Gift-Tax Officer vs Parma Nand Aggarwal, Huf.
1987 Latest Caselaw 483 Del

ORDER

Per Shri. S. P. Kapur, Judicial Member - The revenue is aggrieved and following specific ground has been raised before us :

"On the facts and in the circumstances of the case, the AAC erred in holding that the amount of Rs. 37,188 was a provision for marriage and not liable to gift-tax."

2. At the assessment stage, although a return declaring nil taxable gift was filed, assessment was framed on a gross gift of the valuation of Rs. 37,188 resulting in taxable gift of Rs. 32,188 with the reasoning that the assessed-HUF made a gift of Rs. 37,188 to Miss. Veena Aggarwal, unmarried daughter of Shri. P. N. Aggarwal, by assigning the amount received on the maturity of LIC policy. The stand of the assessed was that gift is not taxable as it was made as provision for the marriage of the daughter. The assessed also contended that Miss Veena Aggarwal got married on 7-12-1975 and took with her along with other assets, the amount received by her against Policy No. 6070852, i.e. Rs. 37,181. the GTO reasoned that the amount was not a provision for marriage expenditure but was taken away by Miss Veena Aggarwal, hence, was a gift within the meaning of Gift-tax Act.

3. The learned AAC held it not to be a gift within the meaning of section 2(xii) of the GT Act and for the purpose he relied upon the decision of the ITAT rendered in the case of the very assessed for the assessment year 1976-77 in ITA No. 58 / Del / 81. The order is dated 15-7-1980. The ITAT in the said order held that jewellery of Rs. 20,826, fiat car worth Rs. 36,784 and balance in Miss Veena Aggarwals account in M/s Jai Bharat Steel amounting to Rs. 85,621 would be considered quite a reasonable dowry for the occasion since Miss Veena Aggarwals marriage was a love marriage and in these circumstances, it will be quite natural for the parents to be a little conservative in giving dowry to the daughter.

4. The revenue is aggrieved and we have heard the parties at length. Shri C. S. Aggarwal has placed strong reliance on the decisions in K. SP. S. KT Kalyappa Chettiar (HUF) v. Second GTO [1984] 7 ITD 213 (Mad.) CGT v. Bandlamudi Subbaiah [1980] 123 ITR 509 (AP), CGT v. M. Radhakrishna Gade Rao [1983] 143 ITR 260 (Mad.) and CGT v. Dr. (Mrs.) Neelambal Ramaswamy [1986] Tax. 80(3)-55 (Mad.). Of course, the ITATs order above referred to, has also been pressed into service. He has further said that the daughter of the karta Miss Veena Aggarwal vis-a-vis marriage expenditure including the assignment of LIC policy and the resultant payment to her accounted for the assessed, pious obligation in terms of the customs prevailing in the Hindus of the areas, hence, there was no gift much less any transfer. The learned D. R. While supporting the order of the GTO assailed the finding of the learned AAC but unsuccessfully since we agree with the stand of the assessed that assignment of LIC policy, which was funded by funds of HUF, has on the facts and in the circumstances of the case to be taken as dowry-presents and as a pious obligation of the assessed-HUF on the occasion of the marriage of the said Miss Veena Aggarwal who was a member of a HUF also and since on the peculiar facts of the present case to say the least to save all embarrassment to the family, the marriage being a love marriage the fact of encashment being later or else the marriage being later, will not affect the merits. Upholding the impugned order of the learned AAC, we adopt his reasoning as our own. Reliance of the learned counsel for the assessed before us supports the assesseds case. Revenues ground stands rejected and the appeal fails.

Per Shri B. Gupta, Accountant Member - since I have not been able to agree to the conclusion reached by the learned Judicial Member I may state my reasons for dissent as follows :

2. The facts leading up to the controversy as projected in the only ground raised by revenue in this appeal filed under the Gift-tax Act, 1958, have been stated in the order proposed by he learned Judicial Member, but in order that there is a proper appreciation of those facts for considering the applicability or otherwise of the relevant provisions of Gift-tax Act, I may state them in some more detail.

3. The assessed-respondent is a HUF which at the relevant time consisted of Parma Nand Agarwal (Karta). Mrs. Agarwal, Varun Agarwal (Son) and Veena Agarwal (unmarried daughter). The HUF had, in the year 1959 taken a joint life endowment insurance policy bearing No. 6070852 on the lives of the karta and his wife, and the premium thereof had always been paid out of the family funds. On 26-4-1974 when the policy was just about to mature, it was assigned to Veena Agarwal. The said policy matured on May 20, 1974 and thereafter a sum of Rs. 37,188 being the maturity amount was received by Veena Agarwal by a cheque dated 3-7-1974 issued by the LIC on Punjab National Bank, Darya Ganj, Delhi. When these facts came to the notice of the ITO holding jurisdiction over the assessed-Hindu undivided family, a letter was issued to the Divisional Manager, Life Insurance Corpn., asking for certain particulars regarding policy No. 6070852. In reply sent vide No. MTY : DO : RLC dated 10 / 12-3-1979, the Divisional Manager stated as follows :

"Dear Sir,

RE : Pol. No. 6070852-fvg. Shri Parma Nand Agarwal and Smt Kamla Aggarwal

We are in receipt of your letter No. CC / XIV / 78-89 / 616 dated 8-3-1979. As desired in your letter under reference we give below the required information :

1. The captioned policy was taken by Shri Parma Nand Aggarwal and Smt. Kamala Aggarwal in the joint name with date of commencement 20-5-1959.

2. It was joint life endowment policy for 15 years with profit for the sum assured of Rs. 30,000.

3. The policy was absolutely assigned on 26-4-1974 to the daughter of the lives-assured as a gift (Miss. Veena Aggarwal age 23) in consideration of natural love and affection.

Yours faithfully,

Sd/-Sr. Divisional Manager."

After a lapse of a couple of years, the ITO / GTO initiated gift-tax proceedings against Parma Nand Agarwal HUF for the asstt. year 1975-76. A nil return of gift dated 14-3-1980 was filed in response to notice issued by GTO. It has been contended before him that the assessed-family was under an obligation to maintain and marry the unmarried daughter and that the sum of Rs. 37,188 being a provision for that purpose was not liable to gift-tax. The GTO rejected the assesseds contention and held that the sum of Rs. 37,188 was not a provision for marriage but a gift taxable within the provisions of Gift-tax Act. On an appeal being filed by the assessed, the AAC deleted the assessment of gift of Rs. 37,188 as according to him there was no outright gift by the appellant HUF to the daughter and as it was in fact a provision for marriage expenses not liable to gift-tax u/s 2(xii) of the Gift-tax Act.

4. It is in the background of the abovementioned facts that the revenue, feeling aggrieved of the order of the AAC, has filed this appeal. Shri. T. R. Talwar, learned Departmental Representative, has while assailing the order of the AAC supported the order of the GTO and contended that the assignment of the insurance Policy No. 6070852 to and the subsequent realisation thereof by Veena Aggarwal was not for the purposes of marriage or maintenance and, therefore, the transaction fell within the definition of gift as contained in the provisions of sec. 2(xii) of the Gift-tax Act.

5. On the other hand, Shri. C. S. Agarwal, Advocate, learned authorised counsel of the respondent, has supported the order of the AAC and reiterated the same contentions as had been made on behalf of the assessed before the GTO and the AAc. The learned authorised counsel has supported the order of the AAC by referring to the decisions of the Honble High Courts of Andhra Pradesh and Madras, respectively, in Bandlamudi Subbaiahs case (supra) and M. Radhakrishna Gade Raos case (supra) and a decision of the ITAT Madras Bench-B in K. SP. S. KT. Kalyappa Chettiar (HUF)s case (supra). Mr. Agarwal has also referred to an order of the ITAT Delhi Bench-B passed in the case of the assessed-HUF in relation to its income-tax assessment for the asstt. year 1976-77 wherein it had been held while considering the adequacy or otherwise of withdrawals made for household expenses, that since the source of jewellery worth Rs. 20,826, Fiat car worth Rs. 36,784 and credit balance in the account of Veena Agarwal in the books of Jai Bharat Steel stood accepted, no addition could be made on account of inadequacy of withdrawals in the asstt. year 1976-77. According to Mr. Agarwal, the above order of the ITAT clearly shows that the sum in question of Rs. 37,188, which had been utilised by Veena Agarwal for purchase of a Fiat car had been given to her as a provision for dowry at the time of marriage and, therefore, not liable to gift-tax.

6. I have very carefully considered the facts of the case and the submissions made in support of rival standpoints of view. The decisions relied upon by the learned authorised counsel of the assessed and the relevant provisions of the Gift-tax Act, 1958 have also been equally carefully perused by me. The undisputed position under the Hindu Law is that an unmarried daughter who is a member of the HUF has a right to be maintained and get married. The obligation of a Hindu father is not only legal but moral and it is the duty of each and every Hindu head of a family to give his daughter in marriage to a suitable husband and to set apart a portion of the family property for the purposes of marriage. As per the provisions of sec. 2(xii) of the GT Act, the other undisputed position of law that emerges is that gift is a transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or moneys worth. In other words, if a transfer is made under a legal obligation, it would not be a gift as it would not be a transfer made voluntarily and without consideration. Having thus instructed myself, it appears to me that the assessed case does not fall within the abovementioned two settled positions of law. The letter issued by the Senior Divisional Manager of LIC reproduced above clearly shows that the policy No. 6070852 had been absolutely assigned on 26-4-1974 to the daughter of the lives-assured as a gift for love and affection. It nowhere shows that the policy had been assigned by way of maintenance of the unmarried daughter of the Karta or for her marriage. After the policy matured on May 20, 1974 and the sum in question of Rs. 37,188 was paid to the assignee, the proceeds of the policy were deposited by Veena Agarwal in her bank balance with the Central Bank of India. Subsequently, out of her balance with Central Bank of India, a sum of Rs. 35,000 was withdrawn and deposited with Nava Ratan Finance and Sales (P.) Ltd. on 2-8-1974. The money deposited with the above named company remained with it for nearly one year and four months when it was withdrawn in order to buy a Fiat car in December 1975. In these facts and circumstances, it cannot be be said that when on 26-4-1974 the policy No. 6070852 had been assigned in Veena Aggarwal it was either for her maintenance or for her marriage which did not take place till nearly a period of one year and 8 months had elapsed. In case the Aggarwal for her HUF in fact wished to assign the policy to Veena Aggarwal for her maintenance or by way of provision for marriage in future, it could have been so declared to the Life Insurance Corporation of India. The intention of the assignors was, however, to assign the policy to Veena Aggarwal for love and affection and accordingly it was so declared before the LIC. That being the factual position, the assesseds case does not fall within the scope of decided cases on which reliance has been placed by the learned authorised counsel of the assessed. In the cases decided by the Honble High Courts in Bandlamudi Subbaiahs case (supra) and M. Radhakrishna Gade Raos case (supra) and similarly in the decision of Madras Bench of the Income-tax Appellate Tribunal in K. SP. S. KT. Kalyappa Chettiar (HUF)s case (supra), the facts were significantly different in as much as in those cases it was found as a fact by the Appellate Tribunal that the assignment, settlement or transfer had been specifically made for the maintenance or marriage of the unmarried female members. In the present case the gift took place when policy No. 6070852 was assigned to Veena Aggarwal for love and affection on 26-4-1974 and, therefore, the GTO was justified in assessing it in the asst. year 1975-76. The order of the ITAT in the assesseds own case relating to its income-tax assessment for the asstt. year 1976-77 does not in any way affect the finding of the GTO in view of the aforementioned facts, which clearly show that the assignment of the policy had not been made in discharge of any legal obligation but for love and affection only. After the assignee, i.e., Veena Aggarwal had received the proceeds of policy No. 6070852, it was at her sweet will to have spent money received in any manner she liked. She first of all invested it in a private limited company and thereafter after a lapse of a year and a half nearly utilised a part of it in buying a car. These facts in no way go to prove that the assignment of the policy No. 6070852 had been made for making any provision for maintenance or for a dowry to be given in the shape of a car. There were no such stipulations attached when the assignment of the policy was made and as I have repeatedly stated above and as is quite clear from the letter of the LIC reproduced above the assignment of the policy was absolute and the proceeds thereof were to be utilised in any unrestricted manner in accordance with the sweet will and discretion of Veena Aggarwal. The assignment of the policy was voluntary and for love and affection and not in discharge of any legal obligation and, therefore, the transaction came within the definition of gift as contained in sec. 2(xii) of the GT Act. The assessment of the assigned value of the policy as gift made by the assessed-HUF to Veena Aggarwal was justified and I uphold it subject to the direction that the GTO will recompute the gift after taking into account the provisions of sec. 5(1) (ix) of the GT Act, 1958.

7. The appeal by revenue is allowed as per directions above.

ORDER UNDER SECTION 23(11) OF THE GIFT-TAX ACT, 1958, READ WITH SUB-SECTION (4) OF SECTION 255 OF THE INCOME-TAX ACT, 1961

In view of difference of opinion between us, the following point merits to be decided by reference to the Third Member and for the purpose, this reference is being made to the Honble President of the Income-tax Appellate Tribunal :

"Whether, on the facts and in the circumstances of the case, an amount of Rs. 37,188 was a provision for marriage and not liable to gift-tax or else the amount falls into the ambit of definition of gift as contained in section 2(xii) of the Gift-tax Act, 1958 ?"

THIRD MEMBER ORDER

Per Shri Ch. G. Krishnamurthy, President - As there is a difference of opinion between the Members of Delhi Bench A on the following point, the matter has been referred to me for my opinion :

"Whether on the facts and in the circumstances of the case, an amount of Rs. 37,188 was a provision for marriage and not liable to gift-tax or else the amount falls into the ambit of definition of gift as contained in section 2(xii) of the Gift-tax Act, 1958 ?"

2. The brief facts necessary to appreciate the controversy in this case are that one Shri Parma Nand Aggarwal assessed to income-tax in the status of HUF filed on 17-3-1980 a return of gift showing nil taxable gift. In response to the notice issued by the Gift-tax Officer, the assesseds representative appeared before the Gift-tax Officer. The Gift-tax Officer noticed that the assessed Shri Parma Nand Aggarwal HUF made a gift of Rs. 37,188 to Miss Veena Aggarwal, the unmarried daughter of Shri Parma Nand Aggarwal by assigning the amount to be received on the maturity of a Life Insurance Policy. Though this appears to be a gift pure and simple, the contention of the assessed before the Gift-tax Officer was that this was amount given to Miss Veena Aggarwal as and by way of provision for her marriage and consequently this could not be deemed as a gift within the meaning of section 2(xii) of the Gift-tax Act as there was consideration for the amount made over to Miss Veena Aggarwal, namely, discharge of the parental obligation under the Hindu Law to perform the marriage of the unmarried daughter. The Gift-tax Officer considered that this was not a provision made for marriage expenses but was a straightaway gift coming within the purview of the Gift-tax Act. After making allowance for the statutory exemption, a sum of Rs. 37,188 was brought to tax under the Gift-tax Act.

3. Aggrieved the assessed preferred an appeal before the Appellate Asstt. Commissioner. It was pleaded before the Appellate Asstt. Commissioner that the assessed-family took a life insurance policy on the life of the karta in 1959, that the premium on the policy was always paid out of the funds of the assessed-HUF, that on 20-4-1974 this policy was assigned in favor of the unmarried daughter of the karta of the HUF, that the policy matured on 20-5-1974 and a sum of Rs. 37,188 became receivable and that amount was received by Miss Veena Agarwal on 3-7-1974 by cheque, which she deposited in her bank account in Central Bank of India, New Delhi and that on 2-8-1974 she withdrew Rs. 35,000 out of the aforesaid amount and deposited with Navaratan Finance and Sales P. Ltd. for interest and that she realised the money from Navratan Finance and Sales P. Ltd. on 20-10-1975 and on 3-12-1975 she paid a sum of Rs. 36,784 to Prem Nath Motors by cheque for the purchase of a car. She got married on 7-12-1975 and took the car along with her. In the background of these facts it was urged that the pious obligation cast on the karta of a HUF to maintain and marry the unmarried daughter was discharged by making over this amount to Miss Veena Agarwal by assigning the insurance policy. Thus the assignment of the policy did not amount to a gift within the meaning of section 2(xii) of the Gift-tax Act. Reliance was placed upon a judgment of the Andhra Pradesh High Court in the case of Bandlamudi Subbaiah (supra) in support of the proposition that a provision made towards marriage expenses of unmarried daughters would not amount to a gift within the meaning of section 2(xii) of the Gift-tax Act. Besides the above the attention of the Appellate Asst. Commissioner, was also drawn to an order passed by the Appellate Assistant Commissioner, A-Range, for the assessment year 1976-77 in the case of the assessed-HUF whereby it was held that Smt. Veena Agarwal received the Fiat car by way of dowry and therefore the amount must be deemed to have been given in discharge of the obligation of meeting the marriage expenditure of the unmarried daughter and not by way of gift out of pure love and affection. The Appellate Asst. Commissioner considered these aspects and held that even though the policy was assigned in favor of the daughter before her marriage, since the amount was utilised by her for the purchase of a Fiat car, which was held to be part of the dowry, there was no gift within the meaning of section 2(xii) of the Gift-tax Act. He, therefore, allowed the assesseds appeal.

4. Aggrieved by the order the department has come up in a further appeal before the Tribunal. The contention of the Revenue before the Tribunal was that the Appellate Asstt. Commissioner was not justified in holding that the amount of Rs. 37,188 was a provision made for marriage and therefore not liable to gift-tax.

5. The learned Judicial Member came to the conclusion on the facts of this case that there was no gift within the meaning of section 2(xii) of the Gift-tax Act, that the assignment of the Life Insurance Policy, which was supported by the funds of the joint family, was made over to Miss Veena Agarwal, another member of the joint family in discharge of the obligation of the karta of the joint family and that the motor car which was purchased with the funds of the Life Insurance Policy at the time of marriage was taken as part of the dowry. He thus confirmed the order of the Appellate Asst. Commissioner. But the learned Accountant Member took a different view. The learned Accountant Member relying upon a letter written by the Senior Divisional Manager, LIC to the Income-tax Officer in response to a letter written by the Income-tax Officer to him, held that the assignment of the Life Insurance Policy made on 26-4-1974 to the daughter of the karta of the assessed-HUF was out of love and affection and as it did not anywhere mention that the policy has been assigned by way of maintenance of the unmarried daughter of the karta or for her marriage, the assignment must be taken to be a gift pure and simple falling within the meaning of section 2(xii) of the Gift-tax Act. He was of the opinion that had the karta intended that the assignment of the policy to Miss Veena Agarwal was towards maintenance or by way of provision for marriage in future, a declaration to that effect should have been made or would have been made to the Life Insurance Corporation of India. Therefore the intention of the assignment of the policy was not for meeting the marriage expenditure but making a gift out of love and affection to Miss Veena Agarwal. The fact that the donee, i.e., Miss Veena Agarwal purchased a car at the time of her marriage did not alter the position or convert the gift made earlier into a provision for marriage expenses because once the gift was made to her, it was open to her to spend the money in any manner she liked. Thus the above difference of opinion arose between the learned Members, who heard this appeal and it was referred to me as a Third Member.

6. I have heard Shri D. K. Sharma, the learned Departmental Representative and Shri C. S. Agarwal, the learned counsel for the assessed at great length and perused the authorities they relied upon in support of their respective contentions. Before I go into the merits of the matter and express my opinion thereon, I must refer to a preliminary objection raised by Shri C. S. Agarwal. As I mentioned earlier, the learned Accountant Member relied upon a letter written by the Senior Divisional Manager, LIC to the Income-tax Officer. The letter is reproduced in his order and it is in the following terms :

"MTY : DO : RLC dated 10/12-3-1979

Dear Sir,

Re : Pol. No. 6070852-fvg. Shri Perma Nand Aggarwal and Smt. Kamla Aggarwal.

We are in receipt of your letter No. CC/XIV/78-79/616 dated 8-3-1979. As desired in your letter under reference we give below the required information :

1. The captioned policy was taken by Shri Parma Nand Aggarwal and Smt. Kamla Aggarwal in the joint name with date of commencement 20-5-1959.

2. It was joint life endowment policy for 15 years with profit for the sum assured of Rs. 30,000.

3. The policy was absolutely assigned on 26-4-1974 to the daughter of the lives-assured as a gift (Miss Veena Aggarwal age 23) in consideration of natural love and affection.

Yours faithfully,

SD/-Sr. Divisional Manager".

This letter was on record of the Income-tax Officer. I say so because at the time of the hearing of this appeal this file was shown to me. But this letter was not relied upon either by the Gift-tax Officer or by the Appellate Asstt. Commissioner or by the learned Judicial Member. It did not form part of the Income-tax Appellate Tribunal record. This letter was never referred to by the Departmental Representative when the matter was being urged in the open court. After the hearing was over, the learned Accountant Member sent for the file of the Income-tax Officer through the medium of the Departmental Representative and after locating this letter, relied upon it. No opportunity was given to the assessed to state its objections, if any, to the consideration of this letter or to say anything either for or against the inferences drawn on the basis of this letter. Even the learned Judicial Member was not aware of this letter. Since the learned Accountant Member relied upon an evidence, which was never put to the assessed or considered by any authority, the order passed by him was vitiated in law. Relying very strongly upon a judgment of the Supreme Court in the case of Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775, the learned counsel for the assessed, Shri C. S. Agarwal, urged that it was not open to the learned Accountant Member to call for the records in his chamber, consider them and then base his judgment thereon without giving the assessed an opportunity of being heard. This is in direct violation of the law enunciated by the Supreme Court in this case. Thus, the order passed by him was bad in law and should not be regarded at all as proper and valid. Once this letter, which vitiated the conclusions drawn by the learned Accountant Member, is taken out which has to be according to him, then the evidence considered both by the learned Accountant Member, is taken out which has to be according to him, then the evidence considered both by the learned Accountant Member and the learned Judicial Member would be the same and such being the case, the conclusion drawn on the basis of that evidence by the learned Appellate Asstt. Commissioner and the learned Judicial Member, would be the only conclusion to be drawn on the facts of this case, namely, that the assignment of the policy was made out of a desire to discharge the obligation cast upon the assessed to marry the unmarried daughter and the sum could not therefore be regarded as a gift within the meaning of section 2(xii) of the Gift-tax Act. The learned Departmental Representative opposed this objection raised by Shri C. S. Agarwal by pointing out that even though he would admit that the learned Accountant Member after hearing was over, called for the records and came across this letter and relied upon it for his conclusion, it was not an irregular act that he had done. The proceedings before the Tribunal had not come to a close till the final order was passed and it was open to the Members to call for the records and look into them and if by not giving an opportunity to the other side, an irregularity in law had been committed, that irregularity would not vitiate the order passed because a supervening illegality could always be cured by taking suitable action. Now that it was found that the letter dated 10/12-3-1979 relied upon by the learned Accountant Member was not put to the assessed earlier, the matter could be sent back to the regular Bench to give a hearing to the matter again after putting this letter to the assessed. Either with or without the letter, the conclusion according to him, is inescapable that the assignment of the policy made on 26-4-1974 was not pursuant to an obligation cast upon the head of the family to marry the unmarried daughter but it was a pure and simple gift. There was a prescribed form by the Life Insurance Corporation for assignment of policies and the proforma policy showed that the assignment of policy can take place only out of love and affection. By relying upon those expressions the learned Departmental Representative strongly urged that since the assignment of the policy had taken place only out of love and affection, the question of marriage was nowhere in the sight nor in contemplation and a pretext is sought to be made out later the assignment of the policy to convert the gift made out of natural love and affection into a provision made for discharge of marriage expenses. Therefore, the view taken by the learned Accountant Member is supportable even without the letter and the view taken by the learned Judicial Member is not appropriate and should not be accepted.

7. For the purpose of supporting his contention that a supervening illegality does not vitiate the order, the Departmental Representative relied upon a Supreme Court decision in the case of Guduthur Bros. v. ITO [1960] 40 ITR 298. Reliance was also placed on another judgment of the Supreme Court in the case of Kapurchand Shrimal v. CIT [1981] 131 ITR 451 for the proposition that it is open to an appellate authority to correct mistakes committed by the Executive if that is essential for the purpose of rendering substantial justice. To show that record means not only the record of the Income-tax Appellate Tribunal but also the record of the Income-tax Officer, reliance was placed upon another decision of the Supreme Court in Maharana Mills (P.) Ltd. v. ITO [1959] 36 ITR 350. Lastly reliance was placed upon a Third Member decision of the Income-tax Appellate Tribunal in O. P. Ralhan v. WTO [1986] 18 ITD 50 (Bom.) for the view that if any irregularity is found to have been committed by the Members, who have heard the original appeal, the Third Member would be entitled to send the case back to the regular Bench with an appropriate direction. Lastly he submitted that in the absence of any evidence to show that the marriage was in contemplation at the time when the assignment of the policy took place, the circumstances surrounding the assignment and the reasons given for impelling assignment of policy must be looked into.

8. After having considered the arguments of both the parties on this preliminary objection, I must state that the procedure adopted by the learned Accountant Member is not commendable nor appropriate. After the hearing was over, no Member of the Tribunal should call for the parties into their Chambers and ask for any records even if it is for clarification of any doubt. This is opposed to the principles of natural justice and fair hearing and this is also what exactly had been held by the Supreme Court in the case of Dhakeswari Cotton Mills Ltd. (supra). If a Member after hearing the case seeks any clarification, he should allow an opportunity to the other side to explain the point and in case any further evidence is collected, that evidence must necessarily be put to the other side and the other side must be given an opportunity to explain. For this purpose the case must be reposted with the concurrence of the other Member. Otherwise this would amount to collecting evidence behind the beck of the party and the decision so given would be a vitiated decision, not in conformity with the accepted principles of natural justice. Since now it is an admitted fact before me that the learned Accountant Member had called for the records after the hearing is over and relied upon a letter, which was never put to the assessed nor relied upon by the department during the course of hearing before the Tribunal, he should have in all fairness reposted the case for hearing. By this process he has taken all the parties concerned by surprise. I am therefore of the opinion that the letter which had influenced the thinking of the learned Accountant Member should be ignored. I am unable to agree with the arguments of the learned Departmental Representative that the proceedings of the Tribunal can be said to continue till the final order was passed by the Tribunal and it was therefore open to the Members to call for the records in their Chambers as a part of the proceedings and look into them and then decide the matter without giving an opportunity to the other side. So far as calling for the records is concerned, while no serious objection could be taken, serious objection is sustainable to the latter portion of the contention, namely, giving the opportunity to the other side. I am also unable to subscribe to the view canvassed on behalf of the department that the records of the Tribunal include the record of the department. The record of the Tribunal is only that record which was placed in its hands either in the institution of the appeal or during the course of hearing of the appeal but certainly does not include the record of the department. The decision of the Supreme Court relied upon by the Departmental Representative is only relevant for the purpose of finding out what constituted the record of the department. That exposition of law cannot be imported into the meaning of the record of the Tribunal. What is made part of the record of the Tribunal is only the record of the Tribunal. But I am inclined to agree with the contention put forward on behalf of the department that the general proforma form prescribed by the Life Insurance Corporation for assigning of policies could be looked into as it is a statutory form. By looking into that form, it is very clear that assignment of the policy can be made only in consideration of natural love and affection. This is clearly borne out by the following paragraph appearing in the form No. 3846. It says :

"I, ........... the assured in consideration of natural love and affection do hereby as beneficial owner absolutely assign by way of gift unto my ......... (relationship and name) ..........."

This assignment form can be looked into as a piece of evidence as to what prompted the assignment of the policy. The consideration for the assignment of policy according to this form is natural love and affection. It is also to be noted that no assignment of a policy can be enforced against the Life Insurance Corporation unless a notice in writing of the assignment and the policy bearing the assignment or the assignment deed in original are delivered to the Corporation and duly registered by the Corporation. It is only when these formalities are completed that the Life Insurance Corporation accepts the assignment and renders itself liable to make over the proceeds of the policy to the assignee. Since assignment is a contract involving a transfer, there should be valid consideration present as in the case of any other contract to be enforceable. Therefore the consideration for assignment of an insurance policy as per this form is natural love and affection. There may be various reasons and causes fostering love and affection between two persons. It is therefore clear that the natural love and affection is recognized as a valid consideration for a transfer and though for the purpose of a gift natural love and affection can be taken as a consideration, that natural love and affection cannot be considered as an adequate consideration in order that the gift so made could be put outside the ambit of section 2(xii) of the Gift-tax Act. Section 2(xii) of the Gift-tax Act provided the definition of the word gift in the following terms :

"gift means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or moneys worth, and includes the transfer or conversion of any property referred to in section 4, deemed to be a gift under that section;"

Now it will be seen from the definition of the gift that the transfer of an existing property must be made voluntarily and without consideration in money or moneys worth. The contention of the assessed here is that there is consideration other than natural love and affection for the assignment of this policy, namely, the discharge of the obligation cast under the Hindu Law upon a father of an unmarried daughter to maintain and marry the unmarried daughter. If we go by the sequence of events, while the assignment took place on 26-4-1974, the marriage took place on 7-12-1975. On the date when the assignment took place or prior to that, it must have been in the contemplation of the donor or the assignee, i.e., the assessed before us here, that some unmarried daughter Miss Veena Agarwal. There is no evidence led to show that the marriage was in contemplation at that time. I am not on the question that a provision should not and could not be made unless the marriage was in contemplation. It is open to a Hindu father or a karta of a joint family to make a provision for the marriage expenses of an unmarried daughter even while the marriage was not in contemplation even during the minority of the unmarried daughter or at any point of time or according to the Andhra Pradesh High Court even after the marriage. But there must be some evidence to show that a provision for the purpose of marriage was being made or was made. In the absence of any such evidence, the circumstance of marriage taking place after the date of the gift could not perhaps be permitted to be linked up so as to make it a provision made for the marriage. This may amount to taking advantage of the event of the marriage to link up the gift to take it out of the purview of the Gift-tax Act. What is within the special knowledge of the assessed should have been brought out in some form or the other at least by an affidavit sworn to but in the absence of any such evidence being led, it has to be held based upon the phraseology in the assignment form that the gift was made out of natural love and affection and not by way of a provision made for the marriage expenses of the unmarried daughter. This is what appeared to be the truism in this case.

9. It may be true that the Tribunal had held in income-tax proceedings that the value of the car could be regarded as part of the dowry but that observation was made in the context of ascertaining the amount spent in the marriage. The question before the Tribunal at that time was whether the marriage expenses shown and estimated were reasonable or not. To assess the reasonableness of the marriage expenditure, the Tribunal took into consideration the value of the motor car and then held that the value of the motor car could also be regarded as part of the dowry and in that view the estimate made by the department towards marriage expenses was unreasonable. That does not mean that the Tribunal was holding as a fact by applying its mind to this aspect that the car was given as a gift in contemplation of marriage in discharge of the obligation cast upon the assessed to meet the marriage expenditure of Miss Veena Agarwal. To my mind it appeared that the drawing of such an inference from the order of the Tribunal is not proper. In the case before the Andhra Pradesh High Court in Bandlamudi Subbaiahs case (supra) on which greatest emphasis was laid on behalf of the assessed, the High Court then found that there was an arrangement on the occasion of the marriage of the daughter to give her some property. Having regard to the arrangement, the High Court held that it did not matter whether the arrangement at the time of marriage was reduced to writing much later either by way of partition deed or by execution of settlement or gift deed. This decision to my mind appeared to be an authority for the proposition that if there was no arrangement on the occasion of the marriage of the daughter to give her some property, the arrangement should be inferred as was sought to be made out in the case before me. The arrangement that the karta contemplated to give some property by way of provision for the marriage of the daughter is a matter to be proved by fact and that fact could be proved only by the karta because it is within his knowledge. That has to be proved by some evidence and it is that evidence that is not forthcoming in this case except the argument that on the probabilities of this case an inference has to be drawn from the fact of marriage subsequent to the date of assignment of the policy that the assignment of was in discharge of the obligation. This can be so or this cannot be so. Shri Agarwal then referred to a partition that has taken place among the members of the joint family as an occasion to make the provision for the marriage of Miss Veena Agarwal. Were it so, there would have been some mention somewhere about this fact in the documents executed evidencing the partition. No such statement has been brought to my notice. It is no doubt true that it is settled law that an unmarried daughter in a joint Hindu family has a right to be maintained and get married. The obligation of the joint Hindu family in this behalf remains inchoate in the sense that these rights and obligations do not attach to any specific property. When the members of the HUF allot certain properties to the unmarried daughters of the family at the time of partition to discharge the binding obligation on them, to maintain them and to get then married, the Andhra Pradesh High Court said in this case that it cannot be said that the properties were given to the unmarried daughters voluntarily and without consideration in money or moneys worth. Thus the Andhra Pradesh High Court held that the provision made could not be considered to be a gift within the meaning of section 2(xii) of the Gift-tax Act. In order that this decision should apply, as I pointed out earlier, there ought to be some evidence connecting the assignment of the policy to the provision made for meeting the marriage expenditure of the unmarried daughter. Since I do not find any such evidence, I am inclined to agree with the view expressed by the learned Accountant Member, even though he chose to rely upon a document which he collected after the hearing was over in his Chamber with out giving any opportunity to the other side to express their comments on this letter. I feel that as a Third Member my role under the law is confined to expression of opinion on the point referred to the Third Member but not to give a direction to the Bench in any manner. A direction can be given to the Bench only when the Third Member exercise either appellate or revisional jurisdiction. The Income-tax Act does not revisional jurisdiction. Therefore, giving such a direction by the Third Member to the Bench is in my opinion, beyond the power of the Third Member. He may, however, suggest for consideration of the Bench.

10. For the reasons abovementioned, I express my agreement with the view of the learned Accountant Member.

11. The matter will now go before the regular Bench, which heard the appeal originally, for disposal of the appeal according to majority opinion.