COMMISSIONER OF GIFT TAX Vs. J K JAIN

JUDGEMENT

(1.) THE petitioner, the Commissioner of Gift-tax, Haryana, Rohtak, herein seeks issuance of a direction to the Tribunal to refer the following question of law to this court for its opinion in a petition filed under Section 26 (3) of the Gift-tax Act pertaining to the assessment year 1983-84 : "whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that it cannot be said that it was a mistake apparent on the face of the record and the Gift-tax Officer could not rectify the order passed under Section 15 (3) and withdraw the exemption allowed under Section 5 (1) (viii) of the Gift-tax Act in the case of the Hindu undivided family ? "

(2.) THE brief facts giving rise to this petition reveal that the assessee, Shri Jinendra Kumar Jain, the respondent herein, is the karta of his Hindu undivided family. He filed a return declaring a gift of Rs. 50,000 which he had made to his wife, Smt. Shashi Bala Jain. He claimed deduction of Rs. 50,000 under Section 5 (1) (viii) of the Gift-tax Act and the taxable gift, therefore, was declared as nil. The assessment was completed under Section 15 (3) and the deduction of Rs. 50,000 claimed by the assessee was allowed. The Inspecting Assistant Commissioner (Assessment), Karnal, informed the Gift-tax Officer on January 2, 1986, that exemption under Section 5 (1) (viii) was not available in the case of the Hindu undivided family. The Gift-tax Officer then issued a notice to the assessee under Section 34 of the Gift-tax Act. After the assessee had filed objections, he was heard in the matter and while rejecting the objections the Gift-tax Officer passed an order under Section 34 of the Gift-tax Act and withdrew the exemption of Rs. 50,000 allowed by the Gift-tax Officer and computed the taxable gift at Rs. 45,000 after allowing basic exemption of Rs. 5,000. Being aggrieved the assessee filed an appeal before the Appellate Assistant Commissioner of Gift-tax who vide his order dated May 1, 1986, dismissed the appeal. Still aggrieved, the assessee filed an appeal before the Income-tax Tribunal which was allowed, vide its order dated July 27, 1987. The order of rectification was quashed. The Tribunal held that the provisions of Section 5 (1) (viii) were not attracted to the transaction of gift contemplated by the section as there could not be any spouse of the Hindu undivided family as such. However, the Tribunal further held that there were two opinions on the subject and the provisions of Section 34 were not attracted. It was further held that the correct position of law may be against the assessee but at least it could not be said that it was a mistake apparent on the face of record. The order of the Income-tax Tribunal was not accepted by the Department and a reference application under Section 26 (1) of the Gift-tax Act was filed relating to the question of law mentioned above. The Tribunal vide its order dated May 30, 1988, declined to refer the question of law to this court and rejected the reference application filed by the Department. It is in these circumstances that the present petition under Section 26 (3) of the Gift-tax Act for referring the question mentioned above has been filed.

(3.) LEARNED counsel also relies upon yet another decision of the Allahabad High Court in Devendra Prakash v. ITO [1969] 72 ITR 151, wherein it was held as follows (page 155) :