1. The revenue has made this appeal against the order dated 8-5-1980 of the Appellate , Controller B-Range, Bombay, who partly allowed the appeal against the order dated 25-8-1977, of the Fourth Assistant Controller, Bombay.
6. The second issue, in this appeal, is regarding the addition of Rs. 32,281 representing the value of Flat No. 85, in Deepak Building, Peddar Road, Bombay 400 026.
7. The Assistant Controller made the addition of Rs. 32,281 on the ground that the deceased was the actual owner of Flat No. 85 ; while his wife was his benamidar for the Flat.
8. Before us, Shri Viswanathan contends that the assessment records of the deceased show that the deceased had admitted that for the acquisition of the aforesaid flat, it was the deceased who gave the consideration to his wife, but, there is no statement to this effect either of the wife or of the deceased, and the entries in the books of account are merely assertions and if they are proved, then these are admissible in evidence. Hence, these cannot take the place of proof or fact proved.
9. Shri Viswanathan further contended that the income of this flat was added to the income of the deceased, but he has not shown that it was added to the income of the deceased in his assessments as on account of his wife being his benamidar, regarding the aforesaid property. Shri Viswanathan has also not brought on record any evidence to show that in the assessment proceedings of the deceased, the issue of benami transaction or sale of this flat was there, and the authorities below found that it was the deceased who was the actual owner of this flat and his wife was his benamidar.
10. On the other hand, there is evidence on record that after the death of the deceased, his wife was assessed for the income of the flat. Much more, the revenue took the estate duty for the value of this flat from the accountable person of the deceased (wife). Besides, no doubt, the will of the deceased shows that all his properties were his self-acquired properties. However, some of his properties gifted to his wife were in her name in which he had no interest whatsoever. So the will does not support the stand of the revenue and entries in the books of account stated above, though Shri Viswanathan stressed too much on the words "all my properties are my self-acquired properties", but he was not able to say anything regarding the words "some of my properties gifted to my wife are in her name in which I have no interest whatsoever". The books of account, for the purpose of income-tax assessments show otherwise ; it cannot then be presumed on account of these entries that he was the actual owner of Flat No. 85 and his wife is his benamidar, particularly when in the will, he categorically stated that he had gifted some properties (self-acquired) to his wife with which he had no interest. If the revenue contends otherwise for this property, then it is for it to prove accordingly.
11. The wife willed it of as owner of house and the revenue has accepted the will. Moreover, the tenants always paid the rent to the wife and not to the deceased, but the income of rent has been shown in the assessments of the deceased. From this fact, it cannot be concluded that the rental income was there on account of the finding that the wife is the benamidar of the deceased for Flat No 85, and it could be there under Section 64. We have repeatedly asked the departmental representative to show that the inclusions of rent income from the property in dispute in the assessments of the deceased are not under Section 64, but it failed to do so.
12. On the other hand, the departmental representative has admitted that there is no finding in the assessment proceedings of the deceased where it was held that the deceased was the real owner of Flat No. 85, and his wife is the benamidar of the deceased, and as such, the income from the flat is added to the income of the deceased.
13. It is settled law that it is for the allegor to prove the benami transaction. Reliance can placed on the decision reported in AIR 1974 SC 171. So, in this ease, the onus is on the revenue to prove that the deceased was the real owner of Flat No. 85 and his wife was his benamidar. The revenue has failed to do so, and the evidence on the record is otherwise, as we have stated above ; moreover, the accountable person is challenging the revenue in stating that the deceased was the owner of it. Hence, we hold that the deceased was not the real owner of Flat No. 85, nor his wife was his benamidar, and, as such, the value of Flat No. 85 at Rs. 32,281 cannot be added to the estate of the deceased.
14. The cases relied on by the learned departmental representative, namely, O.S. Chawla v. ACED  90 ITR 68 (All.) and Muthukaruppi Achi & Clarance Pals v. CED  124 ITR 143 (Kar.) are of no help to the revenue, as these are distinguishable.
1. It is my misfortune that I am unable to agree with my learned brother in respect of the inclusion of the value of the flat held in the name of the wife of the deceased and the outstanding rent thereof in the deceased's estate.
3. The rent outstanding also is shown in the balance sheet on the asset side. Thus, the books show that the property is the asset of the deceased.
2. These facts completely prove the department's case. Nothing further is required for its inclusion.
There is no statement from the wife or the deceased. The entries in the books are mere assertions. Now, I am really unable to understand this point. If the entries in the books are the assertions, they are assertions of the deceased. We are concerned with the estate of the deceased. So, the assertion of the deceased as shown by his books are very very relevant. Regarding the case that the wife was not examined, it was nobody's case that she should be examined.
Actually, in law, the department had discharged their onus by showing the four facts I have listed above. Granting for argument's sake, these may not be conclusive, the presumption at least is in favour of the department. And it is for the respondent then to show that, in spite of these facts, the wife was not a benami for this purpose, they may, if they think necessary, make the wife to make a statement to that effect.
4. Where purchase consideration is admitted to be from the husband and the property stands in the name of the wife, the presumption is that she is a benami: this proposition of law is as old as the hills and settled a century back by a series of decisions of the Privy Council. I may cite only Mst. Bilas Kanwar v. Desraj Panjit Singh AIR 1915 PC 96, where following decisions one century old, the Privy Council reiterated "where a purchase is made in the name of wife, the natural inference is that the purchase is a benami transaction, a dealing common to Hindus and Muslims alike : it has a curious resemblance to the doctrine of English law that the trust of the legal estate results to the man who pays the purchase money, and this again follows the analogy of common law that where a feoffment is made without consideration the use results to the feoffer : the exception in English law by way of advancement in favour of wife or child does not apply to India".
5. The second point made out is that it has not been shown that the income was assessed in the hands of the deceased because the wife was a benami. Such an issue could never arise because the deceased had not disputed the inclusion. So, the department was never formally called upon to prove benami. As I said earlier, the conduct of the deceased showed that he was treating it as his property.
6. The third point is that after the death, the wife was assessed on this income. That may be so. What is done after the death of the deceased is not relevant 1. This matter has come up before me because there has been a difference of opinion on one point between the two learned members who heard the relevant departmental appeal in the first instance. The point which has been so referred to me is the following : Whether, on the facts and in the circumstances of the case, the department has succeeded in proving that the property standing in the name of the wife of the deceased is benami of the deceased; hence includible for estate duty assessment of the deceased On the facts and in the circumstances of the case, the learned Appellate Controller of Estate Duty erred in directing Assistant Controller of Estate Duty to delete the additions made on account of (i) the value of Rs. 32,281 in respect of Flat No. 85 in 'Deepak Building' at Peddar Road, Bombay-400 026, and (it) the outstanding rent of Rs. 6,625 from the principal value of the estate of the deceased? Thus, the question is whether Smt. Sitabai, the wife of deceased Sri Doulatram Naraindas in whose name the abovementioned flat stood, was his benamidar. There is no dispute that if it is held that she was his benamidar, it will follow that the amount of the outstanding rent will be includible in the principle value of the estate.
2. However, according to the accountable person even if it is held that the property consisting of the flat was beneficially owned by the deceased though standing in the name of his wife as his benamidar. yet the value thereof is not includible in the principal value of the estate. According to the accountable person, this aspect of the case is not included in the point which has been referred to me. According to the department, this aspect is also included in the point which has been referred to me. However, since in the question framed by the two learned members the word "hence" has been used and I also notice that it cannot be said that both the learned members have dealt with this aspect in their orders, I hold that the ambit of the question referred to me does not include the aspect whether the value of the property will not be includible in the principal value of the estate even if it is held that the deceased was the beneficial owner of the property.
3. I may make yet another preliminary observation. It is well-settled that when there is an allegation of a benami arrangement, it is for the party which is suggesting that the apparent state of affairs is not real, to prove that such is the case. This has been also recognised in the question framed by the two learned members and referred to me, because it is the department which has taken the stand that the deceased was the beneficial owner of the property.
4. I may now notice some relevant facts and course of events. The appeal relates to the assessment of estate duty arising from the death of the late Doulatram Naraindas. The name of his wife is Sitabai and the name of their son is Ram. Doulatram will be hereinafter referred to as the deceased. Doulatram as well as Sitabai made their separate last wills on 17-9-1969. One of the recitals in Doulatram's will is that "... some of my properties gifted to my wife are in her name in which 1 have no interest whatsoever..." Another recital is as below : ...I appoint Mr. Mhamatnml Tolaram Wadhwani in whom 1 have great confidence as sole trustee of my Will with power to him to appoint any other trustee in his place. On my death all my properties will vest in my aforesaid trustee .... There is no clear mention of the above mentioned flat.
5. Smt. Sitabai's Will is very brief and the relevant portion is as below : I give all my property movable and immovable to my son Ram. No one else shall have any interest therein.
6. Doulatram died on 14-4-1970. His estate was administered by Shri M.T. Wadhwani, who is the accountable person.
8. The flat was in a co-operative society and one Sri Lalwani had occupied it as a tenant. The membership of the co-operative society was in the name of Smt. Sitabai during her lifetime and not in the name of the deceased. At the stage of the administration of the estate of the deceased as well as the estate of Smt. Sitabai the concerned persons included the value of the flat and the outstanding rent from it in the estate of Smt. Sitabai but not in the estate of the deceased.
9. It is important to notice firstly that is was Shri M. T. Wadhwani who was the accountable person in the proceedings for levy of estate duty in the case of the deceased and secondly that the relevant assessment was made in August 1977, i.e., long after the death of Smt.
Sitabai. Indeed. Shri M. T. Wadhwani filed the estate duty account on 11-11-1971, i.e., one year after the death of Smt. Sitabai. Even at that stage it appears that he had not been able to get at full particulars of the property of the deceased. For example, he had filed a list of assets which were in adverse possession and another list of assets and liabilities which required further investigation, including the abovementioned flat and the corresponding rent outstanding from Shri Lalwani.
10. The value of the flat was included in the principal value of the estate passing on the death of the deceased and also passing on the death of Smt. Sitabai. Needless to state that the Appellate Controller having held that it was not includible in the assessment of the accountable person, who is the respondent in this appeal, that the present controversy has arisen.
11. Now the room for the controversy has arisen not only because of peculiar circumstances such as vague recitals in the wills made by the deceased and Smt. Sitabai, the fact that both of them having passed away their evidence could not be available and the property of the deceased being in the hands of Shri M. T. Wadhwani who was not concerned with the management of the affairs of the deceased during his lifetime, but also because the deceased had filed year after year, for a few years, a "balance sheet" as at 31st of March in connection with the proceedings to assessments to income-tax and wealth-tax in his case, including therein the value of the flat and the outstanding rent.
In the context of the controversy, I have considered the relevant material on record and the rival submissions.
12. It is well-settled that in considering whether certain property is beneficially owned by a person though standing in the name of benamidar, the most important test is the source of the consideration.
Other aspects which are also relevant include motive, relationship between the parties, previous and subsequent conduct of the parties and beneficial enjoyment of the property.
13. A remarkable feature of the case under consideration is that several circumstances on which the rival sides have relied are consistent with the situation that the flat was held by Smt. Sitabai as the benamidar of the deceased and also consistent with the situation that she was herself beneficial owner of the property. I may mention some of the aspects hereafter. It is common ground that the consideration for the flat had been paid by the deceased. However, the stand of the accountable person is that the deceased had made a gift of the property to Smt. Sitabai before he made his will on 17-9-1969 and the recital in the will which I have extracted in para 4 is relied upon.
The value of the property was declared by the deceased in his return of net wealth for the assessments to wealth-tax and the income was also declared in the income-tax return. Assessments were made also accordingly. However, this is explained as a recognition of the operation of the provisions of Section 4 of the Wealth-tax Act and Section 64 of the Income-tax Act.
The inclusion of the value of the flat in the assessment to estate duty arising from the death of Smt. Sitabai is of no significance because it would be so included whether she had received the flat as a gift during the lifetime of the deceased or had inherited it after his death or had adverse possession of the flat. That the tenant paid the rent of the flat to Smt. Sitabai before and after the death of the deceased is similarly consistent with both situations. In connection with a dispute with the tenant, the tenant's advocate in a letter dated 7-2-1972, addressed to the advocate of the accontable person, has stated that she was a tenant of Smt. Sitabai, etc., but this is also consistent with both situations. The relationship between the deceased and Smt. Sitabai is the very close relationship of husband and wife. This is also consistent with both situations, viz., the husband making a gift to the wife and the wife being a benamidar of the husband. If it should have been a case of a gift, one possible motive may be to make a provision for the wife or even to reduce or avoid the burden of estate duty. The motive of reducing the duty would be equally consistent with the deceased making a benami arrangement. Suffice it to state that from all these circumstances it is difficult to say that the case for benami has been proved.
14. With the object of ascertaining whether the concerned parties had been treating the receipts from the rent as the property of the deceased or of Smt. Sitabai and had beneficially enjoyed it (sic) and also because the cornerstone of the case of the department, that it is a case of benami is the balance sheet filed by the deceased showing that the value of the properly and the rent were includible therein, I requested the parties to produce before me the relevant books of account from which the balance sheet had been prepared. The learned counsel for the accountable person took the stand that the accountable person had not been able to get at any books and that there was every indication that no books of account had been kept at all and that the balance sheet in each case was merely a statement of the assets and liabilities. This is consistent with the conduct of the accountable person throughout. For example, as stated earlier, the accountable person had brought to the notice of the concerned officers that certain assets were in adverse possession after the death of the deceased and that there were assets about which investigation was required.
15. The learned departmental representative took the stand that there must have been some books of account and that the receipts from the rent must have been adjusted to the credit of the account of the deceased. He relied upon a copy of the balance sheet as at 31-3-1970.
16. A perusal of this balance sheet does not give any indication that the receipts by way of rent from the flat had been credited to the account of the deceased or otherwise beneficially enjoyed by him. It is true that the value of the flat and the outstanding rent are both displayed on the assets side of the balance sheet but this may be so simply because a list of the assets was prepared without any correlation with contemporary books of account for the period ended 31-3-1970.
17. I gave time to the learned departmental representative for the production of the relevant material from the assessment records of the deceased (and Smt. Sitabai) for assessments to income-tax and wealth-tax so as to get at some reliable evidence to show that the deceased had kept books of account and that the balance sheet was drawn up as the final account in relation to the books of account. He has filed copies of assessment orders for the assessments to income-tax and wealth-tax from 1968-69 to! 1970-71. There is nothing therein to show that the deceased had kept any books of account. On the contrary, it would appear that having prepared a computation of net wealth on the basis of a balance sheet, which was in all probability merely a statement of assets and liabilities as at 31-3-1968, the deceased had made adjustments year after year in respect of new properties or liabilities as at the next balance sheet or the valuation date for assessments to wealth-tax. There is no indication at all that the deceased was in beneficial enjoyment of the property consisting of the flat and the rent therefrom. As stated earlier his conduct in including these items in the balance sheet and the net wealth for assessments to wealth-tax is consistent with his recognition of the operation of the provisions of Section 4 of the Wealth-tax Act and Section 64 of the Income-tax Act.
18. It is significant on the other hand that though an amount of about Rs. 20,000 is shown as cash on hand in the balance sheet as at 31-3-1970, all concerned have proceeded on the footing that the cash on hand as at 14-4-1970, which is the date of the death of the deceased, is not ascertain-able from any books of account of the deceased. The accountable person did not declare any cash. The Assistant Controller after specifically noticing that the cash in the balance sheet as at 31-3-1970 was shown at Rs. 20,724 and that earlier balance sheets also showed cash balance of Rs. 10,000 or so, estimated the cash balance as at 14-4-1970 in the sum of Rs. 10,000. in the first appeal the Appellate Controller estimated it at Rs. 1,000. It is significant that the other ground in the departmental appeal before the Tribunal related to her direction that the estimate of the cash may be reduced by Rs. 9,000 and that after the learned Judicial Member expressed the view that the order of the Appellate Controller on this point may be upheld, the learned Accountant Member did not differ with him in this regard though he had a difference of opinion on the other point (which is the subject-matter of the reference to me now under my consideration).
Further, as pointed out by the learned counsel for the accountable person, in making an adjustment for the liabilities for arriving at the principal value of the estate, the Assistant Controller has not gone by the evidence of the balance sheet or what is more important, of any books of account.
All this shows that the "balance sheet" is not the kind of balance sheet which is prepared on the basis of books of account which are closed at the end of the year. It is a rough and ready summary of the assets and liabilities drawn up for the facility of determining the net wealth, etc.. and no more.
19. Therefore, I am of the opinion that even the balance sheet and the history of the assessments to income-tax and wealth-tax do not show that Smt. Sitabai was the benami of the deceased in so far as the flat and rent from the flat are concerned.
20. For the reasons stated above, I am of the opinion, that on the facts and circumstances of the case, the department has not succeeded in proving that the property standing in the name of the wife of the deceased is benami of the deceased.