1. This appeal of the assessee relates to the assessment year 1979-80 and arises out of the order of the AAC, Nagpur, dated 28-4-1983. The main point for consideration in this appeal is whether Smt. Alka Chaudhary is the owner in her own right in respect of ground floor and first floor of house property standing on plot Nos. 93-94 on Central Avenue Road, Nagpur, or whether She is merely a benamidar of her husband Dr. Vinayak Chaudhary.
2. The case of the assessee is that Smt. Alka Chaudhary and Dr.
Chaudhary are the co-owners of plot Nos. 93-94 and that Smt. Alka Chaudhary is the owner of ground floor and first floor of the house property standing thereon, while Dr. Vinayak Chaudhary is the owner of the second floor and terrace of the said house property. The case of the department is that Dr. Vinayak Chaudhary is the exclusive owner of the entire house property including plot Nos. 93-94 on which the property stands and Smt. Alka Chaudhary is merely his benamidar.
3. It is not out of place to mention at this stage that the issue regarding the nature of ownership first arose in the case of Smt. Alka Chaudhary for the assessment year 1977-78. The ITO in that case passed a draft order and referred the matter to the IAC under Section 144B of the Income-tax Act, 1961 ('the Act'). The IAC collected evidence for the first time in Section 144B proceedings, and on appreciation of the evidence collected by him came to the conclusion that Smt. Alka Chaudhary was merely a benamidar of Dr. Vinayak Chaudhary. Smt. Alka Chaudhary and Dr. Vinayak Chaudhary also filed voluminous evidence in assessment proceedings and also before the IAC. The ITO as per the directions of the IAC under Section 144B proceedings held that Smt.
Alka Chaudhary was the benamidar of Dr. Chaudhary in respect of the property in question. He also came to the conclusion that the investment to the extent of Rs. 34,180 remained unexplained and, hence, he added the same in the case of Smt. Alka Chaudhary. Against the said order for the assessment year 1977-78, Smt. Alka Chaudhary filed an appeal before the Commissioner (Appeals). The Commissioner (Appeals) considered the entire evidence on record and also the submissions of the assessee. He also considered the valuation report of the approved valuer filed by the assessee and also the valuation report filed by the departmental valuer and came to the conclusion that the investment was satisfactorily explained by the assessee and that the addition of Rs. 34,180 was uncalled for. So holding, he deleted the addition.
4. Regarding the nature of ownership, he observed that the assessee Smt. Alka Chaudhary in her submission vide letter dated 15-5-1982 had very effectively answered the various arguments advanced by the IAC in his order under Section 144B. However, he has observed that the issue regarding ownership would be merely academic in the case of Smt. Alka Chaudhary as the effective addition is sought to be made in the case of Dr. Vinayak Chaudhary. Against the said order, the department has filed the appeal before the Tribunal which is also heard along with this appeal.
5. While dealing with the case of Dr. Vinayak Chaudhary, the ITO solely relied on the said order of the IAC under Section 144B proceedings and came to the same conclusion. Against the said order of the ITO for the assessment year 1979-80, Dr. Vinayak Chaudhary filed an appeal before the AAC. It appears that the AAC also collected some more evidence in the appeal proceedings. The AAC after considering the submissions made by the assessee concurred with the view taken by the IAC in Section 144B proceedings. He held that Smt. Alka Chaudhary was a benamidar of Dr. Chaudhary and, hence, the entire house property income arising from the same was liable to be included in the assessment of Dr. Chaudhary.
He alternatively held that the income from the relevant part of the property arising to his wife ostensibly should be included in the hands of the husband under Section 64 of the Act.
6. Both the parties have filed various paper books and have referred to the evidence collected or filed at various stages and, hence, the appeal has to be decided on consideration of the entire evidence. But before considering the evidence it is necessary to set out the well recognised test as laid down by the various High Courts and the Supreme Court in deciding the issue regarding benami nature of transaction: (i) The burden of proving whether a particular person is a benamidar of other or not is upon the person alleging the same. In this case the burden is on the department to prove that Smt. Alka Chaudhary, is the benamidar of Dr. Chaudhary. The burden has to be strictly discharged by adducing legal evidence of definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact--Jaydayal Poddar v. Mst. Bibi Hazra AIR (ii) The essence of benami is the intention of the party or parties concerned. The intention is often shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious burden that rests on him nor justify the acceptance of mere conjectures and surmises as a substitute of proof--Jaydayal Poddar's case (supra). The question whether a purchase in the name of the wife by the husband out of money provided by him is benami for his own benefit would depend upon the intention of the parties at that time of purchase--R.K. Murthi v. CIT  42 ITR 379 (Mad.).
(iii) The source from which the purchase money came Jay day al Poddar's case (supra), the source of purchase money is not always decisive of the real ownership of the property though it may prima facie show that he who provides money does not intend to part with the beneficial interest in the property. Payment of consideration for the purchase of property by one person who invested it with the beneficial interest only if there is no proof of intention on his part to pay it for the benefit of person in whose name the property was purchased--R.K. MurthVs case (supra).
(vi) The position of the parties and the relationship, if any, between the parties.
(viii) The conduct of the parties concerned in dealing with the property after sale--Jay day al Poddar's case (supra).
(ix) Who manages the property and who enjoys the usufruct and who is recognised as owner by the Government and the semi-Government authorities and third parties and other relevant circumstances depending upon the fact of the case.
7. The house property in question consists of ground floor meant for parking, first floor, second floor and terrace on Nagpur Improvement Trust plot Nos. 93-94 on Central Avenue, Nagpur. The said plots were initially allotted to Dr. Chaudhary in the year 1974 for a total premium of Rs. 93,750 payable in Ten yearly equal instalments. Dr.
Chaudhary made the initial payment and paid the first two instalments payable in 1974 and 1975. No instalment appears to have been paid between 1975 to 23-2-1978. In the meantime an application was moved by Dr. Chaudhary and Mrs. Alka Chaudhary on 7-4-1975 to the Nagpur Improvement Trust to take Mrs. Alka Chaudhary as a co-allottee in respect of the said plot. The said application remained in abeyance for quite sometime. Then again applications were filed on 23-12-1975 and 17-3-1976. Mrs. Alka Chaudhary was taken as a co-allottee with reference to these applications on or about 29-3-1976 by the NIT.Thereafter one instalment of premium, interest and ground rent of 1976 was paid by Dr. Chaudhary on 23-2-1973 and one instalment of premium, interest and ground rent of 1977 was paid by Smt. Alka Chaudhary on 18-3-1978. Out of the initial payment and first two instalments paid by Dr. Chaudhary, 50 per cent of the same was debited to the account of Smt. Alka Chaudhary in the books of Dr. Vinayak Chaudhary. Thereafter Dr. Chaudhary paid instalments, interest and ground rent of 1978 and 1979 on 31-8-1979 and debited 50 per cent of the same to the account of Smt. Alka Chaudhary in the books of Dr. Chaudhary. Interest up to 31-7-1981 was equally paid by Dr. Chaudhary and Smt. Alka Chaudhary, that is, each one paid Rs. 5,239 on 1-8-1981. The instalments of premium, interest and ground rent of 1980 and 1981 were equally paid by Dr. Chaudhary and Smt. Alka Chaudhary on 6-11-1982, that is, each one paid Rs. 20,716 on 6-11-1982. Thereafter some further payments of Rs. 1,812 are made by each of them on 17-12-1982. The details of the payments made by the parties have been furnished in tabulated form by the assessee as also in different forms by the department. The assessee has also furnished the copy of account of Smt. Alka Chaudhary as appearing in his books of account from the financial year 1977-78 to 1983-84. In the year 1982-83 Smt. Alka Chaudhary has made two repayments to Dr. Chaudhary, the effect of which is that the account of Smt. Alka Chaudhary in the books of the assessee, Dr. Chaudhary gets fully squared off and Smt. Alka Chaudhary has a small credit balance of Rs. 4,169 in the books of Dr. Chaudhary. The contention of the department is that the instalments of 1974 to 1976 amounting to Rs. 28,125 have been exclusively paid by Dr. Chaudhary. Till the instalment of 1976 was paid on 23-2-1978, the contribution of Smt. Alka Chaudhary was nil and by which time the construction of the house was complete.
The first contribution towards plot instalment made by Smt. Alka Chaudhary was only on 18-3-1978, that is after the completion of the construction. The major contribution towards payment of NIT instalment is by Dr. Chaudhary, while the contribution by Smt. Alka Chaudhary is negligible and is belated and, hence, an afterthought. The contention of the assessee is that the instalments of 1974 and 1975 were naturally to be made by Dr. Chaudhary because till then the allotment of plots stood in his name and, hence, at that time there was no question of Smt. Alka Chaudhary making any payment. She was intended to be taken as co-allottee in respect of the said plots for the first time on 7-4-1975 by application in this behalf to NIT and thereafter the requests were repeated and that Smt. Chaudhary was taken as a co-allottee on or about 29-3-1976. As soon as the NIT took Smt. Alka Chaudhary as a co-allottee, 50 per cent of the amount paid by Dr. Chaudhary till then was debited to the account of Smt. Alka Chaudhary. Thereafter both of them have made payments to NIT towards instalments and interest and ground rent and the account of Dr. Chaudhary and Smt. Alka Chaudhary is finally and mutually adjusted resulting in equal payment by both of them towards the NIT plot. It is true that at some stage Dr.
Chaudhary's contribution towards plot is more, but then he has been reimbursed by Smt. Alka Chaudhary. On consideration of the facts it cannot be said that the entire consideration for purchase of plot was made by Dr. Chaudhary alone and that there was no contribution by Smt.
Alka Chaudhary. The question of Smt. Alka Chaudhary making contribution would arise only after she has been taken as a co-allottee by the NIT and even in respect of earlier payments made by Dr. Chaudhary, 50 per cent amount is debited to the account of Smt. Alka Chaudhary and ultimately Dr. Chaudhary has been reimbursed to the extent of 50 per cent by Smt. Alka Chaudhary. On consideration of the entire facts, as a whole, it is clear that Dr. Chaudhary and Smt. Alka Chaudhary have made equal contribution towards purchase of NIT plot Nos. 93-94. The learned AAC while dealing with the payments of instalments of NIT plots has observed as follows: Thus, the A.R's claim that the lease rent was borne equally by the appellant and his wife after the reallotment in joint names by NIT was made on 29-3-1976 is not correct.
On this basis, he further observed that no adequate consideration flowed from the wife to the husband in respect of the above assignment of part of the leasehold right. The learned AAC obviously not viewed the situation as a whole. He has only taken into consideration the payment of first few instalments into consideration. He has not taken note of the fact that after Smt. Alka Chaudhary was taken as a co-allottee, 50 per cent of the payment made by Dr. Chaudhary was debited to her account and ultimately Dr. Chaudhary has been reimbursed for the same by Smt. Alka Chaudhary. He has also not taken note of the instalments actually paid by Smt. Alka Chaudhary. The mere fact that at earlier stage Dr. Chaudhary alone made the payment of instalments or that at a given point of time the contribution by Dr. Chaudhary was more than that of Smt. Alka Chaudhary will not lead to the conclusion that Smt. Alka Chaudhary was merely a benamidar of Dr. Chaudhary or that the belated payments by Smt. Alka Chaudhary was merely an afterthought nor would it amount to transfer without consideration. If we look to the total situation, as a whole, it is clear that the contribution by both of them is equal and this is in pursuance of the fact that Smt. Chaudhary was intended to be taken as a co-allottee right from 7-4-1975 and that in pursuance of this intention she was taken as a co-allottee in March 1976 and that she made payments and also reimbursed Dr. Chaudhary in respect of 50 per cent payment made by him. The construction, no doubt, had started from August 1975 and was completed by 1977, but during this period it was seen that neither Dr.
Chaudhary nor Smt. Alka Chaudhary had made any payment to NIT. Both of them have made payments in respect of defaulted instalments after the construction was over and have paid future instalments in the manner discussed above. There is, therefore, nothing inconsistent with the fact that Smt. Alka Chaudhary was intended to be taken as a co-allottee from 7-4-1975 and that she was actually taken as a co-allottee in March 1976 and both of them are the co-owners of the said plots. At this stage, can it be said that the act of Smt. Alka Chaudhary being taken as a co-allottee was an afterthought Smt. Alka Chaudhary has been taken as a co-allottee of the said plots by the NIT in pursuance of the application dated 7-4-1975, 23-12-1975 and 17-3-1976. She is the owner in trust record as also in corporation records and that she has made 50 per cent of payments towards plots over a period of time. All these facts show that she is the owner of NIT plot Nos. 93-94 along with Dr.
Chaudhary in her own right and she cannot be termed as benamidar of Dr.
Chaudhary in respect thereof, nor can it be said that Dr. Chaudhary transferred his half share in the said plots to Smt. Alka Chaudhary without consideration.
8. The next point that arises for consideration is regarding the construction of the house property in question and the investment made by Dr. Chaudhary and Smt. Alka Chaudhary. The building plan was initially submitted by Dr. Chaudhary on 8-8-1974 and the same appears to have been sanctioned on 27-8-1974. As per original plan what was visualised was a commercial-cum-residential building. However, it appears that Dr. Chaudhary applied for a revised plan on 13-6-1975 and the same was sanctioned on 5-7-1975. The revised plan was for hospital building. However, subsequently, the plans as per actual construction were submitted by Dr. Chaudhary and Smt. Alka Chaudhary on 10-9-1977 and the same was sanctioned thereafter. Thus the position as it finally stands is that the plan is sanctioned in the names of Dr. Chaudhary and Smt. Alka Chaudhary. It is submitted by the assessee that Smt. Alka Chaudhary made the following investments:1.
Rs. 14,000 Invested partly in cash and partly deposited in account No. 134 with UBI.2. Rs. 2,10,000 Loan from Vijaya Bank in the joint names of Dr.
Chaudhary and Smt. Chaudhary.4. Rs. 15,000 Loan from Mr. A.R. Phalak by demand draft dated 8-2-1977 given to Smt. Alka Chaudhary.5. Rs. 10,000 Loan from Vijaya Bank for construction of strong room in the building.
It was contended that the investment as made by Dr. Chaudhary in the construction of the building was as follows:2. Rs. 70,000 Loan taken from UBI in the scheme of loan to profes- sionals.4. Rs. 25,000 Cash deposited in account No. 153 with UBI on 4-3-1976, 6-7-1976 and 22-1-1977.
For the purpose of proving the initial investment of Rs. 14,000 by Smt.
Alka Chaudhary, she filed a cash flow statement from the financial year 1966-67 to 1975-76 in her assessment for the assessment year 1977-78.
On the basis of the said cash flow statement, it was contended that Rs. 14,000 was available with Smt Alka Chaudhary and that she made investment in the construction of the building partly through the bank account with UBI and partly making cash payment for the construction of the building. In the written statement dated 23-1-1981 filed by her before the IAC, she mentioned as follows: The account No. 134 with United Bank of India (UBI) is a joint account of myself and my husband. The first cash deposit of Rs. 2,000 on 15-2-1977 is out of my cash. Similarly, I deposited Rs. 4,500 out of my cash on 30-7-1975 in the said account. After these deposits two payments were made towards the construction of our house on Central Avenue. On payment of Rs. 3,734.16 was made on 14-8-1975 to Ramesh Steel towards the cost of iron bars purchased for the construction. Another payment of Rs. 3,000 was made on 14-8-1975 to Parate Construction Co., the contractors, who constructed the house. Small payments were made towards construction.
It was contended that the above submissions were supported by bank account with UBI as also by bills and receipts from the concerned parties to whom payments were made.
9. It was contended by the department that Smt. Alka Chaudhary was not in a position to invest the said amount of Rs. 14,000. Her source of income was salary from the hospital of Dr. Chaudhary. So also she had small interest income besides the amounts declared under the Voluntary Disclosure Scheme, 1975. It was pointed out by the IAC in his order under Section 144B that the assessee, namely, Smt. Alka Chaudhary had acquired assets worth about Rs. 88,331 between 1966 and 1977, while her source during that period was only Rs. 58,350 and, hence, she could not have invested Rs. 14,000 as alleged. In the proceedings before the AAC the assessee had pointed out various mistakes committed by the IAC in holding that no cash was available with Smt. Alka Chaudhary. Even in the proceedings before the Commissioner (Appeals) in the case of Smt.
Alka Chaudhary, it was pointed out that the learned IAC instead of treating cash flow statement as a whole picked up few items of receipts omitting various other items and proceeded to hold that these receipts, as picked up by him were exhausted in other investments and that the assessee was not left with any cash. Some of the errors committed by the IAC were pointed out in the written statement filed by Smt. Alka Chaudhary on 15-5-1982 before the Commissioner (Appeals). The AAC agreed with the contentions of the assessee regarding cash flow statement. However, he reconstructed the cash flow statement in his order and on that basis came to the conclusion that the cash available with Smt. Alka Chaudhary amounted to Rs. 13,132 only. The AAC however, observed that in the first statement filed by Smt. Alka Chaudhary in explaining the source of investment, she had not referred to the initial investment of Rs. 14,000. The cash flow statement, according to him, was filed on the second date of hearing to explain the excess in estimated cost of construction and on that basis he held that the claim of Smt. Alka Chaudhary that she made initial investment of Rs. 14,000 was an afterthought. The learned departmental representative supported the observation of the AAC and sought to give a fresh working about availability of the cash with Smt. Alka Chaudhary. On the basis of the said working which is given for the first time at the appeal hearing in the course of reply, it was submitted that in August 1975 Smt. Alka Chaudhary had only Rs. 984 and, hence, she could not have invested Rs. 14,000 as claimed. On the basis of the said statement, it was pointed out that cash of Rs. 36,604 became available with her only on 29-12-1975. In the first place, the said statement filed in the course of reply does not deserve to be admitted. However, even on the basis of the said statement, it is clear that the amount of Rs. 36,604 was available with Smt. Alka Chaudhary on 29-12-1975 during which period the construction of the house property was in progress. Smt. Alka Chaudhary has specifically asserted in her reply dated 23-1-1981 before the IAC that she made investment of Rs. 14,000 and that the said investment was duly supported by bank account as also the receipts from Ramesh Steel to whom the payment was made for purchase of iron bars and payment of Rs. 3,000 made to Parate Construction Co., the contractors.
If the department is of the opinion that the source of the said amount was not properly explained by Smt. Alka Chaudhary, then the course left open for them was to make the addition of Rs. 14,000 in her case, but it does not mean that Dr. Chaudhary made the said investment. Apart from this, the IAC in his order has come to the conclusion that the cash available with her was Rs. 13,132 and there is no challenge by the department against the said finding. The mere fact that Smt. Alka Chaudhary in her first statement did not refer to the said investment of Rs. 14,000 does not mean that her contention was an afterthought especially when the detailed cash flow statement has been submitted immediately on the second date of hearing and all the items of receipts and payments as mentioned in the said cash flow statement are properly verifiable. The contention of the department that initially the cost of investment was shown at Rs. 3,55,375 and, subsequently, when the valuer gave an estimate at Rs. 3,78,664, the assessee showed an initial investment of Rs. 14,000 to suit the new estimate of cost of construction, does not appear to be sound. It is to be noted that Dr.
Chaudhary and Smt. Alka Chaudhary have not maintained any regular books of account for construction. The question of explaining the investment arose only at the time of assessment proceedings and in the said proceedings they collected the information from various sources and submitted their replies. If a mention of particular item is left out at first stage, it does not necessarily mean that it is an afterthought.
The availability of cash of about Rs. 14,000 with Smt. Alka Chaudhary for investment in construction of the building has been satisfactorily established, on totality of the facts and circumstances of the case as a whole. Oh the basis of the working submitted by the department, the cash available with Smt. Alka Chaudhary would be Rs. 36,604 on 29-12-1975 when the construction was going on and this will further strengthen the case of Smt. Alka Chaudhary that she made investment in construction of the house property in question. In any event it has to be accepted on the evidence and material on record as a whole that Smt.
Alka Chaudhary had made initial investment of at least Rs. 13,132 in construction of house property in question.
10. As regards the loan of Rs. 2,10,000 from Vijaya Bank, it was contended by the assessee that the bank had given loan to Dr. Chaudhary and Mrs. Alka Chaudhary and this fact was certified by the bank by its letter dated 5-9-1979 as follows: This is to certify that a sum of Rs. 2,10,000 was advanced to Dr.
Chaudhary and Smt. Alka Chaudhary by way of mortgage loan on 6-7-1976 towards construction of building on plot Nos. 93-94, Central Avenue Road, Nagpur, as per our records.
The bank by its letter dated 25-2-1983 has further certified as follows: This is to certify that Dr. Chaudhary and Smt. Alka Chaudhary have jointly availed of mortgage loan of Rs. 2,10,000 from our branch on 9-7-1976 against security of rented property bearing plot Nos. 93-94 on Central Avenue Road, Nagpur belong to both the parties.
The assessee has further relied on the promissory note executed by Dr.
Chaudhary and Smt. Alka Chaudhary in favour of Vijaya Bank on 9-6-1976 as also on a letter of confirmation of balances of loan executed by Dr.
Chaudhary and Smt. Alka Chaudhary in favour of Vijaya Bank on 4-7-1979.
It is further contended that when the construction was over Smt. Alka Chaudhary by her letter dated 14-11-1976 offered the premises to the bank for taking possession and it was also intimated that the rent would start from 15-11-1976. The Vijaya Bank by its letter dated 13-12-1976 to Smt. Alka Chaudhary has confirmed having taken possession of the premises. The letter is as follows: We are pleased to receive your letter dated 14-11-1976 declaring the completion of the premises and also putting us in possession from 15-11-1976. We confirm having obtained the possession of the premises from 15-11-1976 and assure you that the rent accruing thereon shall be paid to your loan account with us as desired by you.
The contention of the department is that the loan in effect is given to Dr. Chaudhary alone. For this purpose the department heavily relied upon the application dated 20-1-1976 given to the bank for facility of loan. It is contended that the said application was given by Dr.
Chaudhary alone and Smt. Alka Chaudhary does not figure therein. The loan application was for Rs. 2,50,000 and the security offered was the land and building on completion of the premises. The purpose of the loan is stated to be the construction of the premises for Vijaya Bank and the terms of payment is stated to be out of the rent payable in respect of the said premises. In the said application, the branch manager of the bank has given an opinion that Dr. Chaudhary is a reputed consulting surgeon of the locality. He is also having another consulting room at Dharampeth and that he desires to have a nursing home on the second floor. He has stated that the loan would be utilised for repaying the existing loan of UBI and the balance for completion of the premises for the bank. The loan will be adjusted against the rent and it will be cleared off in seven years. The premises in question will be mortgaged with the bank and the bank will also be taken as co-allottee with NIT in respect of the plot till the loan is fully repaid and, hence, the manager has recommended for sanction of the loan at 15 per cent per annum. The purpose of the loan was stated to be not only the construction of the house but also repayment of loan overdraft taken by Dr. Chaudhary. It was submitted by the department that Dr.
Chaudhary alone had availed of loan from UBI under the scheme of loans to professionals and, accordingly, he opened an account with UBI on 8-8-1975 with Rs. 10,000 and started drawing from the said account for construction. There were huge overdrawings by him and when he was granted professional loan of Rs. 70,000, the same was credited in the said account. He continued drawings from the said account which resulted in overdrawing. Then he was granted a second loan of Rs. 30,000 which was credited in the said account in June 1976. The loan of Vijaya Bank came only on 9-7-1976. The first instalment of loan which came on 9-7-1976 was of Rs. 1,50,000. This amount cleared the overdraft and substantial balance remained for further construction. On the basis of the aforesaid fact it was contended that the loan of Vijaya Bank was in effect to Dr. Chaudhary alone. It is to be noted that when the application was given, Dr. Chaudhary alone was an allottee in respect of NIT plot Nos. 93-94 and, hence, at that stage Smt. Alka Chaudhary did not join the said application. Vijaya Bank has sanctioned the loan by its letter dated 17-9-1976 and the said loan has been sanctioned in favour of Dr. Chaudhary and Smt. Alka Chaudhary. The amount of loan actually sanctioned is Rs. 2,10,000 and the purpose for which the loan is sanctioned is for the construction of premises for the bank. The rate of interest is agreed at 6 per cent above RBI rate with a minimum of 15 per cent. The security required is equitable mortgage related to the property at plot Nos. 93-94 on Central Avenue Road and building to be constructed thereon at a total cost of about Rs. 3,59,000. The term of repayment is at Rs. 3,500 per month. Relying on paragraph No. 21 of the IAC's order, it was submitted that the real security for the Vijaya Bank loan of Rs. 2,10,000 was initially certain assets of Dr. Chaudhary and later investment made by him in the house up to the date of sanction. The JAC pointed out that Dr. Chaudhary had offered some of his personal movable assets as security for the said loan of Rs. 2,10.000. To controvert this fact the assessee filed a letter dated 25-2-1983 from the bank confirming that Dr. Chaudhary had not offered the security of movables for the said loan of Rs. 2,10,000. Those items were stated by him only in the statement of assets and liabilities and were not offered as security. Referring to the loan application and the letter of sanction also it appears that the security offered was in the form of immovable property consisting of plot Nos. 93-94 and the house property standing thereon. The counsel for the department contended that the bank could not have given loan to Smt. Alka Chaudhary as she had no paying capacity. According to him, the bank had given loan looking to the fact that Dr. Chaudhary was a reputed surgeon and looking to his application only, the bank sanctioned the loan. The loan was initially applied for by Dr. Chaudhary alone and, hence, the loan must be deemed to have been sanctioned only to Dr. Chaudhary. It is difficult to accept the aforesaid contention of the department in view of the fact that the sanction letter of the bank filed by the department itself shows that the loan of Rs. 2,10,000 has been sanctioned to Dr. Chaudhary and Smt. Alka Chaudhary. Further the bank has time and again certified that they have granted loan to Dr.
Chaudhary and Smt. Alka Chaudhary against security of their rented property. In view of these documents it is difficult to accept the contention of the department that the loan must be deemed to have been granted only to Dr. Chaudhary. Further the bank official has not been examined by the department and it is, therefore, difficult to assume that the bank must have granted loan to Dr. Chaudhary alone looking to his reputation and capacity to repay. Even assuming that such consideration might have weighed with the bank, it does not necessarily follow that the bank granted loan to Dr. Chaudhary alone. The bank is always concerned with proper security and in this case the security offered was the land consisting plot Nos. 93-94 and the construction to be made thereon. As has been stated earlier, the land in question is owned by both of them and both are the co-owners of the said land.
Therefore, the security offered in the form of land is a security offered by both of them and it is against this security the bank has granted loan. The loan is sanctioned in favour of both of them especially when the sanction letter clearly states the names of Dr.
Chaudhary and Smt. Alka Chaudhary as persons to whom the loan is granted. It may be pointed out that Dr. Chaudhary and Smt. Alka Chaudhary have made representation to the bank by letter dated 30-3-1982 that the loan be transferred in the name of Smt. Alka Chaudhary as she alone is the owner of ground and first floor which is let out to the bank. She has also represented that the lease deed be executed by the bank in her favour. On the said letter the bank has obtained the legal opinion of the counsel, Shri S.R. Dapke. He has given his opinion on 28-6-1983. He has opined that nothing would be wrong if the loan is transferred in the individual name of Smt. Alka Chaudhary provided Dr. Chaudhary acts as a guarantor for due repayment of loan which is presently done by way of rent adjustment against the loan. As regards the execution of the lease agreement between the bank and the owner of the building, he has stated that it is required to be signed and executed by the bank on one side and Smt. Alka Chaudhary on the other side as owner of first floor and the lease deed between the bank and Smt. Alka Chaudhary would be valid and legal as per provisions of law if she executes the lease of the first floor only. He has also opined that an affidavit be obtained from Dr. Chaudhary that he has partitioned the property with Smt. Alka Chaudhary granting her first floor. Conduct of the parties shows that the loan in question was intended to be transferred in favour of Smt, Alka Chaudhary alone.
However, the position at the relevant time was that the loan was in favour of Dr. Chaudhary and Smt. Alka Chaudhary. In any event it is difficult to accept the contention of the department that the loan was granted only to Dr. Chaudhary and not jointly to Dr. Chaudhary and Smt.
Alka Chaudhary. Further the assessee has filed a copy of account of Vijaya Bank. The said account is a joint account of Dr. Chaudhary and Smt. Alka Chaudhary and the loan of Rs. 2,10,000 is debited in the said joint account on 6-7-1976 and this loan is being adjusted from the rent payable by the bank in respect of the said premises. The reference to the professional loan of Rs. 70,000 and Rs. 30,000 granted by UBI to Dr. Chaudhary is irrelevant for consideration of the fact as to whom the loan of Rs. 2,10,000 was granted by Vijaya Bank because admittedly the loan of Rs. 70,000 and Rs. 30,000 is granted by UBI to Dr.
Chaudhary alone and in fact there is no dispute about the same. The maintenance of account with UBI for construction is for the sake of convenience and most of the contribution whether by way of loans from UBI or Vijaya Bank or third parties are routed through the said bank account. On consideration of the entire documentary evidence on record it is clear that the loan of Rs. 2,10,000 is granted by Vijaya Bank jointly to Dr. Chaudhary and Smt. Alka Chaudhary on security of plot and construction to be made thereon.
11. As regards the loan of Rs. 12,000 by Professor Mahure to Smt. Alka Chaudhary received on 4-1-1977, it was contended by the assessee that the said loan has been duly established by letter from Professor Mahure to Smt. Alka Chaudhary. In his letter dated 30-12-1976 addressed to Smt. Alka Chaudhary along with which he sent the cheque of Rs. 12,000, he says that he is sending the amount as requested by her letter dated 15-11-1976. He further states that as requested by her the cheque is drawn in the name of Dr. Chaudhary. The observations of the IAC in Section 144B proceedings was that the said loan was received after the construction was over and, hence, the borrowal by Smt. Alka Chaudhary after the construction^ over does not prove that she is the owner. The AAC has observed that the loan is genuine but he feels that it cannot be said with certainty if the loan was contracted by the lady or her husband. The contention of the department is that the letter of Professor Mahure makes it clear that the cheque is drawn in favour of Dr. Chaudhary and this coupled with the fact that Dr. Chaudhary and Professor Mahure being in the same profession and known to each other will lead to the conclusion that the loan is by Professor Mahure to Dr.
Chaudhary. Such a contention cannot be accepted. In view of the fact that the letter of Professor Mahure addressed to Smt. Alka Chaudhary clearly states that he has given loan to her in pursuance of her request and that the cheque is issued in the name of Dr. Chaudhary as per her request only. Since most of the expenditure for construction work was routed through the account with UBI in the name of Dr.
Chaudhary there is nothing unnatural in Smt. Alka Chaudhary asking for issue of cheque in the name of Dr. Chaudhary. This does not mean that the loan is given to Dr. Chaudhary. The IAC has also not doubted the genuineness of the loan to Smt. Alka Chaudhary. The AAC has also accepted the said loan to be genuine. The said loan amount is actually deposited in the account with UBI and the said amount is actually utilised for payment of construction bills. There should be, thus, no hesitation in holding that Smt. Alka Chaudhary has established the contribution of Rs. 12,000 for construction of the house property in question. The observation of the AAC that the said contribution is negligible also cannot be appreciated. If the said contribution is viewed in isolation then it may be said that it is negligible or small but if we look to the contribution from all sources it cannot be said so. The aforesaid contribution along with other contributions has gone for construction of the house property. In the same way the loan of Rs. 15,000 to Smt. Alka Chaudhary from her father Shri Phalak has also been duly established and that the same is utilised for construction. In fact there is no contest by the department in respect of this amount and its utilisation by Smt. Alka Chaudhary for construction of house property in question.
12. After having considered the question regarding sources of money for investment in plot Nos. 93-94 and in construction of house property, it is necessary to consider other relevant facts and circumstances of the case and apply the well recognised tests referred to earlier for determining the question whether a particular person is a benamidar of other or not. It was contended by the assessee, as stated earlier, that an application was made to NIT on 7-4-1975 for taking Smt. Alka Chaudhary as a co-allottee for plot Nos. 93-94. The said application was kept in abeyance for some time for the reasons stated in submissions filed before the Commissioner (Appeals) on 21-3-1983 and the actual co-allotment took place on 29-3-1976. However, during the said period the construction of house property had started. Bhumipujan was performed some time in June 1975 and the construction started from July/August 1975. As discussed earlier Smt. Alka Chaudhary started making her initial contribution right from the earliest stage of construction, even though by that time her name was not actually included in the co-allotment in respect of plot Nos. 93-94, though the application for such co-allotment was already filed on 7-4-1975. This will show that she was intended to be taken as a co-allottee right from 7-4-1975 when the application was first moved and in anticipation of co-allotment, she started making some investment from her own sources to the extent of about Rs. 14,000. The contract for construction was given to Parate Construction Co. The first bill submitted by it was on 15-9-1975. The said bill describes Smt. Alka Chaudhary and Dr.
Chaudhary as owners of the property under construction. Thereafter other running bills are submitted by Parate Construction Co. on 11-12-1975, 13-3-1976 and 18-1-1977. All these running bills described Smt. Alka Chaudhary and Dr. Chaudhary as the owners of the building under construction. During the course of construction part payments are made to the said contractor and the said contractor has acknowledged the receipts of amounts from Smt. Alka Chaudhary and Dr. Chaudhary.
Such receipts started from 5-8-1975 and continued till the consolidated full payment receipt is executed on completion of the work. The counsel for the department has contended that the running bills filed by Parate Construction Co. do not bear any date. To controvert the contention of the counsel for the department, it is stated by the learned counsel for the assessee that it is only when the bills are submitted to the owners, Smt. Alka Chaudhary has acknowledged the receipts of such bills and she has put the date on the same. On all the bills Smt. Alka Chaudhary has put the date of receipt of bill by her. However, the contractors have not put the date. It may be stated that all these bills were produced before the taxing authorities at the earliest stage and the genuineness of the bills has never been doubted by any of the authorities below. Further as and when the part payments are made, separate receipts have been invariably taken by Smt. Alka Chaudhary and Dr. Chaudhary and such vouchers and receipts always contained the date.
The payments are also made by cheques. The running bills also mention the details of work carried out by contractors and the same appears to have been checked by Smt. Alka Chaudhary and she has put her initials after verification of the bills. The contractors have not been examined by the department nor any question has been put to Dr. Chaudhary or Smt. Alka Chaudhary in respect of these bills and receipts in the course of their examination. In this view of the matter it is difficult to doubt the genuineness of the bills in question, especially when none of the authorities below have ever doubted its genuineness. All these running bills and receipts only go to show that the contract for construction was given by Dr. Chaudhary and Smt. Alka Chaudhary and that the contractors treated them as the owners of the said construction. It will also show that both of them have been actively associated in the work of construction activity. Further the facts found on record clearly establish that Smt. Alka Chaudhary and Dr.
Chaudhary are the owners of the building. The facts found are the following: 1. The final plans of the construction have also been sanctioned by NIT in the name of Dr. Chaudhary and Smt. Alka Chaudhary.
2. The house property in question has been mutated in corporation records in the names of Dr. Chaudhary and Smt. Alka Chaudhary right from the time when the house property tax became payable.
3. The mutation has been made by corporation with effect from 1-10-1976 by its intimation dated 16-6-1977.
4. The corporation bills have been issued from year to year in the joint names of Dr. Chaudhary and Smt. Alka Chaudhary.
5. The NIT has issued the bills in favour of both of them jointly from year to year.
6. After the construction was over Smt. Alka Chaudhary by her letter dated 14-11-1976 offered the possession of the property to Vijaya Bank and Vijaya Bank has acknowledged having taken possession from her and has agreed to pay the rent to be adjusted in her loan account.
All the aforesaid facts clearly go to show that the third parties like bank, contractors and the other semi-Government authorities or local bodies have treated Dr. Chaudhary and Smt. Alka Chaudhary as owners of the said house property.
13. Another point to be considered is that when the construction activity was near completion Dr. Chaudhary and Smt. Alka Chaudhary have entered into an agreement for recording the factum of ownership by both of them and for dividing the property by allotting specific portion to each of them on 25-8-1976. The said agreement is signed by the parties and is witnessed by two witnesses. The IAC and the AAC have observed that the said agreement was merely make-believe affair. According to the AAC the vital clause of the said agreement was Clause 3 whereby the parties agreed to get the property valued by an approved valuer for determination of investments attributable to their respective portions and settle the account between them, accordingly. According to him, the parties did not get the property valued till September 1979, and have also not settled the accounts between them and such inaction would lead one to believe that this agreement was merely a make-believe, It has to be observed that this agreement has been signed and executed by parties and is duly witnessed by the witnesses. Both the executants of the agreement, viz., Dr. Chaudhary and Smt. Alka Chaudhary have been examined extensively on various aspects but nothing has come out in the said depositions which would lead one to believe that the agreement in question was not genuine or was not executed on the date stated in the agreement itself. Further it is seen that though the agreement has been witnessed by two witnesses, none of the witnesses have been examined by the department. If the department had any doubt about the genuineness of the said agreement it should have examined the said witnesses.
14. Another important point that is to be noted at this stage is that the agreement is execute d at a time when no enquiry of any nature was pending against them nor any enquiry was started by Income-tax Department. As per Clause 2 of the said agreement, the ground floor and first floor have been allotted to Smt. Alka Chaudhary and the second floor, etc., have been allotted to Dr. Chaudhary. Clause 3 of the agreement refers to the determination of valuation of the property and settlement of account between the parties. Clause 4 refers to the fact that both the parties would get their names mutated in municipal records to facilitate the payments of taxes and says that taxes shall be borne by the parties in respect of the portions allotted to them.
Clause 5 says that the cost of maintenance and repairs shall be borne equally by the parties. Clause 6 says that both the parties are free to use their respective portions in any manner as they like keeping in view the rights of the respective ownership. However, none of the parties shall sell or dispose of his or her portion to any third parties without consent of the other and that each of the party shall have first right to buy the portion in case of proposed sale, at a market price. Now after dealing with the various clauses in the agreement we will proceed to see whether how far the terms of the agreement have been given effect to by the parties. As per the said agreement, the names of the respective parties are mutated in corporation records and NIT records. Municipal tax receipts are issued in the names of both the parties. The property has been valued by approved valuer and cost in respect of the portions belonging to each of them has been determined. The first floor of the premises has been let out to the bank while the second floor is exclusively used by Dr.
Chaudhary for his hospital purposes. It, therefore, appears that almost all the terms of the agreement have been given effect to and there is no reason to believe the agreement to be an afterthought or make-believe as assumed by the AAC, simply because the valuation of the property has been made late, that by itself does not mean that the same is an afterthought or a make-believe. One has to remember that it is a matter of adjustment of rights between the husband and wife and not between third parties and, therefore, the delay in valuation of the property or adjustment of accounts will not take away the genuineness of the agreement* Further it is found that the mutation in corporation records and NIT records have been made at the earliest time and the tax bills are issued in their names and taxes are also paid by them. There is also separate enjoyment of the property by both of them in respect of the portions allotted to them. In this view of the matter it cannot be said that the agreement is an afterthought or make-believe. The said agreement is binding on both of them and it validly determined their rights inter se. Looking to the totality of all the facts and circumstances of the case and on appreciation of voluminous evidence brought on record by both the parties, it cannot be said that Smt. Alka Chaudhary is merely a benamidar of Dr. Chaudhary in respect of the ground floor and first floor of the house property standing on plot Nos. 93-94 on Central Avenue Road, Nagpur.
15. The learned counsel for the assessee relied upon a number of authorities. Main reliance was placed on Jaydayal Poddar's case (supra) wherein their Lordships have laid down the following dictum in paragraph No. 6 of the judgment: It is well settled that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the persons asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence of a benami is the intention of the party or parties concerned ; and not unoften such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him ; nor justify the acceptance of mere conjectures or surmises, as a substitute for proof... Though the question, whether a particular sale is benami or not, is largely one of fact, and for determining this question, no absolute formulae or acid test, uniformally applicable in all situations, can be laid down; yet in weighing the probabilities and for gathering the relevant indicia, the Courts are usually guided by these circumstances: (1) the source from which the purchase money came ; (2) the nature and possession of the property, after the purchase ; (3) motive, if any, for giving the transaction a benami colour ; (4) the position of the parties and the relationship, if any, between the claimant and the alleged benamidar ; (5) the custody of the title-deeds after the sale ; and (6) the conduct of the parties concerned in dealing with the property after the sale. The above indicia are not exhaustive and their efficacy varies according to the facts of each case.
Nevertheless No. 1, viz., the source whence the purchase money came, is by far the most important test for determining whether the sale standing in the name of one person, is in reality for the benefit of another. (p. 172) The ratio laid down in the aforesaid case has been followed by the Allahabad High Court in the case of Prakash Narain v. CIT  134 ITR 364. In the said case following transactions were held to be benami by the ITO: (i) A house in the joint names of the assessee's wife and mother-in-law ; (ii) four shops in the names of the assessee's wife, his mother-in-law and his father-in-law ; and The Tribunal also held the said transactions to be benami for the following reasons: (i) B, the father-in-law of the assessee, could not be believed when he said that he had a sum of Rs. 1 lakh in cash with him since he had discontinued his business in 1946.
(ii) B had no source of income and at the relevant period he along with his wife was living with his son-in-law and both of them were dependent on the assesseee.
(iv) The assessee was not honest as he had admittedly purchased a house property benami, in the name of his wife.
The High Court applied the various tests laid down by the Supreme Court in Jaydayal Poddar's case (supra) and CIT v. Daulat Ram Rawatmull  87 ITR 349 and held as follows: Held, that the mere fact that the statement of B that he had cash amounting to Rs. 1,00,000 was not accepted by the Tribunal, would not lead to the inference that the properties in question were purchased benami by the assessee himself. The assessee's mother-in-law had stated that she had in her possession jewellery worth Rs. 15,000 and cash of Rs. 5,000. The Tribunal had not stated that this statement was not acceptable or was being rejected and, unless it were rejected, the Tribunal could not enter a finding that both the father-in-law and mother-in-law of the assessee were dependent on him. The fact that the assessee's wife was the only child of her parents could not lead to the conclusion that the purchases of the properties were financed not by her parents but by the assessee. In India benami transactions were not considered to be dishonest and the Tribunal erred in concluding that the assessee was dishonest because he had admittedly purchased one house benami in the name of his wife. No motive had been suggested for the benami purchases by the assessee. There was no material or evidence on record in support of the finding of benami recorded by the Tribunal.
The purchases of the first three items of the properties were not benami purchases for purposes of income-tax. They could not be included in the total wealth of the assessee. (p. 365) 16. The assessee also relied on the decision of the Supreme Court in Daulat Ram Rawatmull's case (supra) wherein their Lordships have observed that the question was not whether the amount of Rs. 5 lakhs belonged to B, but whether it belonged to the respondent firm. The fact that B had not been able to give a satisfactory explanation regarding the source of Rs. 5 lakhs would not be decisive even of the matter as to whether B was or was not the owner of that amount. A person could still be held to be the owner of a sum of money even though the explanation furnished by him regarding the source of that money was found to be not correct. From the simple fact that the explanation regarding the source of money furnished by X, in whose name the money was lying in deposit, had been found to be false, it would be a remote and far-fetched conclusion to hold that the money belonged to Y. There would be in such a case no direct nexus between the facts found and the conclusions drawn therefrom.
Heavy reliance was also placed by the learned counsel for the assessee on the Madras High Court decision in the case of R.K. Murthi (supra).
In that case the assessee was a director in a company. Another director of the said company sold 2,098 shares of the said company to the assessee's wife for Rs. 24,000. The assessee's wife paid only Rs. 4,000 and executed the promissory note for the balance amount of Rs. 20,000 in favour of the said director and undertook to pay the amount without interest. The said amount of Rs. 20,000 was paid by the assessee and not his wife to the said director as follows: The assessee's wife reimbursed her husband in respect of the amount paid by him out of the dividends which she received from the said company on those 2,098 shares. The department sought to include the entire dividend income received by the assessee's wife in the total income of the assessee, whereas the Tribunal held that as Rs. 20,000 have come out of the assessee's fund in the first instance for the purchase of shares at least five-sixth of the dividend income should be included in the assessee's total income. The contentions raised by the department are: 2. there was a transfer of asset by the assessee to his wife indirectly within the meaning of Section 16(3)(a)(iii) of the Indian Income-tax Act, 1922. The department in that case relied on the following circumstances to show that the transaction was benami: (iii) the false case was put forward to connect receipts issued by Mr. Jackson to Shri Murthi as evidencing to actual payment towards the pronote and that the amount paid to Mr. Jackson by the assessee is only temporary accommodation ; and (iv) there was no proof of adjustment of rights between husband and wife.
...In our opinion, none of these circumstances, whether taken alone or along with others, would prove the case of benami. The first circumstance relied on would not be evidence of benami unless there is proof that the husband provided the purchase money also. As regards circumstance Nos. 2 and 4, we have shown that such payments were made long after the date of purchase, and the husband recouped himself out of dividends received. It is not denied that the dividend monies were given to him. It is unnatural to expect that as between a husband and wife there should be adjustment of accounts or striking of balance, etc. It is no doubt true that the assessee's case in regard to the receipts issued by Mr. Jackson cannot be accepted ; it is not unusual to find false evidence being given to support a true case ; but that circumstance may raise at best a suspicion, such suspicion being insufficient to displace or even shift the onus of proof which lies on the department. On the materials available, it cannot be held that the shares are held by the assessee's wife for his benefit. Nor is there any material to support the finding that the assessee was entitled to 5/6th share in the property. (p. 391) The argument regarding application of Section 16(3) was negatived by the High Court in the following terms: ...For the purpose of the application of Section 16(3), it must be assumed that the title to the transferred shares vested in the wife and the dividends belonged to her. When, therefore, those monies are taken by the husband to recoup what he had paid to Mr. Jackson, it follows that what Mr. Murthi did was only to give a loan or tempora rily to accommodate his wife to meet the demands of the assignor.
Being only a loan, the payments cannot amount to a transfer of assets. There is no prohibition against a husband advancing monies to his wife for the acquisition of property by her. Whether in such cases there was a loan by the husband to the wife or whether it was merely a camouflage to cover a case of transfer of assets, is a question of fact. That question does not, however, arise in the present case, as the amounts advanced were repaid out of the dividents, and what was advanced could only be a loan. Even assuming that there was no material to show that Mr. Murthi did grant a loan to his wife, and that the payment of the wife's obligations to the vendor amounted to a transfer of assets to enable her to obtain the shares, such transfer should be held to be one for consideration, as the monies were ultimately repaid, presumably in pursuance of the original understanding between the parties. The provision of Section 16(3) would not, therefore, apply to the case. (p. 389) The learned counsel for the assessee further relied upon the decision of the Allahabad High Court in L. Sheo Narain Lal, In re.  26 ITR 249. The assessee drew our attention to the following extract in the report: If a house stands in the name of the wife, the presumption is that she is the owner thereof. It is for the persons alleging that she is a mere benamidar for her husband to prove the allegations either by direct or circumstantial evidence.
The question whether a property belongs to the assessee or to his wife will be a question of fact.
In respect of a house purchased by the assessee's wife it was established that half the sale price was provided by her. As regards the source of the other half, the Tribunal disbelieved her statement that she had received gifts of cash and jewellery from her father and father-in-law on ceremonial and other occasions and held that it must have come from the assessee and therefore he was assessable on half the income of the house: Held, that the mere fact that the statement of the assessee's wife was disbelieved by the Tribunal would not entitle the Tribunal to hold that half the sale price must have been contributed by the assessee. (p. 249) In this case the assessee has adduced voluminous evidence as also the department has collected evidence from various sources. When the entire evidence covering different aspects of the case is on record, the question regarding burden of proof is not of much relevance. The case has to be decided on consideration of the entire evidence as a whole and it's appreciation in the light of various tests laid down by the Supreme Court and the various High Courts. The department has relied on the case of the Bombay High Court in Seth Ramnath Daga v. CIT  82 ITR 287. The counsel for the department drew our attention to the observations made by their Lordships, the extract of which is given below: ...It is possible to establish the nature of the transaction either by direct evidence or circumstantial evidence. But when it is between persons who are in fiduciary relationship with each other it is often difficult to prove the nature of the transaction by direct or positive evidence and it is not possible for the department to adduce any direct or positive evidence to establish the nature of the transaction. The transaction and its nature is such as is known only to the parties between themselves and it is only by placing before the Court several circumstances that the real nature of the transaction could be brought to surface.... (p. 294) The aforesaid observation was made by the High Court in the context that except making a bare statement, the parties had not produced any evidence. The best evidence which could have been in possession of the parties and which could have been produced in the case was not produced and in absence of that evidence the bare explanation of the assessee cannot be taken as truthful. It is in that context that the High Court made the abovequoted observation. It is true that the benami nature of transaction can be proved either by direct evidence or by circumstantial evidence and especially when the transaction is between the persons who are in fiduciary relationship. The transaction in its nature is known only to the parties and it is only by placing before the Court several circumstances that real nature of the transaction can be determined. In the present case as stated above voluminous evidence has been placed on record and none of the parties have held back any evidence or material. Therefore, as stated by the High Court the only way to ascertain the true nature of the transaction is by appreciation of the evidence on record and by applying various tests laid down by the Courts.
17. Another case on which the reliance was placed by the revenue is CIT v.Durga Prasad More  82 ITR 540 (SC). The facts in that case are that purporting to act as trustee of a trust created by his wife, the assesses purchased on 30-9-1940 certain house property for Rs. 1,85,000. During the assessment for the assessment year 1942-43 the assessee claimed that the income from the property should not be brought to tax in his hands and in support thereof produced the deed of conveyance in his favour and the deed of trust executed by his wife nearly a year thereafter on 10-9-1941. Apart from saying that it was her stridhan property and that a sum of Rs. 2 lakhs was all along lying in the hands of his father-in-law, the assessee did not produce any material to show that his wife had any independent source of income.
The Tribunal rejected his claim leaving it open to the assessee to establish his case in subsequent assessment proceedings. During the assessment years 1942-43 to 1957-58, the income of those premises was assessed in his hands. For the assessment years 1958-59 and 1959-60 the assessee revived his plea and the Tribunal again rejected it, holding that the recitals in the two deeds were make-believe statements. The following facts and circumstances were relied on: (i) the assessee's wife was not shown to have any source of income ; (ii) the assessee was unable to explain the source ; (iii) the sale deed in favour of the assessee was executed even before the trust deed ; (iv) even after the Tribunal observed in the year 1942-43 that he could take up that question again in subsequent years, the assessee had allowed the income to be taxed in his hands for several years without any objection. It was under the aforesaid facts that their Lordships of the Supreme Court held: ... (i) that it could not be said that the finding of the Tribunal as to the unreality of the trust put forward was not based on evidence or was otherwise vitiated ; (ii) that the Tribunal did not interpret the two deeds but merely found itself unable to accept the correctness of the recitals in those documents ; to accept those recitals or not was within the province of the Tribunal and the High Court could not interfere with its conclusion unless it was perverse or not supported by evidence or was based on irrelevant evidence ; (iii) that though an apparent statement must be considered real until it was shown that there were reasons to believe that the apparent was not the real, in a case where a party relied on self-serving recitals in documents, it was for that party to establish the truth of those recitals ; the taxing authorities were entitled to look into the surrounding circumstances to find out the reality of such recitals ; (iv) though it was true that neither the principle of res judicata nor the rule of estoppel was applicable to assessment proceedings, the fact that the assessee included the income of the premises in his returns for several years, after objecting to its inclusion in the year 1942-43, was a circumstance which the taxing authorities were entitled to take into consideration, in the absence of any satisfactory explanation ; (v) that no question of law arose out of the order of the Tribunal and that the Tribunal was right in holding that the house property was not trust property. (p. 540) It is true that the taxing authorities are not bound to blindly follow the recitals made in the documents. They are entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents. There can be no exception to the said proposition laid down by the Supreme Court. In fact, while appreciating the agreement dated 25-8-1976 executed between Dr. Chaudhary and Smt. Alka Chaudhary, these aspects have been kept in view and the agreement has been appreciated clause by clause and keeping in view the surrounding circumstances and also other evidence and material to see if the same has been implemented. On appreciation of the facts and circumstances of the case and other evidence it has been found that the said agreement dated 25-8-1976 is a genuine one and has been entered into at a time when no enquiry of any nature was pending against the assessee and that the terms stated therein have been substantially implemented by the parties and have been given effect to. In this view of the matter and applying the tests laid down by the Courts it cannot be said that the said agreement is merely a make-believe as contended by the department.
18. The AAC has alternatively held that the income accruing to Smt.
Alka Chaudhary is liable to be included in the income of Dr. Chaudhary by applying provisions of Section 64. He has relied upon the decision of the Calcutta High Court in the case of K.D. Ghosh v. C1T  111 ITR 502.
19. We may mention that firstly the AAC is wrong in giving an alternative finding. The Appellate Court has to decide the issue one way or the other. It cannot give an alternative finding especially in a case like this. If one holds that a particular person is a benamidar of other then on the basis of that finding itself the income of benamidar can be included in the case of the real owner and there is no scope for application of Section 64. Section 64 presupposes that the wife or the minor child is the real owner of the asset in question but that asset having been acquired by direct or indirect transfer from husband or father without consideration, the income arising from such asset is liable to be included in the case of the husband or father as the case may be by virtue of Section 64. Thus, the finding of benamidar and application of Section 64 are mutually exclusive.
20. Apart from this position even on consideration of facts of this case there is no scope for application of Section 64. As has been held earlier Smt. Alka Chaudhary has become the owner of half share of the property in her own right and there is no transfer of asset without consideration from the husband to the wife. The case of K.D. Ghosh (supra) is on its own facts. In that case the husband had gifted a plot of land to his wife. She had no source of income to construct the house thereon. She took loan and advance rent on hypothecation of said gifted land and constructed the house thereon. Under these circumstances the Calcutta High Court held that income arose to the wife of the assessee directly from the gifted assets and, hence, the income from rent was liable to be included in the case of the husband under Section 64. The said case has no application to the facts of the present case. In this case Smt. Alka Chaudhary contributed half the price for the plot in course of time. She reimbursed Dr. Chaudhary in respect of some of the instalments paid by Dr. Chaudhary. Thus, this was not a case of gift or transfer without consideration. In fact the case of the Madras High Court, R.K. Murthi (supra), squarely applies to the facts of this case and Section 64 has no application to the facts of this case. We, therefore, hold that Smt. Alka Chaudhary is not the benamidar of Dr.
Chaudhary in respect of ground floor and first floor of the house property standing on NIT plot Nos. 93-94 on Central Avenue Road, Nagpur. She is the owner of half share in the said plot and ground floor and first floor of the building in her own right. Thus, the income by way of rent arising from her portion of property cannot be included in the total income of Dr. Chaudhary. We further hold that the provisions of Section 64 are not applicable to the facts of the case and that the income accruing to Smt. Alka Chaudhary by way of rent from Vijaya Bank is not liable to be included in the income of Dr. Chaudhary by application of Section 64.