1975 (11) TMI 51 - AT - Income Tax

Summary

Issues:
1. Validity of the gift of ancestral land made by the assessee in favor of his sons.
2. Applicability of Hindu Law and Customary Law in determining the legality of the gift.
3. Interpretation of Article 59 of the Digest of Customary Law in Punjab.
4. Effect of the decree obtained by other sons challenging the gift on the assessment made by the GTO.

Analysis:

The appeal was filed by the Department against the order of the AAC, Jullundur, canceling the assessment made by the GTO regarding the gift of ancestral land by the assessee to his sons. The assessee contended that the land was ancestral and, under both Hindu Law and Customary Law, he could not legally gift the joint family property to his sons without their consent. The AAC accepted this plea, emphasizing that the gift was void ab initio under Customary Law as the other sons did not consent to it. The AAC also noted that the Hindu Succession Act abrogated the Customary Law, making the gift invalid under Hindu Law as well. The AAC canceled the assessment as illegal and unjustified without delving into the land's valuation.

Upon review, the ITAT found the appeal to be lacking in substance. It was established that, whether governed by Hindu Law or Customary Law, the assessee, as a Karta, could not legally gift the ancestral property. The Punjab and Haryana High Court precedent in the case of "CIT vs. Tej Nath" supported this, declaring such gifts void ab initio. Even under Customary Law, the gift was invalid as the other sons did not consent to it, evident from the civil suit they filed challenging the gift and obtaining a decree against the donor and donees. The ITAT affirmed the AAC's decision to cancel the assessment based on the gift's invalidity under both Hindu and Customary Laws, considering the civil court decree as well.

In conclusion, the ITAT dismissed the appeal, upholding the AAC's order. The judgment emphasized that the gift of ancestral land by the assessee to his sons was deemed invalid under both Hindu Law and Customary Law due to the lack of consent from all male descendants, as required by law. The decision highlighted the importance of legal consent in such transactions and the impact of civil court decrees on the validity of gifts involving ancestral property.