Per Shri M. C. Agarwal, Judicial Member - These are two appeals by the assessee for the assessment years 1968-69 and 1970-71, respectively.
The cases have a chequered history and the assessee is before us for the third time in respect of the same assessments.
2. We have heard the learned counsel for the assessee and the learned departmental representative and have persuade the record.
3. The assessee was a minor child during the assessment years in question. He was born on 5-5-1957 meaning thereby that on 31-3-1968 which is the date on which the assessees previous year for the assessment year 1968-69 ended, he was only about 10 years and 9 months old and at the close of the previous year for the assessment year 1970-71 he had gained two more years in age. The Income-tax returns for the assessment years 1968-69 to 1972-73 were filed purporting to be on behalf of the assessee by his father and the natural guardian on 28-2-1973 voluntarily. The income shown in those returns was income from interest on money lent. In the assessment year 1968-69, an income of Rs. 5,100 was disclosed and in the assessment year 1970-71 an income of Rs. 5,300 was disclosed. The capital for this business of money-lending was claimed to have come from gifts from three persons at the time of the birth of the assessee somewhere in the year 1957. The details of those gifts are as under : Thus, the money-lending business is said to have been started with those sum of Rs. 12,500 and various amount of income were earned during the years preceding the assessment year 1968-69. According to the assessee, at the beginning of the accounting period for the assessment year 1968-69, i.e., on 1-4-1967, the assessees total capital became Rs. 24,500. The ITO felt that the gifts were not proved and he, therefore, added this amount of Rs. 24,500 to the assessees income for the assessment year 1968-69 observing that in fact it would be proper to assess this whole amount protectively since the assessee was merely minor and the fund s utilised belonged to his father who was assessed by the ITO, A-ward, Indore. The assessment on the assessee was, thus, made on protective basis. In the accounting period relevant to the assessment year 1970-71, a further gift of Rs. 4,950 was said to have been made to the assessee by Narsinghdas Mittal and since the ITO was of the opinion that Narsinghdas Mittal was not a man of sufficient means, he added this amount to the assessees income. The assessee preferred appeals against the aforesaid assessment to the AAC who accepted the assessees claim and deleted the additions. the matter then came to this Tribunal on the revenues appeals being IT APPEAL Nos. 634 AND 635 (Indore) OF 1976 which were allowed by this Bench vide order dated 31-1-1976 and the Tribunal set aside the order of the AAC and directed him to reduced the appeal after making some inquiries about the factum and genuineness of the gifts in question. after the matter went back to the learned AAC, the latter again allowed the assessees appeal holding the gifts to have been satisfactorily proved. The revenue again come to this Tribunal in IT Appeal Nos. 54 and 55 (Indore) of 1979 which were allowed by this bench vide order dated 7-6-1979 on the ground that the AAC had not followed the instructions given by this tribunal in its earlier order. The matter, thus, went back to the AAC again and vide order now under appeal the learned AAC had confirmed the ITOs order holding that the gifts were not proved.
This time it is the assessee who has come to this Tribunal.
4. We have given our anxious consideration to the facts and the circumstances of the case and are surprise to find how in the circumstances of the case the revenue could act in a self-defeating manner firstly holding that the entire story was unbelievable and it was the father who owned the money as well as the income and yet assessed the present assessee who was a minor child of 10 or 12 years of age during the relevant accounting years and is not shown to have been doing any business, etc., of his own out of which he could have earned any income. The ITO has himself held that the amounts are properly taxable in the hands of the father. So far as the father is concerned we find that the ITO vide order dated 30-5-1974 (copy at page 41 of the paper book) accepted that the business in the name of the present assessee did not belong to the father Shri Kishan Mittal. Thus, these amounts have not been accepted by the revenue to belong to the father and if they belonged to the present assessee there was no escape from the conclusion that he must have received some gifts which provided his guardian with nucleus with which to start the business.
5. So far it has not been clarified under which section of the Income-tax act, 1961 (the Act) the sum for Rs. 24,500 and the other sum of Rs. 4,950 has been assessed. Sections 69, 69A, 69B and 69C of the Act had not application as the amount were fully recorded in the books and no money was actually found anywhere. Section 68 of the act could have been applied to the present case if the assessee had been a major.
Section 68 comes into operation where any sum is found credited in the books of the assessee maintained for any previous year. In the case of the present assessee who was just a child, the books which were produced before the ITO were written by his natural guardian and it cannot be said that they are the books of the assessee. The natural guardian was not acting as the minors agent. He was acting in his own rights as the legal guardian and, therefore, in such a case section 68 could hardly be applied.
6. We are, therefore, of the view that in view of the young age of the assessee and in view of the fact that the entire story is based on the conduct of his natural guardian, which conduct has been disbelieved by the authorities below, the discretionary provisions of section 68 could not be applied and the amount should not have been taxed in the hands of the present assessee. The reason is that once we disbelieved the gifts the entire conduct of the natural guardian becomes unauthorised and by his an authorised conduct he cannot burden the assessee with liability to pay tax. We may mention that the learned departmental representative could not assign any acceptable reason how in the face of the ITOs observations mentioned above, the amount could be taxed in the hands of the present assessee.
7. Coming to the question of the genuineness of the gifts, it is important to mention that Narsinghdas Mittal died in the year 1978, Pannalal died in the year 1969 and Rampyaribai died in the year 1967.
The later two donors were, therefore, not available for confirmation.
Narsinghdas Mittal was, however, available when the ITO proceeded to make these assessments in 1974 but the orders passed by the ITO would show the he made no attempt to summon this person and examined him on oath. He has made very perfunctory observation that the donor was living with the assessees father and from this he has concluded that he could not have any means to make the gifts. We may mention that the written confirmation of the firs gift by this person was filed before the ITO and for the second gift a document on a stamp paper was duly executed and filed before the ITO. About the other gifts made by the Pannalal and Rampyaribai, one Jamnalal, the son of Pannalals brother had filed an affidavit stating that the two gifts were made in the year 1957 in this presence. He was also examined by the learned AAC and there was no reason to doubt his statement. Narsinghdas Mittal had also filed an affidavit before the learned AAC in March 1977 affirming the gifts. The ITOs observation that he was living with the assessees father is not correct as this person has stated that he had been living at Anjed and practising in Ayurvedic medicine. His wife had died long back and he had no issue of his own. Therefore his capacity to save and a will to make a gift to his nephew could not be suspected. The amounts of gifts are also not too big to arouse suspicion. The learned AAC has found minor faults with the assessees evidence to discard the theory of gifts; for example, he says that the confirmation signed by Narsinghdas Mittal is an dated and the precise date of the gift is not known and that Narsinghdas Mittal had no education in Ayurvedic medicines. These are not things which can be said to be sufficient to discredit such a small amount of gifts. Narsinghdas Mittal was alive when the assessments were made and it was not the assessees fault if the ITO did not chose to examine him and make detailed inquiries. We may again mention that the ITO has accepted Shri Kishan Mittals version of this state of affairs. If that be so, how can the statement of the same person in the case of the present assessee be disbelieved.
8. The nature and extent of evidence required in a particular case depends on the particular circumstances of that case. Where in a case like the present one the direct witness are dead and those available at the proper time were to examined, we cannot expect strict standards of proof.
9. Having given our consideration to the entirety of circumstances and the legal position, we hold that the aforesaid gifts were satisfactorily proved and even if for some reason it is held that the gifts are not proved, the amount cannot be taxed in the hands of the present assessee who was a young lad having several years to go before he attains majority and who is not shown to have any other independent source of income.
10. In the result, the appeals are allowed and the aforesaid additions of Rs. 24,500 and Rs. 4,950 are deleted.