TMI Blog2016 (5) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ITAT. Facts and circumstances of the case as discussed above do not purportedly show income derived from M/s. Parbati Engineering Works is of K. Sandhyarani or K. Parbati but it is income of appellant. So, the appellant being assesee is liable to pay Income Tax on the income derived from M/s. Parbati Engineering Works and question of income of his daughter at the hand of appellant does not arise. Moreover, other questions whether provisions of Section 64 of the Act is contrary to above findings now becomes academic. - INCOME TAX APPEAL NOS. 16, 17, 18, 19, 20 AND 21 OF 2005 - - - Dated:- 31-3-2016 - MR. INDRAJIT MAHANTY and DR. D.P. CHOUDHURY, JJ. For The Appellant : M/s. S. Ray, S. Dey A. Mallick For The Respondents : Mr. S.K. Acharya, Senior Standing Counsel, Income Tax Department Dr. D.P. Choudhury, J. The captioned Appeals arise out of a common order dated 23.6.2004 passed by the learned Income Tax Appellate tribunal, Cuttack Bench, Cuttack (hereinafter called ITAT ) in I.T.A. Nos. 277 to 280/CTK/2002 for the assessment years 1994-95 to 1997-98 and another common order dated 2.7.2004 in ITA Nos. 56 and 57 of 2004 for the assessment years 1992- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant preferred appeals before the ITAT, Cuttack Bench, Cuttack challenging the orders passed by the Commissioner of Income Tax. The appellant did not appear before the ITAT on the date of hearing. Thereafter without affording any further opportunity to the appellant the ITAT disposed of the cases against the appellant by affirming the orders passed by the authorities below. Then against the orders of the ITAT the present appeals have been filed by the appellant challenging same raising various contentions. SUBMISIONS 3. Learned counsel for the appellant submitted that the order of the ITAT are illegal and arbitrary for violation of natural justice for being not followed the principles of audi alterm partem. The ITAT has also committed error by confirming the order of the First Appellate Authority in observing that the income of the major daughter of the appellant also belongs to the income of the appellant. He further submitted that the impugned order suffers from illegality by not considering the income of the daughter of the appellant as separate income of the daughter of the appellant. The ITAT has also erred in law by considering the property of the daughter of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal taken by the appellant does not vitiate the proceedings and render the order non-est in law? (iv) Whether in the facts and circumstances of the case, the appeal decided ex parte without ext ending reasonable opportunity of being heard to the appellant, should not be held as arbitrary and highly prejudicial, and should not be struck down as being in gross violation of rules of natural justice? 5. Learned Senior Standing Counsel for the revenue submitted that the impugned orders suffered from no illegality and they are based on facts of the case. According to him, the daughter of the appellant has been examined by the assessing Officer and in her statement she categorically stated that M/s. Parbati Engineering Works is owned by her father although purchased in her name, in view of such submission there is no wrong in clubbing the income of M/s. Parbati Engineering Works, which is under the control of the assessee, with the income of the appellant. He further submitted that rightly the authorities below have appreciated the fact that the daughter of the appellant being minor has acquired the property of M/s. Parbati Engineering Works as Benami property of the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting by any law to which he is subject. 9. From the aforesaid provision it is clear that no minor is competent to enter into contract. To acquire competence to enter into a contract K. Sandhyarani should have been age of majority as required under section 11 of the Indian Contract Act. In the case of Mathai Mathai v. Joseph Mary @ Marykkutty Joseph ors., reported in (2015) 5 SCC 622, where Their Lordships observed at paragraphs-9 and 10 as follows:- 9. The first point is required to be answered against the appellant for the following reasons:- It is an undisputed fact that Exh. A1 is the mortgage deed executed by the uncle of the appellant and the first respondent in favour of the deceased mother of the appellant as collateral security towards the dowry amount. At the time of execution and registration of the document, it is an undisputed fact that the age of the mortgagee, the deceased mother of the appellant was 15 years as mentioned in the mortgage deed itself. Therefore, she had not attained the majority under the Indian Majority Act, 1875. To acquire the competency to enter into a contract with the uncle of both the appellant and the first respondent the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, such act or abstinence or promise is called a consideration for the promise; (e) Every promise and every set of promises, forming the consideration for each other, is an agreement; (f) Promises, which form the consideration or part of the consideration for each other, are called reciprocal promises; (g) An agreement not enforceable by law is said to be void; (h) An agreement enforceable by law is a contract; (i) An agreement which is enforceable by law at the option of one or more of the parties- thereto, but not at the option of the other or others, is a voidable contract; (j) A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable. 11. Who are competent to contract- Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject. This important factual and legal aspect has been conveniently ignored by the authorities including the High Court while adverting to Exh.A1, the mortgage deed. A strong reliance was placed upon it by both the Land Tribunal and the Appellate Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Second Appeal and the authorities below have consistently found fact that K. Sandhyarani was a minor while executed the promissory note to succeed to M/s. Parbati Engineering Works of her mother and there being no objection to such findings by the appellant, we are constrained to observe that such document is void one. Apart from this, question arises in mind as to her capacity to earn money and pay ₹ 10,000/- for purchasing of M/s. Parbati Engineering Works from her mother. On the other hand, it is clear from the orders of the authorities below that K. Sandhyarani has admitted before the Assessing Officer that the entire document of promissory note and other documents were only prepared at the instance of her father who is the appellant and she had no any knowledge of purchase of the property. 11. It is also available from the documents filed that K. Sandhyarani has executed one power of attorney in favour of the appellant to look after the affairs of M/s. Parbati Engineering Works and take all necessary steps to file the Income Tax return etc. It is revealed from orders of the Assessing Officer that while K. Sandhyaani was examined, she admitted that she has no kn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year, and where any such income is once included in the total income of either parent, any such income arising in any succeeding year shall not be included in the total income of the other parent, unless the Assessing Officer is satisfied, after giving that parent an opportunity of being heard, that it is necessary so to do. 13. From the aforesaid provisions it is made clear that Section 64 of the Act purportedly directs for computing income of individual where income of wife be included. Section 64A of the Act also enshrines about clubbing of income of minor child with income of father under individual category if it is not derived from his (minor) manual work or activity concerning minor s skill, talent and likewise. So even if for argument shake it is considered that this property of M/s. Parbati Engineering Works belongs to his wife or minor daughter, income of such property will be clubbed with the income derived from M/s. Jeypore Small Scale Industries of the appellant. 14. In view of the analysis made above, we are of the view that M/s.Parbati Engineering Works belongs to appellant and income of such fabrication unit is income of the appellant. So, we are of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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