PRAM DUTT AHUJA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under s. 66(2) of the IT Act, 1922, at the instance of the assessee in pursuance of an order of this Court in Mise. Civil Case No. 196 of 1966, decided on September 26, 1968. The assessee is an individual who, in the relevant year, was the managing director of "Ramkrishna Besan and Flour Mills Ltd." The assessment year in question is 1957-58, the corresponding previous year being the year ending on March 31, 1957. Smt. Gyan Devi is the wife of the assessee. In the relevant year, she received dividend amounting to Rs. 2,600 on the shares held in her name of the value of Rs. 20,000 in the Ramkrishna Besan and Flour Mills Ltd. These shares were acquired by her in earlier years. She also received interest amounting to Rs. 600 on a fixed deposit, which was made on April 14, 1955, in the aforesaid mills. She filed separate return of her income for the asst. yr. 1957-58, showing the aforesaid items as her income in the previous year.

(2.) IN the assessment proceedings of the assessee, the husband of Smt. Gyan Devi, the ITO called upon him to explain the source of investments in the name of his wife. The explanation of the assessee was that these assets belonged to her and were bought out of her stridhan which was acquired by her at the time of her marriage and later in the shape of gifts and presents. The ITO did not accept the explanation and included the aforesaid income of Rs. 2,600 in the assessee's total income under s. 16(3) of the Act on the ground that the income had accrued to the wife from the assets transferred to Smt. Gyan Devi by her husband, the assessee, otherwise than for adequate consideration. According to the ITO :

(3.) NOW, in the instant case, from the mere circumstance that the assessee has failed to establish that the assets in question in the name of his wife did not come out of the gifts received by her from his father-in-law, it does not necessarily follow that they must have come from the assessee by a transfer, direct or indirect. No attempt was made by the Department to bring facts on record from which such an inference could reasonably be made. The wife of the assessee, in whose name the assets stood, was neither noticed nor called upon to state the source of those assets. No material was placed on record that during the years preceding the accumulation of assets by the wife, the assessee had large incomes from which large unexplained withdrawals were made and which could reasonably account for the accumulation of assets by the wife in those years. The aforesaid circumstances are only illustrative and our purpose in stating them is to show that material could have been collected and placed on record to permit the drawing of an inference one way or the other. Because, in the absence of such material, all we have is the fact that the wife of the assessee has some assets in her name for which the assessee has not accounted to the satisfaction of the IT authorities.