedule  or,  as  the  case  may  be, 2[at  the  rate  specified  in  sub-section  (2)  of              
section 3].] 

3[18A. Credit for stamp duty paid on instrument of gift. — Where any stamp duty has been paid 
under  any  law  relating  to  stamp  duty  in  force  in  any  State  on  an  instrument  of  gift  of  property,  the 
assessee shall be entitled to a deduction from the gift-tax payable by him of an amount equal to the stamp 
duty  so  paid  or  one-half  of  the  gift-tax  payable,  before  making  the  deduction  under  this  section, 
whichever is less.] 

4*         

* 

* 

* 

* 

CHAPTER V 

LIABILITY TO ASSESSMENT IN SPECIAL CASES 

19. Tax  of  deceased  person  payable  by  legal  representative. — (1)  Where  a  person  dies,  his 
executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased 
person,  to  the  extent  to  which  the  estate  is  capable  of  meeting  the  charge,  the  gift-tax  determined  as 
payable by such person, or any sum which would have been payable by him under this Act if he had not 
died. 

(2) Where a person dies without having furnished a return under section 13, or after having furnished 
a  return  which  the 5[Assessing  Officer]  has  reason  to  believe  to  be  incorrect  or  incomplete,  the 
5[Assessing Officer] may make an assessment of the value of the taxable gifts made by such person and 
determine the gift-tax payable by him, and for this purpose may, by the issue of the appropriate notice 
which  would  have  had  to  be  served  upon  the  deceased  person  if  he  had  survived,  require  from  the 
executor, administrator, or other legal representative of the deceased person any accounts, documents, or 
other  evidence  which  might,  under  the  provisions  of  section  15,  have  been required  from  the  deceased 
person. 

(3) The provisions of sections 13, 14 and 16 shall apply to an executor, administrator or other legal 

representative as they apply to any person referred to in 6[those sections]. 

1. Subs. by Act 23 of 1986, s. 44, for “or, in case where the provisions of Section 6-A are applicable to a gift, in the manner 

specified in that section” (w.e.f. 1-4-1987).   

2. Subs. by s. 44, ibid., for “in the manner specified in section 6A” (w.e.f. 1-4-1987). 
3. Subs, by Act 14 of 1982, s. 39 for section 18A (w.e.f. 1-4-1983). 
4. Chapter IV-A containing section 18-B” omitted by Act 3 of 1989, s. 95 (w.e.f. 1-4-1989). Earlier it was inserted by Act 4 of 

1988, s. 175 (w.e.f. 1-4-1989). 

5. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988).  
6. Subs. by Act 58 of 1960, s. 3 and the Second Schedule, for “that section” (w.e.f. 26-12-1960). 

29 

 
 
 
 
 
 
 
                                                           
 
1[19A. Assessment of persons leaving India.  — (1) Notwithstanding anything contained in section 
3,  when  it  appears  to  the 2[Assessing  Officer]  that  any  individual  may  leave  India  during  the  current 
assessment year, or shortly after its expiry and that he has no present intention of returning to India, the 
gifts made by such individual during the period from the expiry of the previous year for that assessment 
year up to the probable date of his departure from India, shall be chargeable to gift-tax in that assessment 
year. 

(2) The taxable gifts made in each completed previous year or part of any previous year included in 
such period shall be chargeable to gift-tax at the rate or rates specified in the Schedule 3[or, as the case 
may  be,  at  the rate specified  in  sub-section  (2) of  section  3], and separate  assessment  shall  be  made  in 
respect of each such completed previous year or part of any previous year. 

(3) The  2[Assessing Officer] may estimate the value of the gifts made by such individual during such 

period or any part thereof, where it cannot be readily determined in the manner provided in this Act. 

(4)  For  the  purpose  of  making  an  assessment  under  sub-section  (1),  the 2[Assessing  Officer]  may 
serve a notice upon such individual requiring him to furnish, within such time, not being less than seven 
days,  as  may  be  specified  in  the  notice,  a  return  in  the  same  form  and  verified  in  the  same  manner  as       
4[a return  under sub-section  (1)  of  section  13],  giving  particulars  of  the  gifts  made  by  him  during  each 
completed previous year comprised in the period referred to in sub-section (1) and during any part of the 
previous year comprised in that period; and the provisions of this Act shall, so far as may be, and subject 
to  the  provisions  of  this  section,  apply 5[as  if  the  notice  were  a  notice  issued  under  clause  (i)  of                     
sub-section (4) of section 15]. 

(5) The gift-tax chargeable under this section shall be in addition to the tax, if any, chargeable under 

any other provision of this Act. 

(6)  Where  the  provisions  of  sub-section  (1)  are  applicable,  any  notice  issued  by  the 2[Assessing 
Officer] under 6[clause (i) of sub-section (4) of section 15] or under section 16 in respect of any gift-tax 
chargeable under any other provisions of this Act may, notwithstanding anything contained in 6[clause (i) 
of sub-section (4) of section 15], or section 16, as the case may be, require the furnishing of the return by 
such individual within such period, not being less than seven days, as the 2[Assessing Officer] may think 
proper.] 

20. Assessment after partition of a Hindu undivided family. — (1) Where, at the time of making 
an assessment, it is brought to the notice of the 2[Assessing Officer] that a partition has taken place among 
the members of a Hindu undivided family, and the 2[Assessing Officer], after enquiry, is satisfied that the 
joint family property has been partitioned among the various members or groups of members in definite 
portions, he shall record an order to that effect and he shall make assessments 7[on the value of the taxable 
gifts] made by the family as such as if no partition had taken place and each member or group of members 
shall be liable jointly and severally for the tax assessed on the value of the taxable gifts made by the joint 
family as such. 

(2) Where the 2[Assessing Officer] is not so satisfied, he may, by order, declare that such family shall 

be deemed for the purposes of this Act to continue to be a Hindu undivided family. 

1. Ins. by Act 53 of 1962, s. 15 (w.e.f. 1-4-1963). 
2. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988).  
3. Ins. by Act 23 of 1986, s. 45 (w.e.f. 1-4-1987). 
4. Subs. by Act 4 of 1988, s. 186, for “a return under sub-section (2) of section 13” (w.e.f. 1-4-1989). 
5. Subs. by s. 186, ibid., for “as if the notice were a notice issued under sub-section (2) of section 13” (w.e.f. 1-4-1989). 
6. Subs. by s. 186, ibid., for “sub-section (2) of section 13” (w.e.f. 1-4-1989). 
7. Subs. by Act 58 of 1960, s. 3 and the Second Schedule, for “on the amount of taxable gifts” (w.e.f. 26-12-1960). 

30 

 
                                                           
21. Liability  in  case  of  discontinued  firm  or  association  of  persons.  —    (1)  Where  a  firm  or 
association of persons liable to pay gift-tax has been discontinued or dissolved, the 1[Assessing Officer] 
shall  determine  the  gift-tax  payable  by  the  firm  or  association  of  persons  as  such  as  if  no  such 
discontinuance or dissolution had taken place. 

(2)  If 

the 1[Assessing  Officer], 

the 2[Deputy  Commissioner  (Appeals)], 3[the  Commissioner 
(Appeals)] or the Appellate Tribunal in the course of any proceeding under this Act in respect of any such 
firm  or  other  association  of  persons  as  is  referred  to  in  sub-section  (1)  is  satisfied  that  the  firm  or 
association is guilty of any of the acts specified in clause (a) or clause (b) or clause (c) of sub-section (1) 
of section 17, he or it may impose or direct the imposition of a penalty in accordance with the provisions 
of that section. 

(3) Every person who was at the time of such discontinuance or dissolution a partner of the firm or a 
member of the association, as the case may be, shall be jointly and severally liable for the amount of tax 
or  penalty  payable,  and  all  the  provisions  of  Chapter  VII,  so  far  as  may  be,  shall  apply  to  any  such 
assessment or imposition of penalty. 

4[21A.   Assessment  of  donee  when  the  donor  cannot  be  found.  —  (1)  Where  an 1[Assessing 
Officer]  after  using  all  due  and  reasonable  diligence  cannot  find  the  donor  who  had  made  any  taxable 
gifts,  for  the  purpose  of  service  of  notice  under  sub-section  (2)  of  section  13  or  under  section  16,  the  
1[Assessing  Officer]  may  make  an  assessment  of  the  value  of  all  such  taxable  gifts  made  by  him  and 
determine  the  gift-tax  payable  by  him  and  for  this  purpose  may,  by  the  issue  of  the  appropriate  notice 
which  would  have  had  to  be  served  upon  the  donor,  require  from  the  donee  or  donees  any  accounts, 
documents or other evidence which might, under the provisions of section 15, have been required from 
the donor. 

(2) Where any assessment in respect of the taxable gifts made by the donor has been made under sub-

section (1), every donee shall be liable for the gift-tax so assessed : 

Provided that where the donees are more than one, they shall be jointly and severally liable for the 

amount of the gift-tax so assessed : 

Provided further that the amount of the gift-tax which may be recovered from each donee shall not 

exceed the value of the gift made to him as on the date of the gift. 

(3)  The  provisions  of  sections  13,  14  and  16  shall  apply  to  a  donee  as  they  apply  to  any  person 

referred to in those sections.] 

CHAPTER VI 

APPEALS, REVISIONS AND REFERENCES 

22. Appeal  to  the 2[ Deputy  Commissioner  (Appeals)] from  orders  of 1[Assessing  Officer].  —

(1) 5[Subject to the provisions of sub-section (1A), any person,]— 

 (a)  objecting to the value of 6* * * taxable gifts determined under this Act; or 

        (b)  objecting to the amount of gift-tax determined as payable by him under this Act; or 

        (c)  denying his liability to be assessed under this Act; or 

1. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988). 
2. Subs. by s. 161, ibid., for “Appellate Assistant Commissioner” (w.e.f. 1-4-1988). 
3. Ins. by Act 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978).   
4. Ins. by Act 53 of 1962, s. 16 (w.e.f. 1-4-1963). 
5. Subs. by Act 29 of 1977, s. 39 and the Fifth Schedule, for “Any person” (w.e.f. 10-7-1978). 
6. The word “his” omitted by Act 53 of 1962, s. 17 (w.e.f. 1-4-1963). 

31 

                                                           
1[(d) objecting to any penalty imposed by the Assessing Officer under section 17 2* * *]; or 

(e) objecting to any order of the 3[Assessing Officer] under sub-section (2) of section 20; or 

(f) objecting  to  any  penalty  imposed  by  the 3[Assessing  Officer]  under 4[sub-section  (1)  of                 

section 221 of the Income-tax Act] as applied under section 33 for the purposes of gift-tax; 5[or] 

6[(g) objecting  to  an  order  of  the 3[Assessing  Officer]  under  section  34  having  the  effect  of 
enhancing the assessment or reducing a refund or an order refusing to allow the claim made by the 
assessee under that section; or 

7* 

       * 

 *  

* 

 *] 

may appeal to the 8[Deputy Commissioner (Appeals)] against the assessment or order, as the case may be, 
in the prescribed form and verified in the prescribed manner : 

Provided that  no  appeal  shall  lie  under  clause  (f)  unless  the  tax  has  been  paid  before  the  appeal  is 

filed. 

9[(1A) Notwithstanding anything contained in sub-section (1), any person,— 

(a)  objecting to the value of taxable gifts determined under this Act or objecting to the amount of 
gift-tax determined as payable by him or denying his liability to be assessed under this Act where the 
value of taxable gifts determined on assessment exceeds two lakh rupees; or 

10[(b)  objecting  to  any  assessment  or  order  referred  to  in  clauses  (a)  to  (g)  (both  inclusive)  of                  

sub-section  (1),  where  such  assessment  or  order  has  been  made  by  the 11[Joint  Commissioner]  in 
exercise of the powers or functions conferred on or assigned to him under section 7 or section 10; or 

12[(c)  objecting  to  any  penalty  imposed  under  sub-section  (1)  of  section  17  with  the  previous 

approval of the 11[Joint Commissioner] as specified in sub-section (3) of that section;] 

(d)  objecting  to  any  penalty  imposed  by  the 13[Joint  Director]  or  the 11[Joint  Commissioner] 

under section 17A; or] 

(e)  objecting to any order made by an 3[Assessing Officer] in the case of such persons or classes 
of persons as the Board may, having regard to the nature of the cases, the complexities involved and 
other relevant considerations, direct, 

may  appeal  to  the  Commissioner (Appeals)  against  the  assessment  or  order,  as  the  case  may  be,  in  the 
prescribed form and verified in the prescribed manner: 

1. Subs. by Act 4 of 1988, s. 176, for clause (d) (w.e.f. 1-4-1989). 
2. The words, figures, letters and bracket “as it stood immediately before the 1st day of April, 1989 or under section 17 as 

amended by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988)” omitted by Act 3 of 1989, s. 88 (w.e.f. 1-4-1989). 

3. Subs. by Act 4 of 1988, s. 161, for “Gift –tax Officer” (w.e.f. 1-4-1988).   
4. Subs. by Act 53 of 1962, s. 17, for “sub-section (1) of section 46 of the Income-tax Act” (w.e.f. 1-4-1963).   
5. Added by s. 17, ibid. (w.e.f. 1-4-1963). 
6. Ins. by s. 17, ibid, (w.e.f. 1-4-1963). 
7. Clause (h) omitted by Act 4 of 1988, s. 176 (w.e.f. 1-4-1989). 
8. Subs. by s. 161, ibid., for “Appellate Assistant Commissioner” (w.e.f. 1-4-1988).  
9. Ins. by Act 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978). 
10. Subs. by Act 4 of 1988, s. 176, for clauses (b), (c) and (d) (w.e.f. 1-4-1989). 
11. Subs. by Act 21 of 1998, s. 76, for “Deputy Commissioner” (w.e.f. 1-10-1998). 
12. Subs. by Act 3 of 1989, s. 88, for clause (c) (w.e.f. 1-4-1989). 
13. Subs. by Act 21 of 1998, s. 76, for “Deputy Director” (w.e.f. 1-10-1998). 

32 

 
 
 
 
 
 
 
 
                                                           
 
Provided that no appeal shall lie under clause (b) of this sub-section against any order referred to in         

clause (f) of sub-section (1) unless the tax has been paid before the appeal is filed.] 

1[(1B)  Notwithstanding  anything  contained  in  sub-section (1),  the  Board or the Director  General  or 
the Chief Commissioner or the Commissioner, if so authorised by the Board, may, by order in writing, 
transfer any appeal which is pending before a Deputy Commissioner (Appeals) and any matter arising out 
of or connected with such appeal and which is so pending, to the Commissioner (Appeals), if the Board 
or, as the case may be, the Director General, the Chief Commissioner or the Commissioner (at the request 
of the appellant or otherwise) is satisfied that it is necessary or expedient so to do having regard to the 
nature  of  the  case,  the  complexities  involved  and  other  relevant  considerations  and  the  Commissioner 
(Appeals)  may  proceed  with  such  appeal  or  matter  from  the  stage  at  which  it  was  before  it  was  so 
transferred : 

Provided that the appellant may demand that before proceeding further with the appeal or matter, the 

previous proceeding or any part thereof be reopened or that he be reheard.]] 

(2) An appeal shall be presented within thirty days of the receipt of the notice of demand relating to 
the  assessment  or  penalty  objected  to,  or  the  date  on  which  any  order  objected  to,  is  communicated  to 
him,  but  the 2[Deputy  Commissioner  (Appeals)] 3[or, as  the  case  may  be,  the  Commissioner  (Appeals)] 
may admit an appeal after the expiration of the period aforesaid if he is satisfied that the appellant had 
sufficient cause for not presenting the appeal within that period. 

(3)  The 2[Deputy  Commissioner  (Appeals)] 3[or,  as  the  case  may  be,  the  Commissioner  (Appeals)] 

shall fix a day and place for the hearing of the appeal and may from time to time adjourn the hearing. 

(4)  The 2[Deputy  Commissioner  (Appeals)] 3[or,  as  the  case  may  be,  the  Commissioner  (Appeals)] 

may,— 

(a)  at the hearing of an appeal allow an appellant to go into any ground of appeal not specified in 

the grounds of appeal; 

(b)  before  disposing  of  an  appeal,  make  such  further  inquiry  as  he  thinks  fit  or  cause  further 

enquiry to be made by the 4[Assessing Officer]. 

(5)  In  disposing  of  an  appeal,  the 2[Deputy  Commissioner  (Appeals)] 3[or,  as  the  case  may  be,  the 
Commissioner (Appeals)] may pass such order as he thinks fit which may include an order enhancing the 
amount of gift-tax determined or penalty imposed: 

Provided that no order enhancing the amount of gift-tax determined or penalty imposed shall be made 
unless the person affected thereby has been given a reasonable opportunity of showing cause against such 
enhancement. 

5[(5A) In disposing of an appeal, the 2[Deputy Commissioner (Appeals)] 3[or, as the case may be, the 
Commissioner (Appeals)] may consider and decide any matter arising out of the proceedings in which the 
order appealed against was passed, notwithstanding that such matter was not raised before the 2[Deputy 
Commissioner (Appeals)] 3[or, as the case may be, the Commissioner (Appeals)] by the appellant. 

(5B) The order of the 2[Deputy Commissioner (Appeals)] 3[or, as the case may be, the Commissioner 
(Appeals)]  disposing  of  the  appeal  shall  be  in  writing  and  shall  state  the  points  for  determination,  the 
decision thereon and the reasons for the decision.] 

1. Subs. by Act 4 of 1988, s. 176, for “sub-sections (1B) and (1C)” (w.e.f. 1-4-1989). 
2. Subs. by s. 161, ibid., for “Appellate Assistant Commissioner” (w.e.f. 1-4-1988).  
3. Ins. by Act 29 of 1977, s. 39 and Fifth Schedule (w.e.f. 10-7-1978). 
4. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988). 
5. Ins. by Act 53 of 1962, s. 17 (w.e.f. 1-4-1963). 

33 

                                                           
(6) A copy of every order passed by the 1[Deputy Commissioner (Appeals)] 2[or, as the case may be, 
the  Commissioner  (Appeals)]  under  this  section  shall  be  forwarded  to  the  appellant  and  the  3[Chief 
Commissioner or Commissioner.] 

22A.  [Application by the assessee in certain cases.] — Omitted by the Direct Tax Laws (Amendment) 
Act, 1989 (3 of 1989), s. 95 (w.e.f. 1-4-1989). Which was inserted by the Direct Tax Laws (Amendment) 
Act, 1987 (4 of 1988), s. 177 (w.e.f. 1-4-1989). 

23.  Appeal  to  the  Appellate  Tribunal.  —4[(1)  An  assessee,  objecting  to  an  order  passed  by  the  
1[Deputy Commissioner (Appeals)] 5[or the Commissioner (Appeals)] 6[under section 17 or section 17A] 
or section 22 7* * *] or sub-section (2) of section 36 8* * *, may appeal to the Appellate Tribunal within 
sixty days of the date on which the order is communicated to him.] 

(2)  The  Commissioner  may,  if  he  is  not  satisfied  as  to  the  correctness  of  any  order  passed  by  a                      

1[Deputy  Commissioner  (Appeals)] 5[or  a  Commissioner  (Appeals)]  under  section  22,  direct  the 
9[Assessing Officer] to appeal to the Appellate Tribunal against such order, and such appeal may be made 
at  any  time  before  the  expiry  of  sixty  days  of  the  date  on  which  the  order  is  communicated  to  the 
Commissioner. 

10[(2A) The 9[Assessing Officer] or the assessee, as the case may be, on receipt of the notice that an 
appeal against the order of the 1[Deputy Commissioner (Appeals)] 5[or the Commissioner (Appeals)] has 
been preferred under sub-section (1) or sub-section (2) by the other party, may, notwithstanding that he 
may  not  have  appealed  against  such  order  or  any  part  thereof,  within  thirty  days  of  the  receipt  of  the 
notice, file a memorandum of cross-objections, verified in the prescribed manner, against any part of the 
order  of 
the  Commissioner  (Appeals)],  and  such 
memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the 
time specified in sub-section (1) or sub-section (2).] 

the 1[Deputy  Commissioner  (Appeals)] 5[or 

11[(3)  The  Appellate  Tribunal  may  admit  an  appeal  or  permit  the  filing  of  a  memorandum  of                       

cross-objections after the expiry of the relevant period referred to in sub-section (1) or sub-section (2) or             
sub-section (2A), if it is satisfied that there was sufficient cause for not presenting it within that period.] 

(4) An appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the 
prescribed  manner  and  shall,  except  in  the  case  of  an  appeal  referred  to  in  sub-section  (2),  be 
accompanied by a fee of 12[two hundred rupees]. 

(5) The Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, 
pass such orders thereon as it thinks fit, and any such orders may include an order enhancing the amount 
of gift-tax determined or penalty imposed: 

1. Subs. by Act 4 of 1988, s. 161, for “Appellate Assistant Commissioner” (w.e.f. 1-4-1988).   
2. Ins. by 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978). 
3. Subs. by Act 4 of 1988, s. 161, for “Commissioner” (w.e.f. 1-4-1988). 
4. Subs. by Act 53 of 1962, s. 18, for sub-section (1) (w.e.f. 1-4-1963).  
5. Ins. by Act 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978). 
6. Subs. by Act 41 of 1975, s. 116, for “under section 17” (w.e.f. 1-4-1976). 
7. The words, figure and letters “or section 22A” omitted by Act 3 of 1989, s. 95 (w.e.f. 1-4-1989). Earlier inserted by Act 4 of 

1988, s. 186 (w.e.f. 1-4-1989). 

8. The Words “or to an order passed by the Inspecting Assistant Commissioner under section 17A” omitted by Act 29 of 1977,              

s. 39 and the Fifth Schedule (w.e.f. 10-7-1978). 

9. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988).   
10. Ins. by Act 53 of 1962, s. 18 (w.e.f. 1-4-1963).  
11. Subs. by s. 18, ibid., for sub-section (3) (w.e.f. 1-4-1963). 
12. Subs. by Act 16 of 1981, for “one hundred and twenty-five rupees” (w.e.f. 1-6-1981). 

34 

                                                           
 
Provided that no order enhancing the amount of gift-tax determined or penalty imposed shall be made 
unless the person affected thereby has been given a reasonable opportunity of showing cause against such 
enhancement. 

1* 

2* 

3*    

      * 

      * 

      *  

* 

* 

* 

* 

* 

* 

* 

* 

* 

(9) A copy of every order passed by the Appellate Tribunal under this section shall be forwarded to 

the assessee and the Commissioner. 

(10) Save as provided in section 26, any order passed by the Appellate Tribunal on appeal shall be 

final. 

(11)  The  provisions  of 4[sub-sections  (1),  (4)  and  (5)  of  section  255]  of  the  Income-tax  Act  shall 
apply to the Appellate Tribunal in the discharge of its functions under this Act as they apply to it in the 
discharge of its functions under the Income-tax Act. 

24. Powers  of  Commissioner  to  revise  orders  of  subordinate  authorities.  —  (1)  The 
Commissioner may, either on his own motion or on application made by an assessee in this behalf, call 
for  the  record  of  any  proceeding  under  this  Act  in  which  an  order  has  been  passed  by  any  authority 
subordinate  to  him,  and  may  make  such  inquiry,  or  cause  such  inquiry  to  be  made,  and  subject  to  the 
provisions  of  this  Act,  pass  such  order  thereon,  not  being  an  order  prejudicial  to  the  assessee,  as  the 
Commissioner thinks fit : 

Provided that the Commissioner shall not revise any order under this sub-section in any case— 

(a)  where  an  appeal  against  the  order  lies  to  the 5[Deputy  Commissioner  (Appeals)] 6[or  to  the 
Commissioner (Appeals)] or to the Appellate Tribunal and the time within which such appeal can be 
made has not expired or, 7[in the case of an appeal to the Commissioner (Appeals) or to the Appellate 
Tribunal], the assessee has not waived his right of appeal; 

(b)  where  the  order  is  pending  in  appeal  before  the 5[Deputy  Commissioner  (Appeals)]  or  has 

been the subject of an appeal 6[to the Commissioner (Appeals) or] to the Appellate Tribunal; 

(c)  where the application is made by the assessee for such revision unless— 

(i)  the application is accompanied by a fee of rupees twenty-five; and 

(ii)  the application is made within one year from the date of the order sought to be revised or 
within such further period as the Commissioner may think fit to allow on being satisfied that the 
assessee was prevented by sufficient cause from making the application within that period; and 

(d)  where the order is sought to be revised by the Commissioner of his own motion, if such order 

is made more than one year previously. 

1. Sub-section (6) omitted by Act 45 of 1972, s. 22 (w.e.f. 1-1-1973). 
2. Sub-section (7) omitted by s. 22, ibid, (w.e.f. 1-1-1973). 
3. Sub-section (8) omitted by s. 22, ibid, (w.e.f. 1-1-1973). 
4. Subs. by Act 53 of 1962, s. 18, for “sub-sections (5), (7) and (8) of section 5-A” (w.e.f. 1-4-1963).  
5. Subs. by Act 4 of 1988, s. 161, for “Appellate Assistant Commissioner” (w.e.f. 1-4-1988).   
6. Ins. by Act 29 of 1977, s. 39 of the Fifth Schedule (w.e.f. 10-7-1978). 
7. Subs. by s. 39 ibid., of the Fifth Schedule, “in the case of the Appellate Tribunal” (w.e.f. 10-7-1978).  

35 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
Explanation.—For the purposes of this sub-section,— 

(a)  the 1[Deputy Commissioner (Appeals)] shall be deemed to be an authority subordinate to 

the Commissioner; and 

       (b)  an order by the Commissioner declining to interfere shall be deemed not to be an order 
prejudicial to the assessee. 

(2) Without prejudice to the provisions contained in sub-section (1), the Commissioner may call for 
and  examine  the  record  of  any  proceeding  under  this  Act,  and,  if  he  considers  that  any  order  passed 
therein by an 2[Assessing Officer] is erroneous in so far as it is prejudicial to the interests of revenue, he 
may, after giving the assessee an opportunity of being heard, and after making or causing to be made such 
inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including 
an order enhancing or modifying the assessment or cancelling it and directing a fresh assessment. 

3[Explanation.—For  the  removal  of  doubts,  it  is  hereby  declared  that,  for  the  purposes  of  this                  

sub-section,— 

(a)  an  order passed 4[on  or  before  or  after the  1st  day  of  June,  1988]  by  the  Assessing  Officer 
shall  include  an  order  passed  by  the 5[Joint  Commissioner]  in  exercise  of  the  powers  or  in 
performance of the functions of an Assessing Officer conferred on or assigned to him under orders or 
directions issued by the Board or by  the Chief Commissioner or Director General or Commissioner 
authorised by the Board in this behalf under section 120 of the Income-tax Act read with section 7 of 
this Act; 

(b)  “record” 6[shall include and shall be deemed always to have included] all records relating to 

any proceeding under this Act available at the time of examination by the Commissioner; 

(c)  where any order referred to in this sub-section and passed by the Assessing Officer had been 
the subject matter of any appeal,  4[filed on or before or after the 1st day of June, 1988], the powers of 
the Commissioner under this sub-section shall extend 4[and shall be deemed always to have extended] 
to such matters as had not been considered and decided in such appeal.] 

(3) No order shall be made under sub-section (2) after the expiry of two years 7[from the end of the 

financial year in which the order sought to be revised was passed.] 

8[Explanation.—In computing the period of limitation for purposes of this sub-section, the time taken 
in  giving  an  opportunity  to  the  assessee  to  be  reheard  under  the  proviso  to  section  38  and  any  period 
during which any proceeding under this section is stayed by an order or injunction of any court shall be 
excluded.] 

25. Appeal to the Appellate Tribunal from orders of enhancement by 9[Chief Commissioner or 
Commissioner].  — 10[(1)  An  assessee  objecting  to  an  order  passed  by  the 9[Chief  Commissioner  or 
Commissioner]  11[under section 17 or section 17A] or to an order of enhancement passed by him under 

1. Subs. by Act 4 of 1988, s. 161, for “Appellate Assistant Commissioner” (w.e.f. 1-4-1988).  
2. Subs. by s. 161, ibid., for “Gift-tax Officer” (w.e.f. 1-4-1988). 
3. Subs. by Act 26 of 1988, s. 68, for Explanation (w.e.f. 1-6-1988).   
4. Ins. by Act 13 of 1989, s. 32 (w.e.f. 1-6-1988). 
5. Subs. by Act 21 of 1998, s. 76, for “Deputy Commissioner” (w.e.f. 1-10-1998).  
6. Subs. by Act 13 of 1989, s. 32, for “includes” (w.e.f. 1-6-1988).  
7. Subs. by Act 67 of 1984, s. 74, for “form the date of the order sought to be revised” (w.e.f. 1-10-1984).  
8. Explanation added by Act 53 of 1962, s. 19 (w.e.f. 1-4-1963). 
9. Subs. by Act 4 of 1988, s. 161, for “Commissioner” (w.e.f. 1-4-1988). 
10. Subs. by Act 53 of 1962, s. 20 (w.e.f. 1-4-1963). 
11. Subs. by Act 41 of 1975, s. 117, for “under Section 17” (w.e.f. 1-4-1976). 

36 

                                                           
section 24 1[or an order passed by the Director-General or Director under section 17A] may appeal to the 
Appellate Tribunal within sixty days of the date on which the order is communicated to him.] 

(2) An appeal to the Appellate Tribunal under sub-section (1) shall be in the prescribed form and shall 

be verified in the prescribed manner and shall be accompanied by a fee of 2[two hundred rupees]. 

(3) The provisions of  3[sub-sections (3), (5), (9) and (10)] of section 23 shall apply in relation to any 

appeal under this section as they apply in relation to any appeal under that section. 

26.   Reference to High Court. — 4[(1) The assessee or the 5[Chief Commissioner or Commissioner] 
may, within sixty days of the date upon which he is served with notice of an order under section 23 or 
section  6[or  clause  (e)  of  sub-section  (1)  of  section  34]  by  application  in  the  prescribed  form 
accompanied, where the application is made by the assessee, by a fee of 7[two hundred rupees], require 
the  Appellate  Tribunal  to  refer  to  the  High  Court  any  question  of  law  arising  out  of  such  order  and, 
subject to the other provisions contained in this section, the Appellate Tribunal shall, within one hundred 
and twenty days of the receipt of such application, draw up a statement of the case and refer it to the High 
Court. 

(2) The Appellate Tribunal may, if it is satisfied that the applicant was prevented by sufficient cause 
from  presenting  the  application  within  the  period  specified  in  sub-section  (1),  allow  it  to  be  presented 
within a further period not exceeding thirty days.] 

(3) If, on an application made under sub-section (1), the Appellate Tribunal,— 

(a)  refuses to state a case on the ground that no question of law arises, or 

(b)  rejects it on the ground that it is time barred, 

the  applicant  may,  within  ninety  days  from  the  date  on  which  he  is  served  with  a  notice  of  refusal  or 
rejection, as the case may be, apply to the High Court, and the High Court may, if it is not satisfied with 
the correctness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state the case 
to the High Court, and on receipt of such requisition the Appellate Tribunal shall state the case: 

Provided that, if in any case where the Appellate Tribunal has been required by an assessee to state a 
case, the Appellate Tribunal refuses to do so on the ground that no question of law arises, the assessee 
may, within thirty days from the date on which he receives notice of refusal to state the case, withdraw his 
application, and if he does so, the fee paid by him under sub-section (1) shall be refunded to him. 

8[(3A) If, on an application made under this section, the Appellate Tribunal is of the opinion that on 
account  of  a  conflict  in  the  decisions  of  High  Courts  in  respect  of  any  particular  question  of  law,  it  is 
expedient that a reference should be made direct to the Supreme Court, the Appellate Tribunal may draw 
up a statement of the case and refer it through its President direct to the Supreme Court.] 

(4)  The  statement  to  the  High  Court 8[or  the  Supreme  Court]  shall  set  forth  the  facts,  the 

determination of the Appellate Tribunal, and the question of law which arises out of the case. 

1. Ins. by Act 3 of 1989, s. 89 (w.e.f. 1-4-1989). 
2. Subs. by Act 16 of 1981, s. 33, for “one hundred and twenty-five rupees” (w.e.f. 1-6-1981).  
3. Subs. by Act 45 of 1972, s. 23 for “sub-sections (3) and (5) to (10) inclusive” (w.e.f. 1-1-1973). 
4. Subs. by Act 53 of 1962, s. 21, for “sub-section (1) and (2) (w.e.f. 1-4-1963). 
5. Subs. by Act 4 of 1988, s. 161, for “Commissioner” (w.e.f. 1-4-1988).   
6. Ins. by Act 49 of 1991, s. 88 (w.e.f. 27-9-1991). 
7. Subs. by Act 16 of 1981, s. 34, for “one hundred and twenty-five rupees” (w.e.f. 1-6-1981).  
8. Ins. by Act 53 of 1962, s. 21, (w.e.f. 1-4-1963).  

37 

                                                           
(5) If the High Court 1[or the Supreme Court] is not satisfied that the case as stated is sufficient to 
enable it to determine the question of law raised thereby, it may require the Appellate Tribunal to make 
such modification therein as it may direct. 

(6) The High Court 1[or the Supreme Court], upon hearing any such case, shall decide the question of 
law raised therein, and in doing so, may, if it thinks fit, alter the form of the question of law and shall 
deliver judgment thereon containing the grounds on which such decision is founded and shall send a copy 
of the judgment under the seal of the court and the signature of the Registrar to the Appellate Tribunal 
and the Appellate Tribunal shall pass such orders as are necessary to dispose of the case conformably to 
such judgment. 

2[(7) The costs of any reference to the High Court or the Supreme Court which shall not include the 

fee for making the reference shall be in the discretion of the court.] 

27. Hearing by High Court. —  When a case has been stated to the High Court under section 26, it 
shall  be  heard  by  a  Bench  of  not  less  than  two  Judges  of  the  High  Court  and  shall  be  decided  in 
accordance with the opinion of such Judges or of the majority of such Judges, if any: 

Provided that where there is no such majority, the Judges shall state the point of law upon which they 
differ  and  the  case  shall  then  be  heard  upon  that  point  only  by  one  or  more  of  the  Judges  of  the  High 
Court, and such point shall be decided according to the opinion of the majority of the Judges who have 
heard the case, including those who first heard it. 

28.   Appeal to Supreme Court. — (1) An appeal shall lie to the Supreme Court from any judgment 
of the High Court delivered on a case stated under section 26 in any case which the High Court certifies 
as a fit case for appeal to the Supreme Court. 

(2) Where the judgment of the High Court is varied or reversed on appeal under this section, effect 

shall be given to the order of the Supreme Court in the manner provided in sub-section (6) of section 26. 

(3)  The  High  Court  may,  on  application  made  to  it  for  the  execution  of  any  order  of  the  Supreme 
Court in respect of any costs awarded by it, transmit the order for execution to any court subordinate to 
the High Court. 

3[28A.  Tax  to  be  paid  notwithstanding  reference,  etc.  —  Notwithstanding  that  a  reference  has 
been  made  to  the  High  Court  or  the  Supreme  Court,  or  an  appeal  has  been  preferred  to  the  Supreme 
Court, tax shall be payable in accordance with the assessment made in the case. 

28B. Definition of High Court. — In this Chapter, “High Court” means — 

(i)  in relation to any State, the High Court of that State; 

4[(ii)  in relation to the Union territory of Delhi, the High Court of Delhi; 

5*  

* 

 * 

          *  

                   *] 

6[(iii)  in relation to the Union territories of Arunachal Pradesh and Mizoram, the Gauhati High 

Court (the High Court of Assam, Nagaland, Meghalaya, Manipur and Tripura);] 

1. Ins. by Act 53 of 1962, s. 21 (w.e.f. 1-4-1963). 
2. Subs. by s. 21, ibid., for sub-section (7), (8) and (9) (w.e.f. 1-4-1963). 
3. Ins. by s. 22, ibid, (w.e.f. 1-4-1963). 
4. Subs. by the Punjab Reorganisation and Delhi High Court (Adaptation of Laws on Union Subjects) Order, 1968, for clause (ii) 

(w.r.e.f. 1-11-1966). 

5. Clause (iia) omitted by State of Himachal Pradesh (Adaptation of Laws on Union Subjects) Order, 1973 (w.r.e.f. 25-1-1971).   
6. Subs. by the North-Eastern Areas (Reorganisation) (Adaptation of Laws on Union Subjects) Order, 1974, for clause (iii) 

(w.r.e.f. 21-1-1972.) 

38 

 
 
 
 
 
                                                           
(iv)  in  relation  to  the  Union  territory  of  Andaman  and  Nicobar  Islands,  the  High  Court  of 

Calcutta; 

(v) in relation to the Union territory of 1[Lakshadweep], the High Court of Kerala;] 

2[(va) in relation to the Union territory of Chandigarh, the High Court of Punjab and Haryana;] 

3[(vi) in relation to the Union territories of Dadra and Nagar Haveli and Goa, Daman and Diu, the 

High Court at Bombay; 

(vii)  in relation to the Union territory of Pondicherry, the High Court at Madras.] 

CHAPTER VII 

PAYMENT AND RECOVERY OF GIFT-TAX 

4[29.  Gift-tax by whom payable. — Subject to the provisions of this Act, gift-tax shall be payable 
by  the  donor  but  when  in the  opinion  of  the 5[Assessing  Officer]  the  tax  cannot be  recovered  from  the 
donor, it may be recovered from the donee: 

Provided that where the donees are more than one, they shall be jointly and severally liable for the 

amount of tax determined to be payable by the donor: 

Provided further that the amount of tax which may be recovered from each donee shall not exceed the 

value of the gift made to him as on the date of the gift.] 

30. Gift-tax to be charged on property gifted. — Gift-tax payable in respect of any gift comprising 
immovable property shall be a first charge on that property but any such charge shall not affect the title of 
a bona fide purchaser for valuable consideration without notice of the charge. 

6[31  Notice  of  demand.  —  When  any  tax,  interest,  penalty,  fine  or  any  other  sum  is  payable  in 
consequence of any order passed under this Act, the 5[Assessing Officer] shall serve upon the assessee a 
notice of demand in the prescribed form specifying the sum so payable.] 

32. Recovery of tax and penalties.  — (1) Any amount specified as payable in a notice of demand 
under  section  31  shall  be  paid  within 7[thirty  days]  of  the  service  of  the  notice  at  the  place  and  to  the 
person mentioned in the notice: 

Provided that, where the 2[Assessing Officer] has any reason to believe that it will be detrimental to 
revenue if the full period of 7[thirty days] aforesaid is allowed, he may, with the previous approval of the   
8[ 9[Joint] Commissioner], direct that the sum specified in the notice of demand shall be paid within such 
period being a period less than the period of 7[thirty days] aforesaid, as may be specified by him in the 
notice of demand. 

1. Subs. by the Laccadive, Minicoy and Amindivi Islands (Alteration of Name) Adaptation of Laws Order, 1974, for “the 

Laccadive, Minicoy and Amindivi Islands” (w.r.e.f. 1-11-1973). 

2. Ins. by the Punjab Reorganisation and Delhi High Court (Adaptation of Laws on Union Subjects) Order, 1968                      

(w.r.e.f. 1-11-1966). 

3.  Ins. by the Taxation Laws (Extension to Union Territories) Regulation, 1963 (3 of 1963), s. 3 and the Schedule                                  

(w.e.f. 1-4-1963).  

4. Ins. by Act 53 of 1962, s. 23 (w.e.f. 1-4-1963). 
5. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988). 
6. Subs. by Act 53 of 1962, s. 24, for Section 31, 32 and 33 (w.e.f. 1-4-1963). 
7. Subs. by Act 4 of 1988, s. 178, for “thirty-five days” (w.e.f. 1-4-1989).  
8. Subs. by s. 161, ibid, for “Inspecting Assistant Commissioner” (w.e.f. 1-4-1988).  
9. Subs. by Act 21 of 1998, s. 76, for “Deputy Commissioner” (w.e.f. 1-10-1998). 

39 

 
                                                           
(2)  If  the  amount  specified  in  any  notice of  demand  under section  31 is  not  paid  within  the  period 
limited under sub-section (1), the assessee shall be liable to pay simple interest at 1[one and one-half per 
cent. for every month or part of a month comprised in the period commencing from the day immediately 
following  the  end  of  the  period  mentioned  in  sub-section  (1)  and  ending  with  the  day  on  which  the 
amount is paid]: 

2[Provided that  where  as  a  result  of  an  order  under  section  22,  or  section  23,  or  section  24,  or                

section 25, or section 26, or section 28, or section 34, the amount on which interest was payable under 
this  section  had  been  reduced,  the  interest  shall  be  reduced  accordingly  and  the  excess  interest  paid,  if 
any, shall be refunded:] 

3[Provided further that in respect of any period commencing on or before the 31st day of March, 1989 
and ending after that date, such interest shall, in respect of so much of such period as falls after that date, 
be calculated at the rate of one and one-half per cent. for every month or part of a month.] 

(3) Without prejudice to the provisions contained in sub-section (2), on an application made by the 
assessee before the expiry of the due date under sub-section (1), the 4[Assessing Officer] may extend the 
time  for  payment  or  allow  payment  by  instalments  subject  to  such  conditions  as  he  may  think  fit  to 
impose in the circumstances of the case. 

(4)  If  the  amount  is  not  paid  within  the  time  limited  under  sub-section  (1)  or  extended  under                   

sub-section  (3),  as  the  case  may  be,  at  the  place  and  to  the  person  mentioned  in  the  said  notice,  the 
assessee shall be deemed to be in default. 

(5) If, in a case where payment by instalments is allowed under sub-section (3), the assessee commits 
default  in  paying  any  one  of  the  instalments  within  the  time  fixed  under  that  sub-section,  the  assessee 
shall be deemed to be in default as to the whole of the amount then outstanding, and the other instalment 
or instalments shall be deemed to have been due on the same date as the instalment actually in default. 

(6) Where the assessee has presented an appeal under section 22, the 4[Assessing Officer] may in his 
discretion and subject to such conditions as he may think fit to impose in the circumstances of the case, 
treat the assessee as not being in default in respect of the amount in dispute in the appeal, even though the 
time for payment has expired as long as such appeal remains undisposed of.] 

33. Mode  of  recovery.  —The  provisions  contained  in  5[sections  221  to  227,   228A,]  229,  231  and 
232 of the Income-tax Act and the Second and Third Schedules to that Act and any rules made thereunder 
shall, so far as may be, apply as if the said provisions were provisions of this Act and referred to gift-tax 
and sums imposed by way of penalty, fine and interest under this Act instead of to income-tax and sums 
imposed by way of penalty, fine and interest under that Act 6[and to the corresponding gift-tax authorities 
instead of to the income-tax authorities specified therein]. 

1. Subs. by Act 4 of 1988, s. 178, for “fifteen per cent. annum from the day commencing after the end of the period 

mentioned in sub-section (1)” (w.e.f. 1-4-1989).  

2. The proviso added by Act 5 of 1964, s. 52 (1-4-1963). 

3. The proviso ins. by Act 4 of 1988, s. 178 (w.e.f. 1-4-1989). 

4. Subs. by s. 161, ibid., for “Gift-tax Officer” (w.e.f. 1-4-1988). 
5. Subs. by Act 16 of 1972, s. 53, for “sections 221 to 227” (w.e.f. 1-4-1972). 

6. Subs. by Act 4 of 1988, s. 179, for “Gift-tax Officer and Commissioner of Gift-tax instead of to Income tax Officer and 

Commissioner of Income-tax” (w.e.f. 1-4-1988).   

40 

 
                                                           
Explanation  I.—  Any  reference  to  sub-section  (2)  or  sub-section  (6)  of  section  220  of  the 
Income-tax Act in the said provisions of that Act or the rules made thereunder shall be construed as 
references to   sub-sections (2) and (6) respectively of section 32 of this Act. 

1[Explanation  II.—The  Chief  Commissioner  or  Commissioner  and  the  Tax  Recovery  Officer 
referred to in the Income-tax Act shall be deemed to be the corresponding gift-tax authorities for the 
purpose  of  recovery  of  gift-tax  and  sums  imposed  by  way  of  penalty,  fine  and  interest  under  this 
Act].] 

2[CHAPTER VIIA 

REFUNDS 

33A.  Refunds. — (1) Where, as a result of any order passed in appeal or other proceeding under 
this Act, refund of any amount becomes due to the assessee, the 3[Assessing Officer] shall, except as 
otherwise  provided  in  this  Act,  refund  the  amount  to  the  assessee  without  his  having  to  make  any 
claim in that behalf: 

4[Provided that where, by the order aforesaid,— 

(a)  an assessment is set aside or cancelled and an order of fresh assessment is directed to be 

made, the refund, if any, shall become due only on the making of such fresh assessment; 

(b)  the assessment is annulled, the refund shall become due only of the amount, if any, of the 

tax paid in excess of the tax chargeable on the 5[taxable gifts] returned by the assessee.] 

6[(2) Where refund of any amount becomes due to the assessee as a result of an order under this 
Act  or  under  the  provisions  of  sub-section  (1)  of  section  15  after  a  return  has  been  made  under 
section 13 or section 14 or in response to a notice under clause (i) of sub-section (4) of section 15 and 
the Assessing Officer is of the opinion, having regard to the fact that,— 

(i)  a notice has been issued, or is likely to be issued, under sub-section (2) of section 15 in 

respect of the said return; or 

(ii)  the order is the subject-matter of an appeal or further proceeding; or 

(iii)  any other proceeding under this Act is pending, 

that the grant of the refund is likely to adversely affect the revenue, the 3[Assessing Officer] may, with the 
previous approval of the Chief Commissioner or Commissioner, withhold the refund till such time as the 
Chief Commissioner or Commissioner may determine.] 

1. Subs. by Act 4 of 1988 s. 179, for “Explanation II” (w.e.f. 1-4-1989). 

2. Ins. by Act 53 of 1962, s. 25 (w.e.f. 1-4-1963). 

3. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988). 

4. The proviso added by Act 4 of 1988, s. 180 (w.e.f. 1-4-1989). 
5. Subs. by Act 3 of 1989, s. 90, for “total income” (w.e.f. 1-4-1989). 

6. Subs. by Act 36 of 1989, s. 33, for sub-section (2) (w.e.f. 1-4-1989). 

41 

                                                           
 (3) Where a refund is due to the assessee in pursuance of an order referred to in sub-section (1) 
and the 1[Assessing Officer] does not grant the refund within a period of six months from the date of 
such order, the Central Government shall pay to the assessee simple interest at 2[fifteen per cent.] per 
annum on the amount of refund due from the date immediately following the expiry of the period of 
six months aforesaid to the date on which the refund is granted. 

3[(3A)  Where  the  whole  or  any  part  of  the  refund  referred  it  in  sub-section  (3)  is  due  to  an 
assessee  as  a  result  of  any  amount  having  been  paid  by  him  after  the  31st  day  of  March,  1975,  in 
pursuance  of  any  order  of  assessment  or  penalty  and  such  amount  or  any  part  thereof  having  been 
found in appeal or other proceeding under this Act to be in excess of the amount which such assessee 
is liable to pay as tax or penalty, as the case may be, under this Act, the Central Government shall 
pay to such assessee simple interest at the rate specified in sub-section (3) on the amount so found to 
be  in  excess  from  the  date  on  which  such  amount  was  paid  to  the  date  on  which  the  refund  is    
granted : 

Provided that, where the amount so found to be in excess was paid in instalments, such interest 
shall be payable on the amount of each such instalments or any part of such instalment, which was in 
excess, from the date on which such instalment was paid to the date on which the refund is granted : 

Provided further that no interest under this sub-section shall be payable for a period of one month 

from the date of the passing of the order in appeal or other proceeding : 

Provided also that, where any interest is payable to an assessee under this sub-section, no interest 

under sub-section (3) shall be payable to him in respect of the amount so found to be in excess.] 

(4) Where a refund is withheld under the provisions of sub-section (2), the Central Government 
shall pay interest at the aforesaid rate on the amount of refund ultimately determined to be due as a 
result of the appeal or further proceedings for a period commencing after the expiry of  six months 
from the date of the order referred to in that sub-section to the date the refund is granted. 

4[(4A)  The  provisions  of  sub-sections  (3),  (3A)  and  (4)  shall  not  apply  in  respect  of  any 
assessment  for  the  assessment  year  commencing  on  the  1st  day  of  April,  1989,  or  any  subsequent 
assessment year. 

(4B)  (a) 5[Where  refund  of  any  amount  becomes  due  to  the  assessee  under  this  Act,]  he  shall, 
subject  to  the  provisions  of  this  sub-section,  be  entitled  to  receive,  in  addition  to  the  said  amount, 
simple  interest  thereon  calculated  at  the  rate  of  one 6*  *  *  per  cent.  for  every  month  or  part  of  a 
month comprised in the period or periods from the date or, as the case may be, dates of payment of 
the tax or penalty to the date on which the refund is granted. 

Explanation.—For the purposes of this clause, “date of payment of the tax or penalty” means the 
date on and from which the amount of tax or penalty specified in the notice of demand issued under 
section 31 is paid in excess of such demand. 

1. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988). 

2. Subs. by Act 67 of 1984, s. 75, for “twelve per cent.” (w.e.f. 1-10-1984). 

3. Ins. by Act 41 of 1975, s. 118 (w.e.f. 1-10-1975). 

4. Ins. by Act 4 of 1988, s. 180 (w.e.f. 1-4-1989). 

5. Subs. by Act 3 of 1989, s. 90, for “Where, in pursuance of any order passed under this Act, the refund of any amount 

becomes due to the assess” (w.e.f. 1-4-1989). 

6. The words “and a half” omitted by Act 49 of 1991, s. 89 (w.e.f. 1-10-1991).  

42 

                                                           
(b) If the proceedings resulting in the refund are delayed for reasons attributable to the assessee, 
whether wholly or in part, period of the delay so attributable to him shall be excluded from the period 
for which interest is payable, and where any question arises as to the period to be excluded, it shall be 
decided by the Chief Commissioner or Commissioner whose decision thereon shall be final. 

(c)  Where,  as  a  result  of  an  order  under 1[sub-section  (3)  or  sub-section  (5)  of  section  15  or] 
section  16  or  section  22  or  section  23  or  section  24  or  section  26  or  section  28  or  section  34,  the 
amount on which the interest was payable under clause (a) has been increased or reduced, as the case 
may  be,  interest  shall  be  increased  or  reduced  accordingly,  and,  in  a  case  where  the  interest  is 
reduced, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form 
specifying  the  amount  of  the  excess  interest  paid  and  requiring  him  to  pay  such  amount;  and  such 
notice of demand shall be deemed to be a notice under section 31 and the provisions of this Act shall 
apply accordingly. 

(d)  The  provisions  of  this  sub-section  shall  apply  in  respect  of  assessments  for  the  assessment 

year commencing on the 1st day of April, 1989, and subsequent assessment years.] 

(5)  Where  under  any  of  the  provisions  of  this  Act,  a  refund  is  found  to  be  due  to  any  person,  the             

2[Assessing  Officer], 3[Deputy  Commissioner 
5[Chief 
Commissioner or Commissioner], as the case may be, may, in lieu of payment of the refund, set off the 
amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this 
Act by the person to whom the refund is due, after giving an intimation in writing to such person of the 
action proposed to be taken under this section.] 

(Appeals)] 4[Commissioner 

(Appeals)]  or 

CHAPTER VIII 

MISCELLANEOUS 

6[34. Rectification  of  mistakes.  —  (1)  With  a  view  to  rectifying  any  mistake  apparent  from  the 

record— 

(a)  the 2[Assessing Officer] may amend any order of assessment or of refund or any other order 

passed by him; 

7[(aa) a gift-tax authority may amend any intimation sent by it under sub-section (1) of section 15 

or enhance or reduce the amount of refund granted by it under that sub-section;] 

8[(b)  the 9[Joint  Director]  or 10[Joint  Commissioner]    or  Director  or  Commissioner  or  Deputy 
Commissioner  (Appeals)  or  Commissioner  (Appeals)  may  amend  any  order  passed  by  him  under 
section 17A; 

(c)  the  Deputy  Commissioner  (Appeals)  or  Commissioner  (Appeals)  may  amend  any  order 

passed by him under section 22 11* * *; 

(d) the Commissioner may amend any order passed by him under section 24; 

1. Ins. by Act 3 of 1989, s. 90 (w.e.f. 1-4-1989). 
2. Subs. by Act 4 of 1988, s. 161 for “Gift-tax Officer” (w.e.f. 1-4-1988). 
3. Subs. by s. 161, ibid., for “Appellate Assistant Commissioner” (w.e.f. 1-4-1988). 
4. Ins. by Act 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978).  
5. Subs. by Act 4 of 1988, s. 161, for “Commissioner” (w.e.f. 1-4-1988).   
6. Subs. by Act 53 of 1962, s. 26, for section 34 (w.e.f. 1-4-1963).  
7. Ins. by Act 4 of 1988, s. 181 (w.e.f. 1-4-1989). 
8. Subs. by s. 186, ibid., for “clauses (b), (c), (d) and (e)” (w.e.f. 1-4-1989). 
9. Subs. by Act 21 of 1998, s. 76, for “Deputy Director” (w.e.f. 1-10-1998). 
10. Subs. by s. 76, ibid., for “Deputy Commissioner” (w.e.f. 1-10-1998). 
11. The words, figures and letter “or section 22A” omitted by Act 3 of 1989, s. 91 (w.e.f. 1-4-1989). 

43 

 
                                                           
(e) the Appellate Tribunal may amend any order passed by it under section 23 or section 25.] 

(2) Subject to the other provisions of this section, the authority concerned— 

(a)  may make an amendment under sub-section (1) of its own motion; and 

(b)  shall  make  such  amendment  for  rectifying  any  such  mistake  which  has  been  brought  to  its 
notice by the assessee, and where the authority concerned is the 1[Deputy Commissioner (Appeals)]  
2[or the Commissioner (Appeals)] or the Appellate Tribunal, by the 3[Assessing Officer] also. 

(3)  An  amendment,  which  has  the  effect  of  enhancing  an  assessment  or  reducing  a  refund  or 
otherwise increasing the liability of the assessee, shall not be made under this section unless the authority 
concerned  has  given  notice  to  the  assessee  of  its  intention  so  to  do  and  has  allowed  the  assessee  a 
reasonable opportunity of being heard. 

(4)  Where  an  amendment  is  made  under  this  section,  an  order  shall  be  passed  in  writing  by  the           

gift-tax authority concerned. 

(5) Subject to the provisions of sub-section (2) of 4[section 33A], where any such amendment has the 
effect of reducing the assessment, the 3[Assessing Officer] shall make any refund which may be due to 
such assessee. 

(6)  Where  any  such  amendment  has  the  effect  of  enhancing  the  assessment  or  reducing  a  refund 
already made, the 3[Assessing Officer] shall serve on the assessee a notice of demand in the prescribed 
form  specifying  the  sum  payable,  and  such  notice  of  demand  shall  be  deemed  to  be  issued  under             
section 31 and the provisions of this Act shall apply accordingly. 

(7) No amendment under this section shall be made after the expiry of four years 5[from the end of the 

financial year in which the order sought to be amended was passed].] 

35. Prosecution. — (1) If any person fails without reasonable cause,— 

(a)  to furnish in due time any return of gifts under this Act; 

(b)  to  produce,  or  cause  to  be  produced,  on  or  before  the  date  mentioned  in  any  notice  under              

6* * * sub-section (4) of section 15, such accounts, records and documents as are referred to in the 
notice; 

7*  

             * 

*  

        *     

       * 

he shall, on conviction before a magistrate, be punishable with fine which may extend to rupees ten for 
every day during which the default continues. 

(2) If a person makes a statement in a verification in any return of gift furnished under this Act or in a 
verification mentioned in section 22, 23 or 25 which is false, and which he either knows or believes to be 
false, or does not believe to be true, he shall, on conviction before a magistrate, be punishable with simple 
imprisonment which may extend to one year, or with fine which may extend to rupees one thousand, or 
with both. 

1. Subs. by Act 4 of 1988, s. 161, for “Appellate Assistant Commissioner” (w.e.f. 1-4-1988). 
2. Ins. by Act 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978). 
3. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988). 
4. Subs. by Act 5 of 1964, s. 52, for “section 33” (w.e.f. 1-4-1963).  
5. Subs. by Act 67 of 1984, s. 76, for “from the date of the order sought to be amended” (w.e.f. 1-10-1984).  
6. The words, brackets and figure “sub-section (2)” omitted by Act 41 of 1975, s. 119 (w.e.f. 1-4-1976).  
7. Clause (c) omitted by s. 119. ibid, (w.e.f. 1-4-1976). 

44 

 
 
 
 
 
  
                                                           
1[(2A)  If  a  person  abets  or  induces  in  any  manner  another  person  to  make  and  deliver  an  account, 
statement or declaration relating to any gifts chargeable to tax which is false and which he either knows to 
be  false  or  does  not  believe  to  be  true,  he  shall,  on  conviction  before  a  magistrate,  be  punishable  with 
simple  imprisonment  which  may  extend  to six  months  or  with  fine  which  may  extend  to  one  thousand 
rupees, or with both.] 

2[(3) A person shall not be proceeded against for an offence under this Act except with the previous 

sanction of the Commissioner or Commissioner (Appeals): 

Provided that  the  Chief  Commissioner  or,  as  the  case  may  be,  Director  General  may  issue  such 
instructions  or  directions  to  the  aforesaid  gift-tax  authorities  as  he  may  deem  fit  for  institution  of 
proceedings under this sub-section. 

(4) Any such offence may, either before or after the institution or proceedings, be compounded by the 

Chief Commissioner or Director General.] 

3[ 4[ Explanation 1].—For the purposes of this section, “magistrate” means a presidency magistrate or 

a magistrate of the first class.] 

5[Explanation  2.—  For the removal  of  doubts, it is  hereby  declared that  the  power  of the  Board  to 
issue orders, instructions or directions under this Act shall include and shall be deemed always to have 
included  the  power  to  issue  instructions  or  directions  (including  instructions  or  directions to  obtain  the 
previous approval of the Board) to other gift-tax authorities for the proper composition of offences under 
this section.] 

6[35A. Offences  by  companies.  —(1)  Where  an  offence  under  this  Act  has  been  committed  by  a 
company, every person who, at the time the offence was committed, was in charge of and was responsible 
to, the company for the conduct of the business of the company, as well as the company, shall be deemed 
to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: 

Provided that  nothing  contained  in  this  sub-section  shall  render  any  such  person  liable  to  any 
punishment if he proves that the offence was committed without his knowledge or that he had exercised 
all due diligence to prevent the commission of such offence. 

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act, has been 
committed  by  a  company  and  it  is  proved  that  the  offence  has  been  committed  with  the  consent  or 
connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other 
officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty 
of that offence and shall be liable to be proceeded against and punished accordingly. 

Explanation.—For the purposes of this section,— 

     (a)  “company” means a body corporate, and includes— 

      (i)  a firm, and 

     (ii)  an association of persons or a body of individuals, whether incorporated or not; and 

     (b)  “director”, in relation to— 

      (i)  a firm, means a partner in the firm, 

1. Ins. by Act 53 of 1962, s. 27 (w.e.f. 1-4-1963). 
2. Subs. by Act 49 of 1991, s. 90, for sub-sections (3) and (4) (w.e.f. 1-10-1991). 
3. Subs. by Act 53 of 1962, s. 27, for Explanation (w.e.f. 1-4-1963). 
4. The Explanation renumbered as Explanation 1 thereof by Act 49 of 1991, s. 90 (w.e.f. 1-4-1963). 
5. Ins. by s. 90, ibid, (w.r.e.f. 1-4-1958.) 
6. Ins. by Act 41 of 1975, s. 120 (w.e.f. 1-10-1975). 

45 

                                                           
(ii)  an association of persons or a body of individuals means any member controlling the affairs 

thereof. 

35B. Offences  by  Hindu  undivided  families.  —  (1)  Where  an  offence  under  this  Act  has  been 
committed by a Hindu undivided family, the karta thereof shall be deemed to be guilty of the offence and 
shall be liable to be proceeded against and punished accordingly: 

Provided that nothing contained in this sub-section shall render the karta liable to any punishment if 
he  proves  that  the  offence  was  committed  without  his  knowledge  or  that  he  had  exercised  all  due 
diligence to prevent the commission of such offence. 

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been 
committed  by  a  Hindu  undivided family  and it  is  proved  that  the  offence  has  been  committed  with  the 
consent  or  connivance  of,  or  is  attributable  to  any  neglect  on  the  part  of,  any  member  of  the  Hindu 
undivided family, such member shall also be deemed to be guilty of that offence and shall be liable to be 
proceeded against and punished accordingly. 

35C. Section  360  of  the  Code  of  Criminal  Procedure,  1973  and  the  Probation  of  Offenders    

Act, 1958, not to apply. — Nothing contained in section 360 of the Code of Criminal Procedure, 1973 (2 
of 1974), or in the Probation of Offenders Act, 1958 (20 of 1958), shall apply to a person convicted of an 
offence under this Act unless that person is under eighteen years of age.] 

1[35D. Presumption as to culpable mental state. —(1) In any prosecution for any offence under this 
Act  which  requires  a  culpable  mental  state  on  the  part  of  the  accused,  the  court  shall  presume  the 
existence of such mental state but it shall be a defence for the accused to prove the fact that he had no 
such mental state with respect to the act charged as an offence in that prosecution. 

Explanation.—In this sub-section, “culpable mental state” includes intention, motive or knowledge of 

a fact, or belief in or reason to believe, a fact. 

(2) For the purposes of this section, a fact is said to be proved only when the court believes it to exist 
beyond  reasonable  doubt  and  not  merely  when  its  existence  is  established  by  a  preponderance  of 
probability.] 

2[35E. Proof of entries in records or documents. —Entries in the records or other documents in the 
custody of a gift-tax authority shall be admitted in evidence in any proceedings for the prosecution of any 
person for an offence under this Act, and all such entries may be proved either by the production of the 
records  or  other  documents  in  the  custody  of  the  gift-tax  authority  containing  such  entries,  or  by  the 
production  of  a  copy  of  the  entries  certified  by  the  gift-tax  authority  having  custody  of  the  records  or 
other documents under its signature and stating that it is a true copy of the original entries and that such 
original entries are contained in the records or other documents in its custody.] 

3[36. Power regarding discovery, production of evidence, etc. — (1) The 4[Assessing Officer], the 
5[Deputy  Commissioner  (Appeals)] 6[the  Commissioner  (Appeals)],  the 7[Chief  Commissioner  or 
Commissioner] and the Appellate Tribunal shall, for the purposes of this Act, have the same powers as 
are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of 

1. Ins. by Act 46 of 1986, s. 41 (w.e.f. 10-9-1986). 
2. Ins. by Act 3 of 1989, s. 92 (w.e.f. 1-4-1989). 
3. Subs. by Act 53 of 1962, s. 28, for section 36 (w.e.f. 1-4-1963). 
4. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988). 
5. Subs. by s. 161, ibid., for “Appellate Assistant Commissioner” (w.e.f. 1-4-1988).  
6. Ins. by Act 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978).  
7. Subs. by Act 4 of 1988, s. 161, for “Commissioner” (w.e.f. 1-4-1988). 

46 

                                                           
the following matters, namely :— 

(a)  discovery and inspection; 

(b)  enforcing  the  attendance  of  any  person,  including  any  officer  of  a  banking  company  and 

examining him on oath; 

(c)  compelling the production of books of account and other documents; and 

       (d)  issuing commissions. 

1[(1A)  If  the  Director  General  or  Director  or 2[Joint  Director]    or  3[Assistant  Director or  Deputy 
Director] has reason to suspect that any gifts chargeable to tax under this Act have been concealed, or are 
likely to be concealed, by any person or class of persons within his jurisdiction, then, for the purposes of 
making any inquiry or investigation relating thereto, it shall be competent for him to exercise the powers 
conferred under sub-section (1) on the gift-tax authorities referred to in that sub-section, notwithstanding 
that no proceedings with respect to such person or class of persons are pending before him or any other 
gift-tax authority.] 

4* 

* 

* 

* 

 *] 

37. Power to call for information. — 5[ Where, for the purposes of this Act, it appears necessary for 
any  gift-tax  authority  to  obtain  any  statement  or  information  from  any  person  or  banking  company,]            
6[such  gift-tax  authority]  may  serve  a  notice  requiring  such  person,  on  or  before  a  date  to  be  therein 
specified, to furnish such statement or information on the points specified in the notice, and that person 
shall,  notwithstanding  anything  in  any  law  to  the  contrary,  be  bound  to  furnish  such  statement  or 
information to 6[such gift-tax authority]: 

Provided that no legal practitioner shall be bound to furnish any statement or information under this 
section based on any professional communications made to him otherwise than as permitted by section 
126 of the Indian Evidence Act, 1872 (1 of 1872). 

38.  Effect  of  transfer  of  authorities  on  pending  proceedings.  —   Whenever  in  respect  of  any 
proceeding  under  this  Act  any  gift-tax  authority  ceases  to  exercise  jurisdiction  and  is  succeeded  by 
another who has and exercises such jurisdiction, the authority so succeeding may continue the proceeding 
from the stage at which the proceeding was left by his predecessor: 

7[Provided that  the  assessee  concerned  may  demand  that  before  the  proceeding  is  so  continued  the 
previous  proceeding  or  any  part  thereof  be  reopened  or  that  before  any  order  of  assessment  is  passed 
against him, he be reheard.] 

8[39.   Computation of period of limitation. — In computing the period of limitation prescribed for 
an appeal or an application under this Act, the day on which the order complained of was served and if 
the assessee was not furnished with a copy of the order when the notice of the order was served upon him, 
the time requisite for obtaining a copy of such order shall be excluded.] 

1. Ins. by Act 26 of 1988, s. 70 (w.e.f. 1-6-1988). 
2. Subs. by Act 21 of 1998, s. 76, for “Deputy Director” (w.e.f. 1-10-1998). 
3. Subs. by s. 76, ibid., for “Assistant Director” (w.e.f. 1-10-1998). 
4. Sub-section (2) omitted by Act 4 of 1988, s. 182 (w.e.f. 1-4-1989). 
5. Subs. by s. 183, ibid., for “Where, for the purposes of determining the gift-tax payable by any person, it appears necessary for 

the Gift-tax Officer to obtain any statement or information from any person” (w.e.f. 1-4-1989).  

6. Subs. by s. 183, ibid., for “the Gift-tax Officer” (w.e.f. 1-4-1989). 
7. The Proviso added by Act 53 of 1962, s. 29 (w.e.f. 1-4-1963). 
8. Subs. by s. 30, ibid., for section 39 (w.e.f. 1-4-1963).  

47 

 
 
 
 
 
 
 
 
                                                           
40.  Service of notice.  — (1) A notice or a requisition under this Act may be served on the person 
therein  named  either  by  post  or  as  if  it  were  a  summons  issued  by  a  court  under  the  Code  of  Civil 
Procedure, 1908 (5 of 1908). 

(2)  Any  such  notice  or  requisition  may,  in  the  case  of  a  firm  or  a  Hindu  undivided  family,  be 
addressed to any member of the firm or to the manager or any adult male member of the family, and in 
the case of a company or association of persons be addressed to the principal officer thereof. 

1[(3) After a finding of total partition has been recorded by the 2[Assessing Officer] under section 20 
in respect of any Hindu family, notices under this Act in respect of the gifts made by the family, shall be 
served on the person who was the last manager of the Hindu family, or if such person is dead, then on all 
surviving adults who were members of the Hindu family immediately before the partition. 

(4) Where a firm or other association of persons is dissolved, notices under this Act in respect of the 
gifts made by the firm or association may be served on any person who was a partner (not being a minor) 
or member of the association, as the case may be, immediately before its dissolution.] 

[41. Prohibition  of  disclosure  of  information.]  —Omitted  by  the  Finance  Act,  1964  (5  of  1964),                    

s. 52 (w.e.f. 1-4-1964). Earlier, this section was substituted by the Gift-tax (Amendment) Act, 1962 (53 of 
1962), s. 32 (w.e.f. 1-4-1963). 

3[41A.   Publication  of  information  respecting  assessees.  —  (1)  If  the  Central  Government  is  of 
opinion that it is necessary or expedient in the public interest to publish the names of any assessees and 
any  other  particulars  relating  to  any  proceedings 4[or  prosecutions]  under  this  Act  in  respect  of  such 
assessees, it may cause to be published such names and particulars in such manner as it thinks fit. 

5[(2) No publication under this section shall be made in relation to any penalty imposed under this Act 
until the time for presenting an appeal to the 6[Deputy Commissioner (Appeals)] 7[or, as the case may be, 
the  Commissioner  (Appeals)]  has  expired  without  an  appeal  having  been  presented  or  the  appeal,  if 
presented, has been disposed of.] 

Explanation.—In  the  case  of  a  firm,  company  or  other  association  of  persons,  the  names  of  the 
partners of the firm, directors, managing agents, secretaries and treasurers or managers of the company, or 
the members of the association, as the case may be, may also be published if, in the opinion of the Central 
Government, the circumstances of the case justify it. 

41B.  Disclosure  of  information  respecting  assessees.  — Where  a  person  makes  an  application  to 
the 8[Chief  Commissioner or  Commissioner]  in the  prescribed  form  for  any  information relating  to  any 
assessee in respect of any assessment made under this Act, the 8[Chief Commissioner or Commissioner] 
may,  if  he  is  satisfied  that  it  is  in  the  public  interest  so  to  do,  furnish  or  cause  to  be  furnished  the 
information asked for in respect of that assessment only and his decision in this behalf shall be final and 
shall not be called in question in any court of law.] 

9[41C.    Return  of  gifts,  etc.,  not  to  be  invalid  on  certain  grounds.  —  No  return  of  gifts, 
assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to 
have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be 
invalid  or  shall  be  deemed  to  be  invalid  merely  by  reason  of  any  mistake,  defect  or  omission  in  such 

1. Ins. by Act 53 of 1962, s. 31 (w.e.f. 1-4-1963). 
2. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988). 
3. Subs. by Act 5 of 1964, s. 52, for sections 41A and 41B (w.e.f. 1-4-1964). 
4. Ins. by Act 41 of 1975, s. 121 (w.e.f. 1-10-1975). 
5. Subs. by s. 121, ibid., for sub-section (2) (w.e.f. 1-10-1975). 
6. Subs. by Act 4 of 1988, s. 161, for “Appellate Assistant Commissioner” (w.e.f. 1-4-1988). 
7. Ins. by Act 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978). 
8. Subs. by Act 4 of 1988, s. 161, for “Commissioner” (w.e.f. 1-4-1988). 
9. Ins. by Act 41 of 1975, s. 122 (w.e.f. 1-10-1975). 

48 

                                                           
return of gifts, assessment, notice summons or other proceeding, if such return of gifts, assessment, notice 
summons or other proceeding is in substance and effect in conformity with or according to the intent and 
purpose of this Act.] 

42.   Bar  of  suits  in  civil  court.  —  No  suit  shall  lie  in  any  civil  court  to  set  aside  or  modify 
1[any proceeding taken or order made]  under this Act, and no prosecution, suit or other legal proceedings 
shall lie against 2[the Government or] any officer of the Government for anything in good faith done or 
intended to be done under this Act. 

3[43. Appearance before gift-tax authorities by authorised representatives. —An assessee who is 
entitled to or required to attend before any gift-tax authority or the Appellate Tribunal in connection with 
any proceeding under this Act, except where he is required under this Act to attend in person, may attend 
by  a  person  who  would  be  entitled  to  represent  him  before  any  income-tax  authority  or  the  Appellate 
Tribunal under section 288 of the Income-tax Act.] 

4[43A.  Appearance  by  registered  valuer  in  certain  matters.  —  Any  assessee  who  is  entitled  or 
required to attend before any gift-tax authority or the Appellate Tribunal in connection with any matter 
relating to the valuation of any asset, except where he is required under this Act to attend in person, may 
attend by a registered valuer. 

Explanation.—In  this  section,  “registered  valuer”  has  the  same  meaning  as  in  clause  (oaa)  of                

section 2 of the Wealth-tax Act, 1957 (27 of 1957).] 

44.   Agreement  for  avoidance  or  relief  of  double  taxation  with  respect  to  gift-tax.  —  5[The 

Central Government may enter into an agreement with the Government of any reciprocating country— 

(a)  for the avoidance or relief of double taxation with respect to gift-tax payable under this Act 

and under the corresponding law in force in the reciprocating country, or 

(b)  for exchange of information for the prevention of evasion or avoidance of gift-tax chargeable 
under  this  Act  or  under  the  corresponding  law  in  force  in  that  country  or  investigation  of  cases  of 
such evasion or avoidance, or 

(c)  for recovery of tax under this Act and under the corresponding law in force in that country, 

and  may,  by  notification  in  the  Official  Gazette,  make  such  provision  as  may  be  necessary  for 
implementing the agreement.] 

Explanation.—The expression “reciprocating country” for the purposes of this Act means any country 
which the Central Government may, by notification in the Official Gazette, declare to be a reciprocating 
country. 

6[44A.  Rounding  off  of  taxable  gifts.  —  The  amount  assessed  in  accordance  with  the  foregoing 
provisions of this Act as being the value of all taxable gifts shall be rounded off to the nearest multiple of 
ten rupees and, for this purpose, any part of a rupee consisting of paise shall be ignored and thereafter, if 
such  amount  is  not  a  multiple  of  ten  rupees, then, if the  last  figure  in that  amount  is  five  or  more,  the 
amount shall be increased to the next higher amount which is a multiple of ten and, if the last figure is less 
than  five,  the  amount  shall  be  reduced  to  the  next  lower  amount  which  is  a  multiple  of  ten  ;  and  the 

1. Subs. by Act 26 of 1988, s. 71, for “any order made” (w.e.f. 1-3-1988). 
2. Ins. by Act 5 of 1964, s. 52 (w.e.f. 1-4-1964). 
3. Subs. by Act 53 of 1962, s. 34, for section 43 (w.e.f. 1-4-1963).  
4. Ins. by Act 45 of 1972, s. 24 (w.e.f. 1-1-1973). 
5. Subs. by Act 16 of 1972, s. 54, for the portion beginning with words “The Central Government may” and ending with the 

words  “for implementing the agreement.” (w.e.f. 1-4-1972).  

6. Ins. by Act 42 of 1970, s. 70 (w.e.f. 1-4-1971). 

49 

                                                           
amount so rounded off shall be deemed to be the value of all taxable gifts of the assessee for the purposes 
of this Act. 

44B.  Rounding  off  of  tax,  etc.  — The  amount  of  gift-tax,  interest,  penalty,  fine  or  any  other  sum 
payable,  and  the  amount  of  refund  due,  under  the  provisions  of  this  Act,  shall  be  rounded  off  to  the 
nearest rupee and, for this purpose, where such amount contains a part of a rupee consisting of paise, then, 
if such part is fifty paise or more, it shall be increased to one rupee, and if such part is less than fifty paise, 
it shall be ignored.] 

45. Act not to apply in certain cases. —  1[No tax shall be levied under this Act in respect of gifts 

made by]— 

2[(a)  a company in which the public are substantially interested; 

(b)  any company to an Indian company in a scheme of amalgamation;] 

3[(e)  any  institution  or  fund  the  income  whereof  is  exempt  from  income-tax  under                          

4[section 11 or section 12] of the Income-tax Act.] 

5[Explanation  1.—For  the  purposes  of  clause  (b), the term  “amalgamation”  shall have  the  meaning 

assigned to it in clause (1B) of section 2 of the Income-tax Act.] 

6[Explanation  3.—For  the  removal  of  doubts,  it  is  hereby  declared  that  the  exemption  admissible 
under clause (e) in relation to gifts made by an institution or fund referred to in that clause shall not be 
denied merely on either or both of the following grounds, namely :— 

(i)  that,  subsequent  to  the  gift,  any  part  of  the  income  of  the  institution  or  fund  has  become 
chargeable to tax due to non-compliance with any of the provisions of  7[section 11 or section 12 or 
section 12A] of the Income-tax Act ; 

(ii)  that, under clause (c) of sub-section (1) of section 13 of the Income-tax Act, the exemption 
under  8[section  11 or  section  12]  of  that  Act  is  denied  to  the  institution  or  fund  in  relation  to  any 
income arising to it from any investment referred to in clause (h) of sub-section (2) of section 13 of 
the  said  Act  where  the  aggregate  of  the  funds  invested  by  it  in  a  concern  referred  to  in  the  said                 
clause (h) does not exceed five per cent. of the capital of that concern.] 

46.   Power to make rules. — (1) The Board may, by notification in the Official Gazette, make rules 

for carrying out the purposes of this Act. 

(2) In particular, and without prejudice to the generality of the foregoing power, rules made under this 

section may provide for— 

(a)  the manner in which the value of any property may be determined; 

(b)  the form in which returns under this Act shall be made and the manner in which they shall be 

verified; 

(c)  the form in which appeals and applications under this Act may be made, and the manner in 

which they shall be verified; 

1. Subs. by Act 4 of 1988, s. 184, for “The provisions of this Act shall not apply to gifts made by” (w.e.f. 1-4-1989). 
2. Subs. by s. 184, ibid., for clause (a), (b), (c), (d) and (da) (w.e.f. 1-4-1989). 
3. Subs. by s. 184, ibid., for clause (e) (w.e.f. 1-4-1989). 
4. Subs. by Act 16 of 1972, s. 55, for “section 11” (w.e.f. 1-4-1973).  
5. Subs. by Act 3 of 1989, s. 93, for Explanations 1 and 2 (w.e.f. 1-4-1989). 
6. Ins. by Act 32 of 1971, s. 37 (w.e.f. 1-4-1972). 
7. Subs. by Act 16 of 1972, s. 55, for “section 11” (w.e.f. 1-4-1973). 
8. Subs. by s. 55, for “section 11” (w.e.f. 1-4-1973). 

50 

                                                           
1[(cc)  the circumstances in which, the conditions subject to which and the manner in which, the             

2[Deputy  Commissioner  (Appeals)] 3[or  the  Commissioner  (Appeals)]  may  permit  an  appellant  to 
produce  evidence  which  he  did  not  produce  or  which  he  was  not  allowed  to  produce  before  the                                                        
4[Assessing Officer]; 

(d)  the form of any notice of demand under this Act; 

(e)  the  refunds  of  gift-tax  paid  in  respect  of  gifts  which  are  revoked  on  the  happening  of  any 
specified event which does not depend on the will of the donor or of any amount paid under section 
18; 

5[(ee)  the  procedure  to  be  followed  in  calculating  interest  payable  by  assessees  or  interest 
payable by the Government to assessees under any provisions of this Act, including the rounding off 
of the period for which such interest is to be calculated in cases where such period includes a fraction 
of  a  month,  and  specifying  the  circumstances  in  which  and  the  extent  to  which  petty  amounts  of 
interest payable by assessees may be ignored;] 

(f)  the areas for which lists of valuers may be drawn up;  

(g)  any other matter which has to be, or may be, prescribed for the purposes of this Act. 

6[(3) The power to make rules conferred by this section shall include the power to give retrospective 
effect, from a date not earlier than the date of commencement of this Act, to the rules or any of them and, 
unless the contrary is permitted (whether expressly or by necessary implication), no retrospective effect 
shall be given to any rule so as to prejudicially affect the interests of assessees.] 

7[(4) The Central Government shall cause every rule made under this Act to be laid as soon as may be 
after  it  is  made  before  each  House  of  Parliament  while  it  is  in  session  for  a  total  period  of  thirty  days 
which may be comprised in one session 8[or in two or more successive sessions], and if, before the expiry 
of the session 9[immediately following the session or the successive sessions aforesaid] both Houses agree 
in making any  modification in the rule or both Houses agree that the rule should not be made, the rule 
shall thereafter have effect only in such modified form or be of no effect, as the case may be, so however, 
that any such modification or annulment shall be without prejudice to the validity of anything previously 
done under that rule.] 

10[46A.  Power  to  make  exemption,  etc.,  in  relation  to  certain  Union  territories.  —  (1)  If  the 
Central Government considers it necessary or expedient so to do for avoiding any hardship or anomaly or 
removing any difficulty that may arise as a result of the application of this Act to the Union territories of 
Dadra and Nagar Haveli, Goa, Daman and Diu and Pondicherry, or in the case of the Union territory of 
Pondicherry,  for  implementing  any  provision  of  the  Treaty  of  Cession  concluded  between  France  and 
India on the 28th day of May, 1956, the Central Government may, by general or special order, make an 
exemption, reduction in rate or other modification in respect of gift-tax in favour of any class of gifts or in 
regard to the whole or any part of the gifts made by any assessee or class of assessees : 

1. Ins. by Act 16 of 1972, s. 56, (w.e.f. 1-4-1972). 
2. Subs. by Act 4 of 1988, s. 161, for "Appellate Assistant Commissioner" (w.e.f. 1-4-1988). 
3. Ins. by Act 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978). 
4. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988). 
5. Ins. by Act 42 of 1970, s. 71 (w.e.f. 1-4-1971). 
6. Subs. by Act 26 of 1974, s. 19, for sub-section (3) (w.e.f. 18-8-1974). 
7. Subs. by Act 53 of 1962, s. 36, for “sub-section (4) (w.e.f. 1-4-1963). 
8. Subs. by Act 41 of 1975, s. 123, for “or in two successive sessions” (w.e.f. 1-4-1976). 
9. Subs. by s. 123, ibid., for “in which it is so laid or the session immediately following” (w.e.f. 1-4-1976). 
10. Ins. by The Taxation Laws (Extension to Union Territories) Regulation, 1963 (3 of 1963), by s. 3 and the Schedule               

(w.e.f. 1-4-1963). 

51 

                                                           
Provided that the power conferred by this section shall not be exercisable after the 31st day of March, 

1967, except for the purpose of rescinding an exemption, reduction or modification already made.] 

1[47.  Power to remove difficulties. — (1) If any difficulty arises in giving effect to the provisions of 
this  Act  as  amended  by  the  Direct  Tax  Laws  (Amendment)  Act,  1987  (4  of  1988),  the  Central 
Government  may,  by  order,  do  anything  not  inconsistent  with  such  provisions  for  the  purpose  of 
removing the difficulty : 

Provided that no such order shall be made after the expiration of three years from the 1st day of April, 

1988. 

(2) Every order made under sub-section (1) shall be laid before each House of Parliament.] 

1. Ins. by Act 4 of 1988, s. 185 (w.e.f. 1-4-1988). 

52 

 
 
                                                           
1[SCHEDULE 2[I]   

3[[See section 3(1)]] 

RATES OF GIFT-TAX 

(1)  where  the  value  of  all taxable  gifts  does  not         

exceed Rs. 20,000 

(2)  where  the  value  of  all  taxable  gifts  exceeds                                   

Rs. 20,000 but does not exceed Rs. 50,000 

5  per  cent.  of  the  value  of  such 
gifts; 

 Rs.  1,000 plus 10  per  cent.  of  the 
amount by which the value of such 
gifts exceeds Rs. 20,000; 

(3)   where  the  value  of  all  taxable  gifts  exceeds 

Rs. 50,000 but does not exceed Rs. 1,00,000 

 Rs.  4,000 plus 15  per  cent.  of  the 
amount by which the value of such 
gifts exceeds Rs. 50,000; 

(4)   where  the  value  of  all  taxable  gifts  exceeds  
but 

1,00,000 

does 

not 

exceed                          

Rs. 11,500 plus 20 per cent. of the 
amount by which the value of such 
gifts exceeds Rs. 1,00,000; 

(5)  where  the  value  of  all  taxable  gifts  exceeds 
but 

2,00,000 

does 

not 

exceed                          

Rs. 31,500 plus 25 per cent. of the 
amount by which the value of such 
gifts exceeds Rs. 2,00,000; 

Rs. 
Rs. 2,00,000 

Rs. 
Rs. 5,00,000 

(6)  where  the  value  of  all  taxable  gifts  exceeds 
but 

5,00,000 

does 

not 

Rs. 
Rs. 10,00,000 

exceed                          

Rs.  1,06,500 plus 30  per  cent.  of 
the  amount  by  which  the  value  of 
such gifts exceeds Rs. 5,00,000; 

(7)  where  the  value  of  all  taxable  gifts  exceeds 

Rs.  10,00,000  but  does  not 
Rs. 15,00,000 

exceed                           

Rs.  2,56,500 plus 40  per  cent.  of 
the  amount  by  which  the  value  of 
such gifts exceeds Rs. 10,00,000; 

(8)  where  the  value  of  all  taxable  gifts  exceeds 

Rs.  15,00,000  but  does  not 
Rs. 20,00,000 

exceed                               

Rs.  4,56,500 plus 50  per  cent.  of 
the  amount  by  which  the  value  of 
such gifts exceeds Rs. 15,00,000; 

(9)  where  the  value  of  all  taxable  gifts  exceeds 

Rs. 20,00,000 

Rs.  7,06,500 plus 75  per  cent.  of 
the  amount  by  which  the  value  of 
such gifts exceeds Rs. 20,00,000.] 

1. Subs. by Act 19 of 1970, s. 27, for the Schedule (w.e.f. 1-4-1971). 
2. The Schedule renumbered as the Schedule (1) thereof by Act 3 of 1989, s. 94 (w.e.f. 1-4-1989).   
3. Subs. by Act 23 of 1986, s. 46, for “(See section 3)” (w.e.f. 1-4-1987).  

53 

 
 
 
 
 
 
 
                                                           
1[SCHEDULE II 

[See section 6(1)] 

RULES FOR DETERMINING THE VALUE OF PROPERTY GIFTED  

1. Value of gifted property, how to be determined. — 2[Subject to the provisions of rules 2 to 7, the 
value of any property], other than cash, transferred by way of gift shall, for the purposes of this Act, be 
determined in accordance with the provisions of Schedule III to 3[the Wealth-tax Act, 1957 (27 of 1957) 
(hereinafter referred to as the Wealth-tax Act)], which shall apply subject to the following modifications, 
namely :— 

In the said Schedule,— 

(a)  references by whatever form of words to the Wealth-tax Act shall be construed as references 

to this Act ; 

(b)  in  rule  5,  the  reference  to  the  year  ending  on  the  valuation  date  shall  be  construed  as  a 

reference to the previous year as defined in this Act; 

(c)  save  as  provided  in  clause  (b),  references  to  the  valuation  date  shall  be  construed  as 

references to the date on which the gift was made ; 

(d)  reference to section 7 of the Wealth-tax Act shall be construed as references to section 6 of 

this Act ; 

(e)  references  to  section  16A  of  the  Wealth-tax  Act  shall  be  construed  as  references  to                     

sub-section (6) of section 15 of this Act.] 

4[2. Quoted shares and debentures of companies. — The value of an equity share or a preference 
share in any company or a debenture of any company which is a quoted share or a quoted debenture shall 
be taken as the value quoted in respect of such share or debenture on the date on which the gift was made 
or  where  there  is  no  such  quotation  on  such  date,  the  quotation  on  the  date  closest  to  such  date  and 
immediately preceding such date. 

Explanation.—The  words  and  expressions  used  in  this  rule  and  rules  3  to  7  but  not  defined  and 
defined in rule 2 of Schedule III to the Wealth-tax Act shall have the meanings respectively assigned to 
them in rule 2 of that Schedule. 

3. Special  provision  for  quoted  shares  of  companies.  —  Notwithstanding  anything  in  rule  2,  the 
value of an equity share in any company which is a quoted share may, at the option of the assessee or a 
company, be taken on the basis of the average of the value quoted on the 31st day of March immediately 
preceding the assessment year and the values quoted in respect of such share on the said dates in relation 
to each of the immediately preceding nine assessment years, or where there is no such quotation on any of 
the  aforesaid  dates,  the  quotation  on  the  date  closest  to  the  said  date  and  immediately  preceding  such                 
date : 

Provided that where for any reason the value of such share is quoted in relation to lesser number of 
assessment years than the said nine assessment years, then the value or values so quoted shall be taken 
into account for the purposes of the aforesaid average: 

1. Ins. by Act 3 of 1989, s. 94 (w.e.f. 1-4-1989). 
2. Subs. by Act 38 of 1993, s. 42, for “The value of property” (w.e.f. 1-4-1993). 
3. Subs. by s. 42, ibid., for “the Wealth-tax Act” (w.e.f. 1-4-1993). 
4. Ins. by s. 42, ibid, (w.e.f. 1-4-1993). 

54 

                                                           
Provided further that where the assessee opts for the average of the values so quoted, he shall get such 
values certified by an accountant and attach the certificate to the return of gifts in respect of the relevant 
assessment year. 

Explanation.—For  the  purposes  of  this  rule,  “accountant”  shall  have  the  same  meaning  as  in 

the Explanation below sub-section (2) of section 288 of the Income-tax Act. 

4. Unquoted  preference  shares.  —  (1)  Subject  to  the  provisions  of  sub-rule  (2),  the  value  of  an 

unquoted preference share in any company shall,— 

(a)  where the preference share is issued before the date on which the gift was made at a rate of 

dividend of not less than eight per cent. be the paid-up value of such share; and 

(b)  where  the  preference  share  is  issued  before  the  said  date  at  a  rate  of  dividend  of  less  than 

eight per cent. be the adjusted paid-up value of such share. 

(2)  Where  no  dividend  has  been  paid  in  respect  of  an  unquoted  preference  share  by  any  company 
continuously for not less than three accounting years ending on the date on which the gift was made or, in 
a  case  where  the  accounting  year  of  the  company  does  not  end  on  that  date,  for  not  less  than  three 
continuous accounting years ending on a date immediately before the date on which the gift was made, 
the paid-up value or, as the case may be, the adjusted paid-up value shall be reduced— 

(a)  in the case of a non-cumulative preference share, as indicated in the Table below : 

TABLE 

Number of accounting years ending on the date on which the gift 
was made or, in a case where the accounting  year does not end 
on  that  date,  the  number  of  accounting  years  ending  on  a  date 
immediately preceding the date on which the gift was made, for 
which no dividend has been paid 

Rate of reduction 

(1) 

(2) 

            Three Years 

            Four Years 

            Five Years 

            Six Years and above 

10% 

20% 

30% 

40% 

of  the  paid-up  value  or 
the  adjusted  paid-up 
value,  as  the  case  may 
be; 

(b)  in the case of a cumulative preference share, by one-half of the rates specified in the aforesaid 

Table. 

Explanation.—For the purposes of this rule, “adjusted paid-up value”, in relation to a preference 
share, means an amount which bears to the paid-up value of the preference share the same proportion 
as the stipulated rate of dividend [being the rate of dividend on the preference share specified in the 
terms of issue of such share, and in a case where such dividend is required to be increased under the 
provisions of section 3 of the Preference Shares (Regulation of Dividends) Act, 1960 (63 of 1960), 
the rate of dividend as so increased] on such share bears to the rate of eight per cent. 

55 

 
 
  
  
  
  
  
  
  
  
  
  
5. Unquoted equity shares in companies other than investment companies. — (1) The value of an 
unquoted  equity  share  in  any  company,  other  than  an  investment  company,  shall  be  determined  in  the 
manner set out in sub-rule (2). 

(2) The value of all the liabilities as shown in the balance sheet of such company shall be deducted 
from the value of all its assets shown in that balance sheet; the net amount so arrived at shall be divided 
by the total amount of its paid-up equity share capital as shown in the balance sheet ; the result multiplied 
by the paid-up value of each equity share shall be in the break-up value of each unquoted equity share, 
and  an  amount  equal  to  eighty  per  cent.  of  the  break-up  value  so  determined  shall  be  the  value  of  the 
unquoted equity share for the purposes of this Act. 

(3) For the purposes of sub-rule (2),— 

(a)  the  following  amounts  shown  as  assets  in  the  balance  sheet  shall  not  be  treated  as  assets, 

namely :— 

(i)  any amount paid as advance tax under the Income-tax Act; 

(ii)  any amount shown in the balance sheet including the debit balance of the profit and loss 
account  or  the  profit  and  loss  appropriation  account  which  does  not  represent  the  value  of  any 
asset ; 

(b)  the  following  amounts  shown  as  liabilities  in  the  balance  sheet  shall  not  be  treated  as 

liabilities, namely :— 

(i)  the paid-up capital in respect of equity shares; 

(ii)  the  amount  set  apart  for  payment  of  dividends  on  preference  shares  and  equity  shares 
where  such  dividends  have  not  been  declared  before  the  date  on  which  the  gift  was  made  at  a 
general body meeting of the company ; 

(iii)  reserves, by whatever name called, other than those set apart towards depreciation ; 

(iv)  credit balance of the profit and loss account ; 

(v)  any  amount  representing  provision  for  taxation,  other  than  the  amount  referred  to  in              

sub-clause (i) of clause (a), to the extent of the excess over the tax payable with reference to the 
book profits in accordance with the law applicable thereto; 

(vi)  any amount representing contingent liabilities other than arrears of dividends payable in 

respect of cumulative preference shares. 

Explanation.—For the purposes of this rule, “balance sheet”, in relation to any company, means the 
balance sheet of such company (including the Notes annexed thereto and forming part of the accounts) as 
drawn up on the date on which the gift was made and, where there is no such balance sheet, the balance 
sheet drawn up on a date immediately preceding that date, and, in the absence of both, the balance sheet 
drawn up on a date immediately after the date on which the gift was made. 

6. Unquoted equity shares in investment companies. (1) Subject to rule 7, the value of an unquoted 

equity share in an investment company shall be determined in the manner specified in sub-rule (2). 

(2) The value of all the liabilities as shown in the balance sheet of such company shall be deducted 
from the value of all its assets shown in that balance sheet ; the net amount so arrived at shall be divided 
by  the  total  paid-up  equity  share  capital  of  the  company  as  shown  in  the  balance  sheet,  and  the  result 
multiplied by the paid-up value of each equity share shall be the value of the unquoted equity share in that 
investment company for the purposes of this Act. 

56 

(3)  For  the  purposes  of  sub-rule  (2),  the  value  of  an  asset  disclosed  in  the  balance  sheet  of  the 
company  shall  be  taken  to  be  its  value  determined  in  accordance  with  the  rules  as  applicable  to  that 
particular  asset  and,  in  the  absence  of  any  such  rule,  the  value  of  such  asset  shall  be  its  value  as 
determined under rule 20 of Schedule III to the Wealth-tax Act. 

(4) For the purposes of this rule,— 

(a)  “balance sheet” has the same meaning as in rule 5; 

(b)  the amounts referred to in sub-rule (3) of rule 5 shall not be treated as assets or liabilities. 

(5) For the purpose of facilitating the valuation of unquoted equity shares under this rule and rule 7, 
the company concerned shall have such valuation made by its auditors appointed under section 224 of the 
Companies  Act,  1956  (1  of  1956),  and  a  certificate  of  the  auditors  relating  to  such  valuation  in  the 
prescribed form shall be furnished to the Assessing Officer and the shareholders of the company; and the 
valuation made by the auditors shall be taken into account in the assessment of the shareholders of the 
company. 

7. Unquoted equity shares in interlocked companies. — (1) The value of an unquoted equity share 
in one of the two interlocked companies held by the other interlocked company for the purposes of rule 6 
shall be equal to the paid-up value of such share or the value determined under sub-rule (2), whichever is 
higher. 

(2)  For  the  purpose  of  sub-rule  (1),  the  aggregate  value  of  all  the  equity  shares  in  an  interlocked 

company shall be arrived at by multiplying the maintainable profits of such company by— 

(a)  the fraction 100/8.5, in a case where the gross total income of the company consists, to the 
extent  of  not  less  than  51  per  cent.  of  income  chargeable  under  the  head  “Income  from  house 
property” under the Income-tax Act ; or 

(b)  the fraction 100/10, in the case of any other interlocked company, 

and the resultant amount divided by the number of such equity shares shall be the value of such an equity 
share in such company. 

(3) The maintainable profits of the company, for the purpose of sub-rule (2), shall be computed in the 

following manner, namely :— 

(a)  the book profits of the company for the five accounting years of the company immediately 

preceding the date on which the gift was made shall first be ascertained ; 

(b)  adjustments  shall  be  made  to  the  book  profits  for  each  of  the  said  five  years  for  all  non-

recurring and extraordinary items of income and expenditure and losses ; 

(c)  adjustments shall be made to the book profits for expenditure which is not of a revenue nature 
but is debited in the accounts and for receipts which are in the nature of revenue receipts but are not 
accounted for in the profit and loss account ; 

(d)  any  development  rebate  or  investment  allowance  debited  in  the  books  of  account  shall  be 

added back to the book profits ; 

(e)  the  tax  liability  of  the  company  on  the  book  profits,  arrived  at  after  the  adjustments  at                  

items (a), (b), (c) and (d), shall be deducted from such book profits ; 

(f)  amounts required for paying dividends on preference share or shares with prior rights shall be 

deducted from such book profits; 

57 

(g)  the  aggregate  of  the  book  profits  for  the  five  accounting  years  so  arrived  at,  divided  by  5, 

shall be the maintainable profits of the company. 

Explanation.—For  the  purposes  of  this  rule,  “interlocked  companies”  means  any  two  investment 

companies each of which holds shares in the other company.] 

______ 

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