Law: Income Tax Act, 1961

Section: 256(2)

Law: Income Tax Act, 1961

Section: 256(2)

Section 64 of the Income-tax Act, 1961 - Transfer of assets - For benefit of spouse etc. - Assessment years 1968-69 to 1970-71 - Income from house property standing in name of assessee's wife was brought to tax in hands of assessee holding him as real owner of said property - Whether since assessee failed to establish that his wife had assets sufficient to provide consideration money for acquisition of said property, assessee had purchased that property out of his own funds and income from house property was assessable in hands of assessee - Held, yes FACTS In the course of assessment proceedings, the ITO found that the assessee had acquired a house, in the name of his wife. The said house was reconstructed in the year 1962, and a portion thereof had been rented out to a company. The ITO further found that the assessee had purchased another plot of land, also in the name of his wife and had constructed a house thereon in 1965 and was occupying the same for residential purposes from 1969. The ITO found that the assessee was being assessed as the karta of a HUF until the assessment year 1966-67. When the assessee was called upon to explain the source from where the two acquisitions had been made, the assessee stated that the residential house was acquired out of the rental income received from the company. The ITO found that the expenditure for construction as disclosed was low and added a sum to the expenditure disclosed. He came to hold that though the house property stood in the name of the assessee's wife in the municipal records. In the absence of satisfactory explanation for the source of acquisition of money, the assessee should be treated as the real owner and the assessee's wife as a name-lender. Accordingly, the ITO proceeded to assess the income from house property in the hands of the assessee. The first appellate authority upheld the assessments and dismissed the appeals. In appeals to the Tribunal, the assessee maintained that the burden lay on the revenue to prove that the apparent was not the real and the assessee and not his wife was the owner of the property. But the Tribunal, held that the assessee had purchased the properties in question out of…

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