TMI Blog1974 (1) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ember 3, 1958, was a prominent member of the Jewish community in Cochin. Her husband, Mr. S. Koder, is a commanding figure of that community. By documents inter vivos Mr. David had created three trusts : (1) The Mercantile Bank Trust ; (2) The Bank of India Trust ; and (3) The Eastern Bank Trust. The settlor, Mr. E. D. David, it is said, was entitled to the income from the properties during his lifetime, and thereafter the same was to be taken by the appellant during her life, at least in respect of the first two trusts. Neither the settlement deeds or documents constituting the trust nor copies thereof have been exhibited. By his last will and testament dated April 12, 1943, Mr. David constituted a fourth trust, the State Bank of India Trust, in regard to his residuary properties. In respect of this last trust, the State Bank of India Trust was constituted both the executor as well as the trustee. Exhibit P-11 is a copy of the will. The appellant, as noticed, is a beneficiary under the Mercantile Bank Trust the Bank of India Trust, and the State Bank Trust. It is said by the respondents that the State Bank functioned as executor of the residuary estate from September 3, 1958, till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siduary assets. Exhibit R-1 proceeded : " As regards the assets held by the above-mentioned two trustees, viz., Mercantile Bank (Agency) Pvt. Ltd. and Bank of India Ltd., as Mrs. Koder was the life tenant under these two trusts, a portion of the value of the trust assets on the basis of Jellicoe's formula should be included in the lady's wealth-tax return. The balance of wealth should be taxed in the hands of the two trustees. However, as stated above, the total of the value of the residuary assets as well as of the trust assets have been assessed to wealth-tax in the hands of the estate of Mr. E. D. David. We also advised Mrs. Koder about this matter and she differed from us. We requested the Wealth-tax Officer to revise the assessment but the Wealth-tax Officer advised us to prefer an appeal to you." The counter-affidavit has stated that on this petition the Commissioner set aside the assessment orders for 1963-64 to 1967-68 and directed the Wealth-tax Officer to make fresh assessments. It was thereafter that exhibits P-5 and P-6 notices were issued. The appellant moved the Commissioner of Income-tax and received exhibit, P-8 reply refusing to interfere at this stage wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of such assets. (3) Where the guardian or trustee of any person being a minor, lunatic or idiot holds any assets on behalf or for the benefit of such beneficiary, the tax under this Act shall be levied upon and recoverable from such guardian or trustee, as the case may be, in the like manner and to the same extent as it would be leviable upon and recoverable from any such beneficiary if of full age, of sound mind and in direct ownership of such assets. (4) Notwithstanding anything contained in this section, where the shares of the persons on whose behalf or for whose benefit any such assets are held are indeterminate or unknown, the wealth-tax shall be levied upon and recovered from the court of wards, administrator-general, official trustee, receiver, manager or other person aforesaid as if the persons on whose behalf or for whose benefit the assets are held were an individual who is a citizen of India and resident in India for the purposes of this Act, and-- (a) at the rates specified in Part I of the Schedule ; or (b) at the rate of one and one-half per cent ; whichever course would be more beneficial to the revenue : Provided that in a case where-- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Wealth-tax v. Kumari Manna G. Sarabhai , where Chief Justice Bhagwati of the Gujarat High Court, speaking for the court, observed : " The revenue has thus two modes of assessment available for assessing the interest of a beneficiary in the trust properties, where there is either a single beneficiary or there are more beneficiaries than one but their shares in the trust properties are determinate and known. The revenue may either asses the interest of the beneficiary in the trust properties in the hands of the trustees in a representative capacity under sub-section (1) or assess it directly in the hands of the beneficiary by including it in the net wealth of the beneficiary. These two modes of assessment are clearly alternative to each other. The revenue can adopt either the one or the other but not both, because whether the assessment is made on the trustees or on the beneficiary, it is the same asset which is assessed to wealth-tax, namely, the interest of the beneficiary in the trust properties and it is elementary that the revenue cannot seek to assess the same asset twice. Sub-section (5) also emphasizes that where the trustees are assessed under sub-section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvited our attention to the Privy Council decision in Commissioner of Income-tax v. Mahaliram Ramji Das to the effect that the Income-tax Officer can initiate the reassessment proceedings under section 34 even after an order of assessment had been carried in appeal, and had become final. The decision was followed by the Allahabad High Court in B. P. Halder Sons, In re Attention was called to the decision in S. Gyani Ram and Co. v. Income-tax officer, in support of the view that the mere fact that a particular income had been assessed in the hands of a particular individual as his income cannot prevent or preclude the Income-tax Officer on proper materials from proceeding to reassess under section 34 of the 1922 Act and treating the income as income of another. Reliance was also placed on the Supreme Court decision in Manji Dana v. Commissioner of Income-tax that there was nothing to preclude the Income-tax Officer in a subsequent year from assessing as income of the " individual " a head of income assessed as that of a " Hindu undivided family " in the previous year. The relevant observations of the court are as follows : " Under section 25A(1) the Income-tax Officer may, on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready been assessed for the year 1955-56 in the hands of the members could not be assessed again as the income of the family ; and (2) that as the family had ceased to exist and the partition was recognized no notice could be issued to the respondent as karta of the family. The Income-tax Officer, in the counter-affidavit, averred that despite the compromise decree the members of the family were living together, had a joint mess, and that the business was run by the respondent and, therefore, the compromise was only a make-believe one and the family continued to be a Hindu undivided family. The High Court held that the notice was invalid as the assessment of income in the hands of the members of the family for the same year had not been set aside, and without doing so, the same income could not be taxed again in the hands of the family by proceeding under section 34. On appeal, while remanding the matter back, it was pointed out by the Supreme Court that a Hindu undivided family was a distinct assessable entity and if its income had escaped assessment for any year, notice under section 34 could issue. The court observed : " It was then forcibly brought to our notice that the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o avoid double taxation of the same income. The only question that arises at the time the income-tax Officer proposes to take proceedings under section 34 of the Act is, whether the income has escaped assessment or has been under-assessed in the hands of the person against whom the said proceedings are initiated. At that stage, the question of resolving the conflict between the proposed assessment and an earlier assessment made on a wrong person does not arise." The principle of these decisions cited by the revenue is helpful to repel the appellant's contention, although they may not be directly in point. In the light of these, we are unable to hold that exhibits P-3 and P-4 orders would bar the Income-tax Officer from proceeding to reassess the net wealth under the provisions of the Wealth-tax Act. Nor are we impressed by the argument that if exhibits P-3 and P-4 orders were really wrong on facts or in law the appropriate remedy should have been rectification under section 35 of the Act and not reassessment under section 17. As noticed by the Allahabad High Court in Hira Lal Sutwala v. Commissioner of Income-tax and in Chowdhary Mithoo Missar v. Commissioner of Income-tax , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me can only be under the provisions of sub-clause (b), and not sub-clause (a) of section 17 of the Act, and that, in that event, the proceedings, or at least the best part of the same, would be beyond time. There is ample authority in support of the view that the question whether the reassessment is barred by time is to be left in the first instance to the taxing authorities. This court under article 226 is not to enter into any detailed evaluation of the facts and the law. In Lalji Haridas v. R. H. Bhatt the Supreme Court observed : " Mr. Pathak for the appellant attempted to argue that the notice issued against the appellant is, on the face of it, invalid, because it is barred by time. We did not allow Mr. Pathak to develop this point because we took the view that a plea of this kind must ordinarily be taken before respondent No. 1 himself. The jurisdiction conferred on the High Court under article 226 is not intended to supersede the jurisdiction and authority of the Income-tax Officers to deal with the merits of all the contentions that the assessees may raise before them, and so it would be entirely inappropriate to permit an assessee to move the High Court under article 22 ..... 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