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Issues Involved:
1. Whether the amounts represented by cross-gifts were held by the donees as benamidars of the respective donor-Hindu undivided families (HUFs) or in their own right. 2. Whether the income attributable to the cross-gifts is assessable in the hands of the donors. 3. Whether the Tribunal was right in refusing to entertain and adjudicate upon the contention of the department that the alleged gifts were void in law. Issue-Wise Detailed Analysis: 1. Cross-Gifts and Benamidars: The primary issue was whether the cross-gifts were held by the donees as benamidars of the respective donor-HUFs or in their own right. The Tribunal initially held that the gifts were real and not sham, and thus, the income from these gifts should not be assessed in the hands of the donors. However, the High Court found that the Tribunal had previously determined these gifts to be sham and not real in earlier assessment years (1961-62 and 1962-63). The High Court emphasized that the Tribunal cannot come to a different conclusion on the same facts in subsequent years unless new facts are presented, which was not the case here. The High Court concluded that the Tribunal erred in law by ignoring its previous findings and held that the gifts were indeed sham and not real. Consequently, the income attributable to these gifts should be assessed in the hands of the donors. 2. Income Attributable to Cross-Gifts: Given the finding that the gifts were sham, the income attributable to these gifts should be assessed in the hands of the donors. The High Court reiterated that the Tribunal's earlier finding that the gifts were sham and non-existent in law should stand, and thus, the income from these gifts should be included in the total income of the respective HUFs. The High Court noted that the Tribunal's deviation from its earlier findings was unjustified and based on the same set of facts, the income should be assessed in the hands of the donors. 3. Validity of the Gifts: The second question referred to the High Court was whether the Tribunal was right in refusing to entertain and adjudicate upon the contention of the department that the alleged gifts were void in law. The Tribunal had observed that the gifts made by the HUFs were real and thus, section 16(3)(a)(iv) of the Indian Income-tax Act, 1922, was not applicable. However, the High Court declined to answer this question because it proceeded on the basis of there being real gifts. Since the High Court concluded that the gifts were sham, it rendered the question of their validity moot. Therefore, the High Court did not address this issue further. Conclusion: The High Court answered the first question in the negative, holding that the Tribunal erred in concluding that the gifts were real. Consequently, the income from these gifts should be assessed in the hands of the donors. The second question regarding the validity of the gifts was not answered as it was rendered unnecessary by the High Court's finding that the gifts were sham. The Commissioner was entitled to costs, with counsel's fee set at Rs. 750, to be paid by the three assessees in equal amounts.
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