9911796707
TMI Blog1995 (2) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... and, therefore, the assessee had no right whatsoever in the above Stud Farm. In this connection, the assessee produced before the ITO, judgment of the District Judge, Bangalore, delivered on 13-10-1977 wherein permission had been granted by the Court to raise loans on the property of the minor. As regards he sources of the purchase, it was the contention of the assessee that his minor son had received two gifts of Rs. 10,000 and Rs. 40,000 from his grand-mother (mother-in-law of the assessee) Smt. Kusumkumari, formerly Rani of Mandi. These gifts were stated to have been received in cash on 27-2-1974 and 10-7-1974 respectively. In support of the said gift, a letter from the Chartered Accountants M/s P.C. Hansotia Co., dated 13-9-1976 was produced before the ITO. However, at the same time again, the ITO also found out from a study of the books of the assessee with regard to maintenance of his undisputedly own stud farm viz., Green Acres Estate Agricultural Farm, that he had paid an amount of Rs. 40,000 in cash on 12-2-1975 for the purchase of the Broad Acres Stud Farm. Undisputedly again, the assessee did not include the income of Rs. 66,370 from the Broad Acres Stud Farm in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned order upon the assessee's own averment that he was the guardian of his minor son and that the Court had neither any reason nor any occasion to examine the correctness of this averment. The ITO thus concluded that the aforesaid order of the Court is inconsequential to determine the present issue. The ITO finally concluded that the claim of the assessee that he had purchased the Broad Acres Stud Farm in the capacity of a trustee for his minor son was a sham claim motivated by the desire to reduce is tax liability consequent upon the deletion of section 10(27) from the Income-tax Act effective from assessment year 1976-77. Finally, therefore, he considered the assessee as guilty of concealing his income to the abovementioned extent of Rs. 66,370 and levied penalty as above. 4. The CIT(A) allowed the appeal filed by the assessee before him on the following grounds : The assessee had discharged the initial onus cast on him by adducing necessary evidence to show that even before the return of income had been filed by him, there was a claim that the property belonged to his minor son by relying upon his affidavit dated 30-6-1975 also declaring in the same line, by pointing out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al representative, found to be sham and even a make-belief one. He thus strongly urged that the penalty be restored. 7. The facts of the case are rather quite strange here. A huge property like Broad Acres Stud Farm is stated to have been purchased on behalf of the minor son of the assessee by making payment of a paltry amount of Rs. 50,000 only as advance. Further payments are stated to have been made on much later dates out of the self-generating income of the Stud Farm itself. So far as the initial payment of advance is also concerned, it is a fact that an amount of Rs. 40,000 was paid by the assessee out of his own bank account. Although source of this amount as well as of another amount of Rs. 10,000 has been tried to be explained by way of gifts by the mother-in-law of the assessee to his minor son, yet, apart from the letter dated 13-9-1976 from the C.A. of the mother-in-law of the assessee, there was no other direct evidence about the genuineness of the said gifts. How the gifted money was kept has also not been explained in detail by the assessee anywhere. The Tribunal also raised some suspicion about the genuineness of the entries made in the ledger account of the minor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 22-1-1977 is on record." 8. In its aforesaid order dated 5-10-1994, the Tribunal also quoted extensively from the earlier order of the Tribunal dated 4-12-1985 (para 3), at para 14 of its order as below : " In short, the ITO's argument is that the trust deed is a mere afterthought to divert the income of Broadacres from the hands of the assessee to his minor son consequent upon the withdrawal of the exemption earlier available to stock breading income. I consider that these points have been validly taken up by the ITO. The claim of the assessee that he purchased Broadacres as the trustee of his minor son appears to be claim motivated by his desire to reduce his tax liability consequent upon the deletion of section 10(27), effective from the assessment year 1976-77. It is worthnoting that in a purchase deed under which a substantial estate like Broadacres was purchased even a mere mention of the socalled trusteeship of the assessee was not made anywhere. This is very unusual and indicates clearly that such a trusteeship did not exist and was not in anybody's mind at the time when the purchase deed was executed. The other points raised by the ITO such as absence of any gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, it conveys the interest that the assessee had in the property to his son and in reality this is a deed of transfer for which the assessee had received no consideration. The Tribunal, thus, finally held that the owner of the son of the assessee, namely, Marthand S. Mahindra, acquired the ownership of the property on and from 25-3-1977 by virtue of this release deed alone. 11. So far as the issue raised by the assessee about income from Broad Acres Stud Farm having been assessed in the hands of Marthand S. Mahindra for assessment year 1976-77 is concerned, the ITO has rightly pointed out in the impugned penalty order that the said assessment order was later on set aside by the CIT by his order under section 263 dated 28-2-1981. 12. As regards the reliance placed by the learned counsel for the assessee on the decision of the ITAT, Delhi Bench, in the case of Nuchem Ltd. the assessee in that case had disclosed all material facts pertaining to the computation of income and the same were not found false but additions/disallowances were made on account of difference of opinion. In the instant case, however, the assessee knew it himself that he was the owner of Broad Acres Stu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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