Financing a property purchase does not prove ownership: benami character must be established by cogent evidence.

Advancing funds for a property purchase did not, by itself, justify taxing the financier as the real purchaser or owner. The Revenue had to prove a benami or colourable arrangement with cogent evidence, including control, possession, title custody, motive, and surrounding circumstances, and that burden was not discharged. The sale deeds stood in the name of Shri T. Nadakrishna, so the alleged business income addition in the assessee's hands was deleted. Because the substantive addition failed, the connected protective addition in Shri T. Nadakrishna's hands could not be mechanically sustained and was remitted for fresh adjudication on merits after hearing the parties.

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Issues: (i) whether the addition of Rs. 7,30,77,776 as business income in the hands of the assessee was sustainable on the footing that the transaction routed through Shri T. Nadakrishna was a conduit arrangement; (ii) whether the protective addition in the hands of Shri T. Nadakrishna could survive after the substantive addition in the assessee's case was deleted, or required fresh adjudication.

Issue (i): whether the addition of Rs. 7,30,77,776 as business income in the hands of the assessee was sustainable on the footing that the transaction routed through Shri T. Nadakrishna was a conduit arrangement.

Analysis: The addition could not rest merely on the fact that the assessee had advanced funds for the land purchase. A person who supplies money is not, by that fact alone, the real purchaser or owner of the property. The burden lay on the Revenue to establish, by cogent evidence, that the apparent transaction was really undertaken on behalf of the assessee. The indicia relevant to a benami or colourable arrangement, including control, possession, conduct, custody of title, motive, and surrounding circumstances, were not proved. The sale deeds stood in the name of Shri T. Nadakrishna and the material did not justify recharacterising the transaction as one carried out by him for the assessee. The issue of taxability, if any, arising from the transaction had to be examined in the hands of Shri T. Nadakrishna and not fastened on the assessee merely because it financed the purchase.

Conclusion: The addition in the assessee's hands was deleted and the issue was decided in favour of the assessee.

Issue (ii): whether the protective addition in the hands of Shri T. Nadakrishna could survive after the substantive addition in the assessee's case was deleted, or required fresh adjudication.

Analysis: Once the substantive addition in the assessee's case was deleted, the protective addition in the hands of Shri T. Nadakrishna could not be mechanically sustained only on the earlier reasoning of the appellate authority. The matter required reconsideration on merits after giving an opportunity of hearing and in the light of the Tribunal's findings on the substantive appeal.

Conclusion: The protective addition issue was remitted to the appellate authority for fresh adjudication.

Final Conclusion: The substantive addition was set aside, while the connected protective assessment was restored for fresh consideration, leaving the Revenue to establish taxability on merits in the proper hands.

Ratio Decidendi: Financing a transaction does not, without more, make the financier the real owner or the person taxable on the resulting income; benami or colourable character must be proved by cogent evidence on the surrounding circumstances and conduct.

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