1985 (11) TMI 100 - AT - Income Tax

Tribunal overturns income additions to child, citing lack of direct evidence.

Giriraj Mittal. Versus Income Tax Officer.

Giriraj Mittal. Versus Income Tax Officer. - ITD 015, 650, Issues:Assessment of income in the hands of a minor child based on alleged gifts received.Analysis:The case involved two appeals by the assessee for the assessment years 1968-69 and 1970-71. The assessee, a minor child during the relevant years, filed income tax returns showing income from interest on money lent, allegedly received as gifts at the time of birth. The Income Tax Officer (ITO) added the gifted amounts to the assessee's income, assessing it on a protective basis. The Assessing Officer (AO) held that the gifts were not proved, leading to additions in the assessee's income. The matter went through multiple rounds of appeals and revisions. The Appellate Tribunal noted the chequered history of the case and the young age of the assessee during the assessment years in question.The Tribunal observed discrepancies in the revenue's actions, as the ITO had accepted that the business did not belong to the father but still assessed the minor child. The Tribunal analyzed the application of relevant sections of the Income-tax Act, noting that discretionary provisions like Section 68 could not be applied due to the minor's age and the conduct of the natural guardian. The Tribunal highlighted that the books were maintained by the guardian, not the minor, and thus, the provisions of Section 68 did not apply in this case.Regarding the genuineness of the gifts, the Tribunal scrutinized the evidence provided. Despite the unavailability of some donors, the Tribunal found the evidence presented by the assessee to be satisfactory. The Tribunal emphasized that the deceased donors were not available for examination, and the evidence provided by the assessee was reasonable given the circumstances. The Tribunal held that the gifts were proved satisfactorily, or alternatively, even if not proved, the amounts could not be taxed in the hands of the minor assessee.In conclusion, the Tribunal allowed the appeals, deleting the additions made to the assessee's income. The Tribunal's decision was based on the young age of the assessee, the conduct of the natural guardian, and the evidentiary support provided for the alleged gifts. The Tribunal emphasized the need for a nuanced approach in cases where direct witnesses are unavailable, and the evidence is based on historical events.