GIRIRAJ MITTAL v. INCOME TAX OFFICER
[Citation -1985-LL-1108]

Citation 1985-LL-1108
Appellant Name GIRIRAJ MITTAL
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 08/11/1985
Assessment Year 1968-69, 1970-71
Judgment View Judgment
Keyword Tags business of money-lending • natural guardian • minor child • ayurvedic • on money
Bot Summary: According to the assessee, at the beginning of the accounting period for the assessment year 1968-69, i.e., on 1-4- 1967, the assessee's total capital became Rs. 24,500. The ITO felt that the gifts were not proved and he added this amount of Rs. 24,500 to the assessee's income for the assessment year 1968-69 observing that in fact it would be proper to assess this whole amount protectively since the assessee w a s merely minor and the fund s utilised belonged to his father who was assessed by the ITO, A-ward, Indore. In the accounting period relevant to the assessment year 1970-71, a further gift of Rs. 4,950 was said to have been made to the assessee by Narsinghdas Mittal and since the ITO was of the opinion that Narsinghdas Mittal was not a man of sufficient means, he added this amount to the assessee's income. The assessee preferred appeals against the aforesaid assessment to the AAC who accepted the assessee's claim and deleted the additions. In the case of the present assessee who was just a child, the books which were produced before the ITO were written by his natural guardian and it cannot be said that they are the books of the assessee. We are of the view that in view of the young age of the assessee and in view of the fact that the entire story is based on the conduct of his natural guardian, which conduct has been disbelieved by the authorities below, the discretionary provisions of section 68 could not be applied and the amount should not have been taxed in the hands of the present assessee. Having given our consideration to the entirety of circumstances and the legal position, we hold that the aforesaid gifts were satisfactorily proved and even if for some reason it is held that the gifts are not proved, the amount cannot be taxed in the hands of the present assessee who was a young lad having several years to go before he attains majority and who is not shown to have any other independent source of income.


These are two appeals by assessee for assessment years 1968-69 n d 1970-71, respectively. cases have chequered history and assessee is before us for third time in respect of same assessments. 2. We have heard learned counsel for assessee and learned departmental representative and have persuade record. 3. assessee was minor child during assessment years in question. He was born on 5-5-1957 meaning thereby that on 31-3-1968 which is date on which assessee's previous year for assessment year 1968- 69 ended, he was only about 10 years and 9 months old and at close of previous year for assessment year 1970-71 he had gained two more years in age. Income-tax returns for assessment years 1968-69 to 1972-73 were filed purporting to be on behalf of assessee by his father and natural guardian on 28-2-1973 voluntarily. income shown in those returns was income from interest on money lent. In assessment year 1968-69, income of Rs. 5,100 was disclosed and in assessment year 1970-71 income of Rs. 5,300 was disclosed. capital for this business of money-lending was claimed to have come from gifts from three persons at time of birth of assessee somewhere in year 1957. details of those gifts are as under: Amount gifted Rs. 1. Narsinghdas Mittal (Father's elder brother) 5,000 2. Pannalal (Maternal grandfather) 5,000 3. Rampyaribai (wife of No. 2's brother) 2,500 Thus, money-lending business is said to have been started with those sum of Rs. 12,500 and various amount of income were earned during years preceding assessment year 1968-69. According to assessee, at beginning of accounting period for assessment year 1968-69, i.e., on 1-4- 1967, assessee's total capital became Rs. 24,500. ITO felt that gifts were not proved and he, therefore, added this amount of Rs. 24,500 to assessee's income for assessment year 1968-69 observing that in fact it would be proper to assess this whole amount protectively since assessee w s merely minor and fund s utilised belonged to his father who was assessed by ITO, A-ward, Indore. assessment on assessee was, thus, made on protective basis. In accounting period relevant to assessment year 1970-71, further gift of Rs. 4,950 was said to have been made to assessee by Narsinghdas Mittal and since ITO was of opinion that Narsinghdas Mittal was not man of sufficient means, he added this amount to assessee's income. assessee preferred appeals against aforesaid assessment to AAC who accepted assessee's claim and deleted additions. matter then came to this Tribunal on revenue's appeals being IT APPEAL Nos. 634 AND 635 (Indore) OF 1976 which were allowed by this Bench vide order dated 31-1-1976 and Tribunal set aside order of AAC and directed him to reduced appeal after making some inquiries about factum and genuineness of gifts in question. after matter went back to learned AAC, latter again allowed assessee's appeal holding gifts to have been satisfactorily proved. revenue again come to this Tribunal in IT Appeal Nos. 54 and 55 (Indore) of 1979 which were allowed by this bench vide order dated 7-6-1979 on ground that AAC had not followed instructions given by this tribunal in its earlier order. matter, thus, went back to AAC again and vide order now under appeal learned AAC had confirmed ITO's order holding that gifts were not proved. This time it is assessee who has come to this Tribunal. 4. We have given our anxious consideration to facts and circumstances of case and are surprise to find how in circumstances of case revenue could act in self-defeating manner firstly holding that entire story was unbelievable and it was father who owned money as well as income and yet assessed present assessee who was minor child of 10 or 12 years of age during relevant accounting years and is not shown to have been doing any business, etc., of his own out of which he could have earned any income. ITO has himself held that amounts are properly taxable in hands of father. So far as father is concerned we find that ITO vide order dated 30-5-1974 (copy at page 41 of paper book) accepted that business in name of present assessee did not belong to father Shri Kishan Mittal. Thus, these amounts have not been accepted by revenue to belong to father and if they belonged to present assessee there was no escape from conclusion that he must have received some gifts which provided his guardian with nucleus with which to start business. 5. So far it has not been clarified under which section of Income-tax act, 1961 ('the Act') sum for Rs. 24,500 and other sum of Rs. 4,950 has been assessed. Sections 69, 69A, 69B and 69C of Act had not application as amount were fully recorded in books and no money was actually found anywhere. Section 68 of act could have been applied to present case if assessee had been major. Section 68 comes into operation where any sum is found credited in books of assessee maintained for any previous year. In case of present assessee who was just child, books which were produced before ITO were written by his natural guardian and it cannot be said that they are books of assessee. natural guardian was not acting as minor's agent. He was acting in his own rights as legal guardian and, therefore, in such case section 68 could hardly be applied. 6. We are, therefore, of view that in view of young age of assessee and in view of fact that entire story is based on conduct of his natural guardian, which conduct has been disbelieved by authorities below, discretionary provisions of section 68 could not be applied and amount should not have been taxed in hands of present assessee. reason is that once we disbelieved gifts entire conduct of natural guardian becomes unauthorised and by his authorised conduct he cannot burden assessee with liability to pay tax. We may mention that learned departmental representative could not assign any acceptable reason how in face of ITO's observations mentioned above, amount could be taxed in hands of present assessee. 7. Coming to question of genuineness of gifts, it is important to mention that Narsinghdas Mittal died in year 1978, Pannalal died in year 1969 and Rampyaribai died in year 1967. later two donors were, therefore, not available for confirmation. Narsinghdas Mittal was, however, available when ITO proceeded to make these assessments in 1974 but orders passed by ITO would show he made no attempt to summon this person and examined him on oath. He has made very perfunctory observation that donor was living with assessee's father and from this he has concluded that he could not have any means to make gifts. We may mention that written confirmation of firs gift by this person was filed before ITO and for second gift document on stamp paper was duly executed and filed before ITO. About other gifts made by Pannalal and Rampyaribai, one Jamnalal, son of Pannalal's brother had filed affidavit stating that two gifts were made in year 1957 in this presence. He was also examined by learned AAC and there was no reason to doubt his statement. Narsinghdas Mittal had also filed affidavit before learned AAC in March 1977 affirming gifts. ITO's observation that he was living with assessee's father is not correct as this person has stated that he had been living at Anjed and practising in Ayurvedic medicine. His wife had died long back and he had no issue of his own. Therefore his capacity to save and will to make gift to his nephew could not be suspected. amounts of gifts are also not too big to arouse suspicion. learned AAC has found minor faults with assessee's evidence to discard theory of gifts; for example, he says that confirmation signed by Narsinghdas Mittal is dated and precise date of gift is not known and that Narsinghdas Mittal had no education in Ayurvedic medicines. These are not things which can be said to be sufficient to discredit such small amount of gifts. Narsinghdas Mittal was alive when assessments were made and it was not assessee's fault if ITO did not chose to examine him and make detailed inquiries. We may again mention that ITO has accepted Shri Kishan Mittal's version of this state of affairs. If that be so, how can statement of same person in case of present assessee be disbelieved. 8. nature and extent of evidence required in particular case depends o n particular circumstances of that case. Where in case like present one direct witness are dead and those available at proper time were to examined, we cannot expect strict standards of proof. 9. Having given our consideration to entirety of circumstances and 9. Having given our consideration to entirety of circumstances and legal position, we hold that aforesaid gifts were satisfactorily proved and even if for some reason it is held that gifts are not proved, amount cannot be taxed in hands of present assessee who was young lad having several years to go before he attains majority and who is not shown to have any other independent source of income. 10. In result, appeals are allowed and aforesaid additions of Rs. 24,500 and Rs. 4,950 are deleted. *** GIRIRAJ MITTAL v. INCOME TAX OFFICER
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