Uttamchand Jain vs Commissioner of Income Tax

N.D. Ojha, C.J.—On being required to do so by this court, the Tribunal, Nagpur, has referred the following question to this court for its opinion :

" Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that Shri Bhagchand was a benami-dar for the assessee ? "

It has been urged by learned counsel for the assessee that the burden to prove that Bhagchand was a benamidar for the assessee lay on the Department which had set up the plea of benamidar and since the Department had failed to produce any satisfactory evidence in support of the said plea, the finding recorded by the Tribunal is apparently illegal.

Having heard learned counsel for the applicant, we find it difficult to agree with this submission. From a perusal of the order of the Income Tax Officer who was the assessing authority, it appears that he has recorded the finding that Bhagchand was the benamidar of the assessee in view of the fact that Bhagchand was suffering from mental disease as also in view of the material placed before him on the basis of which he had passed the order of assessment dated December 30, 1976, in the case of Bhagchand. The said order dated December 30, 1976, is on record in the instant case and its perusal indicates that the Income Tax Officer in recording the aforesaid finding had, inter alia, relied on the statement of the wife of Bhagchand who had stated that her husband was without any job and did not earn a single pie even to give pocket money to her for her expenses. It was also pointed out in that order by the Income Tax Officer that there was no satisfactory evidence in support of the case set up on behalf of Bhagchand that he had received cash at the time of his marriage from his near relations. It has also been found that similarly there was no proof as regards the retail business said to have been done in charcoal and wood by Bhagchand. It is in view of this material, coupled with the material that Bhagchand was suffering from mental disorder that in the order dated December 30, 1976, the Income Tax Officer had held that since the sources of investment had not been proved, it was apparent that the investment had been made from the money obtained and received by Uttamchand, namely, the assessee in the instant case.

The assessee preferred an appeal against the order of the Income Tax Officer, which was allowed by the Appellate Assistant Commissioner, on the basis of certain submissions made during the course of the arguments on behalf of the assessee. The matter was taken up in second appeal. The Tribunal pointed out that the finding of the Appellate Assistant Commissioner, reversing the finding of the Income Tax Officer, could not be sustained inasmuch as no additional evidence has been produced before the Appellate Assistant Commissioner on the basis of which the finding recorded by him could be held to be justified. On this view, the Tribunal reversed the finding of the Appellate Assistant Commissioner and restored that of the Income Tax Officer.

Coming back to the submission made by counsel for the assessee that the finding of the Tribunal was vitiated inasmuch as the Department had not produced any cogent evidence in support of its plea that Bhagchand was a benamidar, suffice it to point out that when the evidence produced on behalf of Bhagchand himself in the case relating to his assessment itself was sufficient to establish that Bhagchand did not have any source of income so as to make an investment in the contract business, it was open to the Department as well as the Tribunal to rely on the said evidence. It has not been urged by learned counsel for the assessee that the said evidence was inadmissible. In view of that evidence, we do not find any error in the finding of the Income Tax Officer that Bhagchand was a benamidar. The Appellate Assistant Commissioner, in reversing the finding of the Income Tax Officer, has not at all referred to the material relied on by the Income Tax Officer, already referred to above. The Tribunal was, therefore, justified in setting aside the finding of the Appellate Assistant Commissioner.

In view of the foregoing discussion, our answer to the question referred to us is that, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that Bhagchand was the benamidar of the assessee. In other words, the aforesaid question is answered in the affirmative, in favour of the Department and against the assessee. In the circumstances of the case, however, there shall be no order as to costs.