1986 (2) TMI 123 - AT - Income Tax

Summary

Issues Involved:
1. Whether the assessee can be treated as a benamidar of his minor son for 50% of his share in the firm.
2. Whether the assessment of income in the hands of the minor constitutes double taxation.
3. Levy of interest under sections 139(8) and 215 of the Income-tax Act, 1961.

Detailed Analysis:

1. Benami Claim:
The primary issue is whether the assessee can be considered a benamidar for his minor son, Shri G. Venkata Subbaiah, for 50% of his share in the firm. The assessee argued that clause 9 of the partnership deed explicitly states that he is a benamidar of his minor son to the extent of 50% of his share in the firm. However, the Income Tax Officer (ITO) and the Appellate Assistant Commissioner (AAC) rejected this claim, noting that the funds credited to the minor's account were treated as advances or loans, not as capital contributions. The partnership deed's recital alone was insufficient to establish the benami nature of the relationship. The Tribunal cited the Supreme Court's decision in CIT v. Durga Prasad More [1971] 82 ITR 540, emphasizing that self-serving recitals in documents require corroborative evidence to establish their truth. The Tribunal concluded that the assessee had not proved the benami claim, as the capital investment in the firm was from his own funds, not from the minor's.

2. Double Taxation:
The assessee contended that assessing the same income in the hands of both the minor and himself would amount to double taxation. The AAC rejected this argument, stating that if it is finally decided that the income is assessable in the hands of the assessee, he could approach the Commissioner for cancellation of the minor's assessment under section 264 of the Act. The Tribunal upheld this view, noting that the assessment on the minor for the assessment year 1980-81 was made only as a protective measure. Thus, there was no double taxation, and any tax collected from the minor would be refunded if the income is assessed in the hands of the assessee.

3. Levy of Interest:
The final issue concerned the levy of interest under sections 139(8) and 215 of the Income-tax Act, 1961. The Tribunal held that no appeal is provided against the levy of interest under these sections, citing the decision of the Andhra Pradesh High Court in M.G. Bros. v. CIT [1985] 154 ITR 695. Consequently, this ground was not entertainable.

Conclusion:
The Tribunal dismissed the appeal, upholding the AAC's order. It concluded that the assessee had not established that he was a benamidar for his minor son to the extent of 50% of his share in the firm. The entire share income of the assessee from the firm was assessable in his hands. Additionally, the Tribunal found no merit in the double taxation argument and ruled that the levy of interest under sections 139(8) and 215 was not appealable.