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TMI Blog1970 (3) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... nding previous year being the year ending on March 31, 1957. Smt. Gyan Devi is the wife of the assessee. In the relevant year, she received dividend amounting to Rs. 2,600 on the shares held in her name of the value of Rs. 20,000 in the Ramkrishna Besan and Flour Mills Ltd. These shares were acquired by her in earlier years. She also received interest amounting to Rs. 600 on a fixed deposit, which wag made on April 14, 1955, in the aforesaid mills. She filed separate return of her income for the assessment year 1957-58, showing the aforesaid items as her income in the previous year. In the assessment proceedings of the assessee, the husband of Smt. Gyan Devi, the Income-tax Officer called upon him to explain the source of investments in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direct contemporaneous evidence tracing the assets to the assessee's father-in-law and the family circumstances of his father-in-law on the contrary suggest that he was not capable of giving such valuable assets to his daughter. On the other hand, having regard to the affluent circumstances of the assessee himself and also considering the fact that this was the second marriage, we consider it more probable that the assets held by the second wife were initially transferred by the assessee. The provisions of section 16(3) would, therefore, be attracted and the income of Rs. 2,600 was rightly included in the assessee's total income." On the direction of this court, the Tribunal has now referred to this court the following question for decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms at foiling an individual's attempt to avoid or reduce the incidence of tax by transferring his assets to his spouse or minor children. And as the section creates an artificial liability to tax, it has to be strictly construed: see Commissioner of Income-tax v. Manilal Dhanji, Philip John Plasket Thomas v. Commissioner of Income-tax and Commissioner of Income-tax v. Jwalaprasad Agarwala. Now, in the instant case, from the mere circumstance that the assessee has failed to establish that the assets in question in the name of his wife did not come out of the gifts received by her from his father-in-law, it does not necessarily follow that they must have come from the assessee by a transfer, direct or indirect. No attempt was made by the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or unless such a transfer could reasonably be inferred from the material on record, the provisions of section 16(3) of the Act could not be attracted. We may also add that the burden is on the revenue to show that the income is liable to tax under the statute, though the burden of showing that a particular class of income is exempt from taxation is on the assessee : see Commissioner of Income-tax v. Ramakrishna Deo, Parimisetti Seetharamamma v. Commissioner of Income-tax, and Udhavdas Kewalram v. Commissioner of Income-tax. We are, therefore, of opinion that there was no material before the Tribunal for holding that the income of Rs. 2,600 earned by the assessee's wife was from assets transferred directly or indirectly to her by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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