Law:

Section:

Section 143 of the Income-tax Act, 1961-Assessment-Benami transactions-Assessee-firm had obtained overdraft facilities against fixed deposit standing in the name of its partner-ITO held impugned deposit to belong to assessee-firm rather than to partner's son on the grounds that latter had not proved to have earned that amount and impugned deposit was at all times under control of assessee-Whether there was any nexus between impugned deposit and assessee-Held, on facts, no-Whether from mere fact that impugned deposit did not belong to s, it could follow that it belonged to assessee-Held, on facts, no-Whether, in instant case, deposit offered in security by S to guarantee payment by assessee of debt due from it could be held to belong not to s but to assessee-Held, on facts, no Facts The assessee, a registered firm, had four partners, viz., D, his son S, his grandson R and a stranger RK. A fixed deposit of Rs. 2 lakhs was made by S with a bank. On the security of this deposit, the assessee-firm obtained overdraft facilities. After about two years, the fixed deposit was redeemed with interest and the whole amount was deposited with the assessee. Again, after four or five years, Rs. 2 lakhs was withdrawn by S from the assessee and invested in another firm in which D was partner as well as the financial controller. The ITO, having reason to believe that fixed deposit of Rs. 2 lakhs which was belonged to the assessee-firm and the sum was not accounted for in the books, reopened the assessment of the assessee-firm. He found no proof of business done by S to earn the impugned amount and also found that at all times the deposit was under the control of the assessee. He, therefore, included the amount as income from undisclosed sources of the assessee. On appeal, the AAC accepted the version of S that he had earned huge profits and held that mere enjoyment of overdraft facility on the security of the deposit did not make the assessee the owner of the money. On further appeal, the Tribunal found that (i ) S had not made the profits which he claimed to have made and, hence, could not have made the impugned deposit; (ii ) the firm had the use of the money at all material…

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