9911796707
TMI Blog1979 (1) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... porting to act on behalf of his daughter at the rate of Rs. 24.58 per share. These transactions were entered into and completed through the share brokers S. Bhaltia Bros. ofCalcutta. On7-2-1966the share brokers sent to Kumari Archana a cheque for Rs. 9,200 on the Punjab National Bank. This cheque was deposited in the bank account of Kumari Archana with Devkaran Nanaji Banking Co. Ltd. and after deduction of bank charges, the actual amount credited by the bank in Kumari Archana's account was Rs. 9,19,425. Kumari Archana had at the relevant time a credit balance of Rs. 50,000 approximately. No security was taken by the brokers for this deal stating that it was not the general practice in the market in the cases of well-known parties and they had much business dealings with the assessee, Shri Nar Hari Dalmia, who was a well-known figure in the business circles. 3. On the above facts, in the assessment of Shri Nar Hari Dalmia for the assessment year 1966-67, the ITO held that the income from the transaction in the name of Kumari Archana really belonged to him and included the amount of profit of Rs. 9,200 in his total income. The assessee's appeal to the AAC having failed be appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his minor daughter and the brokers would not have reasonably conceived of it except on the footing that the real person concerned was Shri Nar Hari Dalmia. It is this aspect of the matter which leaves us in no doubt about the real nature of the transaction. The argument of the learned counsel that the speculation profit did not require such risk did not satisfactorily explain this aspect. In fact if it was a mere speculation, it is all the more difficult to understand how prudent businessman would enter into such a transaction on behalf of a minor child and how a prudent broker would accept it as such. In fact if the transaction was a pure speculative transaction it could only be explained on the footing that it was entered into at the risk of Shri Nar Hari Dalmia and it was accepted as such by the brokers. Once we determine the real nature of the transaction, the formalities, viz., the contract notes, the issue of the cheque and the credit in the account have to be put in their proper perspective. All these formalities are consistent both with the transaction being genuinely on behalf of and for the benefit of minor daughter and with the transaction being really by Shri Nar Hari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal assessments of the assessee. In order to assess the said interest income, proceedings were initiated under section 147 of the Income-tax Act, 1961 (' the Act ') and reassessments were completed including the income of Rs. 920 in each of these three years. The assessee's appeals to the AAC failed. Accordingly, the assessee came up in further appeal to the Tribunal. It was contended for the assessee that the Tribunal had come to an erroneous conclusion by improper appreciation of facts, and the facts that were brought on the record did not justify the conclusion that the sum of Rs. 9,200 belonged in truth to the assessee. It was submitted that the income of Rs. 9,200 was earned by entering into some sale of shares of Rs. 2,37,000 and the contract notes issued by the brokers disclosed that those transactions were entered into by the assessee as a guardian of his daughter Kumari Archana and it was common ground that the minor, daughter had funds of Rs. 50,000 of her own. It was urged that on these facts it was not possible to deduce the conclusion that the profit belonged to the assessee and not to Kumari Archana. The Tribunal rejected the above contentions and dismissed the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inclusion of a sum of Rs. 920 as interest income by estimating income on investment of profit of Rs. 9,200. The facts regarding the assessment of Rs. 920 are discussed in the order by the ITO. This matter was considered in the earlier year and on the basis of the order passed by the Tribunal, the ITO rejected the claim of the assessee. For the year in question, the learned counsel contended that the facts of the case remained the same and the arguments advanced before the ITO are reiterated. 2. After looking into the details and discussion of the learned counsel, I see no justification to interfere. The appeal is, therefore, dismissed." 8. The assessee has come up in further appeal to the Tribunal. The assessee's learned counsel, Shri G.C. Sharma, contends that the assessee's case for the assessment year 1966-67 was decided by the Tribunal on an erroneous appreciation of the facts and law. The submission is that the circumstance that Kumari Archana did not have resources at the time the transaction was struck, which would have justified Shri Nar Hari Dalmia in undertaking the transaction on her behalf, taken by the Tribunal as a decisive circumstance, was not only not decisive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representative distinguished the decision of the Calcutta Bench of the Tribunal on facts and submitted that the facts there being different, the assessee cannot derive any assistance therefrom. It was also urged by the learned departmental representative that, on the same facts, the assessee cannot legitimately ask for a different decision from the Tribunal. 10. We have carefully considered the submissions of the parties and gone through the entire record. The point at issue in this case, at first, arose in the assessment year 1966-67. The Tribunal upheld the action of the income-tax authorities in treating the speculative profit of Rs. 9,200 as profit belonging to Shri Nar Hari Dalmia. The facts on which the Tribunal came to the said conclusion are admittedly the same in this year. It is so stated both by the ITO and the AAC and the counsel for the assessee did not dispute either before the AAC or before us that the facts on this point have remained the same since the year 1966-67 and no fresh facts have been found by the assessee. The assessee's reliance mainly is on the decision of the Calcutta Bench of the Tribunal in the case of B.K. Birla. In this connection it has to be bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to refer the same on the ground that it was based on appreciation of evidence. Nevertheless, the argument appears to have no force even on merits. It is true that in such a transaction the full value of the shares is not needed to back the purchase at the stock exchange, but the question would then arise whether a prudent businessman would enter into a mere speculative transaction on behalf of his minor child. It was this aspect of the question which was considered by the Tribunal in 1966-67 and answered in the negative as follows : " In fact if it was a mere speculation, it is all the more difficult to understand how prudent businessman would enter into such a transaction on behalf of a minor child and how a prudent broker would accept it as such. In fact if the transaction was a pure speculative transaction it could only be explained on the footing that it was entered into at the risk of Shri Nar Hari Dalmia and it was accepted as such by the brokers." 11. It has further to be seen that no security was taken by the share brokers in respect of this speculative transaction even though it is ordinarily taken in all such deals. On the other hand, the brokers had certified that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nderstand how a prudent businessman could enter into such a transaction on behalf of his minor child and how a prudent broker could accept it as such. The Tribunal's conclusion that if the transaction was a pure speculative transaction, it could only be explained on the footing that it was entered into at the risk of Shri Nar Hari Dalmia and it was accepted as such is based on appreciation of the circumstances of the case and the material before the Tribunal. In disposing of the appeals for the subsequent assessment years 1967-68 to 1969-70, the Tribunal after considering the circumstances de novo, came to the conclusion that they were unable to see any misdirection in the order of the Tribunal as was sought to be made out by the learned counsel for the assessee. It was essentially a question of fact and two successive Benches of the Tribunal have already come to the conclusion that the sum of Rs. 9,200 belonged to the assessee and not to his minor daughter Kumari Archana. On the same facts we are unable to come to a different conclusion. The argument that there is no prohibition in law against a minor earning income through his guardian has no force in the context of the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on appraisal of the evidence on the record and the circumstances of the case. We do not find any compelling reason to come to a conclusion different from what the Tribunal did in 1966-67 and in the subsequent years 1967-68 to 1969-70. We, therefore, endorse the earlier conclusions of the Tribunal. 14. Before parting with this case, we may mention that the assessee has taken a ground in the grounds of appeal before us that the AAC had erred in holding that the speculation profit of Rs. 9,200 in 1965 was the assessee's income and Kumari Archana was the assessee's nominee and be misconceived the provisions of sections 60 to 64 of the Act and the provisions of the Indian Contract Act, 1872. On looking into the record, we find that the AAC while deciding the assessee's appeal for the assessment year 1966-67 referred to in section 64 and section 11 of the Indian Contract Act. That order of the AAC, however, merged into the order of the Tribunal for that year. We have considered all the arguments advanced on behalf of the assessee before us and endorsed the conclusion of the Tribunal for the assessment year 1966-67. The Tribunal's decision did not proceed on the basis of section 64 or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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