1976 (5) TMI 37 - AT - Income Tax

Issues Involved:
1. Ownership of income from property purchased in the name of the assessee's wife.
2. Status of the assessee for income-tax assessment purposes (HUF vs. Individual).
3. Inclusion of Rs. 39,777 in the total income of the assessee as income from undisclosed sources.
4. Inclusion of interest income received by the assessee's wife and daughter.
5. Addition of Rs. 8,296 out of total deposits of Rs. 20,000 as the assessee's income from undisclosed sources.

Issue-wise Detailed Analysis:

1. Ownership of Income from Property Purchased in the Name of the Assessee's Wife:
The Tribunal found that the property purchased in the name of the assessee's wife, Smt. Gulabrani, belonged to her. The evidence presented demonstrated that the funds used for the purchase were from her own resources, including cash and gold received from her father-in-law, Bissessar Prasad. The Tribunal held that the lower authorities were not justified in including the income from this property in the total income of the assessee. Consequently, the inclusion of such income was deleted.

2. Status of the Assessee for Income-Tax Assessment Purposes (HUF vs. Individual):
The Tribunal concluded that the assessee's correct status for income-tax assessment was that of a Hindu Undivided Family (HUF) and not an Individual. The business carried on by the assessee was started with the share obtained by him on the partition of the HUF consisting of his father, his brother Hiralal, and himself. The mere fact that the assessee had shown his status as an 'individual' earlier did not detract from the fact that the business belonged to the HUF, of which he is the Karta. Thus, the assessee was to be assessed in the status of a HUF in respect of his business income.

3. Inclusion of Rs. 39,777 in the Total Income of the Assessee as Income from Undisclosed Sources:
The Tribunal reviewed the evidence and explanations provided by the assessee regarding the sources of the amount of Rs. 39,777, which included investments and credits in the name of Smt. Gulabrani. The Tribunal found that the investments and credits had their source in funds belonging to Smt. Gulabrani, including cash and gold received from Bissessar Prasad and the sale proceeds of gold ornaments. Consequently, the addition of Rs. 39,777 made by the ITO to the total income of the assessee, and confirmed by the AAC, was deleted.

4. Inclusion of Interest Income Received by the Assessee's Wife and Daughter:
The Tribunal held that the interest received by Smt. Gulabrani and her daughter on deposits of Rs. 10,000 each in their names should not be included in the total income of the assessee. Since these amounts proceeded from funds belonging to Smt. Gulabrani, there was no justification for including the interest on such deposits in the assessee's total income. Accordingly, these additions were deleted.

5. Addition of Rs. 8,296 out of Total Deposits of Rs. 20,000 as the Assessee's Income from Undisclosed Sources:
For the assessment year 1967-68, the AAC had retained an addition of Rs. 8,296 out of total deposits of Rs. 20,000 in the names of Smt. Gulabrani and her daughter Asha as the income of the assessee from undisclosed sources. The Tribunal found that Smt. Gulabrani had the necessary resources to deposit the amount of Rs. 20,000, including the realization of loans and interest received, as well as cash remaining from the gift by Bissessar Prasad. Therefore, the addition of Rs. 8,296 to the total income of the assessee was not warranted and was deleted.

Conclusion:
The Tribunal allowed the appeals I.T.A. Nos. 1700, 1701, 1702, and 1703 (Jab)/1972-73, and partly allowed I.T.A. No. 1704 (Jab)/1972-73, providing relief to the assessee on all the contested points.

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