COMMISSIONER OF INCOME TAX Vs. GUPTA H C

JUDGEMENT

(1.) THE question of law referred to us at the instance of the Commissioner of Income-tax by the Income-tax Appellate Tribunal is:

(2.) THE question has arisen in the following circumstances:

(3.) WHILE the appeal was pending before the Tribunal, proceedings had been taken by the Gift-tax Officer against I. C. Gupta. In respect of the transaction mentioned above, the Gift-tax Officer held that the transaction of exchange of shares between I. C. Gupta and H. C. Gupta amounted to a gift of Rs. 20,587 by I. C. Gupta to H.C. Gupta. This order became final. The Income-tax Appellate Tribunal, taking into consideration this order, passed under the Gift-tax Act, held that no question of capital gain arose because the transaction was held by the Gift-tax Officer to be one of gift. The Income-tax Tribunal appears to have applied the principle of res judicata in non-suiting the department and held that the decision of the Gift-tax Officer under the Gift-tax Act was final and binding on the income-tax authorities in respect of the interpretation or effect of the transaction of exchange which had been brought to tax by the Income-tax Officer under Section 12B of the Income-tax Act in assessment proceedings against the assessee, H. C. Gupta. In our opinion, the Tribunal has committed a clear error of law in taking such a view. Any order passed under the Gift-tax Act in the case of one assessee will not be binding on the Income-tax Officer while taking assessment proceedings against another' assessee even though the transaction giving rise to proceedings under the Gift-tax Act and the Income-tax Act, respectively, against the two assessees may be the same. The income-tax department was not a party in the Gift-tax Act proceedings. Any order passed therein will not be binding, per se, on the Income-tax Officer while he was making assessment against another assessee under the Income-tax Act. In our opinion, the Income-tax Appellate Tribunal could not have disposed of the appeal filed by the Income-tax Officer solely on the ground that, in the case of I. C. Gupta, the Gift-tax Officer had held that the transaction was one in which I. C. Gupta had made a gift to the extent of Rs. 20,587 to the assessee, H. C. Gupta.