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TMI Blog1980 (2) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) Addition on account of personal expenses Rs. 4,500 (2) Income from property in the name of Smt. Kusumlata devi, first wife. Rs. 5,000 (3) ... do... Ahilyabai, second wife Rs. 5,535 (4) Income from interest in the name of Smt. Kusumlata devi. Rs. 3,300 Total additions Rs. 18,335 The facts leading to the addition of the above items are as under: 3. During the course of the assessment proceedings, the ITO found that the household expenses shown by the assessee were very low. He, therefore, made a further addition of Rs. 4,500 towards the total income of the assessee. 4. As regards the additions on account of income from property and interest in the name o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest income exclusively belonged to the two ladies and could not be clubbed in his hands for the purposes of assessment. The ITO did not accept the assessee's contention and held that the house property in question was a benami transfer and the assessee was the owner of the said property. He, therefore, included towards the total income of the assessee relevant for the Asst. yr. 1973-74, the income of Rs. 5,000 derived by the assessee's first wife Shri. Kusumlatadevi and Rs. 5,535 being the income derived by the assessee's second wife. He also included towards the total income of the assessee, a sum of Rs. 3,300 by way of interest income earned by Smt. Kusumlatadevi by certain advances made out of income from the property. 5. The ITO a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax returns and the ITO has also assessed the said income in their hands. It was further pleaded that the mere fact that the assessee's explanation, which was supported by necessary evidences, has been rejected by the Department would not automatically lead to the conclusion that the assessee concealed his income or furnished inaccurate particulars thereof, and, in these circumstances, no penalty under s. 271(1)(c) was leviable. The AAC did not accept the assessee's contention and held that the assessee deliberately furnished inaccurate particulars of his income, and, hence, penalty under s. 271(1)(c) was rightly imposed by the ITO. Aggrieved by this finding, the assessee has come up in the present appeal. 8. Before me, the learned co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly liable to penalty under s. 271(1)(c) of the IT Act, 1961. 9. I have carefully considered the rival contentions, and, in my opinion, the assessee deserves to succeed. So, far as the addition on account of personal expenses is concerned, the facts of the case are clearly covered by the decision of the M.P. High Court,(2). No penalty can be imposed on the assessee on account of income from property in the names of two wives and the interest income earned by his wife Smt. Kusumlatadevi, penalty under s. 271(1)(c), in my opinion, cannot be levied even in respect of these additions. During the assessment proceedings the assessee produced two registered sale deeds to show that the property in question had been transferred in the names of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1). It may be true that the assessee attempted to set up a device whereby the income from property, which should have been assessed in his own hands, was shown to have been earned by his two wives, but even this fact would not establish a case of concealment of income on the part of the assessee. In this connection, it would be pertinent to reproduce the following observations of Their Lordships of the Supreme Court in CIT vs. A. Raman Co.(4) at page 17: "By adopting a device, if it is made to appear that income which belonged to the assessee had been earned by some other person, the income may be brought to tax in the hands of the assessee, and if the income has escaped tax in a previous assessment a case for commencing a proceeding fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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