9911796707
TMI Blog1983 (2) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. But as the assessee had died, proceedings were initiated and continued against his son. The explanation that the default, if any, was not wilful or deliberate was rejected. In appeal, both the orders, of reassessment and penalty, were maintained. The Tribunal' also did not find any merit in any of the appeals. It, however, allowed the application under s. 256(1), filed against the appellate orders in the penalty matters and, referred the following questions of law in ITR No. 981 of 1976. For the assessment I year 1967-68: " Whether, on the facts and in the circumstances of the case the Tribunal was right in holding that the law as on the date of the filing of the return would be applicable for levy of penalty for concealment and not the law as it stood on April 1, 1967, the first day of the assessment year ?" For the assessment years 1967-68 and 1968-69: " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in rejecting the assessee's contention that he had not been allowed an opportunity of being heard before the levy of these penalties ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bonds were received and sold by his wife. Nor could the assessee produce any documentary evidence regarding possession of money by his wife. He was further influenced in rejecting the explanation of the assessee by the absence of proof of possession of such a huge sum, " by an old lady, particularly the wife of a learned advocate ". The ITO did not believe that she could have Rs. 5,000 or sufficient funds at home which she could have advanced to her daughter-in-law to purchase National Savings Certificates in the name of her sons. The ITO further found that there was contradiction in the explanation submitted by assessee that the certificates were purchased by the grandmother from the statement made in the affidavit that the money was advanced by his wife to her daughter-in-law to purchase these certificates for the benefit of her (latter's) minor sons. He did not find any merit in the explanation of the assessee that although the certificates were purchased in the names of the three minor sons and one daughter whereas the property was purchased in the names of the sons only, because the share of the daughter could be spent in her marriage. Further, he drew an inference from this t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the assessee, to Smt. Raj Rani on July 30, 1962, vide bank draft of the State Bank of India and not either by the legal guardian or by the minors. 4. The house was purchased in the names of three minors. Secondly, there is no specification of the share of each minor. This proves that the property was purchased benami for the assessee. 5. The assessee made a further construction in the property and invested a sum of Rs. 60,000. He could not prove the source of the money invested in the property as the minors and their mother are entirely dependent upon him. 6. The assessee has given contradictory statements at different times. He could not be examined as he died and his son shows his inability to prove, explain and furnish and adduce any evidence in his support. 7. The assessee states that he invested about Rs. 20,000 in the construction of the property in different years. He got it valued at Rs. 40,000 by Sri P. R. Gupta, Approved Valuer, who had not considered the rents it is fetching and also ignored that the property is let out under Rent Control Act, is fetching Rs. 9,000 at present. Before examining whether any of these circumstances individually or collect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 1980 SC 727, the intention was held to be decisive. We shall explain whether on the findings recorded by the ITO, which have been endorsed by the Tribunal, the criteria of determining whether the transaction was benami have been established or not, but we may further point out that the burden to establish whether the transaction is benami or not is on the person who claims it to be so. For instance, in this case, it was for the Department to prove that the sale deed in favour of the minor grandsons was in fact a purchase by the assessee himself. It was, necessary for it to establish, by cogent evidence, that the transaction was in fact benami and it was given a colour only to escape the rigour of income-tax. None of the authorities have pointed out any evidence which was led on behalf of the Department nor the learned standing counsel for the Commissioner of Income-tax could point out any. It may be that, once evidence had been led, the burden ,of proof was not very material, yet, before recording a finding against the assessee, it was necessary to have found that from the circumstances and probabilities there could have been no other inference possible except that the purchase w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds and other documents which were filed. Further, there is no finding that she did not receive compensation and rehabilitation bonds from the State in lieu of the vesting of her property in the State. Nor is it disputed that the National Savings Certificates were purchased in 1956 in the names of three minor grandsons and one grand-daughter. In the absence of any evidence how could the ITO draw an inference that the grandmother could not have been possessed of Rs. 5,000 when she had agricultural property in her own name. What was inherently improbable in it. She was the wife of a leading lawyer. Her own income was, therefore, available to her. The sum of Rs. 5,000 did not appear to be so exorbitant an amount which could not have been possessed by her. In any case the Department could not refute it and the authorities indulged in conjectures and surmises. Then, the ITO expected the impossible to be performed by the assessee, when in 1970, he expected him to disclose the exact date when the bonds were received by his wife and sold for Rs. 10,714. The assessee was not businessman but a lawyer who could not be expected to have maintained the date of receipt of bonds and its sale whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the assessee because the National Savings Certificates were in the names of three minor grandsons and one minor grand-daughter, whereas the house was purchased only in the name of the minor grandsons. Even if the explanation of the assessee, that the house was not purchased in the name of the minor grand-daughter as she would have been adequately compensated at the time of her marriage, is ignored, how could this circumstance establish the benami nature of the transaction ? It was not only too remote but irrelevant to draw an inference against the assessee. Similarly the sale of 72 bighas of land which according to the ITO must have been for Rs.20,000 could at the utmost give rise to suspicion but by itself it was hardly any circumstance which could establish that the consideration for the sale deed was paid by the assessee or that the assessee's wife did not have adequate fund from which she could have purchased the National Savings Certificates which on being encashed was utilised in purchasing the house. Further, the ITO stretched the profession of a lawyer to the limit when he observed that the payment of Buhmi-Bhawan Kar by minors, the passing of an allotment order agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivities of assessee ", they were not only irrelevant but leave one astonished if any of them except probably (5) could have been adverted to for deciding if the transaction was benami. Assuming what has been observed by the ITO, that the assessee's wife should have paid gift-tax, that could only establish the avoidance or evasion of tax by her. Action could be taken against her for that but it could not give rise to an inference that a person who gives money to another without paying the gift-tax does not own money. The inference, to say the least, was imaginary. True that the minor children, their father and their mother, were dependent on the assessee, as he was a leading lawyer, but how does it detract from the circumstance that his wife had her own income from agricultural property. There is not even a whisper in the order of the ITO disbelieving the case of the assessee or the Revenue entries that she was not the owner of the Zamindari property which could have yielded a sum of Rs. 5,000. Similarly, the payment of Rs. 7,500 by the assessee's son to the owner of the property could not lead to a remotest inference that the property was purchased by the assessee. Sri Suresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar contention in para. 27. About the contradiction in the statement of the assessee in the explanation and the affidavit, we have already mentioned. It was unfortunate that the assessee died just on the day next to the filing of the affidavit and he could not be cross-examined. But the affidavit could not be rejected on the flimsy contradiction pointed out by the ITO. The ITO further erroneously drew an inference against the assessee because the valuer did not value the property correctly. Assuming it to be so it was necessary for the ITO to find the intention, who was going to gain from it, and then, could it give rise to an inference that the purchase in 1962 was benami ? From what has been stated above it is obvious that none of the circumstances either individually or collectively established that the transaction was benami. It has not been found if the assessee had any motive in purchasing the property in the name of his grandsons. At least no evidence has been led. Assessee was an income-tax payee. He was leading lawyer. He had property too. In the absence of any evidence of motive it could not be readily inferred that the assessee was the real purchaser. In Jay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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