Law: Income Tax Ordinance, 1979

Section: 13(1)(aa),13(1)(d),13,62,56,65,113

(a) Income Tax Ordinance (XXXI of 1979)------S. 13(1)(aa)---Addition---Deemed income---Purchase of property by assessee---Allegation of Benami transaction---Onus to prove Benami transaction---Principles---Property was purchased in the names of assessees and his two brothers---If income from property was taxable the department was to notify the owners of the property and ask them to explain as to who had paid the consideration---Where no such notice was issued to the brothers of the assessee who were living abroad at the relevant time though that fact was sufficiently brought to the notice of the department and stood established beyond doubt that the sale-deed was in the name of three persons (assessee and said two brothers) as owner of the acquired property which fact was also reported by the Inspector of the Department, addition under S.13(1)(aa) of the Income Tax Ordinance, 1979 was not tenable. Heavy burden lies on the taxing authorities to prove that the person in whose name the property stands registered is not the real owner but is only a Benamidar for another and that the assessee had also no burden to show that the property purchased from third party standing in the name of others is not his property. It is to be presumed that owner of the property is that person in whose name the property stands. Nevertheless the source whence the purchase money came is by far the most important test for determining whether the sale standing in the name of one person, is in reality for the benefit of another. The mere rejection of an explanation would not entitle the department to claim that the consideration for the purchase of the property in the name of another was provided by the assessee. Apart from the relationship between the parties, there must be some evidence or material to support the case of the Benami nature of the transaction. If income from the property was taxable the Department was to notify the owners of the property and ask them to explain who had paid the consideration. However, in the present case no such notice was issued to the brothers of the assessee who were living abroad at the material time though this fact was sufficiently brought to the…

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