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TMI Blog1971 (11) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... the conflict of judicial opinion on the question whether the gift by a karta of a Hindu undivided family to coparceners and non-coparceners is void ab initio, we directed that this reference should be heard and decided by a larger Bench. That is how this reference has been placed before the Full Bench. The assessment year in question is 1964-65. The previous year ended on 31st March, 1964. Shri Tej Nath is the assessee. He was assessed as an individual in the year in question (1964-65). The relationship of the donor and the donees is indicated by the following pedigree-table: Sunder Lal His three wives (name not known, Kartari Devi Gulab Devi had pre-deceases (childless) her husband) Amar Nath Ram Nath Tej Nath (wife, Satya Bhama) (wife, Kamla Devi) Rajinder Ravinder Naresh Kumar Kumar Kumar Sunder Lal died some time in 1934. His first wife had pre-deceased him. He had one son from the first wife, Amar Nath. His second wife, Smt. Kartari Devi, was childless. From the third wife, Gulab Devi, he had two sons, Ram Nath and Tej Nath. Ram Nath is dead. His widow is Satya Bhama. Tej Nath was married to Kamla Devi and has three sons, Rajinder Kumar, Ravinder Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed the same. For the view that the gift in question was void, the Tribunal relied on Commissioner of Income-tax v. Braham Dutt Bhargava and A. Basaviah Gowder v Commissioner of Gift-tax. The revenue then moved the Income-tax Appellate Tribunal under section 26(1) of the Gift-tax Act, 1958, for referring the question of law, already set out in the opening part of this order, for the opinion of this court. Mr. Awasthy, learned counsel for the revenue, contends that the gift in question is voidable and not void. So long as the gift is not avoided, it will hold the field and would be a good gift so far as the Gift-tax Act is concerned. The learned counsel places his reliance mainly on the decisions of the Supreme Court in Raghubanchmani Prasad Narain Singh v. Ambica Prasad Singh, Guramma Bhratar Chambasappa Deshmukh v. Mallappa Chanbasappa, Raghbir Singh Sandhawalia v. Commissioner of Income-tax, Jugal Kishore Jai Prakash v. Commissioner of Income-tax and Subba Goundan v. Krishnamachari. The learned counsel, however, concedes that if we come to the conclusion that the gift is void ab initio, he would not be able to take any exception to the decision of the Tribunal, but his princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine all questions necessary for the purpose of making the assessment. Section 22 is the appeal section and the assessee can, in appeal, raise a question that the gift in question is not a taxable gift (section 22(c)). It will appear from these provisions that a complete machinery has been provided to determine whether a gift is a taxable gift. This datermination has necessarily to be made by the Gift-tax Officer. To repeat, there must be a donor, i.e., a person who owns property which is the subject-matter of gift. There must be a donee, i.e., a person to whom the donor transfers the ownership of the property. There must of course be property which is the subject-matter of transfer. It will be obvious that if the donor does not own the property, there would be no gift. It would also be obvious that if there is no donee, there would be no gift. This brings me to the question as to the rights of a karta to transfer coparcenary property by gift: " A joint Hindu family consists of all persons lineally descended from a common ancestor, and includes their wives and unmarried daughters. A daughter ceases to be a member of her father's family on marriage, and becomes a member of her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin reasonable limits of ancestral immovable property for 'pious purposes'. But, the alienation must be by an act inter vivos, and not by will. A member of a joint family cannot dispose of by will any portion of the property even for charitable purposes and even if the portion bears a small proportion to the entire estate. But now see section 30 of the Hindu Succession Act, 1956. 258. (1) According to the Mitakshara law as applied in all the States, no coparcener can dispose of his undivided interest in coparcenary property by gift. Such transaction being void altogether there is no estoppel or other kind of personal bar which precludes the donor from asserting his right to recover the transferred property. He may, however, make a gift of his interest with the consent of the other coparceners. (2) As to disposition by will after the coming into operation of the Hindu Succession Act, 1956, see section 30 of that Act........" It will appear from the combined reading of these paragraphs that the position in Hindu law is that whereas the father has the power to gift ancestral movables within reasonable limits, he has no such power with regard to ancestral immovable property or co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arcenary and, to all intents and purposes, would be strangers. So far as the gift to the three females is concerned, the gift, being to strangers of coparcenary property, would be void. The rule of Hindu law on this matter is clear and no authority taking a contrary view has been brought to our notice. So far as the three sons are concerned, there would be no transfer of ownership from the donor to the donee, because the donees are themselves also owners of the property. They would not be acquiring any property under the gift. It is not a case where there has been a partition of the property and the father is transferring his share after the partition to the sons by gift. Therefore, in the case of sons, there would be no gift within the meaning of the Gift-tax Act. And if there is no gift, the jurisdiction of the Gift-tax Officer to tax the same does not arise. It was conceded by Mr. Awasthy, learned counsel for the department, that the factum of the gift has to be proved, i.e., there must be a gift within the meaning of the Gift-tax Act before the gift can be held to be taxable. If there is no gift, the Gift-tax Officer cannot bring it to tax. However, the text of Hindu law is ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property to his daughter at or after marriage, such gift being customary in this Presidency and countenanced by Hindu law. In the instant case the gift to the daughter was not made at or about the time of her marriage. A gift by a member of a joint family of his interest in the joint family property in favour of a stranger is invalid so as not to bind even the coparcener who made the gift. A divided brother stands in no better position than a stranger. The gifts to the daughter and the divided brother were wholly void. There can be no acquiescence in a void transaction and so the fact that the sons had acquiesced in the gifts made no difference to the validity of the gifts." The next decision, which has taken the same view, is Smt. Valluri Janakamma v. Commissioner of Gift-tax. In this case, a gift of joint family property of which the assessee was the karta was made by him. This gift was sought to be taxed under the Gift-tax Act. It was maintained by the assessee that the gift was void as no gift could be made of the joint family property. This contention was not accepted by the Gift-tax Officer, the Appellate Assistant Commissioner and the Tribunal. On a reference, P. Jaganmoh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he view that inter se the members of a joint Hindu family the gift would be voidable. On the other hand, it was held in Amulya Ratan Sirkar v. Tarini Nath Dey, that the rule of estoppel does not in every case work as between the donor and the donee. The relevant observations in this decision are: "But, on the arguments addressed to us, we are not prepared at present to accept it as an invariable principle of law that, in every case of gift, the doctrine of estoppel may be applied as between donor and donee." The next decision relied upon is Kalyanasundaram Pillai v. Karuppa Mooppanar. This case has no applicability because it deals with the question that a completed gift cannot be revoked. The decision in Subba Goundan v. Krishnamachari does not deal with the question whether a gift by a member of a joint Hindu family is void or voidable. It is a case where the sale by the manager is attacked by the other members of the joint Hindu family. To the same effect is the decision in Bhirgu Nath Chaube v. Narsingh Tiwari. It will appear from a close study of these authorities that their Lordships of the Privy Council were very clear that all alienations are not necessarily void (H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this basis, the income from the gifted shares was treated as the income of the karta, in other words, of the joint Hindu family. This order of the Income-tax Officer was upheld by the Appellate Assistant Commissioner and later by the Appellate Tribunal. On a reference to this court, it was held that the gift was voidable and not void and that the department was in error in bringing the income of the shares gifted to tax as the income of the Hindu undivided family. It will appear from the facts of the aforesaid case that virtually the gift was assented to by the joint Hindu family inasmuch as the son was present when the father made the gift of the shares and he did not object to the said gift. The observations that in all cases where the other coparceners are not the consenting parties to the gift, the gift would merely be voidable, have to be treated as obiter. It appears to me that this decision is of no help to the learned counsel for the department and is clearly distinguishable. The next decision to which reference has been made is Jugal Kishore Jai Prakash v. Commissioner of Income-tax. This decision again is of no assistance to the learned counsel for the department beca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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