RAMPAL THAKURDIN GUPTA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is an income-tax reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the assessee and the following questions of law have been referred by the Tribunal for answer of this court :

(2.) IT is alleged that the contract for sale of country liquor at certain shops in the districts of Jabalpur and Seoni for the financial years 1973-74 to 1976-77 corresponding to the assessment year 1974-75 was knocked down in favour of the assessee on payment of certain licence fees in the public auction. The assessment for the assessment year 1975-76 was completed on March 17, 1989. The Assessing Officer had also issued notices under Section 148 of the Income-tax Act requiring the assessee to furnish returns of income for the assessment years 1974-75, 1976-77 and 1977-78. During the survey operations, it transpired that the assessee was not the real contractor but was benamidar of Shri Subhash Jaiswal and Smt. Nanhibai Jaiswal. In the assessment proceedings, the assessee took the stand that he was not the real contractor but was only a servant of Smt. Nanhibai. He also took the stand that he was inveigled to put his signature on certain papers by Smt. Nanhibai. Thus, it is alleged that the real persons who had earned the income were Smt. Nanhibai and Shri Sub-hash Jaiswal. Though all the contracts were successfully carried through the name of the assessee, the tax authorities below believed that the real contractor was Smt. Nanhibai. The assessment of the assessment year 1975-76 was at one point of time completed on protective basis in the case of the assessee and on substantive basis in the case of Smt. Nanhibai. However, the Commissioner of Income-tax acting upon the documentary evidence that the contractor was the assessee, deleted the additions for the assessment year 1975-76 made in the case of Smt. Nanhibai under Section 264 of the Act and directed the same to be considered on substantive basis in the hands of the assessee. The assessments for all the four assessment years were eventually framed on substantive basis in the hands of the assessee, but all those were not found justified by the Commissioner of Income-tax (Appeals), and, therefore, those assessments suffered remand twice by the orders dated February 26, 1983 and November 4, 1985 of the Commissioner of Income-tax (Appeals). The insistence of both the orders of the Commissioner of Income-tax (Appeals) was that the real person having income from those contracts should be caught, They wanted the Assessing Officer to inquire into the matter as to who was the real earner. The assessee had filed an affidavit stating that he was an illiterate person and he used to sign certain papers at the direction of Smt. Nanhibai. However, the Assessing Officer again assessed the income for all the four years under consideration in the hands of the assessee but the Commissioner of Income-tax (Appeals) deleted the income from liquor contracts assessed in the hands of the assessee, vide his consolidated order dated September 13, 1989.

(3.) WE have heard learned counsel for the parties and perused the records.