TMI Blog1976 (5) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... brani in September, 1964; a credit of Rs. 14,777 in the capital account of the assessee on 7th Dec., 1964, representing sale proceeds of gold ornaments which allegedly belonged to Smt. Gulabrani and Rs. 10,600 representing advance of money of Ratanlal Premchand, Satan (s. 4,600) and Sharmalal Radheshyam of Satan (Rs. 6,000), in the name of Smt. Gulabrani. In response to queries made by the ITO regarding the source of funds for these investments and deposits, the assessee submitted before him that his father Shri Bissessar Prasad effected a partition in his family in 1937-38 at the instance of his elder son Shri Hiralal. Shri Bissessar Prasad was carrying on ancestral business if Sarafa, metal utensils, yarn etc. in the old Native State of Maihar. Hiralal had taken to nationalist political activities as a congress worker and had incurred not only the wrath of the Government of the State but also the extreme displeasure of his father Bissessar Prasad. When things came to a head, Hiralal demanded partition of the family and wanted to take away his share. When efforts of relations and friends of the family, who acted as mediators, failed to effect a compromise between father and son, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash and gold ornaments and gold bullion weighting about 265 Tolas. She did not disclose the exact amount of cash in the safe or the quantity of gold and ornaments to her husband, at that time. Between October, 1950 and June 1951, she sold a part of the gold and gold ornaments weighing in all 124 Tolas, to her husband brother Shri Hirlal for Rs. 14,369 and kept the cash, relished from such sales, in her safe. In September, 1964, it was claimed, she purchased a house for Rs. 14,000 out of the cash available with her. She was also said to have advanced Rs. 4,600 to Ratanlal Premchand and Rs. 6,000 to Sharmanlal Radheshyam out of such cash available with her. It was further submitted that, consequent on the introduction of gold control, the sarafa business of the assessee was adversely effected and he urgently required capital to support his sagging business. As he knew that his wife and received cash had gold from his father, the assessee approached his wife for financial help. It was stated that she declined to part with the cash which she was then holding. However, when she importunities of the husband started taking a rather ugly turn by his exhibition of anger towards here, she ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completing the assessment. They were subsequently examined only when the AAC remained the case to the ITO. With regard to the amount realised by the sale of gold and gold ornaments to Hiralal, between October, 1950 and June, 1951, the ITO held that such amount could not have remained with Gulabrani, unspent for nearly 12 to 13 years, so as to be available in 1964 for the purchase of property. With regard to the sale of gold and gold ornaments at Bombay, resulting in the realisation of Rs. 14,777, the ITO observed that through evidence was produced for such sale, there was nothing to show that the gold and gold ornaments sold at Bombay, belonged to Smt. Gulabrani and that she had received such gold and gold ornaments from her father-in-law, Bissessar Prasad. Similarly, he held that there was nothing to show that the amount of Rs. 10,600 advanced by Smt. Gulabrani to Ratnlal Premchand and Sharmanlal Radheshyam had come out of cash belonging to her. In the result, he treated the entire amount of Rs. 39,777 as having come out of he assessee s income from undisclosed sources. The amount was, consequently, added to the total income of the assessee. The property purchased in the name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. In 1945, when he came out of jail he took back the money from Gourishankar and restarted his business and by 1950, he had a capital nearly Rs. 85,000. Similarly, the assessee also started carrying on business soon after the partition and the source of capital for such business has never been called into question by the Department. Thus, in the case of both Hiralal as well as the assessee, no doubt has been cast by the Department on the source of capital employed by them in such business. In other words, the ancestral character of the capital employed by them in these business had never, so far, been called into question by the Department. It is also on record that Hiralal left the family owing to serious difference with his father and his father was not likely to have given him a share of the family property without having effected a proper partition. Such partition has not only been accepted both by Hiralal and by the assessee Jawaharlal but has also been witnessed and testified to by the witnesses, who are relations and friends of the family. In circumstances, it is not realistic to disbelieve the partition only on the ground that there was no written deed of partition. Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oon after the partition in 1937-38, Hiralal had left his father in anger and frustration as a result of the former s violent opposition to his political activities and aspirations. Without about four months of the partition. Hiralal s wife died. Bissessar Prasad wife had died much earlier. Thus, the only remaining female member was Smt. Gulabrani, wife of the assessee Shri Jawaharlal. It is also in evidence that Bissessar Prasad was living with Jawaharlal. Thus, when Bissessar Prasad fell ill, there was nothing more nature than that Gulabrani, as the only female member of the family, should have taken care of Bissessar Prasad. It is not in evidence that there was any properly equipped hospital in the old Maihar State or near-about or that Jawaharlal failed to get his father admitted to such a hospital, in spite of the available of hospital facilities. The AAC was, therefore, not right in drawing the conclusion that if Bissessar Prasad was seriously ill and had sufficient means as claimed, his son Jawaharlal would have admitted him to a hospital, instead of keeping him a home under the case of his own young and inexperienced wife. 14. The AAC was also not very fair when he dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned unspent at the time of his death. It is, therefore, not unlikely that when he handed over the keys to his safe to Smt. Gulabrani it contained a substantial amount of cash and gold bullion and gold ornaments as claimed by her. it is in evidence, supported by entries in the books of account of Hiralal that she sold gold and gold ornaments to him between October, 1950 and June, 1951 for Rs. 14,369. There is nothing to show that this amount was spent away either by Gulabrani or by the assessee. It is clear that this amount has not been utilised by the assessee for his business. That amount has not been credited in the business accounts of the assessee. Smt. Gulabrani was under the protection of the assessee, her husband, and there is nothing to show that she had to incur any extraordinary expenditure calling for the spending of not only he amount of cash received by her from Bissessar Prasad but also the sale proceeds of the gold ornaments. No doubt, it is unusually for a person, especially one belonging to a family carrying on sarafa and money-lending business, to let large amounts of cash lie idle in a safe. But it would not be proper to equate the unusual with the impossible or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his brother Hiralal and himself. The mere fact that the assessee had shown his status as an individual earlier, does not detract from the fact that the business carried on by him was a business belonging to the HUF, of which he is the Karta. The AAC was, therefore, not right in rejecting the claim of the assessee on the ground that he has not accepted the story of a partition in the family of Bissessar Prasad and his sons. The AAC has observed that, in the return filed before the ITO, the assessee had declared his status as that of Individual and that no revised return was filed, correcting the status to HUF. But the AAC has not rejected the claim of the assessee as not arising out of the order of the ITO and hence, incompetent, but has disposed of the claim on merits, after holding that there was no partition in the HUF. The latter finding of the AAC, on merits, has been negatived by us and we have held that the claim of partition in the family was genuine. In the light of his finding, we have to hold that the assessee has to be assessed in the status of a HUF in respect of his business income. 20. Accordingly, we allow the assessee s appeal, I.T.A. No. 1700(Jab)/1972-73, r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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