1970 (3) TMI 15

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....ar in question is 1957-58, the corresponding previous year being the year ending on March 31, 1957. Smt. Gyan Devi is the wife of the assessee. In the relevant year, she received dividend amounting to Rs. 2,600 on the shares held in her name of the value of Rs. 20,000 in the Ramkrishna Besan and Flour Mills Ltd. These shares were acquired by her in earlier years. She also received interest amounting to Rs. 600 on a fixed deposit, which wag made on April 14, 1955, in the aforesaid mills. She filed separate return of her income for the assessment year 1957-58, showing the aforesaid items as her income in the previous year. In the assessment proceedings of the assessee, the husband of Smt. Gyan Devi, the Income-tax Officer called upon hi....

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....al to it. In the words of the Tribunal : " There is no direct contemporaneous evidence tracing the assets to the assessee's father-in-law and the family circumstances of his father-in-law on the contrary suggest that he was not capable of giving such valuable assets to his daughter. On the other hand, having regard to the affluent circumstances of the assessee himself and also considering the fact that this was the second marriage, we consider it more probable that the assets held by the second wife were initially transferred by the assessee. The provisions of section 16(3) would, therefore, be attracted and the income of Rs. 2,600 was rightly included in the assessee's total income." On the direction of this court, the Tribunal has n....

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.... to the income-tax authorities. It has to be noted that the provision aims at foiling an individual's attempt to avoid or reduce the incidence of tax by transferring his assets to his spouse or minor children. And as the section creates an artificial liability to tax, it has to be strictly construed: see Commissioner of Income-tax v. Manilal Dhanji, Philip John Plasket Thomas v. Commissioner of Income-tax and Commissioner of Income-tax v. Jwalaprasad Agarwala. Now, in the instant case, from the mere circumstance that the assessee has failed to establish that the assets in question in the name of his wife did not come out of the gifts received by her from his father-in-law, it does not necessarily follow that they must have come from t....