Clubbing of spouse-transferred property income and benami burden of proof on Revenue shaped the ownership dispute.

Rent from property gifted by an assessee to his wife was treated as income falling within the statutory clubbing provision for assets transferred to a spouse, so it was included in the assessee's income. By contrast, properties standing in the names of the assessee's sons were not brought within clubbing because the sons were not minor children. On the benami allegation, the department had the burden to prove that the sons were only name-lenders and that the assessee was the real purchaser. Mere absence of substantial income in the sons' hands and their maintenance by the assessee was insufficient, and in the absence of satisfactory evidence the ostensible title could not be displaced.

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Issues: (i) whether rent received by the assessee's wife from property gifted by the assessee was liable to be included in the assessee's income under the clubbing provision; (ii) whether the acquisition of properties in the names of the assessee's sons was benami and the real beneficial ownership vested in the assessee.

Issue (i): whether rent received by the assessee's wife from property gifted by the assessee was liable to be included in the assessee's income under the clubbing provision.

Analysis: The income from property transferred to the wife was held to fall within the statutory clubbing provision applicable to income arising from assets transferred to a spouse. The earlier decision relied on was treated as fully covering the point.

Conclusion: The issue was answered in the affirmative and against the assessee.

Issue (ii): whether the acquisition of properties in the names of the assessee's sons was benami and the real beneficial ownership vested in the assessee.

Analysis: The statutory clubbing provision did not apply to the sons as they were not minor children. The remaining question was whether the department had material to disregard the ostensible title and prove that the sons were only name-lenders. The onus lay on the department to establish that the apparent ownership was not real ownership. Mere absence of substantial income in the sons' hands and the fact that they were maintained by the assessee did not discharge that burden. In the absence of satisfactory evidence showing that the assessee was the real purchaser, the benami plea could not be sustained.

Conclusion: The issue was answered in the negative and in favour of the assessee.

Final Conclusion: The reference was answered partly against the assessee and partly in his favour, with the department failing to prove benami ownership in respect of the sons' properties.

Ratio Decidendi: Where the Revenue seeks to disregard ostensible ownership and treat property as benami, the burden lies on it to adduce sufficient material proving that the apparent owner is not the real owner; absent such proof, the title as it stands cannot be displaced.

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