ORDER
G. SANTHANAM, A. M. :
This is an appeal by the assessee. The assessee is a doctor receiving salary form M/s. P. V. S. Hospital (P) Ltd., Calicut, and also income from profession as practitioner of medicines. The previous year of the assessee is the Financial year. The assessment year is 1984-85. The ITO noticed that the minor children of the assessee, namely, Jaikish, Jaisey and Deepa had filed amnesty returns, admitting income from other sources as follows :
1.
T.J. Jaikish (minor son)
Rs. 39,200
2.
Kum. T.J. Jaisey (minor daughter)
Rs. 25,000
3.
Kum. T.J. Deepa (minor daughter)
Rs. 33,750
The amounts represented amounts of investments in immovable properties. The ITO further noticed that the minor children had only fixed income and therefore, they could not have income from other sources. The funds for investments must have proceeded only from the assessee, who is their father. Though such sums were assessed under the amnesty scheme in the respective hands of the the minor children, he would still that was the assessee who financed the investments in the name of the minor children, in view of the limited of income for the minor children. The assessee did not succeed before the first appellate authority and hence he is on second appeal before the Tribunal.
2. Shri Venkateswaran, the learned Chartered Accountant, submitted that the minor children are assessed to tax for and from the asst. yrs. 1974-75, as follows :
T. J. Jaikish (minor son)
Asst. yr. Income assessed
1975-76
57,690
(admitted to benefits of partnership in Mavoor Trade links, A. Rajan & Co. & Kalpaka Service Station)
1976-77
25,500
1977-78
44,540
1978-79
47,356
1979-80
26,470
Beneficiary in Jaisey Jaikish Benefit Trust, which trust was a partner in firms, Mavoor Trade Links & A. Rajan & Co.
1980-81
17,925
1981-82
38,590
1982-83
71,051
1983-84
26,640
1984-85
61,130
Lease rent, dividend, etc.
T. J. Jaisey (minor daughter)
Asst. yr. Income assessed
1974-75
31,558
(admitted to benefits of partnership in Mavoor Trade Links, A. Rajan & Co. Kalpaka Service Station.
1975-76
58,490
1976-77
26,702
1977-78
48,000
Beneficiary in Jaisey Jaikish Benefit Trust, which trust was partner in firms, Mavoor Trade Links & A. Rajan & Co.
1978-79
51,590
1979-80
31,200
1980-81
23,650
1981-82
39,120
1982-83
70,690
1983-84
33,950
1984-85
51,940
lease rent, dividend, etc.
T. J. Deepa (minor daughter)
1974-75
31,558
(admitted to benefits of partnership in Mavoor Trade Links & A. Rajan & Co.
1975-76
58,570
1976-77
15,847
1977-78
48,150
Beneficiary in Deepa Dhismaja Benefit Trust, which is a partner in firms Mavoor Trade Links & A. Rajan & Co.
1978-79
51,595
1979-80
35,690
1980-81
23,760
1981-82
44,350
lease rent, dividend, etc.
1982-83
69,600
1983-84
26,280
1984-85
48,020
They were having accumulations over the years from their sources of their income. However, as strict proof could not be given for such accumulation when they were finally invested, the minor children went under the Amnesty Scheme through their father and natural guardian. Assessments have been completed on the basis of the returns filed under the Amnesty Scheme in the hands of the minor children. Therefore, to bring the amount to tax again in the hands of the father and natural guardian would amount to double taxation.
3. Shri Abraham, the learned Departmental Representative, contended that even though the assessments have been completed in the hands of the minor children under the amnesty scheme accepting the income offered under other sources, in view of the limited nature of their source of income such as fixed lease rent, interest and dividends, the Assessing Officer is not precluded from looking for sources of such investments in the hands of the assessee.
4. Having regard to rival submissions. We set aside the order of the CIT(A) and restore the issue to the file of the Assessing Officer for the following reasons : The total assessed income in the case of T. J. Jaikish for and from the asst. yr. 1975-76 to 1984-85 is Rs. 4,16,892, after exclusion of income offered under other sources it amounts to Rs. 3,77,692. Similarly the total assessed income in the case of T. J. Jaisey comes to Rs. 4,66,890. After exclusion of Rs. 25,000 offered under other sources, the total assessed income will come to Rs. 4,41,890. In the case of T. J. Deepa, total assessed income would come to Rs. 4,53,420. After exclusion of income offered under other sources in a sum of Rs. 33,750, it comes to Rs. 4,19,670. Further, it is seen that the minor children were beneficiaries in the trust, who were partners in Mavoor Trade Links, A. Rajan & Co. They were also admitted to the benefits of partnership in Mavoor Trade Links, A. Rajan & Co. and Kalpaka Service Station for some years and were also receiving income by way of lease of lorries Kerala Transport Company. It is in such context, Shri Venkateswaran, learned Chartered Accountant, pleaded that the children had accumulation over the years. In order to verify this, we direct the ITO to take the total of the in come assessed upto and inclusive of the asst. yr. 1984-85 excluding of course the income offers under other sources for the asst. yr. 1984-85 in their hands. From the above assessed income, taxed paid by the minor children should be deducted (income-tax and wealth-tax). Any refunds given to the minor children should be added. The minor children should be given credit for their share of any gross profit addition or disallowances made to the firms in which they were admitted to the benefits of partnership either by themselves or as beneficiaries in the trust which were partners in such firms. Any gift received by the minor children should be added to the source. Thus, the source of the minor children over the years should be fixed and added to the net wealth as on 31st March, 1976 (if any) and compared with the net wealth of the minor children as on 31st March, 1984. If the result is much more than the net wealth as on 31st March, 1984 no addition can be made. If the result is less than the net wealth, the addition will have to be sustained in the hands of the father. Before doing so, any gift received should be considered as the source of funds. If the gift is in kind and such gifted items are included in the net wealth for comparison purposes, the gift received in kind should be taken as source. The ITO is directed to do the exercise in the manner indicated and if the result is found to be less than the net wealth the addition to the extent necessary but not exceeding the additions made by the Assessing Officer in the impugned assessments will stand confirmed. Otherwise, it will stand deleted. For this limited purpose, the issue is restored.
5. The second issue in the assessees appeal is against the addition of Rs. 27,410. In the wealth-tax return of minor Jaikish, the Assessing Officer noticed that the net wealth at the beginning of the year amounted to Rs. 3,35,496 without the value of ornaments and that at the close of the year without such ornaments amounted to Rs. 3,76,172. Thus, the increase in the wealth amounted to Rs. 40,676. Further the assessee had paid advance tax of Rs. 22,728. Hence, the minor child had to explain the increase in investment to the extent of Rs. 63,404. As against this the minor child had only Rs. 35,994 as income during the year. In arriving at this figure of Rs. 35,994, the Assessing Officer did not take into account the sum of Rs. 39,200 offered as income under other sources during the previous year. In this manner, he worked out the shortfall in the explanation of the investment in a sum of Rs. 27,410. He took this shortfall as unexplained investment in the name of T. J. Jaikish and assessed it under S. 69 in the hands of the assessee. The addition was confirmed in appeal.
6. We have heard rival submissions. The addition was made as a result of difference between the wealth at the beginning of the year and wealth at the end of the year. The ITO had already assessed the sum of Rs. 39,200 representing the investments in the name of minor child, in the hands of the assessee. We have resorted that issue to the file of the ITO for further enquiries. Even then we cannot sustain this addition for the following two reasons : (1) If ultimately it is found that it is the assessee who has financed the investment of Rs. 39,200 in Moriad Property the relevant amount will have to be considered as unexplained investment in the hands of the assessee as has in fact, been considered by the ITO by including the said sum in total of Rs. 97,950. Therefore, to make another addition would amount to double addition. (2) If upon enquiries it is found that the assessee had nothing to do with such investment and it is the minor who had made investment himself out of his own funds, the very fact that he had offered a sum of Rs. 39,200 for assessment under other sources under the amnesty scheme would constitute the source of investment in a corresponding amount in Moriad property. Thus, from any angle the addition of Rs. 27,410 cannot be sustained. The same is deleted.
7. In the result, the appeal is partly allowed.
