MOHAN SINGH OBEROI vs. COMMISSIONER OF INCOME-TAX, WEST BENGAL

CIVIL APPEAL No. 2492/1969Supreme Court[1973] 2 S.C.R. 105729 November 1972Bench: 3 JudgesAuthor: K.S. HEGDE, P. JAGANMOHAN REDDY, HANS RAJ KHANNA7 pages
AI SummaryDismissed

What were the facts?

For assessment years 1953-54 and 1954-55, the assessee, Mohan Singh Oberoi, reported dividend income from shares held in his name. However, the Income-tax Officer (ITO) included dividend income from shares held by the assessee's wife and two sons in the assessee's total income, asserting these shares were beneficially owned by the assessee and held benami. The Appellate Assistant Commissioner (AAC) confirmed the ITO's order, referencing prior assessments. The Income Tax Appellate Tribunal (ITAT) ruled in favour of the assessee, holding that without evidence of the shares remaining the assessee's property, the dividend income could not be included in his total income, as the wife and sons were the registered holders. The High Court, on reference, ruled against the assessee.

What did the Supreme Court hold?

The Supreme Court held against the assessee and in favour of the revenue. The Court found that the ITO's order indicated an admission by the assessee in the past that the shares held by his wife and sons belonged to him and were his investments. The Tribunal did not dispute the factual correctness of this observation or the admission. There was ample material to infer that the assessee was the real owner and the shares were held benami. The Court noted that the Tribunal failed to deal with the question of whether the purchase was benami. Once it was found that the assessee was the real owner, it would be presumed that ownership remained vested in him unless he proved a subsequent event divesting him of ownership. Therefore, the dividend income should be assessed as the assessee's income, even though the wife and sons were registered holders. The Tribunal's exclusion of the dividend income on the ground of registered ownership was not legally tenable, relying on Kishanchand Lunidarinji Bajaj v. Commissioner of Income Tax. The Court dismissed the appeals.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in excluding from the assessable income of the assessee for the assessment years 1953-54 and 1954-55 the sums of Rs. 56,586 and Rs. 39,542, which were the amounts of dividend received by the assessee's wife and two sons from shares acquired out of the profits of the assessee? (Question of law and fact, turning on the beneficial ownership of shares and the inclusion of dividend income). Assessee's contentions: - The dividend income from shares held by his wife and sons should not be included in his income as they were the registered holders. - The Tribunal's finding that the shares remained in substance the property of the assessee was not supported by evidence. Revenue's contentions: - The shares standing in the names of the assessee's wife and sons belonged to the assessee and were his own investments, admitted by the assessee in the past. - The assessee was the real owner of the shares, and they were held benami. - The dividend income should be assessed in the hands of the assessee as the real owner.

Which sections of the Income-tax Act were involved?

Section 66(1),Section 18(5),Section 16(2)

AI-generated summary — verify with the full judgment below

A 8 c D E F G II 1057 MOHAN SINGH OBEROI v. COMMISSIONER OF INCOME-TAX, WEST BENGAL November 29, 1972 [K. S. HEGDE, P. JAGANMOHAN REDDY AND H. R. KHANNA• JJ.J Income-tax-Shares standing in tire names of wife and son:r of assuste-Dividend incorru from sl1t1res-When to be includtd 111 total income of asse111e--Burdtn of proof.

For the uaeument yem 1953·54 and 1954·55 the appellant showed tbe aross dividend derived by him from shares held by hlm, u hla in· ·come. The Income-tax Officer however included in the asmsee's Income the aross dividend of certain shares held by the asmsee's wi'le and 1001. The Appellate Assistant Commi11ioner confirmed the order. The Appel· late Tribunal held In favour of the asse11ee on the ground that thouah the shares might have been acquired out ol the secreted profits ol the appellant, In the absence of any evidence that the sham remained in substance the property of the assessee, the dividend income could not be included in his total income, and that it was only the wife and the sons of the assessee, who were registered holders of the shares, that could . be assessed for the dividend income from those shares.

The High Court,

The order continues below.

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