Sajiv Vohra (HUF) vs Commissioner of Income Tax

Satish Kumar Mittal, J.—This order shall dispose of six Income Tax appeals, bearing I.T.A. Nos. 178, 179, 246, 249, 247 and 248 of

2007, which are arising from a common order dated June 16, 2006, passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar

(hereinafter referred to as ""the ITAT""), in six appeals, i.e., I.T.A. Nos. 644 to 649 (ASR.)/2004, pertaining to the assessment years 1996-97 to

2001-02, whereby the appeals filed by the assessee have been dismissed.

The brief facts of the case are that on November 27, 2001, notices u/s 148 of the Income Tax Act, 1961 (hereinafter referred to as ""the Act"")

in the case of Shri Sajiv Vohra, individual, were issued for the assessment years 1997-98 to 2000-01 for the reason that various investments made

by him did not stand reflected in the original returns filed by him in his individual capacity. He was required to explain the investment made by him

in acquisition of plot and purchase of Kisan Vikas Patras, etc. He was also asked to explain the source of deposits made by him in various bank

accounts with reference to the capital brought forward as on April 1,1995. His capital account for the period June 27, 1991, to March 31, 1995,

also revealed that he had credited the following income in his capital account as ""by other income"":

31-3-1992 777,000

31-3-1993 1,00,000

31-3-1994 1,00,000

31-3-1995 75,000

After receipt of the aforesaid notices on March 31, 2002, returns in the status of Hindu undivided family were filed by the assessee. These were

find by the Assessing Officer as non est being belated. Thereafter, on March 27, 2003, the Income Tax Officer, Gurdaspur, recorded his reasons

to believe that the income had escaped assessment. In these reasons, it was stated that the assessee had made investments in KVPs, etc., in his

own name and in the names of his family members and that during reassessment proceedings in the status of individual, Shri Sajiv Vohra had stated

that all investments stood in the hands of his Hindu undivided family. The assessments in the status of individual were completed on March 28,

2003. In these assessments, additions were made, observing that in case Shri Vohra was able to prove the assessment, being in the hands of the

Hindu undivided family, the additions in the status of individual would be protective else they would be treated as substantive. These assessments

were not challenged and they attained finality.

The Assessing Officer in the order dated March 16, 2004, for the assessment year 1996-97 concluded that in fact, no Hindu undivided family

existed and the business was the individual business of Shri Vohra. However, income was assessed in the hands of the Hindu undivided family on a

protective basis since the return had been filed in the status of Hindu undivided family.

Feeling aggrieved against the aforesaid order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), who, vide order

dated September 22, 2004, upheld the findings of the Assessing Officer that actually there was no Hindu undivided family. However, the

protective assessment made in the hands of the Hindu undivided family was deleted.

In the individual cases, the assessee stated that the investments stood explained in the hands of the Hindu undivided family. Since the Assessing

Officer was of the view that the investments have been made by individual and were liable to be considered in his case on substantive basis, he,

therefore, made the additions in the hands of individual on substantive basis subject to rider that since assessments in the case of the Hindu

undivided family were still pending and in case the assessee is able to explain the source of investments in the hands of the Hindu undivided family,

the additions in the hands of individual would be protective, else they would be treated as substantive. These additions were never challenged by

the assessee and achieved finality. As such, they became substantive additions. In the Hindu undivided family assessment, the Commissioner of

Income Tax (Appeals) upheld the Assessing Officer''s findings that the assessee never had an Hindu undivided family. The protective assessments

in the Hindu undivided family status were deleted on the premises that the same income could not be assessed twice over, in the hands of the

individual as well as the Hindu undivided family.

Against the aforesaid order passed by the Commissioner of Income Tax (Appeals), the assessee filed appeals which have been dismissed by the

Income Tax Appellate Tribunal, vide order dated June 16, 2006, while observing as under:

...we find that the findings recorded by the Commissioner of Income Tax (Appeals) in this regard are categorical and Shri Vohra has not been able

to controvert the same to any degree. Learned Counsel has first off, contended that for the assessment year 1996-97, no substantive assessment

has been made. But this is not so. As discussed hereinabove, the protective individual assessments have undisputedly attained finality, as not having

been challenged. The status of Hindu undivided family has not been proved. No positive evidence whatsoever has been brought to an otherwise

effect. Rather, all the indication is, as observed by both the authorities below, to the contrary. To begin with, the Hindu undivided family returns

were filed belatedly, only on receipt of notice u/s 148 in the status of individual. The deposits in question were made in the hands of the individuals

and not with the Hindu undivided family. All the bank accounts were in the names of the individuals, rather than in that of the Hindu undivided

family the source of these funds is also not proved to be any Hindu undivided family. The bank declarations were also signed as sole proprietor

and not as karta of an Hindu undivided family. The column in these declaration forms apropos the capacity as Hindu undivided family has, to be

made pointed mention of, been left blank, showing the intention and fact situation at the relevant time. No material of the existence of any corpus of

Hindu undivided family funds was brought, either before both the Assessing Officer and the Commissioner of Income Tax (Appeals) or before us.

The KVPs or FDRs were not declared in the individual status. Once notices u/s 148 were issued in the individual status, the only way out for

legalising such investments was to declare them in the status of Hindu undivided family. It has been so done. However, this machination is amply

transparent from all the aforesaid circumstantial evidence to the contrary. It has thus, correctly been deduced that it was Section 148 notice issued

in the individual capacity which triggered the filing of the sham Hindu undivided family returns.

Then, the entire business was found to be carried on by Shri Vohra in his individual capacity. This chemist business was shown in the individual

status returns. There was only one licence, which was in the name of M/s. Vohra Medical Store. Shri Vohra was not found to have been running

this business in the name of the Hindu undivided family. It does not stand proved otherwise...

8.12 We, however, are not impressed by the stand taken by the assessee. It remains a fact that for the assessment years 1992-93 to 1995-96,

i.e., for the assessment years immediately preceding present one, substantial amounts of money were shown in the assessee''s capital account, to

have been earned as ''other income''. The details of this ''other income'', never saw the light of day undisputedly, no return of income for any of

these years was filed. The sources of this income thus remained shrouded in mystery. In the individual assessments, on the other hand substantial in

additions were made, which were allowed to remain, having not been appealed against. Also, huge gifts were received from Shri Vohra''s parents,

whereas loans were advanced to them free of interest. All this is gathered for the APB itself, constituting self-incrimination documentary evidence

produced by the assessee itself, little realizing that these very documents would comprise evidence capable of working and being used against,

rather than in favour of the assessee.

8.13 To wit, the modus operandi of the assessee is self-explanatory. Res ipsa loquitor. It is merely by design that the status of Hindu undivided

family has been tried, albeit unsuccessfully, to be engineered by Shri Vohra, to suit his nefarious purpose of evading the tax which was the rightful

and legitimate due of the Revenue. Such design must (sic) be allowed to succeed.

Against the aforesaid impugned orders, the instant appeals have been filed in which the assessee has raised the following substantial question of

law for consideration of this Court:

Whether, on the facts and circumstances of the case, the Income Tax Appellate Tribunal was justified in confirming the action of the authorities

below in not accepting the legal status of Hindu undivided family having legally created as per the provisions of law through valid gift deed/affidavit

of the donor being the mother of the appellant (annexure A-7) clearly dispelling her wishes and thus finalising the assessment on substantive basis in

the hands of individual and protective in the hands of Hindu undivided family which is against the established principles of law, thus, needs to be

quashed?

We have heard the arguments of learned Counsel for the appellant and gone through the impugned orders.

Learned Counsel for the appellant submitted that the Commissioner of Income Tax (Appeals) as well as the learned Income Tax Appellate

Tribunal have not properly appreciated the facts of this case and thus have wrongly come to the conclusion that the appellant has failed to prove

the status of Hindu undivided family. Learned Counsel further submitted that the appellant has been dealing in sale and purchase of all types of

veterinary and poultry medicines and vaccines on retail sale basis since 1989 in the name of his proprietary firm M/s. Vohra Medical Store. He

was regularly filing his Income Tax returns in the individual status. He got married on February 3, 1991. His wife is a qualified pharmacist, and after

his marriage, his mother Smt. Bimla Vohra gave a gift of Rs. 20,000 in cash on June 27, 1991, to the joint family and, thereafter, he started running

the wholesale medicine business in the status of Hindu undivided family. He further stated that he continued to file his returns in the capacity of

individual and, thereafter, he filed his returns in the status of Hindu undivided family from the assessment year 1996-97. Learned Counsel also

submitted that from the income of the Hindu undivided family, various investments were made which have been wrongly treated by the Assessing

Officer as individual''s income of Shri Vohra. Learned Counsel submitted that the assessee has completely proved on record, the creation of Hindu

undivided family as well as the income of the Hindu undivided family. In spite of that, the adjudicating authorities have wrongly upheld the order of

the Assessing Officer while coming to the conclusion that the assessee has failed to prove the creation and existence of Hindu undivided family.

Learned Counsel further submitted that a Hindu male with his wife and children constitutes the Hindu undivided family. He submitted that the Hindu

undivided family is a creature of Hindu law and it can exist even without any nucleus or ancestral joint family property. Learned Counsel also

submitted that the property may be joint family property without having been ancestral. Where the members of joint family acquire property by or

with the assistance of joint funds or by their joint labour or in their joint business or by a gift or a grant made to them as a joint family, such

property is the coparcenary property of the persons who have acquired it, whether as an increment to ancestral property, or whether it has arisen

without any nucleus of ancestral property.

Learned Counsel further submitted that in the instant case, the assessee, his wife and his children constitute the joint Hindu family property and

the gift made by his mother for the benefit of the joint family of the assessee, was sufficient in creating the Hindu undivided family and any income

derived from the said nucleus should have been treated as the income of the joint Hindu family. While referring to the decision of the Supreme

Court in Commissioner of Income Tax Vs. K. Satyendrakumar, , learned Counsel for the appellant submitted that where a gift made by a

grandmother for the benefit of the entire family of her son and from the said amount, the son acquired the property and started doing business, the

income from such property was treated as the income of the Hindu undivided family.

After hearing learned Counsel for the appellant and going through the impugned orders, in the facts and circumstances of the case, we do not

find any illegality or perversity in the impugned order passed by the Income Tax Appellate Tribunal as in our view no substantial question of law is

arising from the order passed by the Income Tax Appellate Tribunal. In the instant case, though the assessee has taken the stand that after getting

married and receiving the gift of Rs. 20,000 from his mother in the year 1991, he started the business in the status of Hindu undivided family in the

year 1991 itself and the income from the said business was invested by him in various heads, but the assessee has failed to prove these facts. It is

admitted fact that since the very beginning the assessee is running the business in the name of proprietorship firm in the individual status. All the

bank accounts of the said firm were in the name of the individual and not in the name of the Hindu undivided family. All the investments were made

by the appellant in the individual name and not in the name of the Hindu undivided family. The licence for running the business was also obtained in

the name of individual and not in the name of the Hindu undivided family. The bank declarations were also signed as a sole proprietor and not as a

karta of the Hindu undivided family. There was a column in those forms whether the account is opened in the name of the Hindu undivided family.

Those columns were left blank. Up to the year 2001, the assessee did not show the business of the firm in the status of the Hindu undivided family.

It is only when the notices were issued u/s 148 of the Act for reopening of the assessments made in the individual status, then the assessee filed the

return of the Hindu undivided family with an object to regularise the undisclosed investments made by him. The entire business was found to have

been carried on by the assessee in his individual capacity. Thus, in this case, the assessee has miserably failed to establish that the business carried

on by him was in the name of the Hindu undivided family and not in his individual capacity and the income derived from such business was in the

status of the Hindu undivided family. In our opinion, in the instant case, on the basis of the material and the evidence, a pure finding of fact has been

recorded by the Commissioner of Income Tax (Appeals) which has been affirmed by the Income Tax Appellate Tribunal, and the said finding of

fact does not require any interference in these appeals.

Hence, finding no merits in these appeals, the same are hereby dismissed.