A gift by a karta of a Hindu undivided family to coparceners and non-coparceners is void ab initio.

D.K.Mahajan, J.

1. The Income-tax Appellate Tribunal, Delhi Bench "c", referred the following question of law for the opinion of this court:

"Where, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the gifts made by the assessee, who is also karta of the Hindu undivided family, were void ab initio and, therefore, these gifts could not be brought to tax under the Gift-tax Act, 1958 ?

2. This reference was posted before me and Gopal Singh J. for hearing. In view of the conflict of judicial opinion on the question whether the gift by a karta of a Hindu undivided family to coparceners and non-coparceners is void ab initio, we directed that this reference should be heard and decided by a larger Bench. That is how this reference has been placed before the Full Bench.

3. The assessment year in question is 1964-65. The previous year ended on 31st March, 1964. Shri Tej Nath is the assessee. He was assessed as an individual in the year in question (1964-65). The relationship of the donor and the donees is indicated by the following pedigree-table :

Sunder Lal His three wives

(name not known, had predeceased her husband)Kartari Devi (childless) Gulab Devi

Ram Nath (with, satya Bhama) Tej Nath (wife, Kamala Devi)

Rajinder Kumar Ravinder Kumar Naresh Kumar

Sunder Lal died some time in 1934. His first wife had pre-deceased him. He had one son from the first wife, Amar Nath. His second wife, Smt. Kartari Devi, was childless. From the third wife, Gulab Devi, he had two sons, Ram Nath and Tej Nath. Ram Nath is dead. His second wife, Smt. Kartari Devi, was childless. From the third wife, Gulab Devi, he had two sons, Ram Nath and Tej Nath Ram Nath is dead. His widow is Satya Bhama. Tej Nath was married to Kamla Devi and has three sons, Rajinder Kumar, Ravinder Kumar and Naresh Kumar. All of them were minors at the time when the gift in question was made. It appears that the rule of chundawand governed this family. Sunder Lals property devolved according to the number of his wives. Smt. Kartari Devi relinquished her share in favour of the descendants of the two remaining widows. The property inherited by her was divided into two equal shares, One share each was to go to the descendants of each of her co-widows. The property mainly consisted of agricultural lands. Out of the land which had come to the share of Tej Nath on the death of his father, Sunder Lal, and by reason of relinquishment of her share by Kartatri Devi, he gifted land measuring 652 kanals in equal shares to - (1) Smt. Satya Bhama, wife of his brother, Ram Nath,

(2) Smt. Gulab Devi, his mother,

(3) Smt. Kartari Devi, his step-mother,

(4) Naresh Kumar,

(5) Ravinder Kumar, and

(6) Rajinder Kumar, his three minor sons.

4. This gift was considered for gift-tax by the Gift-tax Officer. The plea raised by the assessee was that the gift was invalid because by the gift, ancestral immovable property, which was joint Hindu family property, had been transferred, and that the assessee as a karta of the family could not transfer the same including his own interest, according to the well-settled rule of Hindu law, and, therefore, there was no valid gift. In other words, the transaction of gift was void. This plea did not prevail with the Gift-tax Officer. The Gift-tax Officer valued the gifted land at Rs. 65,000 and levied gift-tax thereon.

5. The assessee was aggrieved by the order of the Gift-tax Officer and he preferred an appeal to the Appellate Assistant Commissioner. The Appellate Assistant commissioner accepted the contention of the assessee. The appeal was allowed and it was held the gift in question was invalid and three being no legal gift no gift-tax could be levied.

6. The revenue being dissatisfied with the decision of the Appellate Assistant Commissioner, preferred an appeal to the Income-tax Appellate Tribunal. The Tribunal rejected the appeal of the revenue on the short ground that it was not open to and legal for Tej Nath,