Judgment:
1. These are 6 appeals by the assessee against a combined order of Ld.
DCIT (A), Kanpur dated 28-4-1997 for the assessment years 1985-86, 86-87, 87-38, 88-89, 89-90 and 90-91. The facts concerning these appeals are common and identical grounds have been taken by the assessee in all the 6 appeals. Hence, for the sake of convenience, all these appeals are being decided by a common order.
2. Shri S.K. Garg, F.C.A., has appeared on behalf of the assessee-appellant whereas Shri Shambhoo Chopra, the Ld. Sr. D.R.standing counsel, appeared for the department in all these appeals.
3. The assessee-appellant has taken 6 grounds in these appeals but these grounds are very elaborate and are also argumentative. Hence we do not consider it proper to reproduce the same. Instead, we will take up the issues involved in these grounds.
4. Before taking up the issues involved in the grounds of appeal, we consider it proper to state the background and the facts leading to the present litigation which are narrated as under.
4.1 There was a family known as Ram Navmiwalas. The family constructed certain temples and dharamshala. Shri Har Govind Prasad Agarwal, in line with the religious activities of the family, executed a Will on 22-11-70 (pp. 20 to 23 of the paper book) and by virtue of this Will, he bequeathed following properties to the deities of Shri Thakur Ram Laxman Jankiji and Shri Hanumanji and to the dharamshala of Ram Bharoselalji Navmiwale :- 2. 1000 sq. yards of land out of house No. 15/295, Civil Lines, Kanpur.
4.2 It may be mentioned that the temple of Thakur Ram Laxman Jankiji was established in house No. 43/64, Chowk, Kanpur whereas dharamshala was in house No. 39/13, Meston Road, As stated in the Will, the dharamshala and the temple were constructed long back, perhaps in 1950 or earlier and both the buildings became in dilapidated condition. The testator wanted to get the same reconstructed or renovated. For this purpose, he dedicated his share in house No. 15/295A and 1000 sq. yards of land in house No. 15/295 for arranging renovation and construction of the temples and dharamshala etc. For carrying out this object, he appointed his son Shri Prakash Chandra as 'Sarwahakar' and empowered him to sell or transfer these properties for reconstructing the temples and dharamshala etc.
4.3 Shri Har Govind Prasad Agarwal died on 31-1-1971 and the Will came in operation on his death. Shri Prakash Chandra made an application for registration of trust under Section 12 A of the Income-tax Act on 9-10-1975 (copy available at page 24 of the paper book). The Income-tax Officer made certain queries and rejected the application vide order dated 30-1-1976 (copy available at page 32 of the paper book).
Thereafter, vide application dated 6-9-1976 (copy available at page 33 of the paper book), Shri Prakash Chandra Agarwal again moved an application as trustee of the trust under the name of Shri Ram Navmiwala Charitable Trust for registration before the CIT, Kanpur.
Again vide letter dated 24-2-1977, the prayer of the trust for registration under Section 12A was rejected (copy available at page 34 of the paper book). The trust again moved an application on 22-4-1977.
The trust submitted a detailed reply dated 31-12-1977 (copy available at pages 38 to 44 of the paper book) to the Income-tax Officer and prayed that the trust was a public religious and charitable trust and, therefore, the same should be registered. Ultimately, the registration was granted on the application dated 9-10-1975 by the CIT, Kanpur vide his order dated 11-6-1979 (copy finds place at page 48 of the paper book).
4.4 The assessee trust submitted regular returns from assessment years 1975-76 to 1996-97 and assessments were regularly made by the Income-tax Department, treating the assessee as trust and exempting its income. On the basis of registration granted under Section 12A of the Income-tax Act. Copies of the returns, audit reports, balance sheets, statement of facts etc. and of the assessment or orders have been placed on record by the assessee which are available at pages 49 to 160 of the paper book.
4.5 The assessee had let out property No. 15/295A named as Nai Bhava to the Income-tax Department on 16-6-1994. An application under Section 197 read with Rule 28(i) was filed by the assessee before the Assessing Officer on 4-7-1994 for seeking permission for not deducting tax at source. A copy of this application dated 4-7-1994 is available at page 1 of the Volume 2 of the paper book. The ACIT granted certificate under Section 197(1)(a) of IT Act relating to deduction of tax and conveyed the same vide letter dated 6th July, 1994 to the assessee through Shri P.C. Agarwal, Sarwahakar of the trust. A copy of this letter is available at page 2 of the paper book.
4.6 Another application, seeking permission was filed on 9-9-1994 (copy available at page 4 of the paper book Vol. II). Another application was moved on 12-9-1994 to the same effect. The assessee trust also moved an application on 16-9-1994 for the same purpose and clarified the entire position to the department vide a detailed reply dated 29-9-1994. The certificate issued by the Assessing Officer for non-deduction of tax at source remained valid upto 31-9-1995. The application for non-deduction of tax for the assessment year 1996-97 filed on 27-3-1995 (copy available at page 21 of the paper book Vol. II) was not allowed and a show-cause notice was issued on 8-3-1996 by the Asstt. Commissioner concerned (copy available at page 23/24). Thereafter the certificate granted under Section 197(1) was withdrawn vide order dated 22nd March, 1996 (copy available at pages 32/33 of the paper book).
4.7 The departmental authorities thereafter proceeded to reopen the assessment. In this regard, the Income-tax Officer sought a remand report and after considering the same, he held that the income of the assessee has escaped assessment. A relevant portion of the order of Income-tax Officer for the assessment year 1985-86 is reproduced below :- Held, (1) that the endowment was created by an instrument of dedication and not through the medium of a trust, that the deed of dedication created a legal obligation in the deity and its shebait to hold and apply the income of the endowed properties for the purpose specified in the deed of dedication and for no other purpose, and that the income was therefore derived from property held under a legal obligation wholly for religious purposes and was therefore exempt from tax under Section 4(3)(i).
4.8 The Income-tax Department thereafter made assessment in the assessment years 1985-86 to 1990-91. A detailed order was passed by the Income-tax Officer in assessment year 1985-86 under Section 143(3) assessing deities Shri Thakur Ram Laxman Jankiji, Shri Hanumanji and Dharamshala Ram Bharoselalji as artificial juridical persons. The assessments in subsequent years were made against them in the same capacity.
4.9 The assessee challenged the assessment order of the Assessing Officer before the Ld. Dy. CIT(A) and claimed that the assessments were not justified in the status of artificial juridical person; rather the same should have been made in the status of trust as was done earlier.
4.10 The Ld. CIT(A) did not accept the stand taken by the assessee and upheld the assessment orders by a combined order dated 28-4-1997 which is in appeal before us for all the assessment years under consideration.
4.11 In the setting of above factual background, we proceed to take up for disposal ITA No. 880(A)/1997 for the assessment year 1985-86 which relates to main assessment year and from which assessment year, the assessments have been reopened in the present cases.
5. The assessee has taken ground Nos. 1, 2 and 3 for challenging the findings and order of Ld. CIT(A). Ground Nos. 4 and 5 are narrative and argumentative. Ground No. 6 is of general nature. All these grounds centre on the controversy relating to the status of property No.15/295A, Civil Lines, Kanpur which is claimed by the assessee to be property of the trust styled as Shri Ram Navmiwale Public Charitable Trust. The department, on the other hand, has taken this property to be belonging to Shri Thakur Ram Laxman Jankiji, Shri Hanumanji and dharamshala Shri Ram Bharoselalji Agarwal Ram Navmiwale (artificial juridical persons). The Ld. CIT(A) has stated the controversy in terms of following issue : Whether the Will executed by the deceased testator and the income derived from the bequeathed property is assessable in the hands of the legatees of the Will i.e., 4 specified deities and dharamshala in the status of artificial juridical person or income as above is assessable in the hands of public charitable religious trust, known as, Shri Ram Navmi- wale Public Charitable Trust.
6. On the issue stated above, detailed arguments have been submitted before us by the Ld. representatives of both the sides.
7. Shri S.K. Garg, the Ld. counsel for the assessee after narrating the sequence of events, which has also been given by the assessee in the synopsis of 13 pages presented before us at the time of hearing, submitted that there was a charitable trust in existence prior to the execution of the Will by Har Govind Prasad Agarwal dated 22-11-1970 and in this trust, there were temples of Shri Ram Laxman Jankiji in house No. 43/64, Chowk, Kanpur and that of Shri Hanumanji in House No. 39/13, Meston Road, Kanpur. According to him, the testator in his life-time also constructed a dharamshala in 1950 in house No. 39/13, Meston Road, Kanpur for public use and dharamshala was named as Dharamshala Lala Ram Bharoselalji Agarwal Ram Navmiwale. According to Shri Garg, all these properties belonged to the trust. About the property in question, i.e., house No. 15/295A and 1000 sq. yards land in bungalow No. 15/295, Shri Garg submitted that the testator dedicated this property to the said trust which was already existing and by virtue of the Will dated 22-11-1970, this property also became the trust property. In order to substantiate and establish his point, Shri Garg took us to various documents, including the following :- (a) Page No. 24 of Paper Book - Application dated 9th October, 1975 on Form No. 10A under Rule 17A(a) for registration of the trust under Section 12A of Indian Income-tax Act, 1961 : It was pointed out that in this application properties namely, 15/296, Civil Lines, Kanpur, temple at 43/64, Chowk, Kanpur, and dharamshala at 39/13, Meston Road, Kanpur were shown to be belonging to the trust and it was also clarified that the creation of trust was oral.
(b) Statement of income and expenditure from 1-4-1972 to 31-3-1973 (Page No. 25 of the Paper Book) In this statement for the assessment year 1973-74, rent receipts from 43/64, Chowk, Kanpur, 39/13, Meston Road, Kanpur and 15/295A, Civil Lines, Kanpur, totalling to Rs. 11,285, receipts from Yatries in dharamshala and receipts from marriage parties were shown and on expenditure side, expenses on electricity in relation to house No. 43/64, Chowk, Kanpur and 39/13, Meston Road, Kanpur, house tax for these two houses as well as house No. 15/295A, Civil Lines, Kanpur, water tax and expenses relating to daily bhog in mandir Rs. 3000, salary of pujari in maridir Rs. 2064, Expenses in festivals (religious) Rs. 5000 and repairs of property and misc. expenses at Rs. 1800 were shown (c) A similar statement of income and expenditure for assessment year 1974-75 (Page 26 of Paper Book) (d) Statement of income and expenditure for the assessment year 1975-76 (P. 27 of the paper book); Application for registration of the trust dated 11-10-1975 (Paper No. 28) (e) Rejection of the application under Section 12A dated 30-1-1976 (Page No. 32 of paper book) (f) Application dated 6-9-1976 for registration of the trust under Section 12A (Page 33 of the paper book) (g) Order dated 24-2-1977, rejecting the application under Section 12A (Page 34 of Paper Book) (h) Another application dated 22-4-1977 for registration of trust (Pages 35 and 36 of paper book) (i) A detailed reply dated 12-1-1977 for registration of the trust under Section 12A (Pages 38 to 44 of the paper book) (j) Order of registration of the trust under Section 12A dated 11-6-1979 on the application dated 9-10-1975 (Paper No. 48 of the paper book) (k) Assessment order for the assessment year 1975-76 (Page Nos. 49 and 50 of the paper book) (l) Assessment order for the assessment year 1976-77 (Page 52 of the paper book) (m) Other documents relating to returns and assessments in subsequent years.
8. The main contention of Shri Garg was that these documents amply demonstrate that the entire information including the details of Will were furnished to the departmental authorities throughout and nothing was concealed and, therefore, the department was not justified in invoking the provisions of Section 147/148 of the Income-tax Act and to change the status of the property in question. Shri Garg further submitted that in all the five assessment years under consideration, the assessments were completed after taking into consideration of the relevant facts and circumstances and property in question was shown and treated in the hands of the trust. About the application for exemption and certificate under Section 197 read with Rule 28(1), Shri Garg submitted that even such certificate was granted by the department, as is evident from the certificate of Ld. CIT, dated 8-7-1994 (Page 2 of the supplementary paper book) issued under Section 197(1)(a) of the IT Act relating to deduction of tax and other documents. According to Shri Garg, the Will became a fare accomplyzmd as no further facts or fresh material came into existence or to the notice of the department, there was no justification for changing the departmental attitude or for shifting the stand so far as the property in question is concerned. He emphatically submitted that at the most it is mere change of opinion on the basis of which invocation of provisions under Section 148 cannot be justified. In support of his contention, he placed reliance on the following decisions :- CIT v. Orient Longman (P.) Ltd. [1997] 227 ITR 68 [1998] : 98 Taxman 189 (AP.)/273 ITR 668 (sic), Radhasoami Satsang v. CIT [1992] 193 ITR 321 : 60 Taxman 248 (SC), ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) and Jindal Photo Films Ltd. v. Dy. CIT [1998] 234 ITR 170 [1999] : 105 Taxman 386 (Delhi).
9. About the creation of trust, he submitted that the deed of trust need not be in writing and the bona fides of the testator are to be inferred from the circumstances. Elaborating his point, Shri Garg submitted that even if the dedication of the property by the testator through the Will is taken to be in the name of deities, then also, the same will tantamount to transferring the property to the existing trust, the consequence of which will be that the property was held by the trust because even in such a situation, the real beneficiaries are not the deities but the worshippers, i.e., the public at large.
Shri Garg, the Ld. counsel for the assessee, also pointed out that the income of this property was used for charitable purpose, i.e., for maintenance of the temples and dharamshala etc. as envisaged in the Will and no part of it was ever used for personal purpose or for non-charitable and non-religious purposes. After referring to the Will and various other documents, he submitted that the sole trustee or Sarwahakar, namely, Shri P.C. Agarwal, has discharged his duties in relation to trust property very sincerely and faithfully and the department has not been able to show that the trust property was used for any other purpose which was not related to the public and charitable trust.
10. Shri Shambhu Chopra, the Ld. standing counsel, appearing on behalf of the department argued with vehemence that the testator had dedicated the property in question not to the trust but to the deities, as is evident from a perusal of the Will. In support of his argument, he pointed out that there was no trust deed setting out the objects of the trust nor any rules or regulations of the trust. He also pointed out that no trust Committee was ever formed by the Sarwahakar, for managing the trust. According to him, even if there was any trust in existence at the time of making of the Will, then also the property in question cannot be treated to be a part of that trust or property held under that trust because the testator never gave the property to the trust under the Will.
Shri Chopra also pointed out that the lease agreement in relation to this property was executed by the so-called Sarwahakar in favour of Income-tax Department in the capacity of landlord and it was not disclosed that the landlord was a trust.
11. According to Shri Chopra, a document or a deed has to be constructed literally and words which are not incorporated in a deed cannot be incorporated from outside. In support of strict and literal construction of the Will, he made reference to the following decisions :-Federation of Andhra Pradesh Chambers of Commerce & Industry v. State of Andhra Pradesh Smt. Atamjit Singh v. CIT[2001] 247 ITR 356 : 114 Taxman 120 (Kar.) 2000(1) SCC 267 (Sic).
On the issue relating to the reopening of the assessment, Shri Chopra submitted that since the assessee failed to disclose the material facts before the departmental authorities and further since on account of non-disclosure of true facts, the income of the assessee escaped, action under Section 147(a) was fully justified. According to him, it is not on the basis of change of opinion that reassessment by invoking provisions of Section 147 and 148 was made, but by virtue of material facts which subsequently came to the notice of the department. He also pointed out that on the basis of these facts even the certificate granted under Section 197 of the IT Act was withdrawn by the department on 22-3-1996 (page 33 of the paper book, Vol. II).
11.1 Shri Chopra also contended that the property No. 15/295 and 15/295A, Civil Lines being HUF property, it was not within the competence of the testator to have bequeathed these properties to the trust without partition by metes and bounds.
12. In reply to the arguments of the Ld. Standing counsel, Shri Garg submitted that firstly the property in question was held by the trust and the income derived from the same was used by the trust and, therefore, such income is to be exempted under Sections 11 and 12 of the Income-tax Act. His alternative argument was that if it is not accepted that the property, i.e., 1000 sq. yards of land out of the property No. 15/295 and property No. 15/295A was not vested in the trust, then this property, by all means, was held under a legal obligation and according to the definition of 'trust' as given in Explanation 1 to Section 13 trust includes any other legal obligation and by this definition also, the property was held by the trustee or Sarwahakar under a legal obligation, i.e., the maintenance of deities, temples and dharamshala, which itself were the parts of the trust. Shri Garg also submitted that it is not the stand of the department that the trust, i.e., Ram Navmiwale Charitable Trust does not exist. According to him, even the registration granted under Section 12A is still continuing. About the formation of the trust committee, the argument of Shri Garg was that the option was given to the Sarwahakar by the testator, to constitute a trust property or not as required by him and, therefore, it was not essential to form a trust committee for managing the trust affairs. Shri Garg also pointed out that right to sell the property was given by the testator under the Will to the Sarwahakar and after obtaining the permission of Income-tax Department, the said property was sold by Sarwahakar in 1981 and sale proceeds were invested in acquiring another capital asset and in constructing and repairing the trust properties, the details of which were furnished to the department also in the relevant assessment years. Shri Garg also submitted that once properties treated to be held in the trust, nobody can divest it. So far as the objection relating to bequeathing the undivided or unpartitioned share in HUF property is concerned. Shri Garg submitted that there is no bar in transferring or bequeathing a share in HUF by a coparcener.
13. We have carefully considered the facts and circumstances relating to this matter, the material to which our attention was invited by the Ld. representatives of the parties and the submissions made by them before us. After considering the grounds taken in this appeal and after going through the entire record as well as the case law cited before us, we consider it proper to frame following issues for proper adjudication of the matter. These issues are as under :- 1. Whether there existed any trust in the name of Ram Navmiwale Public Charitable Trust prior to the execution of the Will dated 22-11-1970 and subsequent thereto? If so, whether this trust included the deities and temples and dharamshala in house No. 43/64, Chowk, Kanpur and 39/13, Meston Road, Kanpur 2. Whether by virtue of Will dated 22-11-1970, Shri Govind Prasad Agarwal, the testator bequeathed 1000 sq. yards of open land from property No. 15/295, Civil Lines, Kanpur and House No. 15/295A, Civil Lines, Kanpur to the trust or to the deities of Shri Ram Laxman Jankiji Shri Hanumanji and Dharamshala 3. Whether these properties were dedicated to the deities, namely, Shri Thakur Ram Laxman Jankiji and Shri Hanumanji and to the Dharamshala Ram Navmiwale and whether the above-mentioned properties were held under the trust 4. Whether the property was held under a legal obligation to maintain the deities etc.
5. Whether the reopening of the assessment was legally justified in the facts and circumstances of this matter by invoking provisions of Sections 147 and 148 of the Income-tax Act; 6. Whether the income of the property mentioned above is entitled for exemption under Section 11 of the Income-tax Act Issue No. 1 - Whether there existed any trust in the name of Ram Navmiwale Public Charitable Trust prior to the execution of the Will dated 22-11-1970 and subsequent thereto If so, whether this trust included the deities and temples and dharamshala in house No. 43/64, Chowk, Kanpur and 39/13, Meston Road, Kanpur 14. The consistent stand of the assessee is that there existed a public charitable trust in the name of Shri Ram Navmiwale Public Charitable Trust. This stand of the assessee is supported by a plethora of documentary evidence. There is no dispute about the fact that in property No. 43/64, Chowk, Kanpur there was a temple of Ram Laxman Jankiji and in another property there was temple of Shri Hanumanji. A perusal of paras 10 and 11 of the application dated 12-1-1978, addressed to the Income Tax Officer (Pages 38 to 44 of the paper book), goes to show that the temple of Shri Ram Laxman Jankiji was founded by Late Lala Bhagwan Dasji in premises No. 43/64, Chowk, Kanpur about 125 years back. In para 10 of the application, details of several documents have been given at A to E which were placed before the Income-tax Officer. Likewise, in para 11, the evidence relating to construction of dharamshala in premises No. 39/13, Meston Road constructed in the year 1950 was led. In sub-paras (f) to (l) of para 11, reference to various documents have been given to establish this fact and also to demonstrate that it was a public charitable dharamshala. Photocopies of the letter dated 28-7-1951 of Municipal Board, Kanpur, copy of letter dated 28-8-1953 to Divisional Tax Supdt., Municipal Board, Kanpur and other documents referred to in para 11 go to show that dharamshala was for the use of public at large. The department has not been able to find any fact or evidence contrary to or in consistent with documentary evidence referred to in the applications dated 31-12-1977 and 11-1-1978. The department has also not been able to show that these properties were being used for non-religious or non-charitable purposes or were used for personal purposes. On the other hand, the assessee has shown that the income from these properties was accounted for year to year and the statement of income and expenditure in relation to these properties was regularly submitted to the department from the assessment year 1973-74 to assessment year 1995-96. We have gone through these documents and are fully convinced that the public use of the properties and charitable purposes or religious purposes of investment of the income of the trust properties has been fully proved.
15. In support of our above conclusion, we also assign the following reasons:- (i) The dharamshala was constructed in 1950 and was used for the stay of yatries from whom some income was earned which was also spent for the maintenance of properties or for religious purposes.
(ii) The income of these properties was included in the returns and assessments were made on the basis of the same. 'Till now, there is no dispute that the property No. 43/64, Chowk, Kanpur and 39/13, Meston Road, Kanpur do not belong to trust. The assessments of the trust in relation to these properties have not been disturbed. The assessments for the assessment years 1985-86 to 1991-92 have been reopened in so far as property No. 15/295A, Civil Lines and 1000 sq.
yards open land in property No. 15/295, Civil Lines are concerned and not in relation to other properties.
(iii) Exemption was granted to the trust under Section 12A on 11-6-1979 after much exercise. This exemption still holds good. On a perusal of the order of Ld. CIT, particularly para 4 of the remand report goes to show that there was a trust in existence. Likewise, on page 5 of his order, the Ld. Dy. CIT(A) has mentioned that the property under Will was not dedicated to the trust which was already in existence as alleged by the counsel.
(iv) It is not the case of the department that there was no trust at all or that the trust was not for public or charitable purposes.
(v) So far as the objection of the department that in absence of a trust deed, there cannot be any trust is concerned, that objection is not sustainable. In the case of CIT v. Trustees of Shri Cutchi Lohana Panchtade Mahajan Trust [1975] 98 ITR 448, the Bombay High Court has observed that no formal deed or any other writing is needed to constitute a charitable or religious trust. According to the Hon'ble Court, a charitable trust may be created by any words sufficient to show the intention.
16. In the case of CIT v. Promod Jain Trust [1971] 81 ITR 604, the Hon'ble Delhi High Court has held that no formal document or other thing was necessary to create a charitable or religious trust.
According to Hon'ble Court, "such a trust could be created by words as showed an intention to create a charitable trust or religious trust".
If that intention was accompanied with or followed by a formal divesting of the ownership of the property on the part of the donor and vesting of the same in any other person or even in the donor himself as trustee, the dedication is complete.
17. In that case, the donor wrote a letter to the trustee informing his intention to make gift of Rs. 5 lacs for charitable objects like establishment of medical or educational institution or such similar philanthropic objects. Only a sum of Rs. 60,000 was made over to the trustee who was appointed as a sole trustee with power to coopt upto two more trustees. The question was whether a valid charitable trust had been created by the letter of the testator which would entitle the exemption under Section 4(3)(1) of the old Act. It was held that the intention to create a charitable trust was made manifest and there was a formal divesting of the ownership of amount of Rs. 60,000.
18. In the case of All India Spinners Association v. CIT [1944] 12 ITR 482, the Privy Council considered the objects of the Spinners Association and held that a formal deed is not necessary to constitute a trust, so as to constitute a legal obligation binding the trustees.
In the case of Estate of T.R. Narayanaswami Naidu v. Controller of State Duty [1973] 90 ITR 400 (Mad.), the karta of joint Hindu family set apart some building for the use of pilgrims. The building was not used for any private purpose of the family. There were some further arrangements. After the death of the testator, the building was included in the estate of testator. The objection of the accountable person was that the building was held in trust and was not part of the Estate of Shri Naidu. The Assistant Collector, however, held that the building was not trust property and it was owned by the deceased at the time of his death. The Appellate Controller also upheld the order of Assistant Controller. On appeal, the ITAT remitted the issue to Appellate Commissioner for re-examining and reconsidering the evidence.
Thereafter the appellate Commissioner held that the building constituted an endowment set for charitable purposes. However, the Tribunal held that it was the private property. On reference, the Hon'ble Madras High Court reversed the findings of the Tribunal and held as follows :- It is well established that no express words of gift either directly or indirectly in the shape of trust are required to create a dedication. All that is necessary is that the religious purpose or object of the donor shall be clearly specified and that the property intended for the endowment should be set apart and dedicated for those purposes.
It was further held that to constitute a valid dedication or property, by a Hindu, for religious and charitable purposes, no document in writing or registered is necessary.
19. On the basis of the above legal position and facts relating to the instant matter, it is established that there existed a valid trust. It is further established that the said trust is still continuing. The stand of the assessee that the trust is public charitable is also proved as there is nothing on record against this stand of the assessee.
20. Now, the question comes as to whether this trust included in its ambit the deities of Shri Ram Laxman Jankiji and Shri Hanumanji temples and dharamshalas, as shown by the assessee. The evidence on record, including the Will referred to above goes to demonstrate that the trust was for the maintenance of deities, temples and buildings, including dharamshala and the earlier sarwahakar of the trust was the testator himself as mentioned by him in the Will and after his death, Shri P.C.Agarwal has remained the sole trustee of the said trust. It may not be out of place to mention that in all the documents submitted before the Income-tax Authorities, the income from the properties has been shown as the income of the trust consistently. Not only this, the map of guest house at 15/295A was submitted by Shri P.C. Agarwal as Sarwahakar of Ram Navmiwale Public Charitable Trust and the same was approved in the same capacity by Kanpur Development Authority on 19-7-1985.
21. Thus we are of the considered opinion that the trust included and includes the object of pooja, worship and maintenance of deities and a public dharamshala and the temples and dharamshala were part of the trust property and are continuing to be its part.
Issue No. 2-Whether by virtue of Will dated 22-11-1970, Shri Govind Prasad Agarwal, the testator bequeathed 1000 sq. yards of open land from property No. 15/295, Civil Lines, Kanpur and House No. 15/295A, Civil Lines, Kanpur to the trust or to the deities of Shri Ram Laxman Jankiji Shri Hanumanji Temple and Dharamshala 22. The argument of the ld. counsel for the assessee was that accounts of the trust right from the assessment years 1973-74 to 1996-97 and assessment orders made from assessment year 1975-76, the income from the property No. 15/295A was incorporated in the trust accounts and the same was applied on the objects of the said trust and the department also accepted this position by making assessments under Section 143(3) in some of the assessment years. It was also pointed out that in 1979, the other bequeathed property, i.e., 1000 sq. yards of open land in premises No. 15/295 was sold and the permission was granted to the trust as its owner for selling the property. The argument of the department, on the other hand, was that the testator did not create a trust and only dedicated the property to the deities at the most. A perusal of the Will dated 22-11-1970 as a whole and the history and circumstances set out in the Will as well as the preamble of the Will go to indicate the intention of the testator which was to dedicate the properties mentioned above to the trust. It is true that this intention has not been expressed in so many terms but the direction in para 3 of the Will that Shri P.C. Agarwal will have a right to form a trust Committee goes to suggest that the intention of the testator was to give the properties to the trust. On perusal of the entire Will it will appear that the testator wanted to renovate the old dharamshala and temples but could not get opportunity to do so in his life time. Hence in order to fulfil that desire, he made arrangement for reconstruction of dharamshala etc. by dedicating the properties to the said trust of temples and dharamshala. Not only this, the conduct of the testator and other attending circumstances as well as the conduct of the Sarwahakar appointed by the testator go to demonstrate that the properties were given by the testator to the trust and some were held by the trust for a public charitable purpose. In the case of Deokinandan Khetan v. CED [1968] 69 ITR 801, the Hon'ble Allahabad High Court has held that no writing is necessary to create an endowment and that the finding of the department that the property in dispute belonged to Hindu undivided family was not supported by any evidence or on record and hence inclusion of a share thereof in the estate of the deceased was not justified. In that case, an endowment was created by one as a particular item of property was not specifically included in the endowment deed. It continued to stand in his name long after his death.
His son, later on, applied to Municipal Board to have the property registered in the name of Manager of the temple to which the same had been dedicated according to him by his father. The income of this property and expenses relating thereto were dealt with in the accounts of the trust and there were several facts indicating that the property was considered as belonging to the trust. On these facts, the Hon'ble High Court, Allahabad held that the property belonged to the trust. So far as the present case is concerned, the properties bequeathed by the testator have always been shown as part of the trust properties and their income and expenditures have always been incorporated in the returns of the trust by the Sarwahakar. Even the department did not object to this inclusion. The assessments of the trust were completed by the department even under Section 143(3) of the Income Tax Act. At the time of registration of the trust, under Section 12A thereof, enquiry was made by the department and after examining all the facts which included the properties in question, the department granted registration under Section 12A of the IT Act. Thus the conduct of the department was also never against inclusion of the properties in the trust of Shri Ram Navmiwale Public Charitable Trust. In the case of Official Trustee of West Bengal v. CIT [1968] 67 ITR 218 (Cal.), the issue related to gift of a piece of land for religious purposes. The Ekrarnama executed by the owner enjoined upon her sons to build a suddarbati for jatra mahotsava of Shri Ishwari Thakurvati. There was some litigation also and official trustee was appointed to look after the properties. He was assessed in respect of income of debutar estate.
On reference to the High Court by the Tribunal, the question was as to whether there was a trust in favour of the deity or whether there was a dedication of property to the trustee. On facts it was found that in none of the relevant documents was any trust created in the technical sense of the term. The Hon'ble High Court, after making reference to the decision in the case of CIT v. Jogendra Nath Nasker AIR 1965 Cal.
570 and also to the case of Sree Sreelswar Gopal Jew v. CIT [1950] 18 ITR 743 (Cal.) held that there was no trust in technical sense, that is to say, as understood in English law. It was further held that "However, the dedication of property to the deity is also a trust but in larger sense." A similar view has been taken in Tagore law Lectures under the caption "The Hindu Law Religious and Charitable Trust and also in the case of Aggarwal Chamber of Commerce Ltd. v. Ganpat Rai Hira Lal 23. It may be pointed out that in the present case, there was divesting of the property for a religious and charitable purpose and the intention of the testator to dedicate the property to the trust was accompanied by a formal divesting of the ownership of the property on his part and vesting of the same in the trust. In the case of Promod Jain Trust (supra) it was held that a trust could be created by words as showed an intention to create a charitable trust or religious trust.
It may also be pointed out that even if it was a dedication to deities, the beneficiaries being the worshippers, i.e., the general public at large and not the deities. As such, the object is clear and evident, i.e., the dedication was, in fact, and in effect to the trust in the larger sense.
Issue No. 3-Whether these properties were dedicated to the deities, namely, Shri Thakur Ram Laxman Jankiji and Shri Hanumanji and to the Dharamshala Ram Navmiji Wale and whether the above mentioned properties were held under the trust 24. The stand of the department is that the properties were dedicated to the deities of Ram Laxman Jankiji and temples and not to the trust.
If we properly appreciate the facts and background as narrated above, we will come to a conclusion that even dedication to a deity for religious or charitable purposes is covered in the ambit of the trust.
The deity no doubt is regarded and worshipped as a devine entity by its followers and although it is a juristic person legally capable to own and dispose of assets and properties vested in it or owned by it but it cannot do these acts physically. It is, therefore, a symbol. The physical acts of transfer of property investment of funds or other acts are done by the servants or Manager, who is working on behalf of the deity. In his lectures in 'The Hindu Law Religious and Charitable Trust', Hon'ble Justice B.K. Mukherjee, J. has explained this concept in the following words :- "It is a factor to be taken into account in deciding whether an endowment is private or public whether the place of worship is located inside a private house or a public building". The temple in the residential house of the appellant at Paddapuram is different from the suit temple situate at Valuthimmapuram and the suit temple is not situated in the residential house of the appellant. Though "the mere fact that the public is allowed to visit a temple or thakurdwara cannot necessarily indicate that the trust is public as opposed to private. If the endowment was in favour of the idol itself "proof of user by the public without interference would be cogent evidence that the dedication was in favour of the public".
The entries in the Inam Registers indicate that the dedication in the present case was in favour of the idol (Sri Anjaneya Swami).
While considering the question whether the suit temple is a public temple or a private temple, it cannot be ignored that the suit temple falls in the area which was formerly part of Madras Presidency. In the greater part of the Madras Presidency, where private temples are practically unknown, the presumption is that temples and their endowments form public religious trusts. Exception is made in respect of Malabar, where the large towards often established private temples for their own use and there is no presumption one way or the other. So far as Tamil Nadu is concerned there is initial presumption that a temple is a public one, it being up to the party who claims that it is a private temple, to establish that fact affirmatively and this initial presumption must be rebutted by clinching testimony and the crucial question is as to whether the public worship in the temple as of right. In the instant case, the said presumption, instead of being rebutted by the appellant, is reinforced by the entries in the Inam Registers as well as by the oral evidence of DWs 1 to 4 with regard to public having free access to the suit temple for the purpose of worshipping the deity. The finding that the suit temple is a public temple and not a private one is a finding of fact. In the instant case, the Trial Court as well as the High Court have found that suit temple is a public temple. The said finding is not open to further scrutiny by this Court unless it suffers from an error of law. Therefore, the finding recorded by the High Court that the suit temple is a public temple and not a private one and that the appellant has failed to establish his case that he is a hereditary trustee of the same has to be xipheld." 25. In the case of Estate of T.R. Narayanaswami Naidu (supra) joint Hindu family had set apart the building known as Natarajaneelam for the use of pilgrims visiting the town, the other family groups were partitioned but this property was directed to be maintained by one of the sons with the income of other properties. In the family settlement deed also, it was provided that the building has to be maintained.
After the death of Shri T.R. Narayanaswamy Naidu, who was maintaining the building, the issue arose as to whether this building should be included in the estate of the deceased or not. The accountable person pleaded that the building was not includable in the estate of deceased as it has been set apart only for the charitable purposes. In pursuance of the order of the Income Tax Appellate Tribunal, the issue which was remitted to the Appellate Controller was decided by him, holding that the building in question constituted an endowment for religious and charitable purposes. However, the Tribunal did not accept this finding and held that the building in question did not constitute a personal property. It was held that the property was the trust property. The Hon'ble High Court also observed that it is well established that no words gifts either direct or indirect in the shape of trust are required to create a dedication. All that is necessary is that the religious purpose or object of the donor shall be clearly specified and that the property intended for the endowment should be set apart and dedicated to those purposes. It was also held that the karta of a joint Hindu family can make effective direction of joint Hindu properties for religious and charitable purposes.
26. In Black's Law Dictionary, 6th Edn., page 1512, Public Trust is defined as "One constituted for the benefit either of the public at large or of some considerable portion of it answering a particular description; public trusts and charitable trusts may be considered in general as synonymous expressions.
27. In P. Ramariatha Aiyar's The Law Lexicon, Reprint Edn., 1987, at page 1298, Trust has been defined as follows :- In the case of a temple an idol publicly constituted and publicly accessible in which the appearance may be what one may describe as ambiguous, one would expect and ought to insist upon clear evidence of permission given or licence given and permission withheld because it is equally true that a private individual may construct, out of his private purse a private temple and idol retaining the control and management in his own hands and that of his family or some other selected individuals and yet so conduct himself as to provide conclusive evidence of dedication by implication and by conduct.Deoki Nandan v. Murlidhar AIR 1957 SC 133, the Hon'ble Supreme Court has held that "An idol is a juristic person capable of holding properties. The properties endowed for the temple vest in it, but the idol has no beneficial interest in the endowment.
The true beneficiaries are its worshippers. On facts it was found that the temple was a public temple.
29. According to Section 3 of the Trust Act, "A trust is an obligation annexed to the owner of a property and arising out of a confidence reposed in and accepted by the owner or declared or accepted by him for the benefit of endower.
30. According to above definition, for constitution of a trust, three parties are necessary - the settler, the trustee and the beneficiary. A trust is not complete until the trust property vested in the trustee for the benefit of the public at large. In the present case, all these ingredients stand satisfied and, therefore, the properties bequeathed under the Will are held to be trust property.
31. In view of our discussions on issue Nos. 1 and 2 and our findings recorded in relation thereto, it is clear that the properties in question were dedicated to the trust and the same were held for charitable purposes under the trust. To repeat, the properties were always included in the property of the assessee trust in its returns as well as in the applications submitted for exemption under Section 12A of the Income Tax Act. Their income was also the income of the trust which was utilised and used for the objects of the trust, namely, the maintenance of trust property and performance of religious ceremonies like pooja, bhog, salary of pujari and repairs etc. Hence issue No. 3 is also decided in affirmative.
Issue No. 4-Whether the property was held under a legal obligation to maintain the deities etc. 32. The Ld. counsel for the assessee made an alternative argument before us, and submitted that in case the property is not treated to be held under the trust, it should be treated to be under a legal obligation for the purposes of trust. In this regard it was explained that the property No. 15/295A was dedicated to the deity for the purposes of reconstruction of existing dharamshala and the testator did not reserve any right for himself or for the members of the family in the said dedicated property. Thus the built property was held under a legal obligation. The Ld. counsel in this regard also made reference to Explanation I of Section 13 of the Income Tax Act which says that for the purposes of Sections 11, 12, 12A and 13, "trust includes any other legal obligation".
33. The Ld. Sr. Standing counsel, Shri Chopra, on the other hand, contended that the properties were dedicated to the deities and vested in them.
34. We have carefully considered the facts and circumstances relating to this issue and the rival submissions. As pointed out by the Ld.
counsel for the assessee, the definition of trust includes a legal obligation as explained and defined by Explanation I of Section 13 of the Income Tax Act. The old provisions contained under Section 4(3)(i) also contain a similar definition. In the case of Sree Sree Ishwar Gopal Jew (supra), the issue before the Calcutta High Court was as to whether the words "Other legal obligation" in Section 4(3)(i) of Indian Income Tax Act have to satisfy the definition of "Charitable Purpose" or not, as was necessary in case of private religious trusts for claiming exemption. In that case, by a registered deed 'R' dedicated certain immovable properties to a deity which was installed by him. The property was dedicated for defraying the expenses of the daily sewa and periodical festivals of the deity. The question arose whether the income derived from the properties dedicated was exempt from tax under Section 4(3)(i) of the Indian Income-tax Act. The Hon'ble High Court of Calcutta has stated as under :- Held, (1) that the endowment was created by an instrument of dedication and not through the medium of a trust, that the deed of dedication created a legal obligation in the deity and its shebait to hold and apply the income of the endowed properties for the purposes specified in the deed of dedication and for no other purpose, and that the income was therefore derived from property held under a legal obligation wholly for religious purposes and was therefore, exempt from tax under Section 4(3)(i); 35. In the present case also, the property was loaded with a charge or obligation which was for maintenance of deities, temples and buildings etc. and in discharge of this legal obligation, the testator as well as the sarwahakar did everything. The properties and their income was wholly and solely used for carrying out the legal obligation in relation to the properties of earlier trust, namely, dharamshala and temples etc. Hence, on this ground also, the income from such property is liable to be exempted. The Will thus created a legal obligation on the part of the deity as well as on the part of sarwahakar and the properties could be used for the purposes specified in the deed of dedication, i.e., the Will and for no other purpose. As the income of the properties in issue is being held wholly for religious purposes and for which there is legal obligation, it cannot be said that the properties were used for any other purpose. In the case of Sree Sree Ishwar Gopal Jew (supra), it was also held by the Calcutta High Court that it is not material to consider whether such income is being held by the deity or by its Manager, the shebait. According to the Hon'ble Court, in either case, the income is being held under a legal obligation for wholly religious purposes. In the case of Trustees of Shri Cutchi Lohana Panchtade Mahajan Trust (supra), a similar view came before the Hon'ble Allahabad High Court. The Hon'ble Court, after considering various facts, found that the property was not used for personal use for any member of the community. There was thus a finding based on immemorial use of the income that the property was charged with an obligation in the nature of trust. On that basis, the income of the trust was to be exempt from income tax under Section 4(3)(i).
36. In the case of Saila Bihari Singh v. CIT [1951] 19 ITR 430, the Calcutta High Court, referring to the decision in the case of Sree Sree Iswar Gopal Jew (supra) held that the properties which were dedicated for incurring expenses of sewa, Mahotsav, for making new constructions and repairs in respect of Shri Mandir (temple), Natyashala (auditorium), kitchen and stores etc. were properties which were dedicated or given to the deities and once it is held that these properties were dedicated properties, the income from such properties cannot be said to be income arising from a private religious trust.
37. It may be pointed out that before the Ld. Dy. CIT(A), the assessee had taken specific plea by taking a specific ground No. 11 and it was claimed that even if the property under appeal is not held under trust within the purview of Section 11 of the Income Tax Act, the appellant is entitled to exemption under Section 11 since the property is held under legal obligations within the extended purview of expression, as defined by Explanation I of Section 13 of the Income Tax Act. The Ld.
Dy. CIT(A) has not adjudicated this ground properly.
38. In view of the facts and circumstances narrated above and also in view of the legal position stated above, we are of the view that alternative plea raised on behalf of the assessee also deserves to be accepted.
Issue No. 5-Whether the reopening of the assessment was legally justified in the facts and circumstances of this matter by invoking provisions of Sections 147 and 148 of the Income Tax Act 39. The Ld. counsel for the assessee challenged the action of the departmental authorities in making reassessment by invoking provisions of Sections 147 and 148 of the Income Tax Act. It was contended before us that no new fact or material came to the notice of the departmental authorities and, therefore, there was no justification for re-examination or re-consideration of the issue finalised earlier. It was emphatically argued by Ld. council that it is a case of mere change of opinion on the same facts and material. To support this contention, the Ld. counsel invited our attention to various documents, including the income tax assessments and applications for exemption under Section 12A and for certificate under Section 197 of the Income Tax Act. The Ld. counsel for the respondent took a different stand.
40. We have carefully considered the facts and circumstances relating to this issue and the rival submissions. A perusal of the order of assessment dated 17-9-1996 reveals that the assessment was reopened after examining the contents of Will dated 22-11-1970 and particularly its Clause 2.
The Assessing Officer has quoted this clause in para 5 of his order and went to conclude that a plain reading of phraseography used in the said para clearly indicates that the property No. 15 /295A has been bequeathed in favour of deities and no intention, whatsoever, of the testator smacks about throwing that property to the Management of the said trust - Shri Ram Navmiwale Public Charitable Trust. After advancing some logic, the Assessing Officer has also stated that it is an after-thought to say that the property belonged to the trust and that the trust is the owner of the said property. In support of his conclusion, the Assessing Officer has also made reference to the judgment of the Hon'ble Supreme Court of India in the case of M.P.Periakaruppan Chettiar v. CIT [1975] 99 ITR 1 and ratio in the case of C.N. Arunachallamudehar v. Camuruganatha [1955] SCR 243, according to which, the intention of donor is to be connected from language of the document taken along with the surrounding circumstances, in accordance with the well known canons of constitution. After referring to this ratio, the Assessing Officer has proceeded to observe that in the instant case, the construction of Will is clear, in so far as intention of the testator is concerned and language of the document does not suggest that the property was bequeathed in favour of the trust. He, thereafter, held that the property bequeathed through Will if the property of the deities and chargeable to tax in the status of artificial juridical person.
41. The contention of the assessee, challenging this approach before the Ld. CIT(A), was rejected by the Ld. CIT(A) who upheld the findings of the Assessing Officer.
42. After going through the entire material and all the documents on record, we are of the view that the assessee had placed full facts and entire relevant material, including the documents before the Income Tax Department in the assessment year 1973 and onwards and no new material came to the light of the departmental authorities, demanding or justifying initiation of re-assessment proceedings. A perusal of the order of the Assessing Officer makes it very clear that what was constructed or re-constructed, interpreted or re-interpreted considered or re-considered by him, was the only one document, i.e., the Will dated 22-11-1970. The Assessing Officer did not take pains even to point out any fact or circumstances which was inconsistent or contradictory to the stand of the assessee. Even about the user of the dedicated property or utilisation of its income otherwise than in compliance to the deed of Will could not be found and pointed out by the departmental authorities. So far as the reference to the decision of Hon'ble Supreme Court of India in the case of M.P. Pariakaruppan Chettiar (supra) is concerned, in that case the issue related to the construction of gift deeds and use of certain words in the gift deeds was considered to ascertain as to whether the gift was to the sons absolutely or not. In any case, the ratio of that decision cannot provide any justification for reopening the case.
43. On facts it may be pointed out that the Will which was re-considered by the Assessing Officer and the departmental authorities, was placed before the departmental authorities firstly on 6-9-1976 with the letter dated 6-9-1976 in connection with the registration proceedings under Section 12A. A copy of this Will was secondly filed again on 31-12-1977, thereafter on 12-9-1994 in relation to no deduction certificate and again on 16-9-1994. Thus the Will came to the notice and was examined by the department at the stage of granting certificate of registration under Section 12A which was granted in the year 1979. On the basis of this document, the assessee submitted returns of the trust. These returns from assessment years 1975-76 to 1996-97 included the property mentioned in the Will. Even the department made assessments of this property as the property of the trust. It may also be pointed out that in 1979, the other bequeathed property, i.e., 1000 sq. yards of open land of plot No. 15/295 was also sold, after obtaining the requisite permission and the sale proceeds of the same were utilised for reconstruction of temple of Shri Ram Laxman Jankiji in premises No. 43/64, Chowk and the accounts were duly submitted to the department. In view of these facts on record, it is clear that nothing was concealed by the assessee and the entire material, including the Will was always available to the department for consideration and examination and the department had several occasions to consider the implications and consequence of this Will executed before a quarter of the century. In view of these facts and circumstances, the only conclusion which can be derived is that the department was not justified in initiating the proceedings of re-assessment only on the basis of adopting a different approach and a different construction of the Will.
44. The issue relating to the scope of invoking the provisions of Section 147 has been considered in several cases by the Hon'ble Supreme Court and the Hon'ble High Court. In the case of CIT v. Bhanji Lavji [1971] 79 ITR 582 (SC), the issue related to receipt of sale proceeds in taxable territories. The assessee who was carrying on business in ghee in territories was assessed as a non-resident. He had current account in a firm in Bombay and from interest paid by the firm in this account, tax at the maximum rate was deducted. The assessee disclosed these facts to the Income Tax Officer and contended that since he had no business in the taxable territories, the assessment proceedings should be discharged. The Income Tax Officer upheld this contention in assessment year 1947-48 and assessment year 1948-49 and held that there was no source of income in the taxable territories. The proceedings were dropped. In 1949-50, a similar order was passed by another officer. In 1956, the Income Tax Officer initiated proceedings in re-assessment under Section 34(1)(a). It was contended on behalf of the assessee that all the primary facts necessary for the purposes of assessment were fully and truly disclosed and, therefore, the officer had no jurisdiction to initiate assessment proceedings. The Tribunal, in appeal, rejecting the plea of the assessee held that he did not furnish particulars as to how the delivery of ghee was given and his statements were incomplete. On a reference, the Hon'ble High Court held that all the primary facts had been disclosed and, therefore, the action under Section 34(1)(a) was not valid. On appeal to the Hon'ble Supreme Court, the order of the High Court was upheld. The Hon'ble Court has also made following observations :- Held, affirming the decision of the High Court, (i) that the Tribunal had misconceived the nature of the proceedings and the duty imposed upon the assessee by Section 34(1)(a). It is not for the assessee to satisfy the Income-tax Officer that there was no concealment with regard to any question; it was for the Income-tax Officer, if that issue was raised, to establish that the assessee had failed to disclose fully and truly certain facts material to the assessment of income which had escaped assessment. Failure to disclose how the delivery of ghee was given at Porbandar was wholly irrelevant.
(ii) That in regard to the years 1947-48 and 1948-49 the respondent had disclosed that the sale proceeds in respect of ghee supplied were received in Bombay and subsequently transferred to Porbandar.
No more detailed disclosure was necessary to comply with the requirement that the assessee had fully and truly to disclose all material facts necessary for the purpose of assessment. It was not the respondent's duty to disclose to or instruct the Income-tax Officer that there were 'profits embedded in the receipts' of the money at Bombay. The Income-tax Officer might have raised a wrong legal inference from the facts disclosed but on that account he was not competent to commence proceedings under Section 34(1)(a).
45. It was also held by the Hon'ble Court that when the primary facts necessary for assessment are fully and truly disclosed to the Income Tax Officer at the stage of original assessment proceedings, the Assessing Officer is not entitled, on a change of opinion, to commence proceedings for re-assessment under Section 34(1)(a). According to Hon'ble Court, Section 34(1)(a) does not cast any duty upon the assessee to instruct the Income Tax Officer on questions of law.
46. In the case of ITO v. Nawab Mir Barkat Ali Khan Bahadur [1974] 97 ITR 239, the Hon'ble Supreme Court of India held that having second thought on the same material does not warrant the initiation of proceedings under Section 147 of the Income-tax Act, 1961.
47. In the case of Radhasoami Satsang (supra), the Hon'ble Supreme Court held that in the absence of any material change justifying the department to take a different view, a view that was taken in earlier proceedings, the question of exemption of the assessee appellant should not have been reopened. The Hon'ble Court also made the following observations :- Strictly speaking, res judicata does not apply to Income-tax proceedings. Though, each assessment year being a unit, what was decided in one year might not apply in the following year; where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.
48. In the case of Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1, the Hon'ble Supreme Court has also observed as follows :- At the same time, we have to bear in mind that the policy of Law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasijudicial controversies as it must in other spheres of human activity.
49. In the case of M.A. Namazie Endowment v. CIT [1988] 174 ITR 58 : 38 Taxman 126 (Mad.), the issue was as to whether a certain trust was charitable or not. Earlier, it was held that the assessee Wakf was not entitled to exemption. However, the issue again came for consideration.
The Hon'ble Court observed that the Income Tax Officer is not bound by rule of res judicata or estoppel by record and that he can reopen a question previously decided only if fresh facts come to light on investigation that would entitle him to come to a conclusion different from the one previously leased or if the earlier decision had been rendered without taking into consideration material evidence. If the above test is applied to the present case, we will find that neither new facts came to the light nor any material evidence was left without consideration and, therefore, there is no justification for reopening the assessment. It may be pointed out that if a fundamental fact was before the department and if the decision is arrived at, after considering that particular fundamental fact, later on the decision cannot be withdrawn and a fresh litigation cannot be started with a view to obtain another judgment upon a different assumption or fact.
This view was also taken by the Privy Council in the case of Hoystead v. Commissioner of Taxation [1926] AC 155. The Privy Council went further to observe that same principle applies not only to an erroneous admission of a fundamental fact but to an erroneous admission as to the legal circumstances of the fact. It was observed that parties are not permitted to begin fresh litigations because of new views that they may entertain of the law or new variations which they present.
50. In the case of Sirpur Paper Mills Ltd. v. ITO [1978] 114 ITR 404 (AP) a similar view was taken by the Hon'ble Madras High Court and it was held that the Income Tax Department cannot be permitted to reopen the concluded assessment because of new views they have come to entertain on the facts and if this is permitted, litigation would have no end, except when legal ingenuity is exhausted.
51. In the case of Century Enka Ltd. v. ITO [1983] 143 ITR 629 : 12 Taxman 80, the Calcutta High Court has also held that the Income Tax Officer cannot initiate proceedings or reconsider or review the matters already decided or concluded at the time of original assessment and the initiation, as made, cannot be upheld and such initiation must be observed and held to have been made on a mere change of opinion and to be not covered by the same circumstances as envisaged in Section 147 of the Act.
52. So far as the other objection relating to bequeathing the unpartitioned share of HUF is concerned, we are of the view that there is no legal impediment in bequeathing or dedicating even undivided share in HUF. So far as the present case is concerned, no dispute has been raised by any family member or coparcener about the capacity of the testator who was Karta of the HUF and who had dedicated and divested his own share to the deities and to the trust.
Issue No. 6-Whether the income of the property mentioned above is entitled for exemption under Section 11 of the Income-tax Act 53. In view of the above discussion, we hold that firstly the property was held by the trustee, namely, Ram Navmiwale Public Charitable Trust and, therefore, its income was exempted under Section 11 of the Income Tax Act. It may be pointed out that the registration of exemption granted to the trust on 11-6-1979 on the basis of application dated 9-10-1975 and other applications included in the Will and it has not been pointed out by the department that the said certificate has been withdrawn or modified in relation to the properties in issue. It is also not the case of the department that income from these properties were not utilised for public charitable purposes. Hence in our considered view, the properties under the Will are entitled for exemption from Income Tax under Section 11 of the Act.
54. As we have accepted the alternative plea of the assessee, we further hold that since the properties were held under a legal obligation, i.e., the maintenance of temples and deities etc. which was a public charitable purpose, on that basis also and in view of Explanation 1 to Section 13 of the Income Tax Act, the income derived from the properties is entitled to exemption under Sections 11 and 12 of the Act.
55. In view of the above discussion, all the grounds taken by the assessee are allowed. In the result, the appeal of the assessee stands allowed.
56. As the facts of these appeals are identical to IT Appeal No. 880 (All.)/1997 and as identical grounds have been taken in all these appeals, following our findings in that appeal (IT Appeal No.880(A)/1997) and assigning the same reasons, we allow all these appeals.