Pinaki Chandra Ghose, J.
1. On December 1, 1976, an order passed by the Appellate Assistant Commissioner of Income-tax for the assessment years1972-73 and 1973-74 holding that the Health Resort Trust, of which the petitioners are trustees, was a public charitable trust exempt from income-tax under the provisions of Section 11 of the Income-tax Act, 1961 (hereinafter referred to as 'the said Act'), setting aside the order passed by the Income-tax Officer for the said trust was formed for the benefit of the trustees and employees of the Birla group of companies.
2. In spite of the said appellate order which was binding on the Wealth-tax Officer who was also acting as the Income-tax Officer, he issued a notice under Section 17 of the Wealth-tax Act, 1957, on the ground that wealth-tax was leviable on the trust property since exemption under Section 5(1)(i) meant for public charitable trusts was not available because of the user of the trust property by the trustees thereby attracting the provisions of Section 21A(i). Such notice was issued on March 2~5, 1978.
3. On May 15, 1980, an order was passed by the Income-tax Appellate Tribunal upholding the order dated December 1, 1976, of the Appellate Assistant Commissioner of Income-tax for the assessment years 1972-73 and1973-74 allowing exemption as public charitable trust. No reference application was filed against the said order of the Tribunal which became final.
4. Subsequent thereto on May 19, 1980, an order was passed by the Income-tax Appellate Tribunal for the assessment year 1974-75 holding that the trust was entitled to get an exemption under Section 11 of the said Act. The said order became final since the petitioner did not file any reference application against the said order.
5. On or about July 17,1981, an order was passed by the Income-tax Appellate Tribunal for the assessment year 1975-76, following its orders for the earlier years, holding that the trust is a public charitable trust and entitled to get an exemption and further that provision of the resort to the trustees against payment of the usual charges as were payable by the other members of the public did not disentitle it from the exemption. The said order is also final, since the Department did not take any step against the said order.
6. The writ petition has been filed by the petitioners challenging the said notice dated March 25, 1978, issued by the Wealth-tax Officer under section 17 of the Wealth-tax Act, 1957 (hereinafter referred to as 'the 1957 Act'), to the trustees of the 'Health Resort Trust' (hereinafter referred to as 'the said trust'). The notice issued on the ground that the Wealth-tax Officer had reason to believe that net wealth chargeable to tax for the assessment year 1973-74 had escaped assessment and he proposed to assess the same.
7. The case of the petitioners is that the said trust is a public charitable trust and it is exempted under the provision of Section 5(1)(i) of the 1957 Act and there was no application on the part of the said wealth-tax return and further there has been no escapement of any wealth chargeable to tax.
8. Affidavits have been filed in this writ application. It has been alleged in the affidavit-in-opposition that the exemption under Section 5(1)(i) is not available to the petitioners in view of the provisions of Section 21A(i) of the said 1957 Act. The basis of the said reason is that the materials received in the course of the income-tax assessment of the trust for the assessment year 1975-76 the trust property was made available for use by the settlors/trustees against payment of charges. Such use is stated to be in violation of the provisions of Section 13(1)(c) of the said Act read with clauses (b) and (d) of Section 13(2) as a result of which exemption under the provisions of Sections 11 and 12 of the said Act and Section 5(1)(i) of the 1957 Act did not apply. It is further stated that similar facts existed during the previous year relevant to the assessment year 1973-74 and as such the impugned notice was issued.
9. Mr. Khaitan, appearing on behalf of the petitioners, submitted that a trust, which is exempted under the provisions of Section 11 of the 1961 Act as a public charitable trust is also exempted from wealth-tax under the provisions of Section 5(1)(i) of the 1957 Act. The provisions of Section 13(1)(c) read with clauses (b) and (d) of Section 13(2) of the 1961 Act find their equivalent in Section 21A(i) of the 195 7 Act. According to the said provisions, the exemption would not be available if any property or income of the trust is used or applied directly or indirectly for the benefit of, inter alia, the settlors/trustees. If there is no violation of the aforesaid provisions of Section 13 of the 1961 Act then there would equally be no violation of the provisions of Section 21A of the 1957 Act and the trust would be entitled to the exemption both under Section 11 of the 1961 Act and Section 5(1)(i) of the 1957 Act.
10. The question therefore whether the trust is entitled to get an exemption under Section 11 of the 1961 Act arose in the assessment years 1972-73 and 1975-74. In the course of the said assessment proceedings, it appears that the settlors/trustees used the trust property against payment to show charges as were payable by any other member of the public was duly disclosed before the Income-tax Officer and the Income-tax Officer took the view that the trust was formed for the benefit of the trustees and for the benefit of the Birla group of companies.
11. On appeal, the said findings of the Income-tax Officer for the assessment years 1972-73 and 1973-74 were negatived by the Appellate Assistant Commissioner of Income-tax after considering the facts that the settlors/ trustees used the said trust property from time to time on payment of charges and thereafter, held that the trust was a public charitable trust exempt under the provisions of Section 11 of the 1961 Act.
12. In these facts, Mr. Khaitan further submitted that the impugned notice dated March 25, 1978, would not be issued by the Wealth-tax Officer for the assessment year 1973-74 in view of the order passed by the AppellateAssistant Commissioner, when the said order was binding upon the said Wealth-tax Officer, who was also the Income-tax Officer.
13. The Supreme Court has held in Union of India v. Kamlakshi Finance Corporation Ltd., : 1991ECR486(SC) that the principles of judicial discipline required that the orders of the higher appellate authority should be followed unreservedly by the subordinate authorities and the adjudicating authority could not refuse to follow the order of the appellate authority even if it had any reservation on its correctness. Accordingly, Mr. Khaitan submitted that the impugned notice is liable to be set aside on this ground alone.
14. Subsequent to the issue of the impugned notice dated March 25, 1978, the order passed by the Appellate Assistant Commissioner of Income-tax for the assessment years 1972-73 and 1973-74 was upheld by an order dated May 15, 1980, by the Income-tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') and further by an order dated May 19, 1980, the Tribunal held that the trust was entitled to get an exemption under Section 11 of the 1961 Act for the assessment year 1974-75 and further on July 17, 1981, the Tribunal, following its order for the earlier years held that the trust was a public charitable trust and is entitled to get an exemption under Section 11 of the 1961 Act, and further held that the use of the trust property by the settlors/trustees against the payment of the usual charges as were payable by the other members of the public did not disentitle it from the exemption. Therefore, Mr. Khaitan submitted that it cannot be contended by the Revenue that the trust property is not exempted under Section 5(1)(i) of the 1957 Act.
15. He further contended that the income-tax proceedings for the assessment years 1972-73 to 1975-76 have since attained finality and the orders of the Tribunal holding that the trust is entitled to get an exemption under Section 11 of the 1961 Act have been accepted by the Revenue.
16. He further contended that no new material or information came in the possession of the Wealth-tax Officer in the course of the income-tax assessment of the trust for the assessment year 1975-76 on the basis of which he could have taken a view inconsistent with or contrary to the findings of the Appellate Assistant Commissioner. Accordingly, he submitted that since the trust property was exempted under Section 5(1)(i) of the 1957 Act, the trustees were not liable to file any return and that there was no escapement of wealth chargeable to tax. He further submitted that the impugned notice was issued without jurisdiction and without authority of law.
17. He further contended that the question whether there was any wealth chargeable to tax was a jurisdictional fact and the Wealth-tax Officer could not assume jurisdiction by deciding a jurisdictional fact wrongly. In support of such contention he relied upon a judgment reported in Raza Textiles Ltd. v. ITO : [1973]87ITR539(SC) .
18. He further contended that the mere fact that no return was filed on the Wealth-tax Officer to issue a notice under Section 17 inasmuch as there is nothing to show that any asset chargeable to wealth-tax escaped assessment. In support of such contention he relied upon a judgment reported in Thanthi Trust v. WTO : [1989]178ITR1(Mad) .
19. After hearing the submissions made on behalf of the petitioners, I do not have any hesitation in respect of the contention of Mr. Khaitan inasmuch as the order passed by the Appellate Assistant Commissioner concerning the said period held that the said trust is entitled to get benefit under the provisions of Section 5(1)(i) of the 1957 Act and further there was no obligation to file any wealth-tax return. It further appears from the orders passed in the matter by the Appellate Assistant Commissioner and further by the Income-tax Appellate Tribunal for the assessment years 1972-73 and 1973-74 whereby the order passed by the Appellate Assistant Commissioner was upheld and subsequent thereto the orders dated May 19, 1980, and July 17, 1981, passed by the Tribunal following its earlier orders it held that the trust was a public charitable trust and is entitled to get an exemption under Section 11 of the 1961 Act and further use of the trust properties by the settlors/trustees against the payment of the usual charges as were payable by other members of the public did not disclose its disentitlement of such exemption, and further the judgments cited before me by Mr. Khaitan reported in Raza Textiles Ltd. v. ITO : [1973]87ITR539(SC) and Thanthi Trust v. WTO : [1989]178ITR1(Mad) have specifically dealt with the facts identical to this application and there is nothing to show that any asset chargeable to wealth-tax escaped assessment. Non-filing of the return further cannot confer any jurisdiction on the Wealth-tax Officer to issue a notice under Section 17 in view of the said fact.
20. For the reasons stated hereinabove, rule is made absolute.