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TMI Blog1958 (3) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee carries on business as a mill-agent. Sudhirbhai is one of his sons and Pratimaben is a married daughter. 3. The assessee, his two brothers, Kasturbhai Lalbhai and Narottam Lalbhai, their sons and other coparceners held certain joint family assets and they also carry on their joint family business of banking under the name and style of Sheth Lalbhai Dalpatbhai or M/s. Lalbhai Dalpatbhai. M/s. Lalbhai Dalpatbhai are separately assessed as a Hindu undivided family. 4. The assessee purported to make a gift of ₹ 5 lacs to the said Sudhirbhai and ₹ 2 lacs to Pratimaben on November 17, 1952 (S.Y. 2009), by crediting respectively to their accounts the said sums in his books of account. The assessee at the end of S.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer by his letter dated July 21, 1954, made enquiries about the alleged gifts of ₹ 5 lakhs and ₹ 2 lakhs made on November 17, 1952. The assessee replied vide letter, July 26, 1954. The Income-tax Officer, however, held, that the credit entries by the assessee in his books of account on November 17, 1952, were not effective in law to constitute a gift. The Income-tax Officer while computing the interest income of the assessee ignored the interest payable to Sudhirbhai and Pratimaben by the assessee. The assessee did not appeal therefrom Copies of the two letters dated July 21, 1954, and July 26, 1954, and the Income-tax Officer's order for the assessment year 1954-55 are annexed hereto as annexure 'C' collectively and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annexure 'E' and forms part of the case. At the special request of the assessee the order of the Appellate Assistant Commissioner is annexed hereto as annexure 'F'. 11. From these facts the questions of law which arise are: (1) Whether the entries made on November 8, 1953, in the books of M/s. Lalbhai Dalpatbhai constituted a valid gift, or an assignment of a chose in action or a novation of contract by the assessee? (2) Whether on the facts and circumstances of the case the assessee was liable to be assessed on the interest amounts of ₹ 15,334 and ₹ 6,293 credited respectively to the accounts of Sudhirbhai and Pratimaben in the books of M/s. Lalbhai Dalpatbhai? N. A. Palkhivala, for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted to the assessee in respect of his instructions and he signed the voucher. The accounts of Sudhirbhai and Pratimaben also show that they drew upon their accounts in respect of these two sums which were credited to them. It is also significant that it is not suggested that the gifts made by the assessee were not bona fide gifts or that the transaction was not actually effected. The record shows that the reason for making these gifts was, as far as the son was concerned, that he was mentally deranged and the father wanted to make provision for his maintenance, and, as far as the daughter was concerned, she was 29 years of age and a similar consideration moved the father in making the gift. The record also shows that the assessee made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the daughter, and the son and the daughter should have then proceeded to the bank and deposited the money in the bank, and that then only the transaction would be legally effective? Why have the banking system at all in this country? The banks serve the purpose of obviating the necessity of people paying in currency notes. But the Tribunal seems to have forgotten that the banking system has been flourishing in this country and certainly in Bombay and Ahmedabad for a number of years. The second equally extraordinary reason given by the Tribunal is that the assessee did not have sufficient amount to the credit of his account with his bankers on the 8th of November, 1953. Now that is a matter between the assessee and his bankers. If th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealt with by merely making entries in the books of account clearly show that it is not necessary that the bank should have actual funds in order that the bank should acknowledge its liability to pay a certain amount to a third party on behalf of its constituent. We are not concerned with whether the bank was in a position to pay the amount to the son and daughter of the assessee. The bank accepted its liability and as a matter of fact the son and daughter subsequently operated upon their respective accounts on the assumption that the bank had accepted the liability. Mr. Joshi has put forward a further contention and that is that we are not dealing with an ordinary bank, but we are dealing with a joint Hindu family functioning as a bank. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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