DHADI SAHU Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Cuttack Bench, pursuant to a direction from this court on 20th of August, 1975, made an application under Section 256(2) of the Income-tax Act of 1961 (hereinafter referred to as "the Act") and has stated these cases and referred the following common question for opinion of the court:

(2.) ASSESSEE is an individual and the relevant assessment years are 1968-69, 1969-70 and 1970-71. In the course of assessment proceedings for the first of these three years, the Income-tax Officer found that the assessee had acquired a house for a consideration of Rs. 3,400 on 20th of November, 1957, in the name of his wife. The said house was reconstructed in the year 1962, and a portion thereof had been rented out to M/s, Ramdas Motor Transport Pvt. Ltd., the rent being Rs. 240 per month between 1962 and 1966 and Rs. 280 per month from 1967 onwards. The Income-tax Officer further found that the assessee had purchased another plot of land for Rs. 5,000 on May l7, 1960 also in the name of his wife and had constructed a house thereon in 1965 and was occupying the same for residential purposes from 1969. The Income-tax Officer found that the assessee was being assessed as the karta of a Hindu undivided family until the assessment year 1966-67, When the assessee was called upon to explain the source from where the two acquisitions had been made on January 22,1970, the assessee stated that the residential house was acquired out of the rental income received from M/s. Ramdas Motor Transport Private Ltd. The Income-tax Officer found that the expenditure for construction as disclosed was low and added a sum of Rs. 10,000 to the expenditure disclosed. He came to hold that though the house property stood in the name of the assessee's wife in the municipal records, in the absence of satisfactory explanation for the source of acquisition of money, the assessee should be treated as the real owner and the assessee's wife as a name-lender. Accordingly, the Income-tax Officer proceeded to assess the income from house property in the hands of the assessee.