OM DUTT Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) APPELLATE Tribunal, Chandigarh Bench, Chandigarh (for short, 'the Tribunal') has referred the following questions of law for its opinion :

(2.) THE assessees, namely, Shri Om Dutt and Smt. Sushila Devi are related to each other. Both of them were partners of the registered firm M/s Verma Brothers Toka Store, Sirsa. Sarvshri Kuldeep Singh, Dalip Singh and Surinder Singh were Kuldeep Singh and Smt. Tara Devi (daughter -in -law of Smt. Sushila Devi) wife of Dalip Singh were inducted into M/s Verma Brothers Toka Stores, Sirsa, filed return declaring a total income of Rs. 41,074, ITO, 'A' Ward, Sirsa (hereinafter described as 'the AO'), after issuing notice to M/s Verma Brothers Toka Stores and considering the explanation furnished by Shri Om Dutt held that the gifts made by Smt. Sushila Devi and Om Dutt were a part of the same transaction and a device to by -pass the provisions of s. 64(1)(vi) of the IT Act, 1961 (for short, 'the Act') and the same were liable to be included in the income of the assessees. The AAC allowed the appeals filed by Shri Om Dutt and Smt. Sushila Devi and quashed the orders passed by the AO, but his orders were reversed by the Tribunal which allowed below :

(3.) WE have heard learned counsel for the parties. In CIT vs. C.M. Kothari (1963) 49 ITR 107 (SC), the Supreme Court interpreted s. 16(3)(a)(iii) of the IT Act, 1922, which is pari materia to s. 64(1)(vi) of the Act, and laid down the following proposition :