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Mr. Safiullah Wakf Estate Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
Subject;Direct Taxation
CourtGuwahati High Court
Decided On
Case NumberIncome-tax Ref. No. 2 of 1958
Judge
ActsIncome Tax Act, 1922 - Sections 22, 22(4), 23, 23(4), 33, 41, 41(1) and 66
AppellantMr. Safiullah Wakf Estate
RespondentCommissioner of Income-tax
Appellant AdvocateS.M. Lahiri, A.G., P. Chaudhuri and N.M. Lahiri, Advs.
Respondent AdvocateB.N. Chaudhury, Adv.
Excerpt:
- - sub-section (1) of section 41 of the act provides inter alia that in the case of income, profits or gains chargeable under this act which a receiver or manager or any trustee or trustees appointed under a trust deed or any valid wakf deed, is entitled to receive on behalf of any person, the tax shall be levied upon and recoverable from such receiver or manager or trustee in the like manner and to the same amount as it would be 'leviable upon and recoverable from the person on whose behalf such income, profits or gains are receivable, and all the provisions of the act shall apply accordingly'.this is the substantive part of sub-section (1) of section 41 followed by two provisos, of which the first proviso is material because the department appears to have acted on this proviso in..... sarjoo prosad, c. j.1. the only point which arises for consideration in this reference under section 66(2) of the indian income-tax act is:'whether, on the facts and in the circumstances of the case, the computation of tax and the rate, as on an association of persons, is legal and valid'.the assessments in these cases relate to various periods beginning from 194/-48 and ending with 1952-58, with corresponding accounting years.2. the relevant facts have been set out in the letter of reference. on 14-8-1946, one md. safiullah created a wakf styled 'mohammed safiullah wakf estate' in respect of properties details whereof were given in the wakf deed, constitutive himself as the first mutwalli thereof. on 6-10-1952, the income-tax officer, dibrugarh, issued a notice under section 34 read.....
Judgment:

Sarjoo Prosad, C. J.

1. The only point which arises for consideration in this reference under Section 66(2) of the Indian Income-tax Act is:

'Whether, on the facts and in the circumstances of the case, the computation of tax and the rate, as on an association of persons, is legal and valid'.

The assessments in these cases relate to various periods beginning from 194/-48 and ending with 1952-58, with corresponding accounting years.

2. The relevant facts have been set out in the letter of reference. On 14-8-1946, one Md. Safiullah created a Wakf styled 'Mohammed Safiullah Wakf Estate' in respect of properties details whereof were given in the Wakf Deed, constitutive himself as the first Mutwalli thereof. On 6-10-1952, the Income-tax Officer, Dibrugarh, issued a notice under Section 34 read with Section 22(2) of the Indian Income-tax Act to the Mutwali, Md. Safiullah Wakf Estate, calling upon him to file a return of income of the Wakf Estate as, in his opinion, the income from house properties of the Wakf Estate had escaped assessment.

The Mutwalli was unable to file a return as directed by the notice. On 13-1-1953 the Income-tax Officer issued another notice under Section 22(4) of the Act directing the Mutwalli of the Wakf Estate to submit returns and to file other papers, fixing the date of hearing on 4-2-1953. This notice appears to have been delivered to an employee of the Wakf Estate who in turn handed it over to the auditors of the Wakf Estate for necessary action. On 29-1-1953, the auditors wrote to the Income-tax Officer that the accounts were under audit and the returns would be submitted to the proper Income-tax Officer at Calcutta as soon as the audit was completed inasmuch as, according to the auditors, the bulk of the property was situated in Calcutta.

The Income-tax Officer, Dibrugarh, replied on 18-3-1953 observing that the auditors had no power of attorney and, therefore, the application could not be entertained, and inasmuch as no return had been furnished in compliance with the notice under Section 22(4) of the Act, the Officer completed assessment under Section 23(2) of the Act on 30-6-1953. The name of the assessee as given in the assessment order is 'Md. Safiullah Wakf Estate', Tinsukia, and the status mentioned is 'an association of persons'. It is not disputed that Md. Safiullah actually the on 23-3-1953 and was succeeded in the post by one Mr. Azizul Haque who is the present Mutwalli. Azizul Haque applied under Section 27 of the Indian Income-tax Act to re-open the case, but the application was rejected.

3. Thereafter there were appeals to the Appellate Assistant Commissioner of Income-tax. In those appeals, the legality of the ex parte assessments was questioned. The contention, broadly speaking, were that the assessments should have been made on the Mutwalli as the assessee, and not on the Wakf Estate as an association of persons, and that as the shares of the various beneficiaries were specific and determinate, it was incumbent on the Income-tax Officer to make the assessments on the beneficiaries in equal shares, and not to make a combined assessment in the hands of the Mutwalli.

These contentions depend on the application of Section 41 of the Indian Income-tax Act, and the question which, therefore, actually emerges is: whether the assessment should have been under the substantive part of Sub-section (1) of Section 41 of the Indian Income-tax Act or under the first proviso to that section. It was also contended that the Income-tax Officer had made no enquiries regarding the other personal income of the various beneficiaries of the Wakf Estate, or about the fact as to whether the individual shares of the beneficiaries were indeterminate or unknown.

The Appellate Assistant Commissioner decided all these points against the assessee, and on appeal, the order has been confirmed by the Appellate Tribunal. The statement of facts also shows that at the appellate stage before the Tribunal, one Mohd. Siddique filed an affidavit which forms a part of the statement (Annexure 'B'). This affidavit shows that a copy of the Wakf Deed was given to the Income-tax Officer through the Certificate Officer, Dibrugarh, on 18-11-1950, and the original Wakf Deed was deposited with the Certificate Officer on 20-11-1950.

The affidavit also states that a photostatic copy of the Deed was filed along with the application under Section 27 of the Indian Income-tax Act before the Income-tax Officer who made the assessments; nevertheless the Appellate Tribunal also held that inasmuch as the Wakf Deed had not been filed in the present proceedings and there was no return submitted by the Assessee, the Income-tax Officer was justified in proceeding to assess Md. Safiulla Wakf Estate as an association of persons.

4. The question which, therefore, arises on the above facts is: whether the assessment, in the circumstances, as on 'an association of persons' was legal and valid. Sub-section (1) of Section 41 of the Act provides inter alia that in the case of income, profits or gains chargeable under this Act which a receiver or manager or any trustee or trustees appointed under a trust deed or any valid Wakf Deed, is entitled to receive on behalf of any person, the tax shall be levied upon and recoverable from such receiver or manager or trustee in the like manner and to the same amount as it would be

'leviable upon and recoverable from the person on whose behalf such income, profits or gains are receivable, and all the provisions of the Act shall apply accordingly'.

This is the substantive part of Sub-section (1) of Section 41 followed by two provisos, of which the first proviso is material because the Department appears to have acted on this proviso in justifying the orders of assessment. The proviso says that where any such 'income, profits or gains or any part thereof are not specifically receivable on behalf of any one person', or 'where the individual shares of the persons on whoso behalf they are receivable, are indeterminate or unknown', the tax shall be levied and recoverable at the maximum rate. I need not refer to the other parts of the proviso.

Sub-section (1), shortly put, therefore, means that where a trustee under a Wakf Deed receives the income on behalf of the beneficiaries thereof, the income would be liable to assessment in his hands in the same way as if the amount was leviable and recoverable from the person or persons on whose behalf such income has been received. There was some discussion as to the real import and meaning of the expression

'leviable and recoverable In the like manner and to the same amount as it would be leviable upon and recoverable from the person on whose behalf such income, profits or gains are receivable'.

It was suggested that this refers to the person in the singular, as if there is only an individual beneficiary or to all the beneficiaries taken jointly as a person. Such an interpretation would obviously make the other portions of the sub-section, including the provisos, otiose and unnecessary; and the section in that case could simply provide for the assessment of the entire income in the hands of the trustee or manager as if the beneficiaries did not exist. It appears to us that the real meaning of the expression is that in case there are beneficiaries and the income is received by the Mutwalli on their behalf, the tax would be assessed and recovered from the Mutwalli just in the same manner as it would have been assessed and recovered from the beneficiaries individually.

In other words, the measure of the liability of the trustee or other representative under this section is the liability of each beneficiary; and the assessment should be at the individual rate of tax applicable separately to the total income of each beneficiary. For instance, where a business is carried on by the Mutwalli of a Wakf Estate comprising of several beneficiaries, the Mutwalli is taxable on the basis of the profits falling to the share of each beneficiary, and not on the footing of all the beneficiaries constituting an association of persons. In this connection, I may refer to a decision in 'Commissioner of Income-tax, B and O v. Habibur Rahman reported in AIR 1945 Fat 494, where the same principle has been recognised. Fazl All, C. J., as he then was, who delivered the judgment in that case, held that

'the assessee mutwalli should be taxed on the basis of profits falling to the share of each beneficiary, and not on the footing of all the beneficiaries constituting an association of persons, that is to say, the first proviso of Section 41 is inapplicable ........'

To the same effect is the decision in S.C. Mazumdar v. Commissioner of Income-tax, B and O reported in AIR 194S Pat 385. Here also the assessment was under Section 41(1) of the Act and it was held that the tax should be levied upon the receiver to the same extent as it would be leviable upon and recoverable from each of the representative owners. Therefore, there could be no doubt that under this provision the tax could be levied upon and recovered from the manager or the trustee just in the same manner as the income would have been assessed in the hands of the individual beneficiaries for whose benefit the income is received by the trustee or the mutwalli.

This sub-section, therefore, presupposes that not only the beneficiaries must be a known body of persons but also that they should have determinate shares in the trust property. But where this is not possible, in other words, where the beneficiaries are not known and their shares are indeterminate or unknown, the income will have to be assessed in the hands of the mutwalli or trustee as it it is the income of an association of persons held on their behalf jointly by the mutwalli or trustee.

In such an event, the first proviso to Sub-section (1) of Section 41 is attracted. Therefore, in order to bring the case within the proviso to Sub-section (1) of Section 41, it was necessary to find that the beneficiaries were either unknown or that the individual shares of the persons on whose behalf the income was receivable by the mutwalli were indeterminate or unknown. In the absence of any such material, no assessment could be possibly made under the first proviso to Sub-section (1) of Section 41; and the assessment could not be justified.

5. In the present case, therefore, we have to see whether the assessments which have been upheld by the Appellate Tribunal under the above proviso, are valid. The orders of the Income-tax Officer, which are of a common pattern do not make it clear under which provision of law he proceeded to make the assessments. It has been already pointed out that he purported to assess an assessee styled 'Md. Safiullah Wakf Estate, Tinsukia', assigning it the status of 'an association of persons'. The law required that the assessee should have been the mutwalli as such.

This error is, however, inconsequential in the context of the order which merely says that Mr. Safiullah transferred his properties to Md. Safiulla Wakf Estate by a Wakf Deed, dated 14-8-1946; as a result of this, the income from house property of the Wakf Estate escaped assessment. The Mutwalli did not file returns as required by the notice under Section 34 of the Indian Income-tax Act, nor did he comply with the notice under Section 22(4) of the Act, and for these failures, the Income-tax Officer completed the assessment under Section 23(4) read with Section 34 of the Act.

The assessment under Section 23(4) contemplates an assessment to the test of his judgment. It is quite clear on the face of the order that the Officer was aware of the existence of the Wakf Deed, but without caring to ascertain who the beneficiaries were, if any, and what was their respective share, he proceeded to make the assessments. The contention of the learned counsel for the assessee is that there was no material, in the absence of the deed, to justify the assessment on an association of persons.

A best judgment assessment has to be founded on some reasonable material and it is not to be merely a capricious or arbitrary order passed by an Income-tax Officer on mere assumptions, as it seems to have been done in this case. It is true that in this case there was no return filed by the assessee. His case is that the Mutwalli Md. Safiulla was ill at the time and actually thed later. It is also true that there was no compliance with the notice issued under Sub-section (2) of Section 22 of the Act. The statement of facts shows that the first date fixed for hearing was 4-2-53. Safiullah actually thed on 23-3-53 and the assessments were completed on 30-6-53.

These dates are significant and lend support to the case of the assessee that Safiullah was lying seriously ill at the relevant time, and the accounts may have been in the course of audit after his death. Perhaps it would have been wiser to entertain the application under Section 27 of the Act and re-open the assessments. In any case, in making a best judgment assessment, although the Officer concerned acts on his discretion, he must do so on certain reasonable material, and if there is no material on which he proceeds to act, then the assessments are open to question.

Failure to submit a return or to file documents in compliance with a notice under Section 22(4) of the Act should not be visited with a vindictive or penal order against an assessee, which cannot be justified on the ground of best judgment assessment, specially where the Officer concerned knows that there is a Wakf Deed, from the terms whereof it could be easily gathered whether the beneficiaries were known or unknown persons and whether their shares were or were not determinable.

6. If the situation had improved at later stages of the case and the Appellate Assistant Commissioner of Income-tax or even the Tribunal had considered or called for the document in question and then decided the matter, possibly there would not have been anything to say on the point. But it appears from the orders of both the Appellate Assistant Commissioner and the Tribunal that none of them ever cared to look into the document itself to ascertain those particulars before justifying the assessment of the Income-tax Officer under the proviso to Section 41(1) of the Act. The Appellate Assistant Commissioner disposed of the matter simply with the following observation:

'There is no substance in the two contentions either inasmuch as in the absence of any return submitted by the appellants or even the books of account produced, much less a certified copy of the Wakf Estate deed, the Income-tax Officer had no material to come to the conclusion that the shares of the various beneficiaries were specific and determinate. In the absence of any information given to the Income-tax Officer by the appellants themselves, as required by the notices, the Income-tax Officer was fully justified in making the best judgment assessment and taxing the income of the Wakf Estate as if it were the total income of an association of persons. I, therefore, see no justification for setting aside the orders merely on these three grounds raised'.

The order of the Appellate Assistant Commissioner further shows that for the purpose of calculating the income of the house properties, the Income-tax Officer had in fact utilised the returns filed by Md. Safiullah. He says:

'I have perused the assessment records and I find that although the details of the properties and the working of their income are not mentioned in the assessment order, details are recorded by the Income-tax Officer in a separate note recording the number and the nature of the properties as also of the rental value. I have seen the note and I think that the, estimates of the quantum of income as taken by the Income-tax Officer from year to year, are quite reasonable and no deduction is called for.'

In other words, this note of the Income-tax Officer was also treated as a sort of supplement to the order which he had passed; but the important fact remains that the calculation of income was based upon the returns filed by Md. Safiullah. The Department was thus conscious of the file relating to the personal assessment of Md. Safiullah, the then Mutwalli of the Wakf Estate, and the Officer had evidently utilised the records in these cases also. This fact is of some importance in view of the affidavit which was filed by Md. Siddique before the Tribunal.

In that affidavit, Md. Siddique stated that on 18-11-1950, a certified copy of the Wakf Deed was also given to the Income-tax Officer through the Certificate Officer, Dibrugarh, and the same lay with him since that day and had not been returned even up to the date of the affidavit That thereafter, along with the application under Section 27, a photostatic copy was submitted to the Income-tax Officer for his satisfaction, and the Income-tax Officer examined the documents in his possession, enquired in the office of the Wakf Commissioner in Calcutta and instructed the lawyer of the Government of India regarding the expressions in the said Wakf Deed.

This affidavit is, as I have shown, an Annexure to the Statement submitted to us and, therefore, can be legitimately referred to. The Statement does not show that the facts stated in the affidavit were controverted by the Department. The question which arises on the face of this affidavit is: whether when the Income-tax Department had this Wakf Deed in possession from which the necessary materials could be gathered, the Department was justified in ignoring it and then proceeding to assess without any legal foundation for the assessments. The Tribunal disposed of the matter thus:

'The affidavit does not state that whether the original or a copy of the Wakf Deed was filed before the Income-tax Officer who made the assessments which are under appeal. It is not the case of the appellants that the Income-tax Officer to whom a copy of the Wakf Deed was given on 18-11-1950, was the very Income-tax Officer who made the assessments. For these assessments, notices under Section 34 were issued on 6-10-1952. The production of a copy of the Wakf Deed and the original Wakf Deed mentioned in the affidavit was not in connection with these assessments but in connection with the collection proceedings of Mohd. Safiulla in the status of an individual. Since the appellants placed no materials before the Income-tax Officer to hold that the beneficial interest in the Wakf Estate belongs to five persons in definite separate shores, he was justified in making the assessments against the Estate in the status of an association of persons.'

Here again it is apparent that the Tribunal also supported the order of the Income-tax Officer without looking into the document itself. The Tribunal does not come to a definite finding that a certified copy of the Wakf Deed or even a photostatic copy thereof had not been presented to the Income-tax Department as stated in the affidavit of Md. Siddique and Was in its possession; but it appears to justify the assessment orders of the Income-tax Officer and his refusal to get hold of the document for the reasons given in the above quotation.

The position, therefore, remains that neither the Appellate Assistant Commissioner nor the members of the Tribunal looked into any material justifying the assessment under the proviso to Section 41 (1) of the Act, but they proceeded to affirm the order of assessment on the mere assumptions of the Income-tax Officer so that the matter stands where it was at the original stage. What material was there for assessment as on an association of persons? In our opinion, nothing, except the bare supposition that it must be so.

I have already shown that the requirements of the first proviso to Section 41(1) of the Act had to be satisfied before the assessment orders could be sustained on that account; and this satisfaction had to rest 'on positive materials, and not on negative surmises. In other words, it had to be shown by the Department, before acting under the said proviso, that the beneficiaries were either unknown or that their shares were indeterminate, the primary evidence of these facts being the registered Deed itself. No such speculation could be made from the mere failure to file the returns or to produce the books of accounts; and specially in the circumstances disclosed in this case, any such speculation, without any effort to look into the Wakf Deed itself, was quite unjustified.

7. There appears to be still some lurking confusion as to the meaning of the expression 'best judgment assessment' in spite of the fact that the matter has been so often considered and decided by various authorities. A 'best judgment assessment' implies that the officer has to weigh the pros and cons of the matter; in other words, ho should make an effort to find out materials which can be available and on which he should to the best of his ability proceed to make an assessment. The very essence of the matter is justice and fair play. I may usefully refer in this connection to the decision of the Supreme Court in Dhakeswari Cotton Mills Ltd. v. Commr. of Income Tax, West Bengal, 1955-1 SCR 941 at p. 949: ((S) AIR 1955 SC 65 at p. 69) where Mahajan, C. J. observes.

'that the Income-tax Officer is not fettered -by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a Court of law;.....it is equally clear that in making an assessment under Sub-section (3) of Section 23 of the Act, the Income-tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under Section 23(3).'

Their Lordships approved the rule of law on the subject as being fairly and rightly stated by the Lahore High Court in the case of Gurmukh Singh v. Commissioner of Income-tax, Punjab, reported in AIR 1944 Lah 353 (2) (FB). In M/s. Raghubar Mandal Harihar Mandal v. State of Bihar, (S) AIR 1957 SC 810, it was again found on the analogy of Section 23 of the Income-tax Act, that the assessing authorities are not entitled, after rejecting returns and books of account of the assessee, to proceed to estimate the gross turnover and make, an assessment without reference to any evidence or any material at all indulging in pure guess work.

8. On behalf of the Department, Mr. Chaudhuri has entered a vehement plea in defence of the taxing officers. He submits that those officers have many cases to dispose of; they are over-burdened with work and that if the assessee does not cooperate and produce the necessary materials that he is required to produce, then it should not Be left to the officers to fish for evidence on behalf of the assessee and find out materials for him when he himself is unable to do so. These general observations, in my opinion, do not assist the decision of this case.

I fully appreciate the difficulties of these officers and should not be thought to encourage any such attitude on the part of assessees; But it is to be remembered that these officers have to assess and collect taxes according to law and they must insure a fair deal to the assessees. The power to assess and collect taxes should not be exercised in any such manner as may lead one to infer that it was arbitrary or vindictive or unjust. Here, we know for certain that the Department was aware of the existence of the Wakf Deed and, according to the affidavit of Md. Siddique, the Wakf Deed had been presented to the Income-tax Officer who was in possession of a copy thereof.

In any case, before proceeding to assess under the proviso, it was incumbent on the officers concerned to satisfy themselves that the requirements of the proviso had been fulfilled. As I have shown, the Income-tax Officer himself did not purport to act under the proviso because he proceeded to assess as if the Wakf Estate itself was the assessee, [ But the Appellate Assistant Commissioner and the Tribunal have sought to justify the assessment within the meaning of the proviso.

Before they could do so it was necessary to ascertain whether the requirements of the proviso had been fulfilled, and in the absence of any material, they could not on mere guess assume that the assessment could be made upon an association of persons. There was nothing to prevent even the Tribunal from calling for the document in question either from the departmental authorities or from the assessee himself and then proceeding to decide the matter on that basis. It is, therefore, fairly obvious on the Statement of the case that there was no material on which the present assessments as on an association of persons could be justified.

9. It would be, of course, open to the Tribunal to decide the matter of assessment according to law after calling for the document in question and after considering whether the case falls under Sub-section (1) of Section 41 or under the first proviso to that section. Though the present assessments, as made by the Income-tax Officer, may not be sustained, the Tribunal can dispose of the appeal, which should be deemed to be pending before it, according to law and direct appropriate assessments in the light of the order passed by this Court in answering the question raised.

Mr. Lahiri has very fairly conceded that his client has no objection to the payment of taxes due provided they are assessed in accordance with law, and has drawn our attention to the decision in Income-tax Appellate Tribunal Bombay v. S.C. Cambatta and Co. Ltd., AIR 1956 Bom 509 where it was held as follows:

'Reading Sections 53(6) and 66(5) together, the scheme is fairly clear that when a reference is made to the High Court either under Section 66(1) or Section 66(2), the decision of the Appellate Tribunal cannot be looked upon as final; in other words, the appeal is not finally disposed of. It is only when the High Court decides the case, exercises its advisory jurisdiction and gives directions to the Tribunal on questions of law, and the Tribunal reconsiders the matter and decides it, that the appeal is finally disposed of.

In one sense, as the learned Judge rightly points out, it may be said that on the High Court giving its decision, there is a continuation of the appeal under Section 33; in another sense it may be said that there is a rehearing of the appeal by the Appellate Tribunal but it is clear that what the Appellate Tribunal is doing after the High Court has heard the case, is to exercise its appellate powers under Section 33.

Any other construction which might be put upon Section 66(5) will lead to absurdities. For instance, under Section 33(4), an obligation is cast upon the Appellate Tribunal to hear both the parties and to communicate any order that it has passed to the assessee and to the Commissioner'.

We respectfully endorse these observations and we think there is nothing to prevent the Appellate Tribunal from re-considering the appeal in the light of the answer given by us to the question propounded. We accordingly answer the question in the negative and hold, for the reasons which we have already given, that on the facts and circumstances of the case, the computation of tax and the rate, as on an association of persons, was not legal and valid. The assessee is entitled to the costs of this reference. Hearing fee Rs. 100/-.

Mehrotra, J.

10. I agree with the answer proposed by my Lord the Chief Justice, but I would like to add my own reasons also. The facts are fully set out in the order of my Lord the Chief Justice, and need not be reiterated. The question referred to us is in the following terms:

'Whether, on the facts and in the circumstances of the case, the computation of tax and the rate, as on an association of persons, is legal and valid'.

I, therefore have to examine the circumstances found by the Appellate Tribunal justifying the assessment as on an association of persons. The Appellate Tribunal has stated the contention of the assessee in the following terms:

'The contention that the assessment is not legal is said to be based upon the fact that the. Wakf Deed gave definite shares to five individuals and, therefore, under Section 41(1), the assessment should have been made on the individual beneficiaries'.

The entire basis, to my mind, of the assumption of the Appellate Tribunal is erroneous. Section 41(1) of the Income-tax Act lays down that if the income in the hands of the Mutwalli is chargeable to income-tax, it would be levied upon and recoverable from the Mutwalli in the like manner and to the same amount as it would be leviable upon and recoverable from the person or persons on whose behalf such income, profits or gains arc received.

Therefore, if the first proviso to Section 41(1) is not attracted, under Clause (1), the measure of liability of the Mutwalli is the liability of each beneficiary. The Mutwalli will be taxable on the basis of income or profit falling to the share of each beneficiary, and not on the footing of all the beneficiaries constituting an association of persons. The burden, therefore, lies upon the Department to show that the proviso is attracted, The proviso reads as follows:

'Provided that where any such income, profits or gains or any part thereof are not specifically receivable on behalf of any one person, or where the individual shares of the persons on whose behalf they are receivable are indeterminate or unknown, the tax shall be levied and recoverable at the maximum rate, but, where such persons have no other personal income chargeable under this Act and none of them is an artificial juridical person, as if such income, profits or gains or such part thereof were the total income of an association of persons.'

Before the proviso can be attracted, it has got to be established, firstly, that the amount was not receivable specifically on behalf of any person or persons or, secondly, that the shares of the beneficiaries were indeterminate or unknown. The circumstance pointed out by the Appellate Tribunal for coming to the conclusion that in the present case, the shares of the beneficiaries were unknown and indeterminate, is that the returns and the Wakf Deed were not! filed by the Mutwalli. The Tribunal has observed as follows:

Since the appellants placed no materials be fore the Income-tax Officer to hold that the beneficial interest in the Wakf Estate belongs to five persons in definite separate shares, he was justified in making the assessments against the Estate in the status of an association of persons'.

The only circumstance, therefore, pointed out by the Tribunal is that the assessee failed to place materials before the Tribunal from which it could be positively inferred that the Estate belonged to five persons in definite separate shares. That was not what was required to apply the proviso. Before applying the proviso and taxing the Mutwalli on the footing that the beneficiaries constituted an association of persons, the Income-Fax Officer had to come to a definite conclusion that the shares of the beneficiaries were indeterminate or unknown.

By merely saying that in the circumstances, they were unknown to the Income-tax Officer, the burden was not discharged. What actually to my mind this proviso means is that if by reasonable efforts also the Department could not have known the shares or if by looking into the document (Wakf Deed) itself, it was not possible to know the beneficiaries or their definite separate shares, in that event the proviso would be attracted; but in the present case, the assessee only failed to file his returns. He was never asked to file a copy of the Wakf Deed. The Department knew that there was a Wakf created by Safiullah. In these circumstances, it cannot be said that because the returns were not filed, the shares of the beneficiaries were unknown and indeterminate.

Under the proviso, the burden lies upon the Department to prove that the shares are indeterminate and unknown. If the shares could Have been ascertained by looking into the Wakf Deed, it could not be said that they were unknown and indeterminate. By taking no steps to get the Deed and examine its terms, the Department cannot say that the Income-tax Officer definitely found that the shares were unknown or indeterminate and consequently the proviso was attracted. The Department knew that the Wakf Deed had been filed before the Certificate Officer. The records of that case could have been obtained and the document looked into. In my opinion, therefore, in the circumstances of the present case, it cannot be said that the proviso was attracted and the Department was justified in assessing in the status of an association of persons.


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