V.A Mohta, J.:— This is an application by the assessee under section 256(2) of the Income-tax Act, 1961 (the “Income-tax Act”), for a direction to the Tribunal to state the case and to refer the following questions, said to be of law, to this court for opinion:

“(1) Whether, on the facts and in the circumstances of the case, there was any material before the Tribunal to hold that the assessee carried on business in smuggling?

(2) Whether, on the facts and in the circumstances of the case, the notice issued by the Income-tax Officer under section 148 of the Act was valid in law?

(3) Whether, on the facts and in the circumstances of the case, when the same relevant income was assessed in the hands of the two other independent assessees under the self-contained code and provisions of section 132(5) of the Income-tax Act, 1961, and, in spite of the applications of the said other two independent assessees under section 132(11) of the Act pending before the Central Board of Direct Taxes, the Income-tax Officer was justified in separately initiating and completing assessments under section 143(3) read with section 147 of the Income-tax Act, 1961?

(4) Whether, on the facts and in the circumstances of the assessee's case the Income-tax Officer, Central Circle-III, Nagpur, had jurisdic tion over the assessee's case?

(5) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee made investments in house property at Thana, Nagpur and in banks, when all the said investments were in the names of others separately assessed adult assessees in record?

(7) Whether, on the facts and in the circumstances of the assessee's case the Tribunal's decision in sustaining the assessment made by the Income-tax Officer under section 143(3) read with section 147 which was based on investigation and enquiries made and evidence recorded at the back of the assessee is unreasonable and perverse?

(8) Whether, on the facts and in the circumstances of the assessee's case, the order passed by the Tribunal resulting in income higher than the income assessed by the Income-tax Officer without any notice of enhancement issued at any stage is legal and valid in law, when the Tribunal has no power of enhancement under the Income-tax Act, 1961?

(9) Whether, on the facts and in the circumstances of the assessee's case, the Tribunal was justified in law in sustaining the order of the Appellate Assistant Commissioner, whereby the income from an entirely new and different source of alleged smuggling activities was arbitrarily added?

(10) Whether, on the facts and in the circumstances of the assessee's case, the Tribunal was bound to defer its decision, pending disposal by the Central Board of Direct Taxes of applications under section 132(11) of the Inccme-tax Act, 1961, made by Smt. Koushalya Lalvaney and Shri Ramesh Lalvaney who, all along, have declared themselves to be the owners of the disputed income and assets and also have been assessed as such?

(11) Whether, on the facts and in the circumstances of the assessee's case, the Tribunal was justified in law in levying the tax on the assessee relating to the disputed income, which had already been subjected to the levy of tax under section 132(5) in the respective hands of two other assessees, namely, Smt. Koushalya and Shri Ramesh?

(12) Whether, on the facts and in the circumstances of the assessee's case, article 265 of the Constitution which enjoins that ‘no tax shall be levied or collected except by authority of law’ is violated by the orders of the Tribunal?

(13) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in declining to send the assessee's case back to the lower authorities in spite of voicing the said intent in open court?

(14) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in refusing the assessee an opportunity of a fresh hearing as applied for in Miscellaneous Application No. 15/(Nag) of 1977–78?

(15) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in concluding that the Ambassador Motor Car No. BMH 3030, valued at Rs. 14,000, registered at Bombay in the name of Miss Nanki Lalvaney, belongs to the assessee?”

2. Shri Thakar, learned counsel for the assessee, has filed a petition restricting the application to question No. 2 and the reframed question No. 5 and thus we restrict this application to the following two questions:

“(1) Whether, on the facts and in the circumstances of the case, the notice issued by the Income-tax Officer under section 148 of the Income-tax Act, 1961, was valid in law?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that Smt. Koushalya, the wife, and Ramesh, the son, were the benamidars of the assessee and in including the investments made by them and income earned thereon in the total income of the assessee?”

3. The material assessment years are 1967–68 to 1973–74. The assessee, Shri Lalvaney, was serving as a conductor-guard in the Central Railway. The Commissioner of Income-Tax authorised the search of the premises occupied by the family members of the assessee residing at Jaikalpana Building, Ramdaspeth, Nagpur. The Central Excise Department had carried out a search at the assessee's residence at Bhusawal and it seized a number of smuggled goods. The assessee was detained under the MISA and later on under the COFEPOSA Act. The family of the assessee consists of himself, his wife, Smt. Koushalya, his son, Shri Ramesh, and his two minor daughters. The assessee also has a sister by name Smt. Nanki, who is serving as a clerk and stays at Bombay. According to the Income-tax Officer, the assessee had made certain investments in movable and immovable assets in the names of his family members during different periods from 1967–68 up to October, 1975. The Income-tax Officer was of the view that the assessee was the owner of (i) flats purchased in the name of his wife at Bombay and Nagpur, (ii) a flat purchased in his son's name at Thane, (iii) motor vehicles and an ambassador car in the name of his sister, and (iv) amounts advanced in the name of his wife and son. Considering the salary of the assessee and the petty amount of interest that he received and the occupation his family members were doing, the Income-tax Officer was of the view that the assets standing, in the names of his family members were, in fact, the assessee's own property and the assets were disproportionate to the known sources of income of the assessee. The assessments of the wife and son for the years 1967–68 to 1973–74 were reopened. Notice under section 148 was issued to the assessee on February 14, 1975. Notice under section 142(1) was also issued, but the assessee failed to file the return. On March 20, 1976, the assessee filed a return of income along with a written statement showing income from salary and interest, the total of which was shown at Rs. 6,281. Statements of the assessee and the members of his family were recorded on solemn affirmation. According to the assessee, he had income only from salary and interest. His wife was doing tailoring business and son was doing radio repairing business and they had their own independent source of income out of which they had purchased the properties standing in their respective names. The assessee further stated that he and his family members had substantial “778” lottery winnings, that his wife had taken a loan of Rs. 20,000 from Shri Gowekar and that the son had taken a loan of Rs. 15,000 from Messrs. Alfa Engineering Company, Bombay. In the enquiry, it was also found that the assessee was doing the business of selling imported wrist watches, etc., in Amravati. The Income-tax Officer was of the view that the wife could not earn income from tailoring business on the basis of several circumstances like, (i) absence of account books slips, measurement books, sewing machines, (ii) her contradictory and unnatural statements about sale and purchase of sewing machines. Considering the fact that the son was aged only 19 years and in the absence of a licence or a qualification in radio repairing, the explanation about the son's income was also not accepted. Huge earnings out of 778 lottery winnings was considered to be unnatural. The story of receiving loans from Shri Gowekar and M/s. Alfa Engineering Company was not accepted since, after making enquiry, it was found that Gowekar was merely a clerk, living in a dilapidated house and there were contradictions about alleged repayments to both. The Income-tax Officer further found that the assessee and his family members had a total bank balance of about Rs. 2 lakhs in 1973, and in this background, the loans appeared to be unnatural. Miss Nanki had as many as six bank accounts and lockers in the Punjab National Bank, though she was serving merely as a clerk. The Income-tax Officer considered the fact that the Central Excise Department had filed a number of cases against the assessee and that the assessee was detained under the MISA and thereafter under the COFEPOSA Act. The Income-tax Officer considered the fact that several imported articles were seized at the premises of the assessee and his family members and that there were chits written by him which showed his involvement in the dealings of imported wrist watches, straps, etc. The Income-tax Officer made the following additions as income from other sources:

Rs. 1967–68 12,670 1968–69 30,440 1969–70 9,970 1970–71 41,520 1971–72 42,519 1972–73 72,700 1973–74 85,830

Rs. 1967–6812, 6701968–6930, 4401969–709, 9701970–7141, 5201971–7242, 5191972–7372, 7001973–7485,830 The Appellate Assistant Commissioner upheld the action under section 147(a) but deleted the additions on the ground that the wife and son could not be treated as benamidars of the assessee. The Appellate Assistant Commissioner, however, estimated the income from smuggling activities and added it to the income of the assessee. Since the Appellate Assistant Commissioner had deleted the additions made by the Income-tax Officer and the estimated income from the smuggling activities which did not result in enhancement of the income of the assessee, the Appellate Assistant Commissioner did not issue a notice of enhancement to the assessee.

4. The Department as well as the assessee approached the Tribunal which upheld the orders of the Income-tax Officer in its detailed and exhaustive order. The Tribunal came to the conclusion that the order was based on facts and circumstances and no question of law arose out of the said order.

5. Having heard Shri Thakar, learned counsel for the assessee, and Shri Charidurkar, learned counsel for the Department, and having perused the record with their assistance, it seems to us that no case for a reference exists.

6. The thrust of the submission of Shri Thakar has been that the income of the wife and the son of the assessee may be from undisclosed sources, but the Department has failed to discharge the burden of establishing that it was in reality the assessee's income.

7. The crux of the whole controversy is whether the benami nature of the property standing in the names of assessee's wife and son is proved or not. Now, this is essentially a question of fact and a matter of inference to be drawn on the basis of the totality of circumstances. The burden of proving the benami nature of a transaction is no doubt upon the person alleging it, but, on the basis of certain circumstances, the onus can shift from time to time. All these aspects [of the matter have been duly considered by the Tribunal and it cannot be said that, in arriving at the conclusion, the basic relevant principles of law have either been missed or misapplied.

8. A leading case on the point of determination of the benami nature of a transaction is Jaydayal Poddar v. Mst. Bibi Hazra, (1974) 1 SCC 3 : AIR 1974 SC 171, wherein the Supreme Court observed (at page 172) (paragraph 6):

“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 are 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.”

9. Direct evidence about the origin of property or source of money may not always be available. In such a situation, indirect evidence can be entertained and it can be shown from the circumstances that, as between husband and wife or father and son or very close relations, the property in fact did belong to the one in whose name it stands. In the case of husband and wife, even certain presumptions have been drawn as will be seen from several cases (See Mt. Bilas Kunwar v. Desraj Ranjit Singh, AIR 1915 PC 96 and Sura Lahshmiah Chetty v. Kothandarama Pillai, [1924-25] 29 CWN 1013, AIR 1925 PC 181).

10. It is true that such a finding about benami nature cannot be recorded without granting a hearing to the concerned person. But, there is no strait-jacket formula about the extent and nature of the hearing. All depends upon the facts of each case. In this case, explanations are sought and statements are recorded. In this context, we reproduce what the Tribunal has observed (paragraph 32):

“Shri Dewani had stated that certain evidence was taken behind the back of the assessee and that the assessee was not given an opportunity. When a question was put to him by the Bench whether the matter should be restored to the authorities below, Shri Dewani replied in the negative. Accordingly, we see no justification to send back the matter to the authorities below.”

11. The grievance about reopening under section 147(a) without there, being any material is not correct. Whether the assessee had or had not failed to disclose fully and truly all material facts necessary for his assessment is again a question of fact, as held by the Supreme Court in Commissioner Of Income Tax, Bombay North, Ahmedabad v. Lakhiramdas, [1962] 44 ITR 726.

12. All that remain for consideration are three decisions upon which strong reliance is placed on behalf of the assessee. The cases of Cit (Central), Calcutta v. Daulat Ram Rawatmull., [1973] 87 ITR 349 (SC) and Lalchand Bhagat Ambica Ram v. CIT, [1959] 37 ITR 288 (SC) lay down that there should be a direct nexus between the conclusion and the primary fact upon which the conclusion is based and that the use of extraneous and irrelevant material in arriving at that conclusion would vitiate the conclusion of fact because it is difficult to predicate to what extent the extraneous and irrelevant material has influenced the authority in arriving at the said conclusion.

13. We are unable to see how the ratio of those decisions will have any application in the instant case. The Tribunal's conclusion is not based on any irrelevant material or on surmises or conjecture.

14. In the case of Shyama Charan Saxena v. CIT, [1984] 145 ITR 689 (All), the question was whether the house standing in the name of a minor grandson of the assessee was benami or not. The explanation given that the money for purchase was given by the wife of the assessee who, had agricultural property was rejected for no reason. The facts relied upon by the Income-tax Department did not disprove the explanation offered about the nature of the transaction. It was held that the burden to prove the benami nature of the transaction was not discharged. The ratio of this decision also Would not apply to this case. The factual background is not similar.

15. For all these reasons, we reject this application and discharge the rule. No order as to costs.