COMMISSIONER OF INCOME TAX Vs. GANGA SAGAR SURI

JUDGEMENT

(1.) THESE two references are disposed of by a common order. Following questions have been referred for opinion of this Court under S. 256(1) of the IT Act, 1961 (in short the 'Act') by the Income-tax Appellate Tribunal Delhi Bench 'B', New Delhi (in short 'Tribunal') :

(2.) ASSESSEE , who was previously assessed as an individual in respect of share income from a firm M/s Sagar & Co. did not show any income from the share income as an individual and claimed that he had made a gift on 1st Jan., 1972, of the balance outstanding in the books of the firm as also the interest amount in favour of the Hindu Undivided Family (in short 'HUF'), with himself as Karta and his wife and three sons as members thereof. Two affidavits were filed on 6th Jan., 1974. In his affidavit, reference was made to the gift. In affidavit filed by his wife Smt. Shama Suri acceptance of the gift was highlighted. To substantiate the plea, a reference was made to the ledger account, which indicated that the capital amount was to be treated as HUF account w.e.f. 1st Jan., 1972. The Income-tax Officer (in short 'ITO') did not accept the plea and held that this was merely a camouflage and by unilateral declaration no gift could have been made. Matter was carried in appeal before the Appellate Assistant Commissioner of Income-tax (in short 'AAC'). Said authority on consideration of the materials on record accepted assessee's stand. For the asst. yr. 1974-75 also, in view of the decision for the asst. yr. 1973-74, assessee's claim was held to be allowed. Appeal for the asst. yr.1974-75 was heard along with the one relating to the asst. yr. 1971-72. Revenue preferred three appeals before the Tribunal. Main question that was urged before the Tribunal was whether there was a gift and if there was a gift whether provisions of S. 64(2) would have any application. Analysing the factual position, the Tribunal held that in fact there was a gift. So far as S. 64(2) is concerned, it was held that the said provision has no application to the facts of the case as the assessment years involved are 1973-74 and 1974-75.

(3.) WE find that Tribunal formulated the issues to be as follows :