POONAMCHAND Vs. COMMISSIONER OF INCOME TAX M P

JUDGEMENT

(1.) BY this reference under section 256 (I) of the Income Tax act, 1961 (hereinafter referred to as "the Act"), the Income-tax Appellate tribunal, Indore Bench, Indore, has referred the following question of law to this Court for its opinion:-

(2.) THE material facts giving rise to this reference, briefly are as follows:-During the course of assessment proceeding in the case of Shri Chandanmal and his brother Poonamchand, the Income-tax Officer found that Shri chandanmal had made a gift of Rs. 25,000 on 6th of August 1978 as under:- <FRM>JUDGEMENT_760_MPLJ_1982Html1.htm</FRM> The Income-tax Officer also found that on 7th October, 1974, Shri Poonamchand had made a gift of equal amount, that is to say, Rs. 25,000 as under:- <FRM>JUDGEMENT_760_MPLJ_1982Html2.htm</FRM> In view of these facts, the Income-tax Officer concluded that there were cross-gifts to the extent of Rs. 17,000 (excluding the gift of Rs. 8,000 by Shri chandanmal to Shrimati Shardabai) and, hence, he invoked the provisions of clauses (iv) and (v) of section 64 (1) of the Act and included in the total income of Shri Chandanmal, a sum of Rs. 2,083 being the income by way of interest of Shrimati Motanbai, Shri Rajendra Kumar and Shri Ramanlal similarly, the Tribunal included in the total income of Shri Poonamchand rs. 2,040 the income by way of interest of Shrimati Pukhrajbai, Kumari angurbala and Kumari Madhubala. Aggrieved by these orders, the assessee preferred an appeal before the Appellate Assistant Commissioner. The appellate Assistant Commissioner upheld the orders passed by the Income tax Officer. On further appeal the Tribunal held as follows :-

(3.) HAVING head the learned counsel for the parties, we have come to the conclusion that the question has to be answered in the affirmative and in favour of the department. The Tribunal has found on the basis of the material on record that the two transfers by Poonamchand and Chandanmal, the two assessees, were so interconnected as would justify the finding that they were parts of the same transaction. It is, thus, clear that a circuitous method was adopted by the assessees to evade the implications of clauses (iv)and (v) of section 64 (1) of the Act. In view of the finding, no question of jaw really arises for our consideration. The Tribunal, in our opinion, was right in holding that the provisions of clauses (iv) and (v) of section 64 (1) of the Act were applicable to the gifts made by the assessees.