R.B. Lal, J. - (1.) THE Income-tax Appellate Tribunal, Allahabad Bench, has referred the following questions under Section 256(2) of the I.T. Act, 1961 (briefly " the Act "), for the opinion of this court: " 1. Whether, on the facts and in the circumstances of the case, it could be said that the gifts were not accepted by the two ladies, Smt. Bimla Devi and Smt. Shashi Prabha Devi, and they had no possession or control over the amount gifted to them ? 2. Whether the reasonableness or otherwise of the amount of gift when not challenged by any member or members of the family whose interests are affected, could be said to be a void gift ab initio ?
(2.) THE material facts are these : M/s. Kanhaiya Lal Pyare Lal, assessee, is an HUF with Pyare Lal as its karta. THE coparcenary consisted of Pyare Lal and his two sons. Smt. Simla Devi and Smt. Shashi Prabha Devi are the wives of those sons. THE accounting period of the assessee relevant for the assessment year 1961-62 was from July 8, 1959 to June 26, 1960. THE opening balance during this year was Rs. 1,18,697 ; interest and profit were further credited during this accounting period. On July 8, 1959, transfer entries were made in the account books of the HUF whereby Rs. 42,254-1-3 and Rs. 482-1-0 were transferred in the name of Smt. Bimla Devi and equal amounts were also transferred to the name of Smt. Shashi Prabha Devi. During the assessment years 1961-62 to 1963-66, the assessee asserted that interest was paid to the two ladies on the aforesaid amounts, but the Department did not accept the transfers as gifts and did not allow the payment of interest. For the assessment year 1966-67, the assessee again set up the aforesaid gifts in favour of the two ladies and claimed deduction of the amount of interest paid to the two ladies. For the assessment years 1967-68 to 1969-70 also, the assessee took up the same stand and claimed deduction of interest. The ITO took the view that the transfer entries did not amount to gifts in favour of the two ladies. The amounts remained in deposit in the books of the assessee and the gifts had not been accepted by the donees. He also referred to para. 225 of Mulla's Hindu Law, 13th Edn., and observed that the amounts said to have been gifted to the two daughters-in-law were not reasonable. The assessee appealed to the AAC. The AAC passed a detailed order in the appeal relating to the assessment year 1966-67 and took the view that in reality there were no gifts. He took the same view in the appeals relating to the assessment years 1967-68 to 1969.70.
(3.) THE assessee appealed to the Income-tax Appellate Tribunal and the Tribunal concurred with the reasons and the view of the AAC and dismissed the appeal. The Income-tax Appellate Tribunal refused to make a reference and, therefore, the assessee moved this court and obtained a reference of the aforesaid questions.;