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TMI Blog1991 (9) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... he original assessment completed on 30-12-1977. 3. As respects the investment in and income from the Padmanabha Nagar property, the assessee's case was that it belonged to the HUF of which he was the karta. In this regard, the following points were made on behalf of the assessee :---- (i) As far back as on 27-2-1936 (when the assessee was about 2 1/2 years old) certain lands were purchased at Hospet in the joint names of himself and his father for a sum of Rs. 1,875, the source of the investment being the funds of the joint family of which the assessee's grandfather was the karta. (ii) The said Hospet land was sold in August 1972 for a sum of Rs. 80,000. The said sale consideration was paid by the purchaser in instalments starting from November 1970. (iii) The said sale consideration of Rs. 80,000 was utilised in purchasing other properties including the site at No. 1, Padmanabha Nagar, Madras for a sum of Rs. 40,000. The said plot was purchased on 29-1-1972. (iv) An aggregate sum of Rs. 4,35,390 (inclusive of the cost of the site) was spent on constructing the building. The excess of the aggregate cost of construction over the moneys invested out of the sale proceeds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will not ipso facto lead to the conclusion that the land was purchased for the benefit of the assessee and his family. (iii) If it is assumed that the assessee's father purchased the said property, the position will not improve, because there is no evidence to show that the land was purchased for the benefit of the assessee and his family. (iv) As respects the source of investment in the Hospet land, the assessee was taking "contradictory stand". Thus whereas in his letter dated 1-12-1978 he stated that the land was purchased by his father, in the affidavit dated 22-2-1970 he has stated that it was purchased by his grandfather. (v) The assessee's father, Sri Yathiraj Mudaliar, died on 3-6-1968 and the Hospet property was not disclosed in the estate duty return filed by the accountable persons. This will show that the Hospet land was purchased for the individual benefit of the assessee. (vi) The joint declaration dated 10-10-1969 of the assessee and his brothers does not establish that the land belonged to the HUF of which the assessee is karta. (vii) The said joint declaration, inter alia, shows that certain shares in Indian Sugars Refineries Ltd. came to be allotted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince a sum of Rs. 4,35,390 had been booked in the accounts, the ITO treated the difference of Rs. 1,60,180 as assessee's unexplained income under the head 'Other sources'. 8. Thereupon, the assessee moved the first appellate authority, who allowed the assessee's claim that the property belonged to the HUF of which Nithyanandam was the karta. In this regard the CIT (Appeals) was impelled by the following considerations : (i) The Hospet property which was purchased in 1936 was purchased out of the funds of the larger HUF. Thus this property constitutes the ancestral nucleus. (ii) The Hospet property was sold and the sale proceeds utilised for acquiring the plot at Padmanabha Nagar and making a construction thereon. (iii) The joint declaration dated 10-10-1969 of the three brothers supports the contention of the assessee that the Hospet property was ancestral property in the hands of the assessee. (iv) In the case of the other two brothers, in identical circumstances, the Department has accepted their contention that their status, was HUF as respects the ancestral property that fell to their share and other properties that were purchased out of the ancestral properties. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is entitled to succeed. 15. Shri P. Srinivasan, the learned counsel for the assessee, strongly supported the impugned orders of the first appellate authority. He first contended that the existence of joint family nucleus has been proved. It should, therefore, follow that the property in question belongs to the HUF of which Nithyanandam is the karta. 16. Secondly, the joint declaration dated l0-10-1969 cannot be lightly brushed aside. It is a piece of evidence that goes to prove the existence of joint family nucleus. Even assuming, without admitting, that the Hospet property was the individual property of the assessee before us, the joint declaration dated 10-10-1969 could well be regarded as a document evidencing the factum of the assessee's having thrown his individual property into the common hotchpot of the family. In this regard, making his position clear, namely that the said argument is taken alternatively, Shri Srinivasan relied on the Calcutta High Court case of CIT v. Bhikraj Jaipuria [1979] 119 ITR 883 for the proposition that the existence of joint family property is not a pre-condition to the throwing of individual property into the common hotch-pot of the family. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, therefore, there cannot be any question of blending what was already HUF property with HUF property once again. Secondly, he contended that by taking a loan from Indian Bank the assessee, as the karta of the family, had created a liability to the family which he was not competent to do. 22. We have looked into the facts of the case. We have considered the rival submissions. 23. The basic question before us is whether the assessee has proved the existence of joint family nucleus so as to be able to contend that the Padmanabha Nagar property belongs to the HUF and not to him in his individual capacity. The Hindu law upon this aspect of the case is well settled. As has been pointed out by the Privy Council in the case of Applaswami v. Suryanarayanamurti AIR 1947 PC 189 "Proof of the existence of a joint family does not lead to the presumption that property held by any member of the family is joint, and the burden rests upon anyone asserting that any item of property is joint, to establish the fact. But where it is established that the family possessed some joint property, which from its nature and relative value may have formed the nucleus from which the property in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, while on another he had averred that his father had paid the purchase consideration. Besides the obvious point that the assessee need not pass a memory-test to succeed in his legal claim, there is the significant fact that, irrespective of who had financed the purchase of the Hospet land, be it the assessee's grandfather or the assessee's father, as far as the assessee is concerned, the Hospet property is ancestral in character. Fourthly, there is the joint declaration made by the three brothers on 10-10-1969, which makes it clear that many items of joint family properties, including the Hospet land, came to be allotted to the share of each of them. As we see it, the said document dated 10-10-1969 cannot be lightly brushed aside. If regard be had to the chronology of events, namely, that Yathiraj Mudaliar died on 3-6-1968, and that, after a decent interval, the said declaration came to be made, it will readily be seen that, on the death of their father, the brothers wanted to put on record the manner in which the joint family properties were shared by them. This step is in accord with human conduct. We, therefore, see no reason to doubt the veracity of the joint declaration o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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