A gift of shares by a trust is void ab initio if it is violative of Section 11 of the Indian Trusts Act, 1882, which requires the consent of all major beneficiaries and a direction from the competent civil Court.

1. - This application under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), does not raise any arguable question and as such it is not necessary to make a detailed discussion of the facts and circumstances which have given rise to the filing of this application under section 256(2) of the Act. It would be sufficient for the purpose of disposal of this application to state that a question relating to the validity of a gift of 25,000 shares of Jiyajeerao Cotton Mills and income by way of dividends in respect thereof, by Raja Baldeodas Birla Santati Kosh, Pilani, to Birla Jankalyan Trust was raised during the assessment proceedings of this assessee, Raja Baldeodas Birla Santati Kosh, relating to the assessment year 1970-71. The matter was decided by the Income-tax Appellate Tribunal by its order dated September 23, 1976. The Tribunal held that the gift of the said shares was void ab initio and that the transfer of the shares in question by the assessee, Santati Kosh, to the Jankalyan Trust was violative of the provisions of section 11 of the Indian Trusts Act, 1882, on the ground that the trustees were not empowered to give away a part of the corpus for purposes other than that for which the Santati Kosh was created and further that the consent of all the major beneficiaries was not obtained by the trustees of the Santati Kosh before making the said transfer and that a direction of the competent civil Court was also not obtained so far as minor beneficiaries were concerned. It was, therefore, held by the Tribunal that the shares in question continued to remain the property of the Santati Kosh and income therefrom was assessable in the hands of the assessee, Santati Kosh. Thereafter, an application for rectification was filed by the assessee, which was partly allowed by the Tribunal by its order dated March 31, 1978. An application for reference was made before the Tribunal by the assessee desiring that certain questions arising out of the orders of the Tribunal dated September 23, 1976, and March 31, 1978, be referred to this court. So far as the questions arising out of the order dated September 23, 1976, were concerned, the Tribunal itself referred four questions to this court, vide its order dated June 22, 1979, while we have directed the Tribunal to refer two more questions to us by our order passed separately today in D.B. Income-tax Reference Application No. 202 of 1979.

2. So far as the order of the Tribunal dated March 31, 1978, is concerned, only one argument was advanced by the learned counsel for the assessee before us and it was submitted that a decision of their Lordships in Sardar Bahadur S. Indra Singh Trust v. CIT (1971) 82 ITR 561 (SC) , was not referred to by either party at the time of arguments before the Appellate Tribunal, but it was referred to by the Tribunal while deciding the rectification application by its order dated March 31, 1978. The Tribunal rejected the application for making a reference on the ground that the Tribunal only rectified certain mistakes in its order dated September 23, 1976, by the subsequent order passed on March 31, 1978, but the ultimate conclusion remained unaltered and that the decision of the Supreme Court relevant to the subject could be referred to by the Tribunal while deciding the rectification application, although the same may not have been referred to by either of the parties at the time of arguments.

3. Dr. Paul, appearing for the assessee before us, raised only one submission, namely, that it was violative of the principles of natural justice as well as the provisions of the Income-tax Act and the Rules made thereunder as the Tribunal considered the decision in Sardar Bahadur S. Indra Singh Trust's case (1971) 82 ITR 561 , in its judgment, without the same being cited by either party before the Tribunal and it was submitted that the assessee had no opportunity to explain the aforesaid decision before the Tribunal.

4. We do no