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[2008] 304 ITR 41 [2007] 164 TAXMAN 549 (RAJ.) HIGH COURT OF RAJASTHAN Commissioner of Gift-tax v. H.H. Bhagwat Singh* RAJESH BALIA AND RAJENDRA PRASAD VYAS, JJ. IT REFERENCE NO. 112 OF 1998 MAY 2, 2006 Section 17(1)(c) of the Gift-tax Act, 1958 - Penalty - For concealment of gifts - Assessee, erstwhile ruler, in response to notice under section 16 had filed a return declaring value of taxable gifts at nil - GTO on finding that assessee, transferred property in question for an amount otherwise than for adequate consideration, treated difference as deemed gift - Assessee had also made certain payments to members of his family and claimed that disbursement of sum did not amount to gift but part of his expenses as discharge of his obligation as patriarch of household - GTO, however, treated payments made by assessee as taxable gift and levied penalty under section 17(1)(c) - Whether since all relevant and primary facts about transfer of property and disbursement of payments to first degree relation of assessee, claimed to be for maintenance purpose, had been disclosed along with return, although it was a good case for levy of gift-tax, it was not a fit case for levy of penalty under section 17(1)(c) - Held, yes K.K. Bissa for the Appellant. Rajendra Mehta for the Respondent. JUDGMENT 1. Heard learned counsel for the parties. 2. At the directions of the High Court following question of law has been referred along with statement of case by the Tribunal in respect of gift-tax relating to assessment year under the Gift-tax Act, 1958 : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was under a bona fide belief that amount in question was not chargeable to gift-tax and as such no penalty under section 17(1)(c) is leviable ?" 3. Briefly stated the facts are that the assessee - late H.H. Maharana Bhagwat Singh of Mewar (now represented through his son and his legal heir M.K. Arvind Singh) in response to notice under section 16 of the Gift- tax Act had filed a return declaring value of taxable gifts at nil. In the assessment completed under section 15(3) on 3-3-1979, the GTO held that the following…

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