Law:

Section:

Section 69 of the Income-tax Act, 1961 - Unexplained investments - Assessment years 1962-63 to 1969-70- A house property was purchased in name of three grandsons of assessee - In 1970, ITO reopened proceedings being of opinion that assessee had failed to disclose income from said property and to explain investments made therein, in his returns - Assessee's explanation that money was given to his grandsons by their grandmother who had owned property and had income therefrom was not accepted - ITO was of view that it was a case of benami purchase of house property by assessee - Tribunal affirmed finding recorded by ITO - On instant reference, it was, however, seen that it had not been found by any of authorities that assessee's wife did not have agricultural property in her own name and was not deriving income therefrom - Moreover, revenue authorities could not prove that assessee had any motive in purchasing property in name of his grandsons - Whether, in aforesaid circumstances it could not be readily inferred that assessee was real purchaser - Held, Yes - Whether, therefore, it could be said that purchase of house property was not benami, and consequently no penalty could have been levied on assessee under section 271(1)(c) - Held, Yes FACTS In 1961, a house was purchased in the names of three grandsons of the assessee, who was a leading civil lawyer having professional and property income, under the guardianship of their mother. In 1970, the ITO reopened proceedings for the relevant assessment years being of opinion that the assessee had failed to disclose the income from that property and to explain the investments made therein, in his returns. The Explanation of the assessee supported by his own affidavit that the money was given to his grandsons by their grandmother who had owned property and had income there from was not accepted. The ITO held that the house was purchased by the assessee out of his past savings, the sale of agricultural land and National Savings Certificates. In consequence of that finding, notices under section 271(1)(c ) were also issued. But as the assessee had died, proceedings were initiated and continued against his son. The…

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