1. The following income-tax and wealth-tax references shall stand disposed of by this judgment:
1. I.T.R. No. 35 of 1976 in relation to the assessment years 1963-64 and 1964-65.
2. I.T.R. No. 3 of 1977 in relation to the assessment year 1972-73.
3. I.T.R. No. 49 of 1978 in relation to the assessment year 1965-66.
4. I.T.R. No. 331 of 1978 in relation to the assessment years 1973-74, 1974-75 and 1975-76.
2. In all the aforesaid income-tax references the common question of law, which has been referred to this court for opinion, is as follows:
" Whether, on the facts and in the circumstances of the case, the finding of the Tribunal in regard to the income from the three properties in question that they were purchased by the assessee benami was justified in law ?"
5. W.T.R. No. 593 of 1977 in relation to the assessment years 1964-65, 1965-66, 1966-67, 1967-68 & 1968-69.
3. The question of law, which has been referred to us for our opinion in this reference, is as follows :
"Whether, on the facts and in the circumstances of the case, the finding of the Tribunal in regard to the three properties in question that they were purchased by the assessee benami was justified in law and could be included in the total wealth of the assessee ? "
4. It will be seen that the question referred to us in the income-tax references is almost identical with that which has been referred to us in the wealth-tax reference and all the references are, therefore, bound to be answered in the same manner and not differently.
5. The facts, in brief, are these. The assessee is an individual. He is an excise contractor and derives his income from excise contract and house property. He also acted as a toddy contractor. In regard to his income from the house property and from the liquor contract business, his previous year ended on March 31. However, for the toddy contract business for the assessment year 1965-66, his previous year was from October 1, 1963, to September 30, 1964.
6. During the assessment proceedings for the assessment year 1965-66 the ITO found that the assessee had purchased the following four properties.
1. A house in Mohalla Bhatan Tola, Shahjahanpur, purchased on
21-5-1962 for Rs. 8,500. It was purchased in the joint names of the asses-
see's wife and his mother-in-law.
2. Four shops in Mohalla Khalil Gharvi, Shahjahanpur, purchased on 11-11-1963 for Rs. 5,500 in the joint names of the assessee's wife, his mother-in-law and his father-in-law.
3. A house in Mohalla Kachha Katra, Shahjahanpur, purchased in 1963 for Rs. 14,000 in the name of the assessee's father-in-law.
4. A house purchased on 2-4-1965 for Rs. 8,500 in the name of the assessee's wife.
7. Daring the course of the assessment proceedings the assessee admitted that the house mentioned at serial No. 4 above was purchased by him in the name of his wife, but in regard to the other three houses, he denied that they were purchased by him or that he invested any amounts in the said purchases. The ITO recorded the statements of the assessee and his father-in-law, Babu Ram. The mother-in-law of the asses-see filed a written statement before the ITO wherein she asserted that she had moneys in her hands which she invested in the aforesaid purchases of the properties mentioned at serial Nos. 1 and 2 above. The ITO was not satisfied with the aforesaid evidence and he came to the conclusion that the aforesaid purchases were made benami by the assessee himself from his own funds.
8. In the appeal, the AAC reversed the said finding and held that the ITO had failed to discharge the burden which lay on the department to establish that the said purchases were made by the assessee, benami in the names of his father-in-law, his mother-in-law and his wife.
9. In the second appeal before the Income-tax Appellate Tribunal, the department succeeded and it was held that the aforesaid purchases were made by the assessee himself from his own funds but in the names of his father-in-law, his mother-in-law and wife.
10. An application under Section 256(1) of the Act for a reference to this court was rejected by the Tribunal. Thereafter, the assessee moved this court under Section 256(2) of the Act and the following question of law was directed to be referred along with the statement of the case : "Whether, on the facts and in the circumstances of the case, the finding of the Tribunal in regard to the three properties in question that they were purchased by the assessee benami was justified in law ?"
11. In compliance with the said direction, the Income-tax Appellate Tribunal has referred the said question of law along with the statement of the case for the opinion of this court. On behalf of the assessee, it was contended that the finding recorded by the Income-tax Tribunal was not based on any material or evidence and was conjectural in nature. On the other hand, the learned counsel for the department contended that the finding recorded by the Tribunal was a pure finding of fact and no question of law arose for our decision. It was next submitted that in any case, there was good material to support the Tribunal's finding.
12. A large number of reported cases were cited at the bar and they are being noticed below.
13. We shall first take up the Supreme Court cases.
14. In Union of India v. Moksh Builders and Financiers Ltd., AIR 1977 SC 409, a reference was made to Gangadara Ayyar v. Subramania Sastrigal, AIR 1949 FC 88 and to Sree Meenakshi Mills Ltd. v. CIT  31 ITR 28 (SC), and it was held that there are two tests which should be applied to ascertain whether " an assignment in the name of one person is in reality for the benefit of another ". The first test is the source from which the consideration for the transfer has come and the other test is who actually has enjoyed the benefits of the transfer. It was further observed (p. 413): " It is equally well settled that although the onus of establishing that a transaction is ' benami' is on the plaintiff, where it is not possible to obtain evidence which conclusively establishes or rebuts the allegations, the case must be dealt with on reasonable probabilities and legal inferences arising from proved or admitted facts."
15. Lastly, it was emphasised that the burden of proof is not static and may shift during the course of evidence, and
" that where evidence has been led by the contesting parties on the question in issue, abstract consideration of onus are out of place, and the truth or otherwise of the case must always be adjudged on the evidence led by the parties. This will be so if the court finds that there is no difficulty in arriving at a definite conclusion."
16. In Jaydayal Poddar v. Bibi Hazra, AIR 1974 SC 171, it was laid down as under (p. 172):
"It is well settled that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the person asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence of benami is the intention of the party or parties concerned ; and not unoften such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rest on him ; nor justify the acceptance of mere conjectures or surmises, as a substitute for proof. The reason is that a deed is a solemn document prepared and executed after considerable deliberation, and the person expressly shown as the purchaser or transferee in the deed, starts with the initial presumption in his favour that the apparent state of affairs is the real state of affairs. Though the question, whether a particular sale is benami or not, is largely one of fact, and for determining this question, no absolute formulae or acid test, uniformly applicable in all situations, can be laid down, yet in weighing the probabilities and for gathering the relevant indicia, the courts an usually guided by these circumstances : (1) the source from which the purchase money came; (2) the nature and possession of the property, after the purchase; (3) motive, if any, for giving the transaction a benami colour; (4) the position of the parties and the relationship, if any, between the claimant and the alleged benamidar; (5) the custody of the title deeds after the sale ; and (6) the conduct of the parties concerned in dealing with the property after the sale.
The above indicia are not exhaustive and their efficacy varies according to the facts of each case. Nevertheless No. 1, viz., the source whence the purchase money came, is by far the most important test for determining whether the sale standing in the name of one person, is in reality for the benefit of another."
17. In Rai Bahadur Mohan Singh Oberoi v. CIT  88 ITR 53 (SC), relying on the decision in Sree Meenakshi Mills Ltd. v. CIT  31 ITR 28 (SC), it was laid down that a finding on the point as to whether a purchase was made benami or not, would be a finding of fact and if it is based upon some evidence, then such a finding cannot be interfered with by the High Court in a reference, The finding of benami in this case was, however, based on the earlier admissions of the assessee himself.
18. In CIT v. Daulat Ram Rawatmull  87 ITR 349 (SC), it was laid down that findings of fact recorded by the Tribunal can be interfered with by the High Court on a reference only on the ground that there is no evidence to support it or that it is perverse (p. 357): " Further, when a conclusion has been reached on an appreciation of a number of facts, whether that is sound or not must be determined, not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in their setting as a whole. [Sree Meenakshi Mitts Ltd. v. CIT  31 ITR 28 (SC)]."
19. The controversy in this case was whether an amount of Rs. 5 lakhs in fixed deposit in the name of a son of a partner of the assessee-firm, was the concealed income of the said firm. The Supreme Court observed (at p. 358) :
" The Tribunal in arriving at the conclusion that the amount of Rs. 5,00,000 in fixed deposit in the name of Biswanath was the concealed income of the respondent-firm based its decision on the following circumstances :
(1) Explanation furnished by Biswanath with regard to the source of Rs. 5,00,000 in proceedings relating to his personal assessment was found to be incorrect.
(2) The transfer of the two amounts of Rs. 5,00,000 each from Calcutta to Bombay and thereafter to Jamnagar and the issue of fixed deposit
receipts by the bank in the names of the sons of the partners of the respondent-firm.
(3) The use of the above-mentioned two receipts as collateral security for the overdraft facility of Rs. 10,00,000 afforded to the respondent-firm.
The High Court took the view that the above material was not sufficient for holding that the sum of Rs. 5,00,000 belonged to the respondent-firm and that the Tribunal had taken into consideration material which was not relevant to the issue. We have given the matter our consideration and are of the opinion that no case has been made for interfering with the judgment of the High Court."
20. Adverting to the first circumstance mentioned above, namely, that the explanation furnished by the fixed deposit holder Biswanath, with regard to the source of Rs. 5,00,000 had been disbelieved, it was observed (p. 359 of 87 ITR) : " The falsity of the above explanation of Biswanath, in the opinion of the High Court, did not warrant the conclusion that the amount of Rs. 5,00,000 belonged to the assessee. We can find no flaw or infirmity in the above reasoning of the High Court. The question which arose for determination in this case was not whether the amount of Rs. 5,00,000 belonged to Biswanath, but whether it belonged to the respondent-firm. The fact that Biswanath has not been able to give a satisfactory explanation regarding the source of Rs. 5,00,000 would not be decisive even of the matter as to whether Biswanath was or was not the owner of that amount. A person can still be held to be the owner of a sum of money even though the explanation furnished by him regarding the source of that money is found to be not correct. From the simple fact that the explanation regarding the source of money furnished by A, in whose name the money is lying in deposit, has been found to be false, it would be a remote and far-fetched conclusion to hold that the money belongs to B. There would be in such a case no direct nexus between the facts found and the conclusion drawn therefrom."
21. In regard to the other two circumstances mentioned above also, the Supreme Court observed :
" We also see no cogent ground to take a view different from that of the High Court that the other circumstances, namely, the transfer of the amount of Rs. 5,00,000 from Calcutta to Jamnagar for fixed deposit in the name of Biswanath and the use soon thereafter of the said fixed deposit receipt as security for the overdraft facility to the respondent-firm did not justify the inference that the amount belonged to the respondent."
22. It was next emphasised (p. 360) :
" The onus to prove that the apparent is not the real is on the party who claims it to be so. As it was the department which claimed that the amount of fixed deposit receipt belonged to the respondent-firm even though the receipt had been issued in the name of Biswanath, the burden lay on the department to prove that the respondent was the owner of the amount despite the fact that the receipt was in the name of Biswanath. A simple way of discharging the onus and resolving the controversy was to trace the source and origin of the amount and find out its ultimate destination. So far as the source is concerned, there is no material on the record to show that the amount came from the coffers of the respondent-firm or that it was tendered in Burrabazar Calcutta branch of the Central Bank, on November 15, 1944, on behalf of the respondent. As regards the destination of the amount, it has already been mentioned that there is nothing to show that it went to the coffers of the respondent. On the contrary, there is positive evidence that the amount was received by Biswanath on January 22, 1946. It would thus follow that both as regards the source as well as the destination of the amount, the material on the record gives no support to the claim of the department."
In the end, the court laid down as follows (p. 362): "There should, in our opinion, be some direct nexus between the conclusion of fact arrived at by the authority concerned and the primary facts upon which that conclusion is based. The use of extraneous and irrelevant material in arriving at that conclusion would vitiate the conclusion of fact because it is difficult to predicate as to what extent the extraneous and irrelevant material has influenced the authority in arriving at the conclusion of fact."
23. In Karnani Properties Ltd. v. CIT  82 ITR 547. the Supreme Court laid down that the expression " on the facts and circumstances of the case" means the facts and circumstances as found by the Tribunal, and not the facts and circumstances that may be found by the High Court on the reappraisal of evidence. Indeed, the High Court has no jurisdiction to reappraise the evidence and to arrive at its own findings of fact in the reference proceedings.
24. In CIT v. Durga Prasad More  82 ITR 540 (SC), the controversy was whether the house property in question was held by the assessee-husband as a trustee on behalf of his wife. The assessee had put forward the said claim for the first time in the assessment year 1942-43 but the claim was finally rejected by the Tribunal with the observation that it would be open to the assessee to establish his case in subsequent years' assessment proceedings. During the assessment years 1943-44 to 1957-58, the income of the said property was assessed in the hands of the assessee without any contest. During the proceedings for the years 1958-59 and
1959-60 the assessee revived his old plea, but the same was rejected and the said rejection was ultimately upheld by the Supreme Court. The court observed as under (p. 545):
" It is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise, it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour, then the door will be left wide open to evade tax......
Now, coming to the question of onus, the law does not prescribe any quantitative test to find out whether the onus in a particular case has been discharged or not. It all depends on the facts and circumstances of each case. In some cases, the onus may be heavy whereas, in others, it may be nominal. There is nothing rigid about it."
25. In deciding the case the court was very greatly influenced by the fact that the assessee, after having objected to the inclusion of the income from the property in his assessment during the assessment year 1942-43, included the said income in his return for several subsequent years and revived his old objection in the proceedings relating to the assessment years 1958-59 and 1959-60. Further, the court emphasised (p. 546): " There is no dispute that the consideration for the sale was in fact paid by the assessee. He says that he paid it on behalf of the trust orally created by his wife. Therefore, the question is whether he has satisfactorily proved that case. If he has failed to prove that case, as we think it to be so, and in the absence of any other alternative case pleaded by him, it follows as a matter of course that the consideration for the sale passed from him."
26. In A. Govindarajulu Mudaliar v. CIT  34 ITR 807 (SC), the controversy was regarding certain amounts which stood credited to an assessee in a firm wherein he was a partner. The assessee was required to prove the source of the said credits. The explanation offered by him was rejected and it was held that the said credits represented the concealed income of the assessee. The assessee filed appeals after obtaining special leave from the Supreme Court. The appeals were dismissed and it was observed (p. 810): " When both these explanations were rejected, as they have been, it was clearly open to the Income-tax Officer to hold that the income must be concealed income. There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain
amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipts are of an assessable nature. "
27. So far as the Privy Council cases are concerned, a reference was made to Dalip Singh v. Chaudhrain Nawal Kunwar  LR 35 IA 104 ; ILR 30 All 258 (PC), where the controversy related to the genuineness of a transaction of mortgage. Sir Arthur Wilson, speaking on behalf of the board, observed as follows (p. 267) : " There was some evidence on each side, bearing directly on the character of the transaction, but on neither side was that evidence wholly convincing. Persons whom one might have expected to be prominent witnesses were not called, and the evidence that was called is open to much adverse criticism. The testimony of one witness is described by the judge who heard it as being worthless. In determining, therefore, which story is to be accepted, it has been found necessary in India and it is equally necessary for their Lordships, to rely largely upon the surrounding circumstances, the position of the parties and their relation to one another, the motives which could govern their actions, and their subsequent conduct. "
28. So far as the Allahabad decisions are concerned, a reference was made to Sheo Narain Lal, In re  26 ITR 249 and CIT v. Daya Chand Jain Vaidya  98 ITR 280.
29. In Sheo Narain Lal, In re  26 ITR 249, the controversy was in regard to the ownership of a house which stood in the name of the wife of the assessee. Half the sale price for the purchase of the said house was accepted by the department to have been contributed by the wife. However, in regard to the source for the remaining half portion of the house, the Tribunal disbelieved her statement that she had received gifts of cash and jewellery from her father and father-in-law. It was held that the mere rejection of the wife's explanation would not lead to the inference that half the sale price for the purchase of the property must have been contributed by the assessee-husband. The court placed reliance on the decisions of the Patna High Court in Ramkinkar Banerji v. CIT  4 ITR 108 (Pat) and Sovaram Jokhiram v. CIT  12 ITR 110 (Pat), and on the decision of the Lahore High Court in K.B. Sheikh Mohammad Naqi v. CIT  13 ITR 452.
30. In CIT v. Daya Chand Jain Vaidya  98 ITR 280, the controversy was like this. A private limited company was floated by the asses-see and the shareholders in the said company were the assessee, his wife, two major sons and two minor sons. Certain shares were issued and allotted to the shareholders. The share money was entered in the books of the company as having been received from the respective shareholders. The
ITO and the AAC rejected the explanation of the wife of the assessee that the share money had been paid by her in respect of her own shares and in respect of the shares allotted to the two major sons from out of the funds which she had received from her father and father-in-law. However, in the second appeal, the Tribunal held that even though the explanation of the wife had been rejected by the department, still it did not lead to the inference that the money for the purchase of the shares must have been provided by the assessee-husband. In the reference, this court held that the approach of the Tribunal was correct. The cases of Govindarajulu Mudaliar v. CIT  34 ITR 807 (SC), Kale Khan Mohammad Hanif v. CIT  50 ITR 1 (SC) and CIT v. M. Ganapathi Mudaliar  53 ITR 623 (SC) were distinguished on the ground that in the said cases the amounts in question were entered in the account books of the assessees concerned and it was held that once the explanations given by the assessees concerned in respect of such deposits were found to be incorrect, the ITO could properly treat such deposits as the income of the assessee from an undisclosed source. A contention was raised on behalf of the department that as all the shareholders in the private limited company belonged to the family of the asses-see, who was the karta of his family, it could be inferred that the amounts in question belonged to the assessee. Reliance was placed on the decision of the Supreme Court in Juggilal Kamlapat v. CIT  73 ITR 702. The said contention was rejected and it was observed (p. 283 of 98 ITR) : " The revenue, in the circumstances of this case, could only succeed in case they had brought on record material from which it could be concluded that the deposit made by the wife and the two major sons were, in fact, made by the assessee. This has not been done, and as such the amount in question could not be added. "
31. So far as the Madras cases are concerned, a reference was made to R. K. Murthi v. CIT  42 ITR 379, KM. N. N. S. N. Subramanian v. CIT  55 ITR 610, V. Ramaswami Naidu v. CIT  93 ITR 341, First ITO v. M.R. Dhanalakshmi Ammal  112 ITR 413 and D. Damodaran v. D. Leelavathi Ammal, AIR 1975 Mad 278.
32. In R. K. Murthi v. CIT  42 ITR 379, certain shares in a company had been purchased by the wife of the assessee who was himself a director in the said company. Part of the price of the shares was paid by the wife at the time of purchase and for the balance she executed a promissory note in favour of the transferor selling the shares. Subsequently, the said balance amount was paid by the assessee-husband, though later he reimbursed himself from the dividend paid by the company to the wife. The Madras High Court held that there was no material to hold that the
shares were purchased by the assessee-husband benami in the name of his wife. It. was observed (p. 390):
" Assuming that the assessee had no such intention to benefit the "wife, the beneficial interest in the share could be held to vest in the husband only if it is proved that he provided the purchase money. The onus of showing that it was so done is on the department."
33. In Subramanian v. CIT  55 ITR 610 (Mad) certain deposits in a bank in the name of the wife were treated to be the assessee-husband's Undisclosed income. It was, however, emphasised that the facts of the case were peculiar and the controversy was limited to deciding whether the moneys had been provided to the wife by her father-in-law or by her husband. It was emphasised (p, 614): " It is clear from the record that the assessee has proceeded on the footing that if the case of gift by Swaminathan is to be negatived, the money must be held to have been contributed by him. It will follow that the result of the finding reached by the Appellate Tribunal (which is now accepted by the learned counsel appearing for the assessee), that there was no gift of the sum of Rs. 52,500 to Meenakshi Achi by her father-in-law means that the money must have been given to her by her own husband."
34. In V. Ramaswami Naidu v. CIT  93 ITR 341 (Mad), the controversy was whether certain deposits made in the name of the wife of the assessee in a partnership where the assessee-husband was a partner, belonged to her or were held by her benami for her husband. It was observed (p. 346); " There can be no doubt that the burden of proof was on the department to show that the real owner was the assessee and the amount belonged to the assessee. The amount is credited in the accounts of Krishna and Company in the name of Laxmi Ammal and the natural presumption is that it belonged to Laxmi Ammal."
35. The court also considered the effect of the rejection by the department of the explanation given by the assessee and observed (pp. 346-7):
" We are of opinion that this rejection of the evidence alone could not lead to the inference that the consideration was provided by the assessee. There is no material on which we could conclude that the purchase in the name of the minor was benami for the assessee or that the amount standing to the credit of Laxmi Ammal belonged to the assessee......We are of opinion, that on the facts and circumstances of this case, it cannot be stated that the department has discharged its onus of proving that the ostensible owner was not real owner of the property."
36. In First ITO v. Dhanalakshmi Ammal  112 ITR 413 (Mad), the controversy was examined in a first appeal which was directed against the
decision of the trial court in a regular suit which was filed by the plaintiff claiming to be the concubine of the assessee-paramour. Certain properties were sought to be proceeded against for the recovery of the income-tax dues payable by the assessee-paramour. The plaintiff claimed a declaration of her title in respect of such properties. The department's case was that the properties were held benami by the plaintiff for the benefit of the assessee-paramour. The Division Bench held that the department had failed to discharge the burden of proof, which lay on it to prove the case of benami. A reference was made to the criteria which should be satisfied while dealing with a controversy about benami. Such criteria have been laid down by the Supreme Court in Jaydayal Poddar v. Bibi Hazra, AIR 1974 SC 171.
37. In Damodaran v. Leelavathi Animal, AIR 1975 Mad 278, the controversy arose between the husband and the wife. The High Court referred to the criteria laid down by the Supreme Court in Jaydayal Poddar v. Bibi Hazra, AIR 1974 SC 171, for deciding a controversy about benami and held that, in the facts of the said case, the allegation of benami did not stand substantiated.
38. A reference was made to two Patna decisions. In Ramkinkar Banerji v. CIT  4 ITR 108, the controversy was whether a certain amount which the husband paid as royalty to his wife, who had acquired the rights of the superior landlord of a colliery, could be allowed to be deducted while computing the income of the assessee-husband. The following three aspects were emphasised on behalf of the department for holding that the wife was acting as a benamidar for the husband (p. 110):
"(a) That the right by virtue of which the payment of Rs. 15,353 was made stood in the name of S. Devi, the assessee's wife;
(b) that it was not seriously contended that she acquired this right with her stridhan nor was any evidence to that effect produced ; and
(c) that in the absence of any evidence to the contrary, it was reasonable to presume that the right in question was acquired by the assessee as head of the undivided family in the name of his wife."
39. The court held that the aforesaid aspects did not lead to the inference that the property was acquired benami by the husband in the name of the wife. The court observed (p. 110): " There is no presumption that a property standing in the name of a married Hindu lady does, in fact, belong to her husband. The ordinary presumption of law is that the apparent state of affairs is real unless the contrary is proved. The absence of evidence one way or the other did not under the law justify the Assistant Commissioner in drawing an inference that the lady was a benamidar of her husband. If the Assistant Commissioned had disbelieved the payment of the money, much would have been
said in favour of the view that it was a finding of fact but in this case the payment is not disputed. What the Assistant Commissioner has found is this, that the payment was to himself because the lady in whose name the payment has been made was a benamidar. For coming to this finding some evidence was essential, which, in my opinion, was wanting in this case."
40. In S.N. Ganguly v. CIT  24 ITR 16 (Pat), the controversy was in regard to a sum of Rs. 11,000 representing the value of high denomination notes encashed in the name of the assessee's wife. The department treated the said amount to be a secret profit of the assessee-husband. The court held that the department was not justified in doing so on the ground that there was no material to show that the said amount did not belong to the wife but belonged to the assessee-husband, and that the department had failed to discharge the burden of proof which lay upon it. It was observed (p. 23): "There must be some material, apart from the existence of the close relationship of husband and wife, to suggest that the amount of Rs. 11,000 did not really belong to the wife. "
41. A reference was made to three Calcutta cases, Promode Kumar Roy v. Madan Mohan Saha Pramanik, AIR 1923 Cal 228, Bhuban Mohini Dasi v. Kumud Bala Dasi, AIR 1924 Cal 467 and Upendra Nath Nag Chowdhury v. Bhupendra Nath Nag Chowdhury  21 CWN 280;  32 IC 267. Placing reliance on a number of Privy Council decisions, in the first case it was laid down thus (p. 230(2)): " The person who impugns its apparent character must not rely, however solely on probabilities as Lord Buckmaster observed in Irshad Ali v. Kariman  22 CWN 530, he must show something definite to establish that it is a sham transaction on the principle that the burden of proof lies upon the person, who claims contrary to the tenor of a deed and alleges that the apparent is not the real state of things....... Where, however, from the lapse of time, direct evidence of a conclusive or reliable character is not forthcoming, as to the payment of the consideration, the case must be dealt with on reasonable probabilities and legal inferences arising from proved or admitted facts."
42. In the second Calcutta case also, the approach emphasised in the said earlier case was reiterated.
43. In Upendra Nath Nag Chowdhury v. Bhupendra Nath Nag Chowdhury  21 CWN 280;  32 IC 267, 272, it was laid down:
"When, therefore, we apply the two principal tests of benami, namely, source of the purchase money (Dhurm Das v. Shama Soondri Debiah  3 MIA 229 and Gopeekrist Gosain, v. Gungapersaud Gosain  6 MIA 53) and possession of the property (Imambandi Begam v.
Kamleswari Pershad  LR 13 IA 160 ; ILR 14 Cal 109) we find that the inference may legitimately be drawn that the house was purchased by Chandra Nath for the benefit of the estate in the name of his wife, Nishadini. We must also remember that there were strong motives for a step of this description ; as Sir Arthur Wilson said in Dalip Singh v. Nawal Kunwar  LR 35 IA 104 ; ILR 30 All 258 (PC), reliance must be largely placed, not only upon the surrounding circumstances and the position of the parties and their relations to one another, but also upon the motives which could govern their actions and their subsequent conduct."
44. In Seth Ramnath Daga v. CIT  82 ITR 287 (Bom), the controversy of benami was examined in the peculiar facts of the case. A house had been purchased in the name of the second wife of the karta of the assessee-HUF. The contention of the assessee was that the consideration for the purchase had come to the second wife from the funds which were in possession of the first wife to whom the moneys had been given by the husband from time to time. After the death of the first wife these funds came into the possession of the second wife, and she utilized such funds for the purchase of the house. This explanation was not accepted and it was held that the consideration for the purchase was out of the undisclosed income of the assessee-HUF.
45. In S. Kumaraswami Reddiar v. CIT  40 ITR 590 (Ker), the controversy was regarding certain cash credits in the books of the assessee and certain deposits made in the banks. It was contended on behalf of the assessee that when his business income had been enhanced by the application of a flat rate of profit, then it was not open to the department to further increase the income of the assessee by adding such cash credits and bank deposits to his income. This contention was rejected. It was observed (p. 598): " The principle is, therefore, deducible that where the assessee gives no satisfactory explanation of a cash credit or bank deposit, it is open to the Income-tax Officer to hold that it represents an income from an undisclosed source. It is not a question of suspicion or conjecture. He can only act on the evidence which is tendered before him, and where the evidence tendered is worthless or not tendered, he would be justified in taking the evidence of the books showing the cash deposit as conclusive of the fact that some income was made and related to an undisclosed source."
46. In Hazarilal v. CIT  47 ITR 516, the Andhra Pradesh High Court had to examine the controversy in the peculiar facts of the said case. The consideration for the purchase of the house in the name of the wife of the assessee was said to have been provided by the sale of the gold ornaments by the wife. However, the evidence which was produced disclosed
the sale of bullion and not the sale of ornaments and, further, the pattis which were produced to support the case of sale were in the name of the assessee-husband and not in the name of the wife. The court observed (P-519): " As already pointed out, on the evidence on record, the Tribunal came to the conclusion that the source of consideration for the purchase money, which was admittedly paid by the assessee with the help of the sale proceeds of bullion, the pattis of which stood in his name, cannot not be traced to his wife who had failed to establish that she had the jewels which, in fact, were sold in the shape of bullion and the sale proceeds thereof constituted the consideration of the purchase of the property. "
47. Section 82 of the Indian Trusts Act lays down as under :
" Where property is transferred to one person for a consideration paid or provided by another person, and it appears that such other person did not intend to pay or provide such consideration for the benefit of the transferee, the transferee must hold the property for the benefit of the person paying or providing the consideration. "
48. This provision enshrines the fundamental proposition, which is applicable to a controversy regarding benami, that the most important aspect to determine whether a transaction is a benami one or not, is the source of the consideration for the transaction. It has seemed to us that while examining the controversy involved in the instant case, we should not take into account the cases which related to the addition of a cash credit appearing in the books of an assessee, whether in the name of the assessee or in the name of a third party. It is well established that if the assessee's explanation in respect of such cash credits is rejected, then they may be treated as the income of the assessee from undisclosed sources. A reference may also be made to Section 68 of the I.T. Act, 1961, which lays down as under : " Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year."
49. It is not necessary to discuss as to how and in what manner the said provision brought about a change in the law relating to the cash credits under the repealed Indian I.T. Act, 1922. The following propositions seem to be well established:
1. The burden of proof regarding benami is upon the one who alleges benami.
2. To prove benami the most important point is to examine the source of consideration and along with that there are certain other criteria
which should be taken into account. Such criteria have been laid down in Jaydayal Poddar v. Bibi Hazra, AIR 1974 SC 171.
3. A finding regarding benami is a finding of fact.
4. A finding of fact cannot be questioned in the reference proceedings unless it is without any evidence in support of it or is perverse in the sense that 'no person acting judicially and properly instructed as to the relevant law' would reasonably come to such a finding.
5. The mere rejection of an explanation would not entitle the department to claim that the consideration for the purchase of the property in the name of a non-assessee was provided by the assessee.
6. Apart from the relationship between the parties, there must be some material or evidence to support the case of the benami nature of a transaction.
7. When a finding is based on material, partly relevant and partly irrelevant, then such a finding is vitiated in law.
50. In the light of the aforesaid propositions, the controversy may be examined in the present case. It should be emphasised that the Tribunal itself observed that no evidence whatsoever was led by the department in support of its claim. However, the Tribunal thought that there was circumstantial evidence in support of the said claim. The Tribunal has relied upon the following aspects to hold that the three houses in dispute were purchased benami by the assessee :
1. Babu Ram, the father-in-law of the assessee, could not be believed when he said that he had a sum of Rs. 1,00,000 in cash with him when he discontinued his business in 1946.
2. Since 1946, Babu Ram had no source of income and at the relevant period at least he along with his wife was living with his son-in-law and both of them were dependent on their son-in-law.
3. The assessee's wife is the only issue of her parents.
4. It is also significant to note that the assessee is not all that honest as he shows himself to be because he has purchased one house property in the name of his wife benami.
5. The AAC in deciding the controversy in favour of the assessee was led away by surmises and made incorrect statements of fact.
51. So far as the aforementioned first aspect is concerned, it should be seen that the mere fact that the version of Babu Ram, the father-in-law of the assessee, has not been accepted by the Tribunal will not lead to the inference that the properties in question were purchased benami by the assessee himself. This is clear from the following observation made by the Supreme Court in CIT v. Daulat Ram Rawatmull  87 ITR 349 at 359 : " A person can still be held to be the owner of a sum of money even though the explanation furnished by him regarding the source of that
money is found to be not correct. From the simple fact that the explanation regarding the source of money furnished by A, in whose name the money is lying in deposit, has been found to be false, it would be a remote and far-fetched conclusion to hold that the money belongs to B. There would be in such a case no direct nexus between the facts found and the conclusion drawn therefrom."
52. So far as the aforementioned second aspect is concerned, it should be seen that again there is no direct nexus between the conclusion drawn by the Tribunal and the facts found. Further, it has to be emphasised that the Tribunal's finding in this regard is to a great extent without any evidence in support thereof and is based on a misreading of evidence. It should be seen that the mother-in-law of the assessee had stated in her written statement that she had in her possession jewellery worth Rs. 15,000 and that she also had cash to the tune of Rs. 5,000 or so. The Tribunal has nowhere stated that the said version of the mother-in-law was not acceptable or was being rejected. Unless the said version of the assessee's mother-in-law was rejected, the Tribunal was not entitled to a finding that both the father-in-law and the mother-in-law were dependent on their son-in-law. It should be seen that no one had stated that the father-in-law and the mother-in-law dependent on the assessee. There is only one sentence in the statement of the assessee where he stated thus " we all live in this house ". Apart from this sentence, there is nothing either in the statement of Babu Ram or in the statement of the assessee or in the written statement of the mother-in-law, which could have any bearing on this aspect of the matter. The statement of the assessee was recorded on July 18, 1966. The three properties in dispute were purchased in 1962 and 1963. The assessee in his statement merely stated that they were all living in the particular house at the time when he made the statement, i. e., on July 18, 1966. He was not asked as to what was the position in 1962 and 1963. In our opinion, from the said solitary sentence, it was not permissible for the Tribunal to conclude that: " ... ...at the relevant period at least he along with his wife was living
with his son-in-law. Both of them were dependent on their son-in-law."
53. Further, it should be taken into consideration that normally among the Hindus the parents of a married daughter are most reluctant to be dependent upon their daughter and son-in-law. This fact is so well known that a judicial notice of it can be taken. Even if the assessee and his in-laws were living in the same house, it will not be correct to infer that the in-laws were necessarily dependent upon their son-in-law. If the department wanted to rely on this aspect then the witnesses, who were examined, should have been put more explicit questions in this regard. No such question was put to Babu Ram and, so far as the assessee was concerned, he
only said as stated above, that all, i. e., the in-laws and the assessee, lived in one house. He did not say anything more. No question was put to him regarding the alleged dependence of the in-laws on him.
54. So far as the aforementioned third aspect is concerned, we have not appreciated how the fact that the assessee's wife is the only issue of her parents, leads to the conclusion that the purchases of the three properties in dispute were financed not by her parents but by her husband. The said circumstance is a natural one and it was equally possible that the purchases might have been effected by the parents themselves as well as by her husband. Such a circumstance could not be relied upon by the Tribunal for coming to the conclusion that the properties in question could not have been purchased by the parents but must have been purchased by the husband.
55. So far as the aforementioned fourth aspect is concerned, it clearly shows that the Tribunal allowed itself to suffer from a misconception in law. It is well known that benami transactions in India have never been considered to be dishonest as seems to be the view of the Tribunal. A reference has been made hereinbefore to Section 82 of the Indian Trusts Act and it is, therefore, clear that even the statutory law of the country recognizes benami transactions. To hold that the assessee was not an honest one because he admitted that he had purchased one house in the name of his wife benami shows a legal misconception in the minds of the learned Members of the Tribunal.
56. So far as the aforementioned fifth aspect is concerned, again, we have felt that the Tribunal has misconceived and misinterpreted the order of the AAC allowing the assessee's appeal. The Tribunal has found fault with the following observation occurring in the order of the AAC : " The appellant's father-in-law declared himself to have been conducting business in the earlier year and stated that he had considerable savings with the result that he was able to invest his money in the firm and purchase of these properties from the period 1963 to 1965......If the appellant wanted to purchase these properties in his own name, he could have easily done on the basis of the savings available with him on the basis of earlier assessments and income estimated."
57. The Tribunal thought that the said observations were based on a misreading of the evidence. In our opinion, this criticism is not justified. When the AAC observed that Babu Ram had stated that he had been conducting business in the earlier years, what was meant was that the said witness had stated that he had been carrying on excise business from 1932 to 1946. It is true that the said witness had not stated anything about any investment in the firm, but he had said that he had given a sum of Rs. 15,000 to his son-in-law, namely, the assessee in 1946, and probably
this statement was in the mind of the AAC when he made the aforesaid observation about the investment in the firm. However, this is a rather minor aspect of the matter on which nothing hinges. So far as the other part of the statement is concerned, in our view, the Tribunal was not right in observing that there was no material on the record to justify the aforesaid observation of the AAC. For the assessment year 1964-65, the assessee's income was originally computed at Rs. 25,086 and in the revised assessment under Section 147 it was enhanced to Rs. 26,590. For the assessment year 1963-64, his income was originally computed at Rs. 9,250 and, subsequently, it was revised under Section 147 and computed at Rs. 10,750. The AAC had in mind these figures when he observed that if the assessee wanted to purchase these properties in his own name, he could have easily purchased them from his own savings which were available with him on the basis of the earlier assessments. The Tribunal criticised the said observations of the AAC in these words: " In making these observations the Appellate Assistant Commissioner has presumed that in the earlier years the assessee had earned sufficient income and had been able to save sufficient amount from that income. There is no material on record to justify this supposition."
58. In our view, this criticism is unmerited. Moreover, what is more significant is the point that the Tribunal seems to be indulging in a contradiction. Is the Tribunal suggesting that the assessee did not have sufficient funds from his past savings to purchase the three properties in dispute ? If that be so, then how could the Tribunal hold that the said properties were purchased by the assessee benami. There is an obvious inconsistency in the conclusion drawn by the Tribunal and the aforesaid criticism by the Tribunal of the finding recorded by the AAC.
59. Therefore, we have come to the conclusion that the aforesaid aspects emphasised by the Tribunal neither singly nor cumulatively justify the conclusion which the Tribunal drew that the funds for the purchase of the three properties in dispute proceeded from the assessee. Further, it must also be observed that the Tribunal did not record any finding regarding the availability of funds with the wife of the assessee. It is true that the assessee admitted to have purchased one house in the name of his wife, but that admission cannot be construed to be an admission that the wife did not have her independent funds. Inasmuch as the burden of proof lay upon the department, it was necessary for it to have led evidence to show that the wife of the assessee was not in possession of any independent funds of her own from which the houses in question could have been purchased. No such effort was made by the department and there is no finding that the assessee's wife did not have any funds of her own. In such a situation, it could not be inferred that the only funds available for financ-
ing the purchase of throe properties in dispute, were in the hands of the assessee alone.
60. Lastly, we would like to emphasise that one of the important criteria for deciding the controversy about benami is the motive for the benami purchase. Sir Arthur Wilson placed great reliance on this aspect of the matter while delivering the judgment of the Board in [(Dalip Singh v. Chaudhrain Nawal Kunwar  LR 35 IA 104 ; ILR 30 All 258 (PC)]. Sarkaria J. also emphasised the great significance of this aspect of the matter in Jaydayal Poddar v. Bibi Hazra, AIR 1974 SC 171. In the instant case, no motive has been suggested why the assessee desired to purchase the three properties in dispute in the benami name of his father-in-law, in the names of his mother-in-law and wife and in the joint names of his father-in-law and mother-in-law and his wife. Why the three properties in dispute were purchased in these different names, has not been made clear by the Tribunal. One can think of many possibilities and explanations but the important point is that the Tribunal has not gone into the said aspect of the matter at all and has said nothing in respect of the same.
61. In our view, therefore, there is no material or evidence on the record in support of the finding of benami recorded by the Tribunal and "no person acting judicially and properly instructed as to relevant law" would have come to the said conclusion. We have also felt that the verdict of the Tribunal is based on irrelevant considerations and on a misreading and misinterpetation of the. evidence on the record.
62. Accordingly, we answer the question referred to us in the aforesaid income-tax references in the negative, against the department and in favour of the assessee. Similarly, we answer the question referred to us in the aforesaid wealth-tax reference in the negative against the department and in favour of the assessee. The assessee shall be entitled to his costs, which we assess at Rs. 125 for each reference.