JUDGMENT

A. Pasayat, J.

1. Since the factual position is similar in all these five cases, they are disposed of by this common judgment. On being moved by the Revenue in applications under Section 26(3) of the Gift-tax Act, 1958 (in short the "Act"), this court had directed the Income-tax Appellate Tribunal, Cuttack Bench (in short the " Tribunal"), to refer the following question for adjudication :

"Whether, on the facts and in the circumstances of the case, exercise of revisional power by the Commissioner directing further enquiry by the Gift-tax Officer has been unreasonably reversed by the Tribunal ?"

2. The background of the cases as culled out from the statement of facts prepared by the Tribunal is as follows :

Shri Madhusudan Mishra, Shri Jayanarayan Singh Deo, Shri Bansid-har Kalasia and Shri Satiya Budek (each of them hereinafter referred to as the "donor") made gifts of various amounts to Shri Chetram Agarwala. All of them filed returns of gift under Section 13 of the Act for the assessment year 1981-82, while Jayanarayan Singh Deo filed return for the assessment year 1982-83 also. Assessment in each case was taken up by the Gift-tax Officer, Balangir, who computed the taxable gift and determined the tax payable. Subsequently, the Commissioner of Income-tax, Orissa, purporting to act under Section 24(2) of the Act, issued notice to the donors proposing to cancel the assessments on the ground that the assessment in each case was erroneous in so far as it was prejudicial to the interests of the Revenue. The donors appeared and contested the legality of the notice of the Commissioner proposing to set aside the order of the Gift-tax Officer. The Commissioner did not accept the objections and set aside the order in each case holding that the gift was not genuine and directed the Gift-tax Officer to make fresh assessment after examining the whole issue and recording a clear finding whether, in assessing the donor under the Act, the Assessing Officer was merely making the assessment purely on a protective basis or whether he was convinced that the gift was genuine and the donor not only had the capacity for making the gift, but he also had made the gift. It was indicated in the order that, before making assessment afresh, the donor was to be granted an opportunity to explain his position. The order of the Commissioner in each case was assailed before the Tribunal. The Tribunal set aside the order of the Commissioner in each case with two conclusions primarily, i.e., (i) that the Gift-tax Officer had caused necessary enquiries to be made and also examined the donor ; and (ii) that for the purpose of finding out the correctness of the order, it was not open to the Commissioner to refer to other records. The Revenue being not satisfied with the orders of the Tribunal moved for reference of three questions to this court. On the refusal of the Tribunal to refer any question, this court was moved under Section 26(3) of the Act and a direction to state a case on the question referred to above was given.

3. The stand of Mr. Ray, learned standing counsel for the Revenue, is that the Tribunal's approach was erroneous inasmuch as the Gift-tax Officer not having considered the capacity of the donor to make the gift and there being no material to show that, in fact, any gift had been made, the order as passed accepting the gift was erroneous and prejudicial to the interests of the Revenue. It is submitted that there is no detail in the Tribunal's order referring to any other record for causing enquiry in terms of Section 24(2) of the Act. Mr. Arjun Agarwal for the donor, however, contends that, as would be evident from the order of the Gift-tax Officer, a thorough enquiry had been made and nothing was left to be determined and, therefore, the order passed by the Gift-tax Officer was not erroneous in any manner, much less prejudicial to the interests of the Revenue.

4. We shall deal with the second contention of Mr. Ray first. In order to find out the limits of the Commissioner's power to revise an order passed by any subordinate authority, reference may be made to sections 24(1) and 24(2). Section 24(1) gives wide power to the Commissioner to call for the record of any proceeding in which an order has been passed by any authority subordinate to him and to make such enquiry or cause such enquiry to be made for the purpose of passing such order in the records of the proceeding as he thinks fit. But no order prejudicial to the assessee can be passed. The power under Section 24(2) can only be exercised by the Commissioner if he considers that any order passed in any proceeding by a Gift-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. Where the order passed by the Gift-tax Officer is prejudicial to the Revenue and is erroneous, the Commissioner can call for and examine the records of the proceeding, and make such enquiry or cause such enquiry to be made as may be deemed necessary. While making the examination and causing enquiry, it is not impermissible to refer to the records of any other proceeding. Therefore, the Tribunal was not justified in its conclusion that it was not open to the Commissioner to refer to other records. In the course of making enquiry, it would certainly be open to the Commissioner to refer to other materials and records as are relevant for the purpose of finding out whether the order passed by the Gift-tax Officer was erroneous inasmuch as it was prejudicial to the interests of the Revenue.

5. Now, coming to the first limb of argument of Mr. Ray, the Tribunal has recorded a finding that the Gift-tax Officer caused necessary enquiries. Mr. Agarwal for the donors has submitted that, by an elaborate order dealing with the enquiries made by the Inspector and other relevant aspects, the Gift-tax Officer had come to the conclusion about the taxability of the gift. We find that no definite material was placed regarding the capacity to make the gift. From the orders passed by the Commissioner, we find that there was no denial of the position before him that the Gift-tax Officer could not have refused to assess the donor when a return had been filed but, in the interest of the Revenue, it was necessary for him to record whether the gift made was genuine or whether the assessment was made purely as a protective measure. These aspects do not appear to have been considered by the Tribunal. We, therefore, direct that the Tribunal shall rehear the appeal keeping in view the guidelines indicated by us with regard to the power of the Commissioner to examine other records. The question whether the order passed by the Gift-tax Officer was erroneous in so far as it is prejudicial to the interests of the Revenue shall be considered afresh by the Tribunal. In that view of the matter, instead of answering the question, we direct the Tribunal to rehear the appeals.

6. The reference applications are accordingly disposed of. No costs.

S.K. Mohanty, J.

7. I agree.