S. Kannan, Accountant Member - (1.) THESE four departmental appeals are centered on a common issue. They were, therefore, heard together and are disposed of by a common order.
(2.) The assessee is an individual. The assessment for the assessment year 1976-77 was initially completed on 30-12-1977, bringing to charge (i) income from house property situate at No. 266, Indira Nagar, Madras; (ii) income from petrol pump and service station, and (iii) dividend income. Subsequently, the Assessing Officer found that the assessee had purchased a plot of land admeasuring slightly over three grounds and situate at No. 1, Padmanabha Nagar, Madras; that he had constructed during the period 1972 to 1975 a building thereon; and that the assessee had omitted to disclose both the investment in the building and the rental income therefrom. He, therefore, initiated reassessment proceedings. The assessee responded by filing a return of income, disclosing the income which was assessed in the original assessment completed on 30-12-1977. As respects the investment in and income from the Padmanabha Nagar property, the assessee's case was that it belonged to the HUF of which he was the karta. In this regard, the following points were made on behalf of the assessee:- (i) As far back as on 27-2-1936 (when the assessee was about 21/2 years old) certain lands were purchased at Hospet in the joint names of himself and his father for a sum of Rs. 1,875, the source of the investment being the funds of the joint family of which the assessee's grandfather was the karta. (ii) The said Hospet land was sold in August 1972 for a sum of Rs. 80,000. The said sale consideration was paid by the purchaser in instalments starting from November 1970. (iii) The said sale consideration of Rs. 80,000 was utilised in purchasing other properties including the site at No. 1, Padmanabha Nagar, Madras for a sum of Rs. 40,000. The said plot was purchased on 29-1-1972. (iv) An aggregate sum of Rs. 4,35,390 (inclusive of the cost of the site) was spent on constructing the building. The excess of the aggregate cost of construction over the moneys invested out of the sale proceeds of Hospet land was met out of loans from banks (Rs. 3,06,075), rent received in advance from the tenants (Rs. 34,901), and the rent actually collected from the tenants who had occupied the building when it was under various stages of completion (Rs. 1,17,895). According to the assessee, the investment having flowed from joint family nucleus namely, Hospet land, and the loans and advances having been taken by the assessee in his representative capacity as the karta of the HUF, neither the investment in the building nor the income therefrom can be considered in his hands. (v) Just as Hospet land was purchased jointly in the name of the assessee and his father, so similar purchases were made in the name of the two brothers of the assessee, namely A. Y. Prabhakarand A.Y. Radhakrishnan. In this regard, reliance was placed on the joint declarations dated 10-10-1969 made by the brothers in matters relating to the joint family properties which fell to their share. Reliance was also placed on the affidavit dated 13-12-1979 filed by Sri Prabhakar to the same effect in the course of his own assessment proceedings. (vi) The assessee also filed an affidavit dated 22-2-1970 to the same effect. In this regard, an alternative contention that was taken was that the said document should be taken as evidence of the assessee's having thrown his individual property (assuming, of course, that the HUF property was his individual property) in the common hotchpot of the joint family. (vii) Reliance was also placed on the partition deed dated 11-4-1975 wherein the Padmanabha Nagar property was partitioned among the assessee and his four daughters.
(3.) IN view of the foregoing, therefore, it was contended before the ITO that the Padmanabha Nagar property belonged to the HUF and not to the assessee in his individual capacity.;