9911796707
TMI Blog1985 (4) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... in Serajuddin Co. In the proceedings for assessment to tax for the assessment year 1970-71, the Income-tax Officer included the income from a house property standing in the name of the assessee's wife, Smt. Hasena Begum, at No. 19/1, Balu Hakak Lane' in the total income of the assessee. The two plots of land were acquired at a cost of Rs. 28,000 and Rs. 14.000 in 1956-57, and thus the total cost of land was Rs. 42,000. Smt. Hasina Begum filed a disclosure petition under section 271(4A) of the Income-tax Act, 1961, stating that she earned the income of Rs. 1,50,000 in the course of several years out of the agricultural properties but offered the same for assessment to income-tax in the absence of conclusive evidence acceptable to the Income-tax Department. Smt. Hasina Begum is a daughter of late Samsul Huda who died in 1920 leaving about 90 bighas of land in the district of Hooghly, containing extensive agricultural land, ponds, etc. Late Samsul Huda had only one son and one daughter. The son died in 1953 and the whole of 90 bighas of agricultural land had devolved upon the assessee's wife who filed details of income earned from the agricultural lands. Besides, she also stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Commissioner also noticed that a note book had been maintained by the assessee showing the details of money repaid by his wife by way of return of the loans given by him. He also found that some of these payments were made by account payee cheques and that from the total wealth statement of the assessee's wife, a sum of Rs. 53,339 was received as loan outstanding from her to the assessee and that in affidavit had been filed by the assessee's wife making gift of half portion of the property to her son. It was stated by the assessee, before the Appellate Assistant Commissioner that no interest had been charged from the wife because it was sin to charge interest from anyone, according to the principles of Islam. From this, he came to the conclusion that the wife was the legal and beneficial owner and not the assessee, that there was no adequate material by which the Income-tax Officer had come to the conclusion that the house property income should be included in the total income of the assessee. The Appellate Assistant Commissioner excluded the income from house property from the total income of the assessee. Earlier Bench of the Tribunal reversed the decision of the Appellate Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t repayment of the loans in some cases had been made by cheques which could not be denied by the income-tax authorities and this piece of evidence is vital and may lead to the conclusion that the finding given by the Tribunal in the earlier years is not correct and that the case requires reconsideration. It was further stated that the assessee had no other option but to disclose the amount in his own name only to buy peace, as the matter was dragging for a long time. It was also submitted by the assessee that the matter relating to disclosure could not be settled by the Department, unless the assessee agreed to the position that the amounts utilised in the construction of the house property was made by the assessee himself. The assessee referred to the terms of the settlement as contained in the letter of the Income-tax Officer, Special Investigation Branch, Calcutta, dated August 28, 1970: "I am directed to refer to your letter dated July 13, 1970, in which you have requested the Commissioner of Income-tax, West Bengal-I, Calcutta, to intimate the Income-tax Officer, G-Ward, Dist. III(I), to assess you as per your return filed immediately after the settlement and to say that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action is benami or not, three factors have to be considered. Firstly, who contributed the money for the purchase of land and for the construction of the property; secondly, who managed the property and, thirdly, who enjoyed the usufruct of the property. In the circumstances, we find that management of the property was with the wife and usufruct of the property was enjoyed by the wife also. In the earlier order, the Tribunal did not accept the affidavit because it was given before the, Appellate Assistant Commissioner. But this affidavit is already before the revenue authorities. By cross-examining the lady, the contents of the affidavit had not been controverted and, as such, according to the decision in Mehta Parikh and Co. v. CIT [1956] 30 ITR 181 (SC), the contents of the affidavit are to be accepted as correct. Secondly, for an ordinary middle class assessee, property is acquired for the benefit of the wife and his children and not for the assessee. Viewed from this standpoint, the provision of section 64 has been introduced. This aspect of the matter has not been considered by the Tribunal at all. Even assuming that the funds have been contributed by the assessee in the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the wife acquires the property out of the funds transferred by the husband, having regard to the meaning of 'disposition' as found in Stroud's Judicial Dictionary and having regard to the ratio of a decision of the Madras High Court, mentioned supra, it could be held that this was a loan given by the assessee to the wife which could be found from the fact that both of them maintained accounts and they have been accepted by the higher fact-finding authority, the Appellate Assistant Commissioner. The affidavit filed by the lady would also indicate that the property was for the benefit of the assessee and his son. Loans have been taken and repaid and there had been repayment by cheques. In such circumstances, it can be treated as transfer of money between the assessee and the wife and the amount could be regarded as loan given by the assessee to the wife." It has been contended by the learned advocate for the Revenue that there is no evidence before the Tribunal to come to the conclusion that the assessee gave the loan to the wife for the purpose of the construction of the house property in question. He has also submitted that the inference drawn by the Tribunal is without any b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intained by the assessee and his wife. It was found as a fact by the Tribunal that the assessee's wife bad made repayment of the loan partly by cheques. This finding has not been challenged. It was also found that the assessee's wife had rental income from the house property in question and the rent receipts were issued by the assessee's wife. The loan was repaid out of her rental income. Where the assessee's wife had independent income and part of the consideration for the land on which the house property is constructed comes from the wife and the wife as owner of the house property realises the rents and profits thereof and repays the money advanced by the husband out of her income, the conclusion that the husband advanced the money as and by way of loan to the wife is a possible and reasonable conclusion. The quantum and the quality of the evidence adduced or materials before the Tribunal are not at issue. On the facts and circumstances of the case, we are of the view that the Tribunal had evidence to hold that the sum of Rs. 1,40,000 advanced by the assessee to his wife was by way of loan. In the premises, we answer the first question in the affirmative and in favour of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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