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Janki Prasad Sinha Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Patna
Decided On
Judge
Reported in(1985)13ITD373(Pat.)
AppellantJanki Prasad Sinha
Respondentincome-tax Officer
Excerpt:
.....income-tax assessments made on the huf and the funds invested in the construction of the patna house. even before the ito, the assessee had filed an affidavit dated 3-1-1983 sworn by the donor of the land wherein it has been clarified that the gifted land belonged to the entire family of the assessee and not exclusively to him in his individual capacity. it was also stated before the ito that the house building loans and the advances from the gpf account were drawn by the assessee in connection with the construction of another house at muzaffarpur and those loans and advances were not utilised in the construction of the patna house.further, it was explained that the cost of construction of the patna house was such that it could not have been made from the salary income of the.....
Judgment:
1. This appeal has been filed by the assessee against the order dated 2-4-1984 of the AAC relating to the assessment year 1980-81, the previous year of which ended on 31-3-1980.

2. The assessee has been assessed in the status of an individual in the proceedings before me in this appeal. He is a Government officer deriving income from salary. In addition to the salary income, the ITO has assessed a sum of Rs. 11,000 as the assessee's income from house property. There is another sum of Rs. 1,000, assessed income from SOP (sic). The only dispute in this appeal relates to the assessment of Rs. 11,000, as the assessee's income from house property.

3. The case of the assessee before the ITO was that the aforesaid property which yielded an income of Rs. 11,000, according to the computation of the ITO, did not belong to him in his individual capacity, but it belonged to the HUF of which he was the karta. It may be stated that this house was situate at Gandhi Nagar, S. K. Puri, Patna. The assessee explained that he received a gift of the land measuring four kathas from his brother-in-law as per the deed of gift dated 30-9-1972. He constructed the house thereon with the help of the HUF funds. It was stated that the aforesaid HUF was assessed on agricultural incomes amounting to Rs. 2,15,045 in the assessment years 1967-68 to 1975-76, both inclusive. The house at S.K. Puri was constructed between the assessment years 1973-74 to 1975-76 at a cost of Rs. 1,36,000. During the assessment years 1972-73 to 1975-76, the net income from salary earned by the assessee in his individual capacity amounted to Rs. 41,953 only. Thus, the case of the assessee was that the aforesaid house property belonged to the HUF of which he was the karta and not to him in his individual capacity. The ITO did not accept the above contention of the assessee. The reasons given by the ITO in order to reject the contention of the assessee are (i) that the deed does not mention that the land was given to the assessee in his individual capacity as the karta of the HUF; (ii) the assessee had taken house building loans from the Bihar Government and non-refundable advances from his GPF account which are permissible only if the assessee was a owner of the house in his individual capacity; and (iii) there was no nexus between the agricultural Income-tax assessments made on the HUF and the funds invested in the construction of the Patna house. Even before the ITO, the assessee had filed an affidavit dated 3-1-1983 sworn by the donor of the land wherein it has been clarified that the gifted land belonged to the entire family of the assessee and not exclusively to him in his individual capacity. It was also stated before the ITO that the house building loans and the advances from the GPF account were drawn by the assessee in connection with the construction of another house at Muzaffarpur and those loans and advances were not utilised in the construction of the Patna house.

Further, it was explained that the cost of construction of the Patna house was such that it could not have been made from the salary income of the assessee and that the HUF had enough agricultural income to finance the construction of the Patna house and, in fact, it has been so done. The ITO, however, rejected the above explanations. Regarding the affidavit, he observed that it was sworn ten years after the deed of gift and so it did not have any evidentiary value. Regarding the other points, the ITO did not make any comments, but held the assessee in his individual capacity to be the owner of the Patna house and made the assessment accordingly.

4. The assessee appealed to the AAC and repeated his contentions, however, the AAC confirmed the action of the ITO on the same grounds as stated by the ITO in his order.

5. In this further appeal before me, Shri P. Kumar, the learned representative for the assessee, urged before me that the authorities below erred in their decisions. At the time of hearing, I asked him to produce evidence in support of his contention before the ITO that the house building loans and the advances from the GPF account were obtained not in respect of the Patna house, but in respect of the Muzaffarpur plot. The case was adjourned for the purpose. When the case came up for hearing again, Shri P. Kumar produced a copy of the mortgaged deed dated 2-3-1972 whereby the plot of land was mortgaged by the assessee in his individual capacity to the Governor of Bihar for obtaining the house building loan. In this mortgaged deed it is clearly stated that the loan was required for building a house on a piece of land situated in thana No. 402, Mohalla Brahampura, District Muzaffarnagar, and that the area of land was 6.5 kathas. Shri P. Kumar urged that the revenue authorities have not appreciated the explanation given by the assessee and have proceeded on the wrong footing that the Patna house belonged to the assessee in his individual capacity. He stated that the reasons given by the ITO in support of his reasoning were not tenable in law. He referred to the decision of the Patna High Court in the case of Gopiram Bhagwan Das v. CIT [1960] 39 ITR 513 for the proposition that when there is evidence to show that an HUF has funds of his own, then the presumption in law is that any property acquired by a member of the said HUF belonged to the HUF itself unless the member proves otherwise. He also referred to the decision of the Supreme Court in the case of Mallappa Girimallapa Betgeri v. R.Yellappagouda Patil AIR 1959 SC 906 wherein it has been held that the property acquired by the karta of an HUF will be deemed to be the property of the HUF in case the HUF had enough funds to finance the cost of the property acquired unless the karta proves otherwise. He also referred to the decision dated 17-9-1984 of the Tribunal (page 62 of the paper book filed by the assessee) wherein it has been held under similar circumstances by the Tribunal that the property belonged to the HUF. He stated that the assessee has been explaining its stand right from the beginning, but unfortunately the revenue authorities did not apply their mind properly to the explanations given by the assessee because they were under the impression that the assessee had only one plot of land in Patna and that the loans and advances obtained from the Government and the GPF account related to the same plot of land while the facts were otherwise. Shri H. Lai, the learned representative for the department, on the other hand, supported the order of the revenue authorities. He read out the deed of gift dated 30-9-1972 and urged that it has not been stated therein that the land was gifted to the family of the assessee. Hence, he urged that the land must be taken to belong to the assessee in his individual capacity. In this connection he relied on a decision of the Tribunal in the case of Satindra Kumar [IT Appeal No. 349 (Pat.) of 1983]. He emphasised the reasons given by the ITO in his assessment order in order to find support in favour of the case of the revenue.

6. I have considered the contentions of both the parties as well as the facts on record. As has been held by the Supreme Court in the case of Mehta Parikh & Co. v. CIT [1956] 30 ITR 181, an affidavit is a valid piece of evidence and it cannot be ignored without proving the same to be untrustworthy after examining the deponent. The mere fact that a period often years has elapsed between the gift deed and the affidavit will not make the affidavit in any way invalid. Evidently, the need for affidavit arose later on and it was sworn at the appropriate time. The deponent has not been examined and so relying on the case of Mehta Parikh & Co. (supra), I hold that the land in question which is situated in Patna city must be taken to belong to the HUF of which the assessee was the karta. Coming to the cost of construction of the house thereon, the assessee has explained the same to be Rs. 1,36,000 incurred during the three assessment years 1973-74 to 1975-76. The assessee did not have enough income in his individual capacity to meet this cost of construction. This showed that even if we add the loans and advances obtained by him, it must be stated as a matter of fact that the loans and advances were obtained in connection with the Muzaffarpur plot and they were obtained after 1975-76 and they were invested in fixed deposit. In fact, one of the fixed deposit is still standing, as stated by the learned representative for the assessee. Be that as it may, the said loans and advances have not been shown to have been used in the construction of Patna house. On the other hand, the income assessed on the HUF was more than enough to explain the cost of construction of the Patna house. The legal presumptions laid down in the case of Mallappa Girimallapa Betgeri (supra) applies to the facts of this case. There is nothing to suggest that the cost of construction of the Patna house came from the assessee in his individual capacity.

In view of the above facts. I come to the conclusion that the revenue authorities were not justified in holding that the Patna house belonged to the assessee in his individual capacity and in taxing the income therefrom in his hands. Hence, I delete the sum of Rs. 11,000 from the total income of the assessee.


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