1985 (4) TMI 34 - HC - Income Tax

Summary

Issues:
1. Whether the property purchased in the name of minor sons was benami?
2. Whether the income from the property could be assessed in the hands of the assessee?

Analysis:
The case involved two applications under section 256(2) of the Income-tax Act, 1961, filed by the Commissioner of Income-tax, Jodhpur. The assessee, an individual, had purchased immovable property in the name of his minor sons. The Income-tax Officer added the income from the property to the assessee's income, considering it a benami transaction. The Appellate Assistant Commissioner upheld this decision, stating that the property was purchased by the assessee in disguise. However, the Income-tax Appellate Tribunal found that the property was purchased by the minor sons and that there was no evidence to prove it was benami. The Tribunal rejected the Department's application for reference, leading to the filing of applications in the High Court.

The High Court analyzed the facts and held that the Tribunal should have determined whether the transaction was benami based on the evidence. The Court referred to a similar case where it was established that the burden of proof lies with the Department, but they can rely on facts presented by the assessee. The Court concluded that a question of law arose regarding the nature of the transaction and rephrased the question for reference to the Court. The Court directed the Tribunal to refer the reframed question for its opinion, allowing both applications and leaving the parties to bear their own costs.

In summary, the High Court addressed the issue of whether the property purchased in the name of minor sons was benami and whether the income from the property could be assessed in the hands of the assessee. The Court emphasized the need to establish the nature of the transaction based on evidence and reframed the question for reference to the Court, ultimately directing the Tribunal to refer the case for the Court's opinion.