2013 (11) TMI 1495 - HC - Income Tax

Income of minor - Held that - The interest income has been disclosed by the assessee (father of minor) through out these years - The donors have also accepted the fact of gift of Rs. 1 lakh on 19 different occasions, who happened to be close relatives - For 1993-94, 1994-95 assessment years the interest income earned by the minor was clubbed in the hands of the father - Just because an assessment under Section 153 (3) has not been made or no scrutiny has been made, the income of the minor could not be disbelieved, when the interest was clubbed in the hands of father - Decided against Revenue.

Summary

Issues:
1. Appeal under Section 260-A of the Income Tax Act arising from an order of the Income Tax Appellate Tribunal for assessment year 1995-96.
2. Deletion of addition of Rs. 2,20,000 in the name of Shri Naval Jain based on disclosed interest income.
3. Justification of deletion without evidence of money invested.

Analysis:
The High Court heard the appeal under Section 260-A of the Income Tax Act, stemming from the Income Tax Appellate Tribunal's order for the assessment year 1995-96. The primary issues revolved around the deletion of an addition of Rs. 2,20,000 in the name of Shri Naval Jain. The department questioned the Tribunal's decision to delete the addition solely based on disclosed interest income, disregarding the discrepancy in income and capital shown. The Tribunal's findings highlighted that Shri Naval Jain had a history of filing returns and disclosing interest income, with donors acknowledging gifts received. Additionally, in previous assessment years, the interest income earned by a minor was clubbed in the father's hands. The Tribunal concluded that, given these circumstances, the addition in question could not be justified. Consequently, the Tribunal allowed the appeal of the assessee based on these peculiar facts and circumstances.

The department contended that the Income Tax Officer had treated the deposit in the name of Shri Nawal Jain (Minor) as unexplained, despite gifts received and interest earned. However, the Tribunal reasoned that the absence of a specific assessment under Section 153 (3) or scrutiny did not warrant disbelief in the minor's income, especially when the interest was clubbed with the father's income. The High Court concurred with the Tribunal's factual findings, emphasizing that the questions of law framed did not arise for consideration based on the Tribunal's conclusions. As a result, the High Court dismissed the Income Tax Appeal, affirming the Tribunal's decision regarding the deletion of the addition in the case of Shri Naval Jain.

In summary, the High Court upheld the Tribunal's decision to delete the addition in the name of Shri Naval Jain, emphasizing the factual findings and historical disclosure of interest income as key determinants in the case. The judgment highlighted the importance of considering specific circumstances and past practices in assessing income additions, ultimately leading to the dismissal of the Income Tax Appeal based on the established facts and legal principles applied by the Tribunal.