TMI Blog1992 (8) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... as the trustees. At about the same time the settlor created two other trusts in the names of M/s Vaisid Foundation and M/s L.P. Rastogi Memorial Trust. In addition four other private family trusts were created on the same date31st Jan., 1986in the names of Pradip Family Welfare Trust, Sidharath Family Welfare Trust Vaishali Family Welfare Trust and Shefali Family Welfare Trust. The trustees of all these trusts are the settlor's sister and her husband Shri D.C. Rastogi as in the case of the assessee trust. It appears that the assessments of these four private family welfare trusts for the asst. yrs. 1986-87 and 1987-88 were completed holding the same to be bogus trusts. The conclusion that these private family trusts were bogus was reached on the examination of Shri R.N. Rastogi the settlor wherein he was not able to remember the name of any family trust or the amount settled on the trust or even the beneficiaries. He did not even remember that he was a trustee of any of the trusts. The Assessing Officer spent considerable time and space of the assessment order in describing how the donations received by those four private family trusts were treated as not genuine donations and how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by way of donations were not applied for any charitable purpose. He also found that the accounts of the assessee trust were not audited as required by s. 12A of the IT Act, and therefore, even if the trust could be held to be a genuine trust, the provisions of ss. 11 and 12 of the IT Act could not be applied to the extent the exemption of its income from the levy of tax. He held that the income of the assessee trust was assessable in the hands of Shri D.C. Rastogi but made the assessment in the hands of the assessee also on a protective basis without giving exemption to the income. The entire assessment order running into 9 pages was spent to discuss the facts of the other trusts, how they were held to be bogus and the conclusions reached therein were imported into the assessee's case to hold that this trust also likewise was a bogus trust. Likewise he imported the conclusion reached therein that the donations were bogus to hold that the donors also were bogus. But he held that the income of the assessee trust was assessable on protective basis in the hands of Shri D.C. Rastogi for which the reasons given were not in any manner related to the facts of the assessee trust but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition and were demonstratively carried away by the findings given elsewhere to come to the above conclusions, which are totally irrelevant unless they are shown to exist in the case of the assessee also, which exercise was not attempted at all. When the donors have admitted that they donated the funds by way of donations and the amounts were received by account payee cheques, so far as the trustees are concerned, it was immaterial for them as to wherefrom the donor received the money; whether the donated money was tainted in the hands of the donor is not a relevant consideration in so far as the trust is concerned to say that the donation is a valid donation or a bogus donation. A donation can be said to be a bogus when no money was in fact received. But that is not the case here because the money is received by the assessee by way of account payee cheques. Had there been a misuse of the trust funds, it would only amount to a breach of trust and that would not impinge upon the validity of the trust. What is to be seen in a case of this nature is whether the trust is validly created and whether all the legal formalities are complied with. Once a finding to that effect is given the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deed executed and was registered as a public charitable trust. A valid public trust once created is irrevocable by any subsequent act of the author of the trust. The public trust can be created either in writing or oral also. The trust deed clearly pointed out that the trust was an irrevocable trust. If there is any deviation either by the founder of the trust or the trustees from the declared purpose of the trust, that would amount only to a breach of trust and would not detract from the validity or the declaration of the trust and hence the subsequent conduct either of the founder or of the trustees in dealing with the funds of the trust after its creation would not put an end to the trust itself. A trust thus created becomes irrevocable and nothing would nullify it thereafter. This is the law as declared by the Calcutta High Court in the case of Manindra Nath Mukherjee vs. ACED (1982) 30 CTR (Cal) 21 : (1983) 140 ITR 476 (Cal). When the original deed of trust was valid, the Calcutta High Court held in this case that supplementary deeds executed granting other benefits to the settlor and his sons would not be effective. Therefore, in this case since the Department had not found t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount to a breach of trust and, therefore, even if the donations are held to be non-genuine, spurious or fictitious, that would not make the trust which is validly created and irrevocable, a non-genuine trust. The view taken by the authorities below is therefore, erroneous. We, therefore, hold that the trust is validly created. As we have pointed out the ITO was carried away by what happened elsewhere, which has no relevance to the facts of the issue. The ITO should have discussed the facts relevant to the issue instead of digressing to the facts in other cases all because the trustees happened to be the trustees there also. A misdeed committed by a trustee elsewhere all be it in another trust having the same objects cannot mean that the same was effected here also. Each has to be decided on its own independent facts. It was that confusion that led the ITO to hold that this trust is non-genuine whereas in fact it was not so. 8. As regards the donations it is difficult to say that these donations were not genuine donations because undisputedly they were received by account payee cheques. As rightly urged on behalf of the assessee the fact that those sums were tainted, if at all th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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