(1.) 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 his son. With this amount, the son was carrying on business of film-financing and in period of three years, he was able to make up an addition of Rs. 13, 000 to the amounts gifted.
(2.) 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 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.