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TMI Blog1980 (10) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... vidually and, therefore, in his present individual assessments for the two years added them in his individual incomes. The assessee's claim, however, has been, and this Was accepted by the Tribunal, that both the income from the property and the dividends belong to his HUF, and, therefore, cannot be clubbed with his individual earnings. The background of the facts in this respect is that a deed of gift was executed on January 11, 1956, by the assessee's father, Shri Arjun Singh. It was narrated in the gift deed that in consideration of natural love and affection for his son, Gurprit Singh, Arjun Singh was transferring absolutely by gift, all the property known as 18-A, Aurangzeb Road, New Delhi, to be owned and possessed by the donee absolutely. The market value of the said property was computed in this deed at Rs. 90,000 and stamp duty was, accordingly, paid and the document was registered. It was also narrated that the possession of the property had been conveyed to the donee and the donor was, thence on, shorn of all rights, title or interest in the property conveyed, and that the donee would be its absolute owner in possession. Earlier in December, 1954, Arjun Singh had s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined the present references under s. 256(2) of the I.T. Act, 1961, for the opinion of this court. We have heard the parties and given our utmost consideration to all the circumstances. In my opinion, the facts of the present case amply bring out that Arjun Singh had gifted Rs. 50,000 and the property at 18-A, Aurangzeb Road, New Delhi, to Gurprit Singh absolutely. The latter was at that time, unmarried and had no HUF of his own. The gift deed nowhere mentioned that it was being effected for the benefit of the family of Gurprit Singh which was still to be created in future. There has been no evidence nor it was pleaded before the I.T. authorities that Gurprit Singh had imprinted the property and the shares with the character of the HUF during the present years. As observed by the Supreme Court in the case of Arunachala Mudaliar v. Muraganatha Mudaliar (1954] SCR 243; AIR 1953 SC 495, the question whether a property given by a Hindu, by way of gift or will, to his son, is self-acquired property or ancestral property in his hands, is primarily one of the intention of the donor or the testator to be gathered from the terms of the deed of gift or will. If there are no clear words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... family, was within reasonable limits. On the execution and registration of the gift deed, considerable amount of stamp duty was paid. In case Gurprit Singh was already a co-sharer in that property, there was no point in the family incurring unnecessary heavy expenditure. When such has been the overwhelming evidence and circumstances on record, it was unwarranted to deduce from the minor circumstance that when Arjun Singh had been for some time getting himself assessed as an individual and at other times in the status of a HUF, the property and the money belonged to the HUF. Much emphasis was sought to be laid on the assessment for the assessment year 1952-53, when his status was recognised by the AAC as that of a HUF. However, the order in this respect was made on September 13, 1965, long after the making of the gifts and the claim made by Gurprit Singh in the present assessments of his status as an HUF. The making of that belated order could not play the trick and eliminate the manner in which Arjun Singh and Gurprit Singh had been treating the gifted amount and the property in the years 1954 and 1956. Their contemporaneous conduct at the relevant time and their treatment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is nothing to show that the gift made by Arjun Singh in favour of Gurprit Singh, the present assessee, was not made individually to the latter but was made to him as the karta of his own smaller HUF. I am, however, of opinion that there is clear evidence on record to show that the properties were joint family properties in the hands of Arjun Singh, that this was well established in the course of the income-tax proceedings and that it is on this basis that the entire case proceeded before the authorities including the Tribunal. That is why find myself unable to agree with the conclusion arrived at by my learned brother. The statement of the case starts with these words " The assessee, Gurprit Singh, is the son of Arjun Singh and they constitute a joint Hindu family governed by the Mitakshara School of Hindu Law. The family possessed properties including the building at 18A, Aurangzeb Road, New Delhi, shares in various companies, cash, dividends and some contract business." From the order of the Appellate Tribunal, it is seen that these facts have been taken by the Tribunal from the order of the AAC in the case of this very assessee for the assessment year 1961-62. For th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l appears to have used the word " ancestral " in somewhat loose sense when what they really meant was that the property was a joint family property in the hands of Arjun Singh, I find not only (as stated earlier) that the entire case before the Appellate Tribunal proceeded on the above footing but also that this was not a mere assumption based on no evidence but it was amply supported by the evidence in the case. Unfortunately, the findings of the Tribunal had not been detailed and the parties have also not been careful to include in the statement of case, as enclosures, all the relevant documents. As already mentioned, the entire case proceeded on the basis of the order of the AAC for the assessment year 1961-62. But this order does not form part of the record. The Appellate Tribunal's order in the appeal has not been printed in the paper book. Further, the order of the Tribunal, as well as the statement of case, make it clear that the nature and character of the property in the hands of Arjun Singh was put in issue and decided by the AAC in the case of Arjun Singh for the assessment year 1952-53. That order has also not been placed on the record. The gift deed by Arjun Singh to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of his claim. Thereafter, the assessee as well as the various deponents were cross-examined and their statements were also recorded. It is in the light of this evidence that the AAC reheard the appeal and decided the question of the status of Arjun Singh. The case of Arjun Singh was that while he was still student in 1917, his father had purchased in his name and for him 17 acres of land for Rs. 17,000 from which he was getting income. His father also gave him a sum of Rs. 50,000, after his marriage, for business. He invested this amount in 1921 with Lala Bishamber Nath Kapur for a contract with Bombay Development Department. He had six annas share in the profits. In addition to this he had also income from the agricultural lands given by his father. With this income he became a partner with S.B. Dharam Singh. Bungalows Nos. IS and 20, situate at Aurangzeb Road, were received by him in lieu of the profits from the business. It was contended that from the surrounding circumstances it was clear that the property got by Arjun Singh from his father was received as joint family property and treated as such in his hands. It was further pointed out that even if there were some dou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18-A, Aurangzeb Road, as well as the sum of Rs. 50,000 came out of the joint family funds of the joint family of Arjun Singh and Gurprit Singh. It is well-settled law that the court, in a reference, will not and cannot disturb or go behind any finding of fact given by the Tribunal even on the ground that there is no evidence to support it unless it has been first expressly challenged by a question raised in the reference application to the Tribunal (vide the cases listed in foot-note (7) at page 1160 of Vol. I of the Seventh Edition of Kanga and Palkivala on Income-tax). I have endeavoured to point out that in the present case, far from disputing the above position, the department itself proceeded on the above footing for its case before the Tribunal. No question has been sought on behalf of the Commissioner to challenge the finding of the Tribunal that the property and funds gifted by Arjun Singh constituted joint family property in his hands. The Commissioner cannot, therefore, now be permitted to agitate this question. This technical ground apart, I have also endeavoured to point out that the Tribunal arrived at this conclusion not on the basis of mere surmises but on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to exclude it from the assessment in future would be to proceed on the basis of the ITO's finding and to make a gift of the property to his son. By this method he would be able to claim for subsequent assessment years t at the property no longer belonged to him even on the basis of the findings of the Department, This was perhaps the object with which the gift deed was executed on stamp paper and got registered. I am, therefore, not able to place reliance on this document as revealing the real and true character of the property in the hands of Arjun Singh, more so because, subsequent to the execution of this document, Arjun Singh himself had led ample evidence before the ITO to justify the plea that the properties belonged to the joint family. Reference has also been made to the conduct of Gurprit Singh himself in accepting the gift and also in showing it as his individual property in the returns filed by him between 1956 and 1961. So far as the question of acceptance is concerned, this is not of much consequence because the intention of the parties was that Arjun Singh should cease to have any interest in the property and that it should thereafter belong to Gurprit Singh who h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the individual assessment of Gurprit Singh. I would, therefore, answer the question referred to this court in the negative and in favour of the assessee. I would also direct, as a consequence, that the Revenue should pay the costs of the respondent. [The matter came before KAPUR J., who delivered his opinion on October 3, 1980.] M. L. Varma and S. Mukherjee for the Commissioner. G. C. Sharma, E. D. Helms and Anoop Sharma for the assessee. KAPUR J.-This reference has been placed before me on a difference of opinion between S. Ranganathan J. and D. R. Khanna J. I have had the advantage of considering the judgments proposed by them. I have also heard learned counsel and considered the subject-matter of the reference. In the case referred to this court under s. 256(2) of the I.T. Act, 1961, the assessee, Gurprit Singh, was previously being assessed in the status of an individual. In the assessment years 1962-63 and 1963-64, he contended that he was wrongly assessed in the status of an individual; instead he should be assessed as a HUF. This contention was not accepted by the ITO nor by the AAC. But, the Tribunal by an order dated December 23, 1966, partly accepted the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anganathan. J. agreed that if the property belonged to Arjun Singh individually, then it would continue to be the individual property of Gurprit Singh. But, he referred to the statement of case which sets out that Gurprit Singh was a member of a HUF of which his father was the karta and concluded that it was not open to the court to go against the statement of case. I have carefully examined the statement of case in order to ascertain which of these two points of view are correct. The fact of the matter is that the Division Bench itself had directed that a copy of the order passed by the AAC on September 13, 1965, should be placed on record. This order was passed in the, assessment of the father, Arjun Singh, for the assessment year 1952-53, but it was passed many years later on September 13, 1965, after it had been remanded from the Tribunal. After the said remand, the AAC himself had made a remand order to the ITO. Thus, there was considerable delay in deciding the case of the father relating to the year 1952-53. The position of the father is illustrated from this very appellate order passed by the AAC. Originally, Arjun Singh belonged to District Sargodha (now in Pakistan). He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the karta of a HUF was void and not merely voidable. It was held that it was void whether made to a coparcener or a stranger. But in the judgment a number of other cases have been referred to including another judgment of the Punjab High Court, S. Raghbir Singh Sandhawalia v. CIT [1958] 34 ITR 719, in which the gift was made, in the presence of the other coparceners and, therefore, according to the Full Bench, it was valid having been assented to by the other members. It would appear that the present gift would also be valid because Arjun Singh made the gift to his only other coparcener, Gurprit Singh, and, therefore, there was an assent. In any case, whichever view is taken, it would follow that the property was a HUF property in the hands of Arjun Singh and, therefore, continued to be a HUF property in the hands of his son, Gurprit Singh. Whether the property came to Gurprit Singh under a void gift or a voidable gift makes not the slightest difference because the question posed is whether this property can be assessed in the hands of the assessee as an individual. It is not possible to hold that the property can be assessed in the hands of the assessee as an individual, unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HUF property and there is no escape from this conclusion. There has been a reference to the Supreme Court's decision in C. N. Arunachala Mudaliar v. C. A. Muruganatha Mudaliar, AIR 1953 SC 495; [1954] SCR 243, in which the question before the court was whether the property gifted by the father to his son was ancestral property in the hands of the son. It was pointed out that this was a question of construction of the terms on which the gift was made. It is noteworthy that the gifted property was the self-acquired property of the testator. No doubt, the question as to the nature of the interest to be acquired by the son in such a gift would depend on the circumstances of the case. There are other cases dealing with similar points, for instance, Valliammai Achi v. Nagappa Chettiar, AIR 1967 SC 1153, wherein a father disposed of the entire joint Hindu family property by a will and gave only a portion to his son, Pallaniappa, who adopted one Nagappa Chettiar. It was held by the Supreme Court that once it was established that the property was joint HUF property, it must be held that the characteristics of the property could not be changed by the father by making a will and the grands ..... X X X X Extracts X X X X X X X X Extracts X X X X
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