Correct recipient of compensation and interest must be verified before fastening tax liability on an individual or HUF.

Taxability of compensation and interest depended on whether the receipts belonged to the assessee individually or to the HUF. The assessee raised an alternate claim that the amounts had accrued to the HUF, but this contention was not examined by the lower authorities and no supporting material was placed before the Tribunal. As liability must be fastened on the correct recipient, the Tribunal directed fresh examination of the identity of the actual recipient. The matter was remanded to the Assessing Officer for verification after giving the assessee due opportunity.

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Issues: Whether the matter should be restored to the Assessing Officer to determine whether the compensation and interest were received by the assessee in his individual capacity or by the HUF.

Analysis: The assessee raised an alternate plea that the compensation and interest accrued to the HUF and not to him individually. This claim had not been examined by the lower authorities and no supporting documentary material was placed before the Tribunal. Since liability to tax must be fastened on the correct person and the identity of the actual recipient was central to the controversy, the Tribunal found it to have the issue examined afresh by the Assessing Officer.

Conclusion: The matter was remanded to the Assessing Officer to determine, after giving the assessee due opportunity, whether the amount was received by the assessee individually or by the HUF.

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