TMI Blog1967 (12) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 1959-60, the assessee claimed before the Income-tax Officer that the income of the house property consisting of premises Nos. 46A and 46B, Wellesley Street, Calcutta, should be treated as income derived from trust property and hence should be taxed not in his hands as his individual income but as income derived by him as trustee from trust property. It appears that the assessee filed two returns-one in his own name, viz., Shri Durga Prosad More, declaring loss at Rs. 9,736 and the other in the name of Shri Durga Prosad More in the capacity of trustee to the estate of Sm. Benarasi Debi declaring total income at Rs. 34,380. It was stated by the representative of the assessee before the Income-tax Officer that the said house property should not be taxed in the hands of the assessee as it was a trust property but should be taxed separately. In the deed of sale dated 30th September, by which the aforesaid premises were purchased, the assessee has been described as a trustee, being a party thereto as of the fourth part. In the recitals we get the following assertions: " Whereas Sm. Benarasi, wife of the said trustee, has set apart and made over certain sums to the trustee to have an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows ...... The recitals clearly indicate that this document is merely in the nature of a declaration of trust. The conveyance dated 30th September, 1940, indicates that the money was received by the assessee on the basis of an oral agreement to hold the said money for the benefit of his wife and the two sons and with the further obligation to utilize a part of the money towards purchase of some house property to be held in the same manner. Therefore, the documents clearly state that the assessee received the money from his wife subject to the trust aforesaid and that the money was the stridhan property of the wife. There is nothing in these two documents to indicate that the money really belonged to the assessee himself. The Income-tax Officer, however, treated the sum of Rs. 1,85,000 utilized for the purchase of the said house property as belonging to the assessee. He, therefore, treated the house property in question as the property belonging to the assessee. In other words, in the opinion of the Income-tax Officer, the wife is nothing but a benamidar of the assessee. Still, we do not find that any attempt was made by the Income-tax Officer to gather facts or materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax authorities had no materials before them which supported the finding that the house property in question was purchased by the assessee with his own money and not with the stridhan of his wife. All of them proceeded on the footing that the assessee allowed himself to be assessed in respect of the income of this house property year after year since the assessment year 1942-43. According to them he should not be permitted to say, in the absence of any positive evidence adduced by him, that the money with which the house property was purchased really belonged to his wife. It is well settled that in the case of benami, the onus is upon the department to prove that the person whose name appears in the document is merely a name-lender. The Appellate Assistant Commissioner made a feeble attempt to prove that the department had discharged the onus. He quoted a portion from the report of the Income-tax Officer made in connection with the assessment for the assessment year 1942-43. The portion quoted runs thus : " There is a separate set of accounts for this property and the accounts were closed on 30th September, 1941 . . . . The reason submitted by the assessee is that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see being the purchaser in the capacity of the trustee looks incompatible ". The Tribunal seems to think that the trust deed is completely silent about the oral trust on which the assessee received the money before the purchase of the house property. Here also we cannot see eye to eye with the Tribunal. In the deed of conveyance itself it is clearly stated that the money was received by him impressed with the trust and that trust necessarily was oral in nature. Therefore, the Tribunal is not correct in saying that " the case of the trust having been originally made orally therefore cannot stand." A reference may be made to section 92 of the Trusts Act in this connection. The said section runs thus : " Where a person contracts to buy property to be held on trust for certain beneficiaries and buys the property accordingly, he must hold the property for their benefit to the extent necessary to give effect to the contract." From the deed of conveyance it is clear that the assessee contracted to buy the property to be held in trust for the beneficiaries mentioned in the recitals of the said deed of sale. Therefore, in our opinion, apart from the deed of settlement created later on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this income being assessed in his hands year after year. Lord Hanworth M. R. quoted with approval in Commissioners of Inland Revenue v. Sneath the following observation of Lord Parker in Brooks v. Commissioners of Inland Revenue : " . . . but it seems to me that, where there is a statutory provision requiring an estimate to be made for a statutory purpose and by a statutory authority, the principle of estoppel cannot be invoked to render the provision nugatory in cases where such principles might otherwise have applied."' His Lordship in another place observed as follows: It is the amount of the assessment to be made upon the facts of the case before them that is determined by them . . . The High Court may reverse, affirm or amend the determination in respect of which the case has been stated or remit the matter to the Commissioners with the opinion of the court thereon. It is difficult to attribute to such a determination of an assessment in amount, the decision of a lis inter partes. " Mr. Ginwalla drew our attention to the following passage in the judgment of Lord Atkin in Commissioner of Income-tax v. P. R. A. L. Muthukaruppan Chettiar Counsel for the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to him. Therefore, in our opinion, the argument advanced by Mr. Pal on behalf of the revenue that the orders of the income-tax authorities can be justified having regard to the past conduct of the assessee cannot be accepted. We accordingly accept this reference. The question, therefore, must be answered in the negative and in favour of the assessee. The assessee will get his costs from the revenue. P. B. MUKHARJI J.- I agree. The question requiring an answer from this court has two parts, one relates to the facts and circumstances and the other relates to the proper interpretation of the deed of conveyance and the deed of settlement. The question as framed is in these terms: "Whether, in the facts and circumstances of the case and on a proper interpretation of the deed of conveyance and the deed of settlement, the Tribunal is right in holding that the house property being premises Nos. 46A and 46B, Wellesley Street, Calcutta, is not trust property." So far as the interpretation of the deeds is concerned, there cannot, in my opinion, be any controversy whatever. The deeds are clear. The first is the deed of conveyance dated the 30th September, 1940. In this deed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t already in operation. Therefore, the part of the question that relates to the interpretation of these two deeds, one of conveyance and the other of trust must be answered in favour of the assessee. The interpretation of these two deeds leaves no doubt that the premises Nos. 46A and 46B, Wellesley Street, were and are trust properties. The other part of the question relates to "the facts and circumstances of the case". Does the fact or the circumstance of the case lead to any conclusion contrary to what these two deeds record ? They do not. The admitted facts are, (1) there is no proof and no charge against the assessee that he had concealed any income of his own ; (2) there is no evidence whatever that the assessee as husband advanced this money to the wife and thereby concealed his own income ; (3) the assessee has throughout kept separate accounts of his own income and the income of the trust properties and has returned such income separately without any concealment or any evasion, and (4) the assessee when asked definitely produced before the taxing authorities both the sale deed as well as the trust deed to show that the properties in question were trust properties. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Division Bench of the High Court presided over by the learned Chief justice of that court came to the conclusion that " the mere fact that the statement of the assessee's wife was disbelieved by the Tribunal would not entitle the Tribunal to hold that half the sale price must have been contributed by the assessee. " The same view is taken by two other decisions in Ramkinkar Banerjee v. Commissioner of Income-tax and Sovaram Jokhiram v. Commissioner of Income-tax. Now what are the facts here. The assessee himself had said that the money belonged to his wife with which this property was purchased. No enquiry was made by the taxing authorities. The wife was not interrogated. No statement was called from the wife. No statement was called from the father-in-law. The deed itself shows that the wife was claiming this money as her stridhan property. Surely the income-tax authorities sought to discharge their onus in such a case by leaving the question to the husband and by only saying that they do not believe the husband's statement. There should have been enquiries and investigations by the taxing authorities and they were clothed with enough powers in that respect to enquire fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concealment, there was no attempt at prevarication. There was no attempt to slur over the facts by the assessee in this case. On these principles, therefore, we have no hesitation in holding that the burden of proof has not been discharged by the income-tax authorities to displace the fact proved by the assessee as well as by the two deeds of trust and conveyance. The other question for decision in the present reference is one of res judicata. Highest judicial decisions and authorities, as I read them, are in favour of the conclusion that the finding or decision of the income-tax authorities in a previous year, is not res judicata generally and, therefore, may be departed from in any subsequent year. The well-known decision of Hanworth M.R. in Inland Revenue Commissioners v. Sneath is the leading authority on the point. The propositions are clear. If the department wrongly arrived at a certain finding in the past year and the assessee accepted it instead of taking the matter higher, that can give the assessee no claim to have the mistake repeated in a subsequent year in his favour. Equally, on the other side, the assessee may discover that in past years he had paid tax on an er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he judgment would seem to conflict with what was said a month earlier in Broken Hill Proprietary Co. Ltd. v. Municipal Council of Broken Hill by a Board differently constituted (where Lord Carson rejected a plea of res judicata, in words already quoted above).... In my opinion, that is the position here, and I do not find it necessary to examine Hoystead's case further, beyond observing that some of the things that were said in that case are not, I think, entirely consistent with what was said in New Brunswick Railway Co. v. British and French Trust Corporation Ltd. or with what I regard as essential to a successful plea of res judicata, a common medium concludendi in the two actions." Finally in a still later decision in Mohamed Falil Abdul Gaffoor. The Trustees of the Abdul Gaffoor Trust v. Commissioner of Income-tax, Colombo, the House of Lords definitely refused to follow Hoystead's decision and Lord Radcliffe, delivering the judgment of the House of Lords at pages 600-601, observed: Their Lordships are of opinion that it is impossible for them to treat Hoystead's case as constituting a legal authority on the question of estoppels in respect of successive years of tax asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted. It is a principle of law that this cannot be permitted, and there is abundant authority reite rating that principle. Thirdly, the same principle-namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken. The same principle of setting parties' rights to rest applies and estoppel occurs." Finally, at page 168 of the report, Lord Shaw observes: " It might be sufficient to say, in answer to the entire argument on this head, that whether the point as to joint ownership depended upon admission of fact upon evidence led or upon argument upon construction of a statute, that is, as already stated, nothing to the point in considering the question of estoppel. There would be no quieting of litigation unless the judgment was taken as it stands. It is plain that the res in the present case was adjudged, that res being, in figures, that six times 5,000l. should be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot apply so as to make a decision on a question of fact or law in a proceeding for assessment in one year binding in another year. The assessment and the facts found are conclusive only in the year of assessment : the findings on questions of fact may be good and cogent evidence in subsequent years, when the same question falls to be determined in another year, but they are not binding and conclusive. " As against all these massive circumstances, facts, evidence and great authorities, we are unable to hold that the mere fact that the assessee did not carry his protests beyond the Tribunal to this court in previous years concludes this question of the real nature and character of the two deeds of conveyance and trust as res judicata in this case. It is necessary in these circumstances to have a total view of the matter which would include the statements made by the assessee, his conduct and the probabilities. Indeed as was so clearly pointed out by the Supreme Court in Uddhavdas Kewalram v. Commissioner of Income-tax, in these terms: " It is for the income-tax authorities to prove that a particular receipt is taxable. In deciding whether an item of receipt is taxable as income, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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