1997 (3) TMI 42 - HC - Income Tax

Summary

Issues:
1. Whether the property purchased in the names of minor sons can be assessed in the hands of the assessee?
2. Whether the Tribunal's decision on the ownership of the property and assessment of income is correct?

Analysis:
1. The case involved the assessment years 1973-74 and 1974-75, where the assessee, a doctor, declared income inclusive of income from his minor sons. The Income-tax Officer found that the assessee had purchased property in the names of his minor sons. The Officer did not accept the explanation provided by the assessee and added the investment made for the property to the assessee's income. The Appellate Assistant Commissioner upheld the Officer's decision, but the Tribunal accepted the claim of the assessee, stating that the property was purchased by the minor sons using loans from third parties and family members.

2. The Tribunal's decision was based on the fact that the sale deed was in the names of the minor sons, loans were raised from third parties, and there was no dispute regarding the loans' legitimacy. The Tribunal found no evidence to suggest that the assessee was the real owner of the property. The Tribunal emphasized that the Department did not claim the transaction was a sham, and the minors were capable of arranging the property purchase with parental help. The High Court concurred with the Tribunal's findings, rejecting the Revenue Department's argument that the property belonged to the assessee and not his minor sons. The Court held that the property income could not be assessed in the hands of the assessee.

3. The Revenue Department's contention that the Tribunal erred in not examining the assessee, his wife, and minor sons was dismissed by the Court. The Court emphasized that documentary evidence, including the sale deed in the names of the minors and loan details, supported the assessee's claim. The Court noted that the Department's case was based on the minors being benamidars for their father, but there was no evidence to suggest the transaction was a sham. The Court concluded that if parents assisted in purchasing property for their minor children, it was not improper.

4. Ultimately, the High Court ruled against the Revenue Department, upholding the Tribunal's decision that the property purchased in the names of the minor sons belonged to them, and the income from the property could not be added to the assessee's income. The Court found no reason to interfere with the Tribunal's findings and dismissed the Revenue's appeal.

Conclusion:
The High Court affirmed that the property purchased in the names of the minor sons was rightfully owned by them, and the income from the property could not be assessed in the hands of the assessee. The Court's decision was based on the documentary evidence and the absence of proof to suggest the transaction was a sham.