1988 PLP 1 (PTD)

FALAK SHER, J.-- This tax reference has been filed by the Assessee under section 136 (2) of the Income Tax Ordinance, 1979, consequent upon refusal of the Income Tax Appellate Tribunal on 19-3-1986, to make a reference to this Court. The questions referred for consideration are:- (i) Whether the Order of re-assessment by the Income Tax Officer dated 12-6-1982 is hit by the bar of limitation provided in section 66 (1) (c) of the Income Tax Ordinance, 1979. (ii) Whether the Income Tax Appellate Tribunal was right it holding that the property which was purchased by the Applicant's wife on 31-8-1983 for a sum of Rs.50,000 and later sold by her in October, 1974 before her death in June, 1975 could be treated to be the unexplained property of the applicant and whether there was material before the Tribunal for .u holding. (iii) Whether the Tribunal was right in rejecting the affidavit of the applicant dated 19-2-1985 without there being any material on record to controvert the affidavit. (iv) Whether the Tribunal was right in the facts and circumstances of the case in upholding the addition of Rs. 25,000 to the applicant's income on account of allegedly unexplained purchase of machinery. (v) Whether the addition in respect of investment in machinery of Rs.25,000 and in respect of Bungalow of Rs.50,000 under provisions of section 13 (1) of the Income Tax Ordinance, 1979 for the assessment year 1974-75 is in accordance with law and whether the addition without the specific approval of the Inspecting Assistant Commissioner of Income Tax i; sustainable in law?

2. This reference has emerged out of the following facts:- The applicant was assessed as an individual for the charge year 1974-75 by the income Tax Officer, Circle IV, Rawalpindi, vice assessment order dated 28-6-1973; making two additions viz., Rs.75,000 on account of un-explained investment in the purchase of machinery, and Rs.1,40,000 being un-explained investment made in the purchase of two houses Nos.141-B and 141-C (Rawalpindi), in the name of his wife. The A.A.C. vide order dated 29-4-1379, set aside both the additions and remanded the case for decision afresh after serving notice under section 23 (3) of the Repealed Income Tax Act, 1922. The Income Tax Officer in pursuance to that order passed the reassessment order on 12-4-1982, whereby, addition of Rs.50,000 (instead of Rs.75,000) was made on account of purchase of machinery, however addition of Rs.1,40,000 or account of two houses was maintained. This order was appealed before the CIT (Appeals) Rawalpindi, which was accepted on 24-1-1984, deleting both the additions. The Income Tax Officer feeling discontended, impugned the commissioner's order before the Income Tax Appellate Tribunal in I. T. A. No. 34 (IB)/ 83-84, which was partly accepted on 30-4-1985. Addition on account of unexplained investment in the purchase of machinery was reduced to Rs.25,000, whereas addition as unexplained investment in the purchase of houses in the name of his wife was adjudged to be Rs.50,000 against one house only viz., 141-C, (Holding that purchase price of the two houses was Rs.1,10,000 and not Rs.1,40,000 i.e. House No.141-B- Rs.60,000 and House No. 141-C--Rs.50,

000. Further that investment of Rs.60,000 in one house i.e. 141-B, stood explained as having been made by the father-in-law of the applicant).

3. The applicant feeling aggrieved preferred an application under section 136 (1) of the Income Tax Ordinance, 1979, before the Income Tax Appellate Tribunal urging that afore-referred questions be referred to this Court, which was declined vide order dated 30-4-1985. Hence the present reference. It is relevant to mention that though 5 questions were framed in this reference application, but the learned counsel for the applicant, at the time of the hearing, did not press question Nos. I, III, V; and confined his submissions to question Nos. II and IV.

4. We have heard the learned counsel for the parties.

5. On behalf of the applicant it is submitted that onus of proof is a question of law and the authorities below have misdirected themselves on both the counts. Concerning question No. IV it was submitted that investment in machinery was explained as having accrued out of the accumulated, savings of the previous years and the value of the machinery was only Fs.13,000 and not what has been assessed. We have considered this question in the light of the facts and circumstances of the case, and are of the opinion that both the purchase price of the machinery as well as the quantum of accumulated savings, is a question of fact, which is in the exclusive domain of the departmental authorities and the Income Tax Appellate Tribunal has given its finding which is conclusive thus does not give rise to any question of law warranting answer in this reference.

6. As to question No.II, the learned counsel for the petitioner has submitted that the applicant has discharged its onus of proof by stating that the house in question belonged to his wife, therefore, the department was to prove its premise that it was a benami transaction and the applicant was the real owner. In support of this he has placed reliance on the following judgments:- L. Sheo Narain Lal, In re: (1954) 26 ITR 249, K.B. Sheikh Mohammad Naqi v. Commissioner of Income-tax Punjab (1945) 13 ITR 452 and Commissioner of Income-tax (Central) Calcutta v: Daulat Ram Rawatmul (1973) 87 ITR

349. In the case of L. Sheo Narain Lal (1954) 26 I T C 249, 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 ad 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. On reference to the High Court it was held that "there can be no doubt that the burden of proof was on the Department to show that the wife was a benamidar for her husband. The presumption must be that when the house stood in the name of, she was the owner thereof and it was for persons, alleging that she was a mere benamidar, to prove the allegations either by direct evidence or by circumstantial evidence ". Likewise in the case of K.B. Sheikh Mohammad Naqi v. Commissioner of Income-tax Punjab (1945) 13 I T R 452, on reference to the High Court, it was held that "the onus in such cases lies upon the department to show that the ostensible owner was not the real owner". Same view was held by the Supreme Court of India in the case of Commissioner of Income-tax (Central), Calcutta v. Daulal Ram Rawatmull (1973) 87 I T R 349 that "the onus to prove that the apparent is not the real is on the party who claims it to be so. As it was the department which claimed that the amount of fixed deposit receipt belonged to the respondent firm even though the receipt had been issued in the name of Biswanath, the burden lay on the department to prove that the respondent was the owner of the amount despite the fact that the receipt was in the name of Biswanath." We have perused those judgments, and are of the opinion that the legal proposition enunciated in those judgments is not attracted to the peculiar -facts of the present case. Generally speaking it would be incumbent upon the tax department to prove a transaction to be benami, if it is so alleged. However, this rule is not unexceptionable; for example this rule would apply if an assessee turns a deaf ear to the department and keeps mum, does not offer any explanation whatsoever, leaving it solely to be the department's baby to furnish proof positive, thus the onus would be on the department to prove the allegation by adducing direct as well as circumstantial evidence. But in cases like the instant one, where an assessee offers an explanation, which if not substantiated, then, obviously it has its connotations, and the wavery conduct of the assessee would be posted on the debit side of his ledger. The learned counsel for the department has placed on record, statement of assets and liabilities filed by the applicant with the assessing officer for the charge year ending on 30-6-1974, and in pursuance thereto copy of the statement made on solemn affirmation, relevant part of which is reproduced hereinbelow:-- "That property No. 141-B, Saifullah Road, Rawalpindi stands in the name of my wife. This property was purchased by my father-in-law for a sum of Rs.90,000 in the name of my wife Mst. Sadia Begum.................. Further stated that property No. 141-A or 141-C is neither in my name or in the name of my wife or any other dependant of wives. It is owned by other people. This can be verified from the records of the concerned office.................." The above statement clearly shows that applicant admitted that House No. 141-B, Saifullah Lodhi Road, Rawalpindi stands in the name of his wife (Saida Begum) which was purchased out of the funds provided by his father-in-law, whereas he completely in unequivocal and unambiguous terms disowned House No. 141-C, in the widest possible sense of the word. This all embracing statement turned out to be false and untrue since the house also belonged to his wife. Certainly in such like situations the cases cited do not offer much help to the applicant. Therefore, the findings recorded by the Tribunal on this count does not give rise to any question of law, but it confines its activity in the realm of facts.

7. In view of the above, the reference on both the questions is answered in the negative. M. B. A./S-129/L Reference answered in the negative.