P. Joseph Swaminathan vs Commissioner of Income Tax, Madras

Balasubrrhmanyan, J.—The assessee, who figures in this reference was charged to tax on the income from house properties. One of the

house properties the income whereof was brought to tax is a house bearing door No. 91, Bussy Street, Pondicherry. The assessee''s contention

was that this house belonged to his son, Mathew and not to him. Investigation into the circumstances under which this house property was

purchased showed that the sale deed for this property bearing the date, February 5, 1966, stood in the name of the assessee''s son for Rs. 23,000.

According to the assessee, the wherewithal for the purchase of this property was found by his son in the following manner; two lump sums of Rs.

5,000 each were given as gift by the assessee to this son. With this amount, the son was carrying on business of film-financing and in a period of

three years, he was able to make up an addition of Rs. 13,000 to the amounts gifted. The aggregate funds, according to the assessee, went in for

the purchase by the son of this property.

The ITO considered this claim of the assessee in the light of the evidence furnished by him in the course of the assessment proceedings. In the

first place, the assessee sought to establish the initial gift of Rs. 5,000 on two occasions which he claimed to have made to the son, by a reference

to the entries in his books of account. There was an entry in the assessee''s accounts bearing the date, December 24, 1964, showing that Rs.

5,000 was transferred from the assessee''s personal account to the account of his son. Likewise, there was another entry bearing the date,

December 31, 1964, which showed that a like sum of Rs. 5,000 was transferred to the son''s account. Investigation of these entries in the context

of other entries in the cash book, however, showed that the two entries were interpolations. With this discovery, the ITO also pursued other lines

of investigation. He summoned the assessee''s son, Mathew, for a personal examination. It came out from Mathew''s evidence that he was born in

1944, and at the material time he was barely 22 years of age, engaged in pursuing his studies. Mathew, however, deposed that he was, at the same

time, carrying on business of film-financing, and in a matter of three years from 1964 or 1965, his income was of the order of Rs. 5,000 per year.

He, however, admitted that he stopped the business at the end of the third year. He was not able to explain why at all he should discontinue the

business if it had all the while proved lucrative. It also appeared from the evidence of Mathew that in 1967 this property standing in his name was

mortgaged with one Papurajan for Rs. 21,000. The mortgage, it was said, was subsequently redeemed in 1969. Following this information,

Papurajan was summoned to appear and give evidence on oath. According to the evidence of this individual, even while Mathew was redeeming

the mortgage, he had made a representation to the effect that it was his father who had provided him with the money for redeeming the mortgage.

It was not suggested either by the assessee or by Mathew that the latter had any money of his own, apart from the alleged gifts by the assessee.

Nor was it claimed that anyone else had helped Mathew with funds for the purchase of the property. Having considered all these circumstances,

the ITO recorded a finding that it was the assessee who was the real owner of the house property bearing door No. 91, Bussy Street,

Pondicherry. On this basis, the office computed the annual letting value of the property and included it as part of the total income of the assessee.

The assessee objected in appeal to the inclusion of the income from this property. Both the AAC and the Appellate Tribunal, however,

dismissed the appeal. Hence this reference.

The Tribunal in their order have discussed all the materials on record before arriving at their conclusion. However, the assessee obtained a case

stated on the following question of law :

Whether, on the facts and in the circumstances of the case, the inclusion of the income from the property bearing door No. 91, Bussy Street,

Pondicherry, standing in the name of the assessee''s son in the hands of the assessee was justified in law ?

It is not disputed that if the house property bearing door No. 91, Bussy Street, Pondicherry, is the property of which the assessee is the real

owner, then it is quite right that the income therefrom should be assessed as income of the assessee. This is because under the scheme of the I.T.

Act, 1961, the basis of liability for income from property is the ownership of the property by the assessees concerned. The Act does not,

however, pin down the assessing authorities to the registered owner of the house property as decisive of the question of assessability. In

whosoever''s name the house property may stand or get registered, it would yet be within the province of the ITO to find out who the real owner

of the property is so s to fix the liability for Income Tax on that owner in respect of that property. This jurisdiction of the ITO to probe into real and

benami acquisitions of property cannot be gainsaid, considering that the very basis of the charge to tax under the Act is the ownership of the

property.

In this case, as we have shown above, the Tribunal had before them considerable materials on record, on the basis of which they arrived at their

conclusion that the property bearing door No. 91, Bussy Street, Pondicherry, is property of which the real owner is the assessee and not his son.

This finding can only be assailed if it could be urged by the assessee that there is no material whatever in support of that finding. It may, perhaps,

also be challenged on another ground, namely, that the Tribunal''s decision is based on a view of the facts which no reasonable person can come

to, Mr. Subramaniam for the assessee does not suggest that there has been any misconception of the law on the part of the Tribunal. All that he

sought to contend before us was that the materials relied on by the Tribunal cannot be regarded as adequate to support their conclusion. This line

of inquiry is not open to us to pursue in an Income Tax reference. We can, by way of review of the factual finding of the Tribunal, ask the question

whether there is any material in support thereof. If we find, on examination, that there is some material or other to support the Tribunal''s

conclusion, then it is not for us to further inquire whether such materials as the Tribunal had taken into account is adequate or sufficient to justify

their conclusion.

We have earlier summarised all the materials on record and also the reasonings of the ITO, which, by and large, have been accepted by the

Tribunal as well founded. Even assuming that the supporting materials should have been of greater weight than they happened to be in this case,

that would not be a ground for us to hold the decision of the Tribunal is erroneous in law.

For all these reasons, our answer to the question of law is in the affirmative and against the assessee. The Department will have its costs.

Counsel''s fee Rs. 500.