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TMI Blog1976 (10) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... e extracted above. Thereupon, the Commissioner of Income-tax approached this court in T.C.Ps. Nos. 16 to 18 of 1973 and by an order dated February 18, 1974, this court directed the Tribunal to refer the following question also for the opinion of this court: " 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 ?" T.C. No. 64 of 1975 covers the above question. Both the questions referred to above relate to the same assessment year, namely, 1963-64. The short facts are: There were four brothers by name L. G. Balakrishnan, L. G. Varadarajulu, L. G. Ramamurthy and L. G. Nityanand and they constituted a partnership with the firm name of L. G. Balakrishnan and Brothers. In the accounting year ending 31st March, 1958, relevant to the assessment year 1958-59, the Income-tax Officer found the following deposits in the books of the firm called L. G. Balakrishnan and Brothers and the said deposits were made by debiting the capital account of the partners and crediting the account of the minor children as shown below: ----------------------------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken up to this court on a reference by L. G. Balakrishnan, this court in L. G. Balakrishnan v. Commissioner of Income-tax [1963] 49 ITR 102 (Mad) observed at page 106: " The finding of the department as well as of the Tribunal is that there was an indirect transfer of assets by L. G. Balakrishnan to his minor son, Vijayakumar. This is certainly based on the evidence on record and it seems to us that this finding is, fully justified and warranted." Subsequently, two other debit and credit entries were found as follows: -------------------------------------------------------------------------------------------------------------------------------------------- Donor Date Amount Name of the Donee in whose name credited -------------------------------------------------------------------------------------------------------------------------------------------- Rs. L. G. Varadarajulu 24-3-59 75,000 R. Chitra, daughter of L. G. Ramamurthi L. G. Ramamurthi 30-4-59 1,00,000 Sudarshan, son of L. G. Varadarajulu -------------------------------------------------------------------------------------------------------------------------------------------- For the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed the deletion of interest referable to those amounts. The department preferred appeals to the Income-tax Appellate Tribunal and the Tribunal allowed the appeals, holding that the gifts were sham and that the funds which earned interest really belonged to the family and, therefore, the Income-tax Officer was justified in including such interest in the income of the respective families. For the assessment year 1963-64, the Income-tax Officer included the interest income referable to the amounts gifted in each case in the assessment of the respective Hindu undivided families following the order of the Tribunal in the case of the assessment years 1961-62 and 1962-63. On appeal, the Appellate Assistant Commissioner confirmed the order of the Income-tax Officer in that behalf. The assessee took the matter on further appeal to the Income-tax Appellate Tribunal and the Tribunal held that the gifts were real, that the gifts having been made by the Hindu undivided families, section 16(3)(a)(iv) was not attracted and that, therefore the order of the Appellate Assistant Commissioner was not right, with the result the appeals were allowed. It is the correctness of this conclusion of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the question covered by T.C. No. 229 of 1972, and it relates to the correctness of the conclusion of the Tribunal with regard to the nature of the gifts involved in these cases. Before we deal with this question, it is desirable to refer to certain things which had happened previously. We have already referred to the assessment in regard to 1958-59, having been brought up to this court by L. G. Balakrishnan. Similarly, when the Tribunal held in respect of the assessment years 1961-62 and 1962-63, that the gifts were sham and not real, the matter was brought up to this court in the form of a reference in L. G. Ramamurthi v. Commissioner of Income-tax [1970] 1 ITJ 740 (Mad). In that case, the question actually referred to this court was: " Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the income derived by the minor children from gifts made to them by their uncles is includible in the total income of the assessee-Hindu undivided family? " In view of the general terms in which the question was couched, a vast line of argument was sought to be advanced before this court on behalf of the assessee. As a matter of fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il in Griffiths (Inspector of Taxes) v. J. P. Harrison (Watford) Ltd. [1965] 58 ITR 328 (PC), this court further observed-[See [1970] 1 ITJ 740, 747 (Mad)]: " It, therefore, follows that if an alternative conclusion is plausible, then the finding is not perverse or unreasonable. We are also satisfied that such funnelling back of the assets into the joint family, though ostensibly through the minor, is absolutely an artificial transaction made with the intent to avoid tax and is, therefore, bound to be characterised as a sham one which need not be taken notice of by the revenue." Finally, this court wound up with the following statement-[See [1970] 1 ITJ 740, 751 (Mad)]: " Whilst, therefore, accepting the finding of fact noticed by the Tribunal in their order and which have not been challenged by specific questions and after noticing the Tribunal's order and their reasoning we are satisfied that the Tribunal is justified in law in holding that the income derived by the minor children from gifts made to them by their uncles is includible in the total income of the assessee's Hindu undivided family." It is in view of this judgment only that both the sides before the Tribunal in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact by the High Court, so that it cannot be reconsidered by lower Tribunals in subsequent proceedings. In other words, there might arise cases where the High Court would not upset the finding of fact given by the Tribunal on the ground that the same was neither perverse nor based on irrelevant material nor arrived at by ignoring relevant material in spite of the fact that their Lordships feel that if they had to reappraise the evidence, they would, perhaps, have come to a different conclusion. It would, therefore, depend on the language used in each decision as to what their Lordships have really held. It is, thus, not correct to say that a finding of fact not upset by the High Court in each and every case gets the stamp of approval of the High Court and that the Tribunal cannot in any circumstance reappraise the value of the evidence that may be placed before it in the proceedings for the subsequent years." To say the least, we are surprised at these observations of the Tribunal, having regard to the passages in the judgment of this court, which we have extracted already. It was not merely a negative finding of this court that the finding of the Tribunal on the earlier occasion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who decided the case on the present occasion. But what is relevant is not the personality of officers presiding over the Tribunal or participating in the hearing, but the Tribunal as an institution. If it is to be conceded that simply because of the change in the personnel of the officers who manned the Tribunal, it is open to the new officers to come to a conclusion totally contradictory to the conclusion which had been reached by the earlier officers manning the same Tribunal on the same set of facts, it will not only shake the confidence of the public in judicial procedure as such, but it will also totally destroy such confidence.The result of this will be conclusions based on arbitrariness and whims and fancies of the individuals presiding over the courts or the Tribunals and not reached objectively on the basis of the facts placed before the authorities. In this particular case, we are clearly of the opinion that the Tribunal has come to a conclusion totally different from the one which the Tribunal reached in respect of the assessment years 1961-62 and 1962-63 on the identical facts and circumstances. As we have pointed out already, in respect of the assessment years 1961-62 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted : " The departmental representative's contention, in fact, is that if the assessee desires the Tribunal to take a different view, it must produce some material of unimpeachable character that can lead to an inference that the transaction was not sham. In reply, the counsel for the assessee has taken us through the accounts of the donees maintained in the books of the firm, L. G. Balakrishnan & Bros., for various years to show that in the subsequent years the amounts were withdrawn and utilised in some other investments. " (2) the statement that occurs in paragraph 16 of the order of the Tribunal, where it has stated : " It has been emphasised that the money all along remained with the respective families. Here again with great respect we think that this is not proved to be the position. From the manner in which the Hindu undivided family's current account in the firm's books are maintained it appears that the firm, L. G. Balakrishnan and Bros., has been acting as a sort of bankers of the respective Hindu undivided families. " (3) the statement which is found in paragraph 19 of the order, where the Tribunal has observed : " Sri Swaminathan had also, it may be stated, reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Swaminathan invited our attention to a decision of the Bombay High Court stating that there need not be even new facts. The decision relied on is H. A. Shah and Co. v. Commissioner of Income-tax [1956] 30 ITR 618, 625 (Bom). The observation of the Bombay High Court on which reliance is placed is as follows : " Nor are we satisfied that in order to enable the second Tribunal to depart from the finding of the first Tribunal it is essential that there must be some fresh facts which must be placed before the second Tribunal which were not placed before the first Tribunal. If the first Tribunal failed to take into consideration material facts, facts which had a considerable bearing upon the ultimate decision, and if the second Tribunal was satisfied that the decision was arrived at because of the failure to take into consideration those material facts and that if these material facts had been taken into consideration the decision would have been different, then the second Tribunal would be in the same position to revise the earlier decision as if fresh facts had been placed before it on principle there is not much difference between fresh facts being placed before the second and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e succeeding Tribunal must refer to the facts which were before the former Tribunal, but which were not taken into account by that Tribunal and must observe that if those facts had been taken into account by the former Tribunal the former Tribunal itself would have come to a different conclusion. Such a statement in the order of the succeeding Tribunal is required in the interest of comity of judicial precedents as well as in the maintenance of judicial decorum and decency. Otherwise, it will lead to an assumed superiority on the part of the succeeding Tribunal as if it had discovered something which had escaped the attention of the former Tribunal and it alone was able to find out the truth, while the former Tribunal was not able to do so. In this particular case, in the whole of the order of the Tribunal, there is not a single sentence as to what facts were brought to its notice for the first time or as to what facts which were placed before the former Tribunal and which were not taken into account by that Tribunal in arriving at the conclusion which it did and if it had taken those facts into consideration, it would have come to a different conclusion. On the other hand, the on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion. If that is the position even with regard to a question of law, the position will be a fortiori with regard to a question of fact. If the Tribunal in the present case wanted to take an opinion different from the one taken by the earlier Bench, it should have placed the matter before the President of the Tribunal so that he could have referred the case to a Full Bench of the Tribunal, consisting of three or more members for which there is provision in the Act itself. Under these circumstances, we are clearly of the opinion that the Tribunal completely erred in coming to the conclusion it did, at variance with and opposed to the conclusion of the Tribunal on the earlier occasion, namely, that the gifts in the present cases constituted real gifts and not sham ones. The result is, we answer the question referred to us in T.C. No. 229 of 1972 in the negative and against the assessee. In view of this conclusion of ours, namely, that the earlier finding of the Tribunal that the gifts were sham could not be varied by the Tribunal on the present occasion, it becomes unnecessary for us to answer the second question, namely, the question covered by T. C. No. 64 of 1975, which questi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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