TMI Blog1975 (2) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... eged gifts were inchoate and incomplete by the Tribunal in their order dated April 26, 1960, for the assessment year 1954-55 ? " Tax Case No. 42 of 1969 relates to the assessment year 1958-59, whereas Tax Case No. 23 of 1970 is in respect of the assessment year 1960-61 the assessee being in each of the cases an individual--Shri Jhaverbhai Patel. The corresponding previous years for the aforesaid two assessment years were Diwali, 1957, and Diwali, 1959, respectively. The facts giving rise to these cases are short and simple. The assessee was the partner of a firm, Messrs. J. B. and Company, holding eight annas' share in the partnership. One of his sons, Vithalbhai, was also a partner, holding four annas' share. On November 1, 1952, the assessee made three gifts by means of transfer entries in the books of account of the firm aforesaid in the following manner : (i) Rs. 35,000 being gifted to Shri Bipinchandra Vithalbhai, son of Vithalbhai Patel and grandson of the assessee. (ii) Rs. 35,000 to Shri Ashok Kumar Vithalbhai, another son of Vithalbhai Patel and grandson of the assessee. (iii) Rs. 25,000 to Shrimati Savita Ben, wife of Vithalbhai Patel and daughter-in-law of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of an earlier assessment year, the Tribunal dismissed the assessee's appeals. The Tribunal further held that in respect of these two years in question the proper provision of law to be applied would be not section 147(a) but section 147(b) of the Act and, since the proceedings under section 147(b) were not barred by time, the Tribunal treating the reassessments made by the taxing authority below under section 147(a) as being reassessments under section 147(b) rejected the assessee's contention. At the instance of the assessee, the Tribunal has referred these cases. In its appellate order (annexure " C " to the statement of the case) the Tribunal has taken note of certain facts and features which I may sum up hereinbelow : (i) The assessee, " according to his own notions and convictions" made the gifts and considered them as complete when the transfer entries were made in the books of the firm. (ii) This legal position had not been accepted by the taxing authority which held that the gifts were inchoate and incomplete because no cash had actually passed on to the donees on the date when the gifts were purported to be made. (iii) Almost all the High Courts in India ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total income of Shri Jhaverbhai Patel, the assessee, on the ground that the gifts made on November 1, 1952, were incomplete since no cash had passed on to the donees on that day and transference had been made only through book entries ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessee was liable to reassessment under section 147(b) of the Income-tax Act, 1961 ? " From the analysis of facts as noticed by the Tribunal, which I have already recapitulated earlier, it is clear that the Tribunal has felt coerced by its earlier decision on the question regarding the nature of the gifts. There, I must say, the Tribunal was not well instructed in law, for, it is well-settled that the fact that in the earlier proceedings the Tribunal took a different view of the gifts was not a conclusive circumstance, the decision of the Tribunal reached in those proceedings did not and could not, in law, operate as res judicata. Reference in this connection may be made to a decision of the Supreme Court in the case of Commissioner of Income-tax v. Brij Lal Lohia 1. Decisions may be multiplied but the principle of law is so well set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm, to make such cash payments if so demanded. The question as to how far the possession of the thing gifted can be given physically to the donee must depend upon the nature of the subject-matter of the gift. In the circumstances obtaining In the present cases, the Tribunal has actually, indirectly held that the gifts were given effect to, for, they were subjected to gift-tax as and when the amounts were withdrawn by the donees. On such finding of facts, any inference that, since no such cash had passed on to the donees, no acceptance by the donees can be held to have taken effect, must be held to be perverse. The Judicial Member of the Tribunal holds in his supplementary order that the assessee had not intermeddled with the subject-matter of the gifts. No funds were withdrawn by him nor were any interests received by him. In that view of the matter, the law as settled by the Supreme Court in, the cases of Controller of Estate Duty v. C. R. Ramachandra Gounder and in Commissioner of Income-tax and Controller of Estate Duty v. N. R. Ramarathnam approving some of the earlier decisions of different High Courts must come into full play regarding the gifts. The case of N. R. Ramarathna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vour of the assessee and against the revenue. Since I have already held that the Tribunal was not correct in holding that the gifts were inchoate and incomplete either on the ground that the point was concluded by an earlier order dated April 21, 1960, passed by the Tribunal in relation to the assessment year 1954-55 or even on merits, the third question must, as a necessary corollary, be answered in favour of the assessee. Section 147 of the Act deals with income escaping assessment. It is absolutely immaterial whether section 147(a) or section 147(b) could be said to be applicable to the facts of the present case, for, none of the two clauses of section 147 would apply to a case where no income has escaped assessment. As I have already held above, this is not a case of escapement of assessment of any income. As such, the assessee was not liable to reassessment even under section 147(b) of the Act. It is not necessary to go into the question as to whether the original proceeding having been initiated under section 147(a), the Tribunal could legally convert it into a proceeding under section 147(b). In the result, therefore, all the questions as reframed are answered in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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