Commissioner of Income Tax vs Smt. Savitri Devi Shukla

R.V. Raveendran, C.J.—This appeal by the Revenue u/s 260A of the Income Tax Act, 1961 (for short "the Act") relating to the assessment year 1987-88 filed against the order of the Income Tax Appellate Tribunal, Indore, dated November 15, 2003, in I.T.A. No. 719/Ind/1997 has been admitted on the ground that the following question of law arises for consideration:

Whether the Income Tax Appellate Tribunal was justified in law in holding that the addition of Rs. 1,32,442 cannot be made in the income of the assessee on account of unexplained deposits in the savings bank account No. 13272 in the State Bank of India, Hamidiya Road, Bhopal, held by the assessee jointly with Smt. Kashi Bai even though Smt. Kashi Bai did not sign the account opening form nor she operated this bank account at all?

The assessee did not maintain accounts nor had any record of day to day receipts and expenses. After a search, the Revenue reopened the completed assessment and sought details of sources of assets and investments. The assessee furnished a cash flow statement. Not being satisfied the Assessing Officer prepared a cash flow statement for the assessment year 1987-88 and worked out the peak of investment over income at Rs. 1,32,442 and he added the said sum to the income as unexplained deposits u/s 69 of the Act in the order of assessment dated November 25, 1994. For arriving at the said figure, he took two remittances (Rs. 10,360 + Rs. 1,09,640) aggregating to Rs. 1,20,000 made to the joint account (No. 13272) of "Kashi Bai and Savitribai (assessee)" with the State Bank of India, Hamidia Road Branch, as remittances by the assessee. The Assessing Officer held that Kashi Bai was only a name-lender (benamidar) for the said account, as the joint account opening form was signed only by the assessee and not by her mother Kashi Bai and that most of the withdrawals were by the assessee and most of the deposits were by one Arun Sharma, an employee of the Shukla Group. (Note: The question of law framed gives an impression that Rs. 1,32,442 was the deposits to the joint account. The credits to the joint account was Rs. 10,360 plus Rs. 1,09,640 in all Rs. 1,20,000).

In an appeal by the assessee (Appeal No. IT 519/94-95), the Commissioner of Income Tax (Appeals), Bhopal, by order dated April 17,1997, held as follows:

Regarding joint savings bank account No. 13272 with Smt. Kashi Bai, this issue has been discussed by me in details in my appellate order of even date in the case of Smt. Kashi Bai for the assessment year 1987-88 wherein I have held that Smt. Kashi Bai is not a benami of the appellant and hence, the deposits in the said bank account are to be excluded from the cash flow statement of the appellant.

In an appeal by the Revenue in I.T.A. No. 719/Ind/97, the Income Tax Appellate Tribunal, Indore Bench, by order dated November 15, 2002, affirmed the finding of the Commissioner of Income Tax (Appeals) holding that the order of the Commissioner of Income Tax (Appeals) was comprehensive and supported by convincing reasons and did not contain any infirmities. Dealing with the features pointed out by the Assessing Officer, the Tribunal held that Smt. Kashi Bai, the mother of the assessee, being an old lady, there was nothing abnormal in Kashi Bai taking the assistance of her daughter (the assessee) and employees of her daughter''s family (like Arun Sharma) in opening the account and operating the same; and that the absence of the signature of Kashi Bai in the withdrawal form may be on account of her advancing age and poor eye-sight. The Tribunal relied on the decisions of the apex court in Krishnanand Vs. The State of Madhya Pradesh, wherein it was held (headnote):

The burden of showing that a particular transaction is benami and the owner is not the real owner always rests on the person asserting it to be so and this burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove that fact of a benami or establish circumstances unerringly and reasonable raising an inference of that fact. The essence of benami is the intention of the parties and not unoften, such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of the serious onus that rests on him, nor justify the acceptance of mere conjectures or surmises as a substitute for proof. It is not enough merely to show circumstances which might create suspicion, because the court cannot decide on the basis of suspicion. It has to act on legal grounds established by evidence.

In this case, while considering the case of Smt. Kashi Bai for the assessment year 1987-88, the Commissioner of Income Tax (Appeals) has held that Smt. Kashi Bai was not a benamidar of the assessee. The said decision of the Commissioner of Income Tax (Appeals) in the case of Smt. Kashi Bai relating to the assessment year 1987-88, has apparently not been challenged and has attained finality. If that is so, the credits/remittances made to the joint savings bank account No. 13272 cannot be treated as unexplained deposits by the assessee and added to her income. The decision of the Commissioner of Income Tax (Appeals) in the case of the assessee for the assessment year 1987-88 confirmed by the Tribunal, is based on the said decision in Smt. Kashi Bai. So long as the decision of Smt. Kashi Bai for the assessment year 1987-88 stands, the Revenue cannot obviously contend to the contrary in the case of the assessee. Further, appreciating the evidence, the Commissioner of Income Tax (Appeals) and the Tribunal have recorded a finding of fact that the joint account was not held and operated by the assessee alone in the personal capacity and Kashi Bai was not a mere benamidar or name-lender for the assessee. This concurrent finding of fact based on cogent reasoning is not open to challenge in this appeal.

The question of law is raised on the assumption of a factual position. But that factual position is not proved.

We, therefore, answer the question of law in the affirmative against the Revenue and in favour of the assessee.