Banerjee, J. - (1.) UNDER an order of this Court, a statement of case on the following question of law was made by the Tribunal : "Whether, on the facts and in the circumstances of the case, the findings of the Tribunal that the gifts alleged to have been made by the assessee to his brother, Brijlal Lohia, and his nephew, Nandkishore Lohia, were validly made and that the business of Brijlal Nandkishore did not belong to the assessees were perverse in the sense that no reasonable man would come to the findings on the material on record ?"
(2.) FACTS, in so far as necessary for answering the question, are hereinafter stated in brief. The assessee, Kanailal Lohia (alias Kanhaiyalal Lohia), now deceased, used to be assessed as an individual. His estate is represented before us by the executors of his will, namely, Brijlal Lohia and Mahabir Prasad Khemka. On 12th July, 1943, the assessee, Kanailal Lohia, gave Rs. 5,11,101 to his brother Brijlal Lohia, by way of gift. Out of the above sum, an amount of Rs. 5,00,000 was paid by cheque and the balance was paid in cash. Similarly, on 30th Sept., 1943, the assessee gave Rs. 2,50,000 to his nephew, Nandkishore Lohia, son of Brijlal Lohia, by way of gift. Thereafter, Brijlal Lohia and Nand Kishore Lohia started partnership business, some time in August 1943, under a partnership deed dt. 8th Aug., 1943, the firm name being Brijlal Nandkishore. In the said partnership, they invested the money received by them from the assessee. The firm, Brijlal Nandkishore, was granted registration under the provisions of s. 26A of the IT Act, 1922, because the ITO found no reason to doubt the genuineness and the reality of the firm. This partnership used to carry on business in jute, jute baling and shipping, being the same business which the assessee used to carry on. For the asst. yrs. 1945-46 and 1946-47, the ITO had assessed the assessee to tax. Thereafter, proceedings under s. 34 of the Indian IT Act, 1922, were taken against the assessee because the ITO, Non-companies E.P.T. District, felt that the income earned by the firm, Brijlal Nandkishore, was actually the income of the assessee, on the theory that the gift was a sham show. The ITO ultimately included the income of the said firm, for those years, in the income of the assessee. Aggrieved by the order, the assessee preferred an appeal before the AAC, who set aside the assessment in the view that the gift made by the assessee had been validly made an that Brijlal Nandkishore firm was altogether a separate entity with which the assessee had nothing to do. Thereupon, the Revenue appealed against the appellate order before the Tribunal. The Tribunal took a different view, set aside the order of the AAC and restored the order of the ITO. The reasons which weighted with the Tribunal in coming to the conclusion that the gift was not a real gift appear from the following extracts from the judgment of the Tribunal, which we set out below : "(1) The assessee stated that the gift was made in the presence of respectable persons and one of them was Mr. Amrita Lal Majumdar. Sri A.L. Majumdar was examined by the ITO on the 28th March, 1950, and he stated that no such gift was made in his presence. Of the other persons named by the assessee, in whose presence the gift was made, one could not be examined (probably because he was dead by that time) and the other two were not produced before the ITO. (2) The first donee, namely, Brijlal Lohia, was 53 years of age on the date of the alleged gift and the age at which Brijlal Lohia was made a donee made the gift look unreal. Further, the subsequent gift of Rs. 2,50,000 to Nandkishore was not in keeping with the intention of the donor who wanted to help the two donees, inasmuch as a gift having already been made earlier, there was no necessity for the second gift to Nandkishore Lohia. (3) The donor, namely, the assessee, did not produce himself before the ITO to explain the circumstances under which he felt the necessity to make provision for his brother and nephew by giving away so large a sum as gift. (4) The donor's total assets were only to the extent of Rs. 9,75,090 and, as such, the gift of amount Rs. 8,00,000 out of the said assets looked improbable. (5) The intention of making a gift was disproved by the circumstances that the donor had to take an overdraft of 2 lakhs of rupees to make a gift of Rs. 5 lakhs. (6) Out of the money received on gift, Brijlal Lohia and Nandkishore Lohia started carrying on the same business which was previously run by the assessee himself. (7) In the asst. yr. 1945-46, the income derived from the business run by the donees was not distributed amongst the two, although they professed to be partners. (8) The assessee's brother and nephew were probably benamidars for the assessee. On the aforesaid reasons, the Tribunal came to the conclusion that the business of Brijlal Nandkishore was really owned by the assessee, Kanhaiyalal Lohia, an therefore, its income was rightly included by the ITO in the income of the assessee. Thereafter, on the prayer of the assessee, the following question was referred to the High Court, under s. 66(1) of the IT Act : "Whether, in the circumstances of this case, where the ITO, District II(2), separately assessed the business run in the name of Brijlal Nandkishore as belonging to a partnership firm consisting of Brijlal and Nandkishore, the ITO, Non-Companies E.P.T. District, can assess the income from the same business in the hands of the assessee ?"
(3.) DR. Radhabinode Pal, who appeared on behalf of the assessee, at that stage, made the following can did concession, namely, that if a former assessment had in fact been made on a mistaken basis, he did not see why the ITO, dealing with the assessment of the assessee, could be said to have no jurisdiction to bring the income under assessed in his hands. So far as the question of the jurisdiction of the second ITO was concerned, no legal objection could possibly be taken to it. DR. Pal accordingly, conceded the that question referred, taken as a pure question of law, could only be answered in the affirmative. In view of the concession made by Dr. Pal, this Court did not pronounce any decision upon the validity of the gifts or the ownership of the firm of Brijlal Nandkishore but answered the question in the affirmative, regard being had to the nature of the concession made on behalf of the assessee.;