Ramanlal R. Sanghvi v. Commissioner of Income-Tax — 1991 DIGILAW 265 (GUJ)

JUDGMENT : R. C. Mankad, J. The assessee is an individual and the assessment under reference are assessment years 1972-73 to 1975-76. The controversy involved in this reference is with regard to the assessment of income derived from a house property ("the property" for short) standing in the name of the assessee's wife, Jasumatiben, in the hands of the assessee. The property was purchased for Rs. 45,000 in the name of Jasumatiben, on February 22, 1960. In his books of account maintained for the purpose of his business, the assessee showed the property as an asset. In the balance-sheets copies whereof were given by the assessee in the course of the income-tax assessment proceedings, the property was shown as an asset under the head "Building Account" up to assessment year 1963-64. However, from the year of account relevant to the assessment year 1964-65, the account was styled "Jasumati Ramanlal Building Account". Income derived from the property was disclosed by the assessee in his returns of income for the assessment years up to the assessment year 1967-68. For the assessment years 1968-69 up to 1971-72, the assessee showed the income derived from the property in his total income stating that it was includible under section 64 of the Income-tax Act, 1961 ("the Act" for short). However, from the assessment years 1972-73 to 1975-76, the assessee did not disclose the income derived from the property. It was contended by the assessee that the property was purchased by his wife in her own name and that he had given Rs. 45,000 to his wife with the intention of giving a gift of this amount to her. The amount was, however, actually debited to her account. In Samvat year 2023, a sum of Rs. 40,000 was credited to her account. The rental income derived from the property was also credited to her account after Samvat year 2024. The Income-tax Officer, however, rejected the contention of the assessee and, after pointing out various facts including the fact that the rental income derived from the property was credited to the assessee's own capital account, held that the property belonged to the assessee. The Income-tax Officer, therefore, included the income derived from the property in the total income of the assessee for the assessment years under reference. The assessee went up in appeal before the Appellate Assistant Commissioner. The Income-tax Officer, therefore, included the income derived from the property in the total income of the assessee for the assessment years under reference. The assessee went up in appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner, reversing the decision of the Income-tax Officer, held that the property did not belong to the assessee. He, therefore, directed the Income-tax Officer to delete the income derived from the property from the total income of the assessee for the assessment years under reference. Being aggrieved by the order of the Appellate Assistant Commissioner, the Revenue went up in appeal. The Income-tax Appellate Tribunal ("the Tribunal" for short), on appreciation of the evidence on record and the past conduct of the assessee showing the income derived from the property as his own income, held that the property belonged to the assessee and that the Income-tax Officer was, therefore, right in including the income derived from the property in the assessee's total income. It is in the background of the above facts that the Tribunal has referred to us for our opinion, the following question under section 256 (1) of the Act: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the property in question, standing in the name of the assessee's wife, belongs to the assessee and the income arising therefrom should be treated as his income ?" 2. In our opinion, no question of law arises for our consideration in this reference. The finding to the effect that the property belonged to the assessee, which is recorded by the Tribunal, is a finding of fact. It is on the basis of this finding that the Tribunal has concluded that the Income-tax Officer was right in including the income derived from the property in the assessee's total income for the assessment years under reference. The finding which is based on appreciation of evidence on record and the conduct of the assessee is not unreasonable or perverse. The assessee had himself shown the income derived from the property as his own income up to the assessment year 1967-68. The property was also shown as the assessee's asset up to the said year. The finding which is based on appreciation of evidence on record and the conduct of the assessee is not unreasonable or perverse. The assessee had himself shown the income derived from the property as his own income up to the assessment year 1967-68. The property was also shown as the assessee's asset up to the said year. For the assessment years 1968-69 to 1971-72, the assessee had disclosed the income derived from the property as income includible in his hands but, according to him, it was as includible in his income under section 64 of the Act. It was only in the year 1972-73 that the assessee raised the contention that the property belonged to his wife and income derived therefrom was not includible in his hands. It is not disputed that consideration of Rs. 45,000, which was paid for purchasing the property, came from the assessee. The assessee has stated that he had intended to give a gift of this Rs. 45,000 to his wife, but he did not do so. It is the assessee's case that his wife treated the amount of Rs. 45,000 given by the assessee for the purchase of the property as the loan advanced by him and the assessee credited, in the account styled "Jasumati Ramanlal Account" or "Jasumati Ramanlal Building Account", the amounts alleged to have been paid by his wife. It is submitted that, except for one year, this account has been accepted as genuine. Now the assessee is the best person to know whether he had purchased the property or his wife. If the property was purchased by the wife, the assessee would never have treated it as his asset and disclosed the income derived therefrom as his own. When the assessee disclosed the income derived from the property as his own income, he knew what he was doing and he would not have disclosed this income as his income in the aforesaid manner. There was no question of the assessee giving a gift or loan of Rs. 45,000 to his wife for the purchase of the property. The account styled "Jasumati Ramanlal Account" or "Jasumati Ramanlal Building Account" was so styled only for the purpose of identifying the account and not because the property was purchased by the assessee's wife, Jasumatiben. The assessee's case that the property was purchased by his wife is an afterthought. 45,000 to his wife for the purchase of the property. The account styled "Jasumati Ramanlal Account" or "Jasumati Ramanlal Building Account" was so styled only for the purpose of identifying the account and not because the property was purchased by the assessee's wife, Jasumatiben. The assessee's case that the property was purchased by his wife is an afterthought. It was strongly urged that the Tribunal has misinterpreted the observations made in the Tribunal's orders in the assessee's appeals for the assessment years 1967-68 to 1969-70 in holding to the effect that the property belonged to the assessee. We do not find any infirmity in the order of the Tribunal, as urged on behalf of the assessee. The Tribunal has, while reaching the conclusion that the income derived from the property belonged to the assessee, considered various circumstances including those which have been referred to in the earlier orders of the Tribunal. As already observed above, we do not find that the conclusion reached by the Tribunal is unreasonable or unwarranted. It is based on evidence on record. Therefore, in our opinion, no question of law arises for our consideration in this reference. In any case, we do not see any reason to disturb the finding recorded by the Tribunal in this reference. 3. In the result, we answer the question referred to us for our opinion, the affirmative and against the assessee. Reference answered accordingly with no order as to costs. 4. Before parting with this reference, we may mention that the Tribunal ought to have made separate references for each of the assessment years under reference. In other words, it should have made four references. We, therefore, direct that this common reference should be split up and there will be four separate references. We, therefore, direct that a separate reference will be registered for each assessment year. Reference for the assessment year 1972-73 shall be I.T.R. No. 109 of 1979 while references for the subsequent years shaft be registered and numbered as I.T.R. Nos. 109A, 109B and 109C of 1979. Office shall take necessary action accordingly.