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Interpretation of Section 16(3)(a)(iii) of the Income-tax Act in relation to the purchase of a bus by the wife of an assessee, Presumption of ownership of the bus, Authority of the third Member of the Tribunal to decide on new points not referred to them. Analysis: The case involved a dispute regarding the ownership of a bus registered in the name of the assessee's wife, with income from the bus being paid to her. The Income-tax Officer contended that the bus belonged to the assessee, treating the wife as a benamidar. The Tribunal, comprising two Members, disagreed on whether the bus could be presumed to belong to the assessee in the absence of evidence. The matter was then referred to a third Member, who agreed that such a presumption could not be legally drawn. However, the third Member, beyond the scope of the reference, introduced the issue of whether the bus was purchased from assets transferred to the wife by the husband under Section 16(3)(a)(iii) of the Act. The judgment highlighted that the third Member exceeded their authority by introducing a new point not referred to them, as per the provisions of Section 5-A(7) of the Income-tax Act. The Act mandates that a third Member can only decide on the specific point referred to them and cannot formulate new issues for consideration. Furthermore, the judgment emphasized that the case should have been sent back to the Tribunal for a final decision after obtaining the opinion of the third Member, as the Tribunal must consist of a Bench of at least two Members for deciding an appeal. Consequently, the High Court determined that the case had not been appropriately resolved by the Tribunal due to the third Member's actions. Therefore, there was no valid order from the Tribunal for a reference under Section 66 of the Income-tax Act. The Court directed that the case be remanded back to the Tribunal for a lawful decision. The judgment also noted that the Tribunal, upon final disposal of the appeal, could consider other points if deemed necessary, but the third Member was limited to addressing the specific points referred to them. The parties were instructed to bear their own costs due to the unique circumstances of the case.
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