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TMI Blog1966 (2) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been managing the properties of the trust since that time. This trust was recognised as a charitable trust by the income-tax department since 1944-45. For the year 1951-52, the Income-tax Officer on the 16th March, 1961, held that a sum of Rs. 8,000 had not been shown to have been applied for charitable purposes and the same was liable to tax. Against this order, an appeal was filed by the petitioner-trust and the Appellate Assistant Commissioner by his order dated 28th December, 1961, accepted the appeal and held that it was sufficient for the purposes of exemption if the property from which the income was derived was held under trust wholly for religious and charitable purposes and as per the trust deed in the instant case, the properties which were subject to trust, were held wholly for religious and charitable purposes. He then granted the exemption under section 4(3)(i) of the Indian Income-tax Act, 1922, and annulled the order of assessment passed by the Income-tax Officer. The trust invested its funds with different institutions and concerns, namely, the Narain Cold Storage (Private) Ltd., Amritsar, respondent No. 2, the Hindustan Embroidery Mills (Pvt.) Ltd., Chheharta, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Treasury. That led to the filing of the present writ petition on 15th November, 1965. Learned counsel for the petitioner submitted in the first instance that respondent No. 1 had no jurisdiction to attach the property belonging to the petitioner-trust, which was not a " defaulter ". It was a legal entity recognised by the income-tax department as a trust created for charitable and religious purposes, the income of which was exempt under section 4(3)(i) of the Indian Income-tax Act, 1922, corresponding to section 11(1) of the Income-tax Act, 1961. The action of respondent No. 1 in issuing the impugned notices was wholly without jurisdiction. It was not even mentioned in the said notices that the property though ostensibly in the name of the petitioner-trust really belonged to S. Narain Singh, who was the "defaulter". Secondly, it was submitted that respondent No. 1 had no jurisdiction to direct respondents Nos. 2 to 4 to deposit the money in the Government Treasury. At the utmost the said amounts could have been attached under the law. With regard to the first objection, the position of the department as given in the affidavit dated 1st January, 1966, of Shri B. K. Srivastava In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 to 1945-46. Further proceedings are pending in respect of these years in view of the Full Bench decision of this honourable court in Shahzada Nand & Sons case, which is under appeal before the Supreme Court of India. As regards the various trusts mentioned in paragraph 1 of the petition it is submitted that the late S. Narain Singh Uppal always treated the trust properties to be his exclusive properties. The first trust deed dated 30th April, 1941, was a family relief trust, for the benefit of the descendants of the father of the founder and, though others were also to be benefited by this charity, it was expressly mentioned that all cash investments of the trust shall be held with M/s. Uppal and Co. or such institutions which are controlled by them. It may be mentioned here that Uppal and Co., was the family concern of Shri Narain Singh Uppal himself. The property which was the subject-matter of the gift/charity, particularly the 2 1/2 storeyed building, was not in the sole ownership of the author of the trust as his sons also had their share in it. On 31st July, 1941, another deed was executed in respect of the same property in which Shri Narain Singh Uppal described himself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Uppal. In this connection the recitals in the deed that he had ceased to be the owner of these properties on 1st April, 1954, are noticeable. In fact, the record shows that even after 1st April, 1954, Shri Narain Singh Uppal had been operating as the trustee, Shri Narain Singh Uppal, if he had genuinely parted with the owner. ship in 1941, could not repeatedly deal with the trust property as an owner except by resort to the civil court. He could only have dealt with the trust property as a trustee along with other co-trustees. Instead he himself dealt with the trust as if he were the sole and exclusive owner in his own right so as to deal with the trust in all respects including naming the trustees at his sweet free will. In view of the above facts and other facts which are in the possession of the department it is clear that the property which has been attached is only ostensibly in the name of the trust. In fact it was the property of late S. Narain Singh Uppal right up to the date of his death. It is not denied, however, that the late S. Narain Singh Uppal and his son, Dr. Sarmukh Singh, have been carrying on various charitable activities mentioned in the trust deed in the nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanalakshmi Ammal v. Income-tax Officer, Madras). The ostensible owner will then have the right to prefer objections to the attachment before the Tax Recovery Officer, respondent No. 1, in accordance with rule 11 in the Second Schedule of the Income-tax Act, 1961. He will decide these objections according to law after giving full opportunity to the petitioner and the department. If his decision goes against the petitioner-trust it can file a regular suit in a civil court as provided in rule 11(6) in the Second Schedule. According to the petitioner, the property attached belongs to the trust, whereas the case of the department is that in reality it is owned by the defaulter, S. Narain Singh. This is a disputed question of fact, which can properly be disposed of in the manner provided in the statute or by a regular civil suit. It cannot be determined in these proceedings under article 226 of the Constitution. As regards the second objection, in the first place, it has not been specifically taken in the writ petition. Secondly, respondents Nos. 2 to 4 had been asked to deposit the amount in the treasury under section 222 of the Income-tax Act, 1961. This section fully authorises the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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