K.S. Hegde, J. - (1.) This appeal by special leave arises from the decision of the High Court of Madhya Pradesh in a reference under Section 66(1) of the Income-tax Act, 1922 (hereinafter referred to as " the Act"). The question referred for the opinion of the High Court was : "Whether, in the facts and circumstances of this case, the income from the property transferred to the assessee's wife for a consideration of Rs. 1 lakh could be assessed in the hands of the assessee under Section 16(3) of the Act -
(2.) The facts of the case, as set out in the statement of the case submitted by the Tribunal, are as follows : The assessee, a Muslim, claimed in his assessment proceedings for the assessment year 1961-62 that a particular item of income is not his income but that of his wife. According to him he had transferred for consideration the property from out of which the income in question arose to his wife for a consideration of Rs. 1 lakh. His case was that at the time of his marriage with the transferee, in 1930, a meher of Rs. 10,000 had been fixed. But, in 1960, he enhanced the meher to rupees one lakh and in February or March of that year he orally transferred the property in question to his wife to discharge his meher. The Income-tax Officer did not accept the claim of the assessee. He came to the conclusion that there is no satisfactory evidence to show that the transfer in question' is a genuine one. In his view the transaction was a gift and not a transfer for consideration. The conclusion reached by the Income-tax Officer was affirmed in appeal by the Appellate Assistant Commissioner. But, on a further appeal by the assessee to the Tribunal, the Tribunal came to the conclusion that the transfer was genuine as well as valid. In its view it was open to the assessee to increase the meher fixed at the time of marriage, on a subsequent date, and the evidence on record established the enhancement pleaded by the assessee as well as the transfer put forward. It also came to the conclusion that, ever since the transfer, the wife of the assessee was in possession of the property transferred in her name. Hence, the income of that property cannot be considered as the income of the assessee.
(3.) Aggrieved by that decision, the department sought to have the following questions referred to the High Court of Madhya Pradesh under Section 66(1) of the Act: (1) Whether, having regard to the evidence on record, the Appellate Tribunal was justified in holding that the transfer of property under dispute was not a gift (2) Whether there was any material before the Appellate Tribunal to support its finding that the assessee had in fact increased the dower debt from Rs. 10,000 to Rs. 1,00,000 (3) Without prejudice to the questions Nos. 1 and 2 above, whether the Appellate Tribunal was justified in holding that, the property transferred to the wife in consideration of dower debt did not attract the provisions of Section 16(3)(a)(iii) ;