R C MALPANI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of this Court, the Tribunal has referred the question for the opinion of this Court.

(2.) FOR the asst. year 1970 -71, the AO completed the assessment of the assessee in the status of an HUF. The assessment was completed under S. 143(3) of the INCOME TAX ACT, 1961, and the return was filed showing an income of Rs. 17,000 on 31st May, 1971. In the assessment order, the ITO considered the income of the assessee from Hindusthan Saw Mill and from contract works. In respect of income from house property, the ITO mentioned that the assessee had shown Rs. 9,500 as income from other sources. This related to the rent in respect of a hangar (godown) let out to the supply Department. The income was computed at Rs. 14,583. There was another property stated to be in the name of the wife of the Karta, Smt. Ganga Devi. The AO mentioned that the assessee -HUF consisted of the Karta, Smt. Ganga Devi Malpani, mother of the Karta, and Smt. Ganga (sic) Devi Malpani, wife of the Karta. There were also four minor sons and one minor daughter at the relevant time. The ITO mentioned that the family inherited a plot of land located within the Jorhat Municipality, on which a three - storeyed building was constructed in 1967 and completed in 1969. He noted that the entire building together with the land was gifted by the Karta and his mother, Smt. Ganga Devi, to the wife of the Karta, Smt. Ganga Devi by a registered deed of gift on 27th March, 1969. The value of the gifted property was shown as Rs. 1,000. However, the AO found that the annual rent immediately after transfer was shown by the donee at Rs. 14,400. He pointed out that for the asst. yrs. 1968 -69 and 1969 -70, Rs. 60,000 was added to the cost of construction as made by the assessee. The ITO was of the opinion that the gift was prejudicial to the interest of the five minor children in the family and the father had no power to make a gift of ancestral immovable property to the wife to the prejudice of the minors. According to the ITO, the gift was totally void.

(3.) HEARD Dr. A. K. Saraf, learned counsel for the assessee, and Mr. D. K. Talukdar, learned standing counsel for the IT Department.