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Gauri Shankerji Deity and ors. Vs. Union of India (Uoi) - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberFirst Appeal No. 203 of 1978
Judge
Reported in[1984]145ITR67(MP)
ActsIncome Tax Act - Sections 11 and 12
AppellantGauri Shankerji Deity and ors.
RespondentUnion of India (Uoi)
Appellant AdvocateGulab Gupta, Adv.
Respondent AdvocateB.K. Rawat, Adv.
Cases ReferredState v. Anwarbi
Excerpt:
- - 1), who had come to depose that the suit property was paluram's self-acquired property, has clearly stated in paras. d-35. clearly no reliance can be placed on this part of the testimony of this witness. gopal vinayak gosavi [1960]1scr773 .we are satisfied that the plaintiffs have not been able to withdraw this admission nor could they show it to be erroneous. if the income is substantial, it may well form the foundation of subsequent acqusition. further, an intention to throw the separate property into the common stock and to waive all separate rights in respect thereof must be clearly established. although the manager may alienate for optional as well as obligatory religious purposes, not every gift which appeals to the donor as dharmika will meet this requirement. we are clearly.....b.c. varma, j. 1. this first appeal by the plaintiffs is directed against the decree passed by the district judge, raigarh, dismissing their suit for declaration that certain house property belongs to the deity, shri gauri shankerji, and is, therefore, not liable for attachment and sale for recovery of the income-tax and other dues against the huf of late paluram dhanania of raigarh in the state of madhya pradesh.2. seth paluram dhanania was the karta of an huf consisting of himself and his sons. he had extensive business and owned considerable movable and immovable properties. this property included a bungalow styled as 'sewa kunj' and also ten other adjoining houses in raigarh said to have been acquired under the sale deed, dated november 23, 1941, (ex. d-35), wherein paluram and his.....
Judgment:

B.C. Varma, J.

1. This first appeal by the plaintiffs is directed against the decree passed by the District Judge, Raigarh, dismissing their suit for declaration that certain house property belongs to the deity, Shri Gauri Shankerji, and is, therefore, not liable for attachment and sale for recovery of the income-tax and other dues against the HUF of late Paluram Dhanania of Raigarh in the State of Madhya Pradesh.

2. Seth Paluram Dhanania was the karta of an HUF consisting of himself and his sons. He had extensive business and owned considerable movable and immovable properties. This property included a bungalow styled as 'Sewa Kunj' and also ten other adjoining houses in Raigarh said to have been acquired under the sale deed, dated November 23, 1941, (Ex. D-35), wherein Paluram and his son, Baijnath, are shown as purchasers. Paluram's father and uncle were respectable persons of the society and were also businessmen. They had a house at Raigarh and lived and traded jointly. Paluram created a temple within the house situate in the premises 'Sewa Kunj' and installed his family deity of Shri Gauri Shankerji in the said temple. By a registered deed of endowment dated August 6, 1953, (Ex. P-1), he purported to dedicate to the said deity of Shri Gauri Shankerji all the house property including the garden and out houses in the premises 'Sewa Kunj'. The purpose of this dedication is shown in the deed of endowment to be the maintenance of the temple and meeting out the necessary expenses of worship of the 'deity. The property is described as Paluram's self-acquired property. Under this deed, Paluram appointed himself as first shebait. The deed further envisages that on the death of Paluram, his sons jointly, and thereafter, the descendants in the male line will succeed as shebaits and in the absence of male shebaits, the widow, and in absence of any such widow, some other person in his family only was to be the shebait. The income of the property so dedicated was directed to be applied for the maintenance and repair of the property and for payment of cess, nazul taxes and other outstandings and for the remuneration of the pujari and other servants. The remainder was to be applied for the daily worship of the deity. Yet by another deed of endowment, dated March 26, 1955, (Ex. P-2), Paluram for himself and as karta of the joint Hindu family, and for and on behalf of his heirs and successors, further purported to dedicate ten houses to that family deity and described himself as the sole and absolute owner of the property. The details of these houses are given in the schedule to Ex. P-2. These houses are occupied by tenants and fetch income. One or two of these houses are occupied by the I.T. Dept.

3. The HUF of Paluram Dhanania was assessed to income-tax and wealth-tax for which purposes returns were duly filed by Paluram himself and the assessee was always shown as the HUF. The assessments made and completed for the years 1950-51 and 1951-52 and for subsequent years were later on reopened and huge demands were made. Demand notices were issued and when the amounts of tax due against the assessee, i.e., the HUF of Paluram Dhanania were not paid, revenue recovery certificate was forwarded to the Tahsildar, Raigarh, for effecting the recovery of the amount of tax due. During these recovery proceedings, the Tahsildar attached the ten houses as also the premises 'Sewa Kunj'. Objection to this attachment was raised by and on behalf of the deity through Paluram as its shebait claiming that the property exclusively belonged to the deity and was, therefore, not liable to attachment or sale for recovery of the dues against Paluram or his HUF. The two deeds of dedication (Exs. P-1 and P-2)were relied upon. By order, dated January 28, 1959 (Ex. P-3) passed by the Tahsildar, Raigarh, in Revenue Recovery Case No. 5-A-14/1959-60, the objection on behalf of the deity was upheld. The ten houses and the Premises known as 'Sewa Kunj' were held to be dedicated to the deity and were found to be in its possession. Consequently, it was held that the property could not be attached for recovery of dues against Paluram Dhanania and the attachment was held to be null and void. The properties were accordingly released. Paluram Dhanania then died on January 31, 1963. Itappears that thereafter the assessment was reopened and the HUF of Paluram Dhanania was reassessed to income-tax. Proceedings for recovery of the tax so due were resumed. The Tahsildar Raigarh, again proceeded to recover the amount of tax due against that family. By his order, dated September 27, 1971, (Ex.P-6), the Tahsildar-cum TRO, Raigarh, did not think it proper to comment upon the order (Ex. P-3) passed by his predecessor, Tahsildar, and found himself unable to reopen the matter. Accordingly, he held that he was not competent to proceed against that property in view of the earlier order (Ex. P-3). Provision thereafter was made in the I.T. Act itself and certain ITO's were designated as TRO's and were invested with necessary powers to effect recoveries of dues against assessees. By order dated May 24, 1972 (Ex. D-38), Shri S. J. Mal, TRO, Raigarh Range, Raigarh, again took up the matter of recovery of taxes due against the HUF of Paluram Dhanania and attached the property in question. The shebaits of the deity, Shri Gauri Shankerji again raised the objection to attachment and sale of the property. The objections were overruled and the property was held to be belonging to the assessee, namely, the HUF of Paluram Dhanania. The sale of the property was directed to continue. As this order (Ex. D-38) adversely affected the alleged claim of title by the deity over the said property, a notice, dated July 28, 1972 (Ex. 7), was served upon the respondent whereafter the suit giving rise to this appeal was filed.

4. The plaintiffs in this suit are the deity, Shri Gauri Shankerji, installed in the temple in the premises 'Sewa Kunj', Shyam Sunder, son of Paluram, Krishna Kumar and Gopal Das, grandsons of Paluram. They claim the property to be the self-acquired property of Paluram Dhanania and assert that it never assumed the character of joint Hindu family property. The above mentioned two dedications completely divested Paluram Dhanania of all the interest, right and title which he had in those properties and the dedications were irrevocable. The trust so created by Paluram Dhanania was recognised by the I.T. Dept. when it registered it under Section 12A of the I.T. Act. It was alleged that this registration precluded the I.T. Dept. to now contend that the property belonged and continued to belong to the HUF. A further plea taken was that the two orders (Exs. P-3 and P-6) passed by the two Tahsildars, Shri Bose and Shri Jha, exempting the property from attachment and sale for recovery of the tax dues against the HUF of Paluram Dhanania operate as res judicata and precluded the Department to proceed against the suit property for recovery of those dues. All these allegations were traversed by the respondent, who claimed that right from its inception the property in suit was impressed with the character of joint family property belonging to the HUF of Paluram Dhanania and he was its karta. The two deeds of dedication (Exs. P-1 and P-2) were alleged to be sham and bogus created for the purpose of avoiding and defeating the recovery of taxes. The subsequent conduct of Paluram Dhanania was relied upon to show that he also treated the property as belonging to the HUF and even declared it to be so before the Department. The registration of the trust with the I.T. Dept. was said to be wholly inconsequential and did not preclude the Department from proceeding against the property for the recovery of the dues against the HUF of Paluram Dhanania. Similarly, the two orders (Exs. P-3 and P-6) passed by the two Tahsildars, Shri Bose and Shri Jha, respectively, were said to be nullities and not binding on the Department. It was said that the first order (Ex. P-3) was passed without notice to the Department and the second order (Ex. P-6) was, in fact, no decision. The learned district judge, who tried the suit, after recording evidence of the parties, who also filed numerous documents, concluded that the property in suit was the joint family property and Paluram Dhanania alone had no right to make a gift of that property to the deity. The two deeds of dedication (Exs. P-1 and P-2) were held to be fictitious and sham, designed only to avoid the tax liability. It was held that the two orders (Exs. P-3 and P-6) did not operate as res judicata. The registration of the trust was also held to be inconsequential. On these findings, the suit has been dismissed.

5. On behalf of the plaintiffs-appellants, it was first argued that the lower court has gone wrong in holding that the property was not the self-acquired property of Paluram Dhanania. This contention, in our opinion is not sound. It is in the evidence of Bodhram Yadav (P.W. 3) that Paluram's father, Biharilal and uncle, Hardwarilal, possessed land and had a rice mill in Tarapur and were men of repute. Paluram had an ancestral house at Raigarh (Gopaldas Gupta, P.W. 5, para. 56, and Niranjanlal Sharma, P.W. 11, para. 25,). Paluram first started his career in Calcutta and then shifted to Raigarh, where he had ancestral property and business, which had already gained reputation. It appears that the business at Raigarh in the hands of Paluram soon expanded. Admittedly, Paluram's family remaind joint and the buriness was carried in different names. His sons associated themselves in that business. The suit property was acquired on November 23, 1941, under sale deed, Ex. D-35. The purchasers therein are Paluram and his joint son, Baij-nath. It is not the plaintiffs' case that Baijnath's name in the sale deed was included only benami. Thus, to begin with, the acquisition of the suit property is by Paluram and his joint son, Baijnath, and not by Paluram alone. It is true that mere existence of joint family will not lead to an inference that this property was joint nor will mere existence of some ancestral property and business permit inference that it was acquired out of that property or business unless it could be further shown that the said ancestral property/business yielded enough income out of which the property in question could be acquired. As there is no evidence of income of the ancestral property in the present case, it is not possible to draw any presumption that the suit property belonged to the joint family of Paluram. Evidence adduced in the case along shall be decisive. Niranjanlal Sharma (P.W. 1), who had come to depose that the suit property was Paluram's self-acquired property, has clearly stated in paras. 12 and 13 of his deposition that he was unable to state the source of capital invested by Paluram in his business at Calcutta, as also at Raigarh. He could not say if Paluram acquired the suit property out of the income derived from his business.

6. Out of the plaintiffs, only Gopaldas Gupta has been examined as P.W. 5. He is the grandson of Paluram, His age in the plaint is shown as 26 years. The suit was filed in October 1972. In November, 1941, when the suit property was acquired, he was either not born or was in his infancy. He, therefore, cannot be expected to have any knowledge of the source of consideration of the sale deed, Ex. D-35, although in his cross-examination he attempted to say that the property was purchased from the income derived by Paluram from his business in Calcutta. He, however, could not tell the names of the purchasers. He also deposed that he did not instruct his counsel, who drafted the plaint, about the source of consideration for the sale deed Ex. D-35. Clearly no reliance can be placed on this part of the testimony of this witness. Thus the oral evidence on this issue is rather scanty and leads us nowhere. There is no documentary evidence either. One, therefore, has to depend upon the conduct of Paluram and other members of his family in relation to this property. When examined closely, it will appear that Paluram, at no point of time, ever treated this as his self-acquired property. While acquiring it, he included an adult male member of his family as purchaser in the sale deed, Ex. D-35, and never claimed that the inclusion was nominal. Then he claimed all the business as joint family business, It was the joint undivided family that was assessed to income-tax and wealth-tax and there is nothing on record to show that Paluram was ever assessed individually. Before the execution of the deeds of dedication (Exs. P-1 and P-2), the income from the suit property was also shown in the income-tax and wealth-tax returns as the income of the joint family. Indeed, on September 7, 1950, Paluram, describing himself as karta of the HUF, voluntarily declared before the Income-tax Investigation Commission (Ex. D-1C) that the family concealed an income of Rs. 6,50,000 during the assessment years 1941-42 to 1949-50 and that the assets of that assessee, i.e., the undivided family, included 'a two-storeyed building with garden (Sewa Kunj) and 10 one storey buildings in Civil Lines, Raigarh, all standing in the name of Paluram Baijnath'. This unqualified admission by Paluram, in our opinion, goes a long way and, if not conclusive, is yet decisive of the issue, unless successfully withdrawn or shown to be erroneous: Narayan Bhagwantrao Gosavi v. Gopal Vinayak Gosavi : [1960]1SCR773 . We are satisfied that the plaintiffs have not been able to withdraw this admission nor could they show it to be erroneous. In the plaint, no averment appears showing the circumstances under which this admission was made. At the stage of evidence also, no attempt worth the name was made in this direction. The learned counsel for the appellants, however, argued that the assets in Ex. D-1C are the total assets of individual members of the family. This explanation is not at all convincing in view of the unequivocal language employed in that document. On the other hand, from the various assessment orders in income-tax and wealth-tax cases against the HUF of Paluram Dhanania, it appears that the suit property as also its income was treated as the property of the joint family. This was so prior to, as also subsequent to, the creation of the alleged endowments in the years 1953 and 1955. Paluram Dhanania himself never objected to this. This conduct is also very significant and points out that the suit property was all along treated as joint family property during the lifetime of Paluram Dhanania.

7. Learned counsel for the appellants rightly pointed out that in the present case as there was no evidence that the joint property yielded any income out of which the property in question could be acquired, it was for the respondent-defendant to prove that the property in question was the joint family property. The learned counsel rightly placed reliance upon the decision in Srinivas Krishnarao v. Narayan Devji : [1955]1SCR1 , where it was said that the proof of existence of a joint family does not lead to the presumption that property held by any member of the family is joint, and the burden rests upon anyone asserting that any item of property was joint to establish the fact. The Supreme Court further held that where it is established that the family possessed some joint property which from its nature and relative value may have formed the nucleus from which the property in question may have been acquired, the burden shifts to the party alleging self-acquisition. The important thing, in such cases, to consider is the income which the nucleus yields. If the income is substantial, it may well form the foundation of subsequent acqusition. The Supreme Court further pointed out that these are not abstract questions of law but questions of fact to be determined on evidence in the case. (See also Rukhmdbai v. Laxminarayan : [1960]2SCR253 ). We have earlier shown that although there is some evidence in the present case to show that there was some joint family property and business, yet there is hardly any evidence of income derived therefrom. That being so, the mere existence of some joint family property in the present case is of no assistance to the respondent and from that fact alone it is not possible to hold that the suit property was joint family property.

8. Learned counsel for the appellants then pointed out that the lower court is not right in holding that Paluram Dhanania and his son, Baijnath, blended the suit property with the other joint family property. His complaint is that the respondent has raised a specific plea in the written statement in this behalf. In our opinion, specific pleading as to blending is not necessary (See Binod Bihari Lal v. Rameshwar Prasad Sinha : AIR1978SC1201 . All the same, it is pleaded in the written statement that there was some ancestral property, that the suit property was acquired by the joint family and that it ever since has been treated by Paluram Dhanania as also the other members of the family as the joint family property. When read as a whole, the written statement does spell out a plea that the suit property was treated as part of the joint family property by all concerned including Paluram Dhanania. The parties went to trial with full knowledge of this question as if it was in issue, had ample opportunity to adduce evidence thereon and fully availed themselves of the same. It, therefore, cannot be said that want of specific plea in exact terms resulted in any prejudice to the appellants (Nagubai Ammal v. B. Shama Rao : [1956]1SCR451 ). It may be added that during the lengthy arguments that were advanced before us in this case, no prejudice for want of any such plea was demonstrated on behalf of the appellants. Before, however, a finding in favour of blending of any property with other joint family/coparcenary property is made, it is necessary to find the existence of some property with which the property in question could be blended. Further, an intention to throw the separate property into the common stock and to waive all separate rights in respect thereof must be clearly established. No registered document for blending is necessary. Pronouncing upon this question of 'blending', the Supreme Court in Goli Eswariah v. CGT : [1970]76ITR675(SC) , after referring to its earlier decision in Mallesappa Bandeppa Desai v. Desai Mallappa : [1961]3SCR779 , said that the doctrine inevitably postulates that the owner of a separate property is a coparcener who has an interest in the coparcenary property and desires to blend his separate property with the coparcenary property. The existence of coparcenary, therefore, is necessary. The separate property must be voluntarily thrown by him into the common stock with the intention of abandoning the separate claim therein. It is not the physical mixing which impresses the separate property with the character of joint family property but what is necessary is the intention by waiving and surrendering his separate rights. The act is unilateral on the part of coparcener seeking to blend his property and there is no question of the family rejecting or accepting it. It is of utmost importance that the individual renounces his individual rights in the property and treats it as that of the family. The moment he does so, the property assumes the character of joint family property. This doctrine is peculiar to Mitakshara School of Hindu law. Whether a coparcener has thrown his self-acquired property into the common stock and blended it with joint property is entirely a question of fact to be decided in the light of all circumstances of the case (See Narayana Raju v. Chamaraju : [1968]3SCR464 ). Mere permitting user of the property or its income by other members of the joint family out of generosity or kindness of the holder is not enough. The holder cannot also be deprived of his self acquired property merely because he does not maintain a separate account of the earning out of that property. Where, however, an individual debited his capital account in his business accounts with a sum of Rs. 50,000 and claimed that he had thrown this amount into the family hotchpot and rotated in the pawnbroking business of the joint family and made a statement that the money was utilised in the said pawnbroking business by the joint family, the Madras High Court in C1T v. Himmatmal Jawantraj [1980] 126 ITR 391 held that the declaration and the conduct of the individual were sufficient to infer his intention that he blended his separate property of Rs. 50,000 with that of his joint family. Similarly, where the income-tax returns showed that certain properties were impressed with the character of coparcenary property by reason of the declarations made therein, a Division Bench of the Andhra Pradesh High Court in G. Mohan Rao v. G. Satyanarayana : [1972]84ITR685(AP) , held that, in the absence of any explanation, it was manifest from the conduct of the assessee making such a declaration that the statement in the returns was deliberately made out of his own volition with an intention to abandon or give up his interest in the self-acquired property and to impress it with the character of the joint family property. It was pointed out that it will be more so when the statement/declaration so made was repeated in subsequent years. The facts in G. Mohan Rao's case are almost similar to the case in hand. We have earlier pointed out that in all the returns filed for assessment of income-tax and wealth-tax on behalf of the assessee, i. e., the joint Hindu family, Paluram described himself as karta of the family and included the income of the suit properties as that of the joint family and also made a declaration that the suit property was the joint family property. In spite of the fact that this circumstance was relied upon by the respondent for its assertion that the property in suit was treated as joint family prperty by Paluram Dhanania himself, no explanation has been offered by the plaintiffs either in the plaint or by Gopaldas Gupta (P.W. 5) when he appeared in the witness box. The statement was repeated. We are therefore, inclined to agree with the view taken by the trial court that the suit property was impressed with the character of the joint family property and was ever since treated as such. We, accordingly, affirm the finding that the property in suit belonged to the joint Hindu family and not to Paluram individually when it was sought to be dedicated to the deity installed in a temple situate within the premises 'Sewa Kunj'.

9. To wriggle out of this situation, learned counsel for the appellants argued that as karta of the family, Paluram had a right to make the gift of the suit property to the deity for religious and charitable purpose. The Hindu law permits small portions of immovable and reasonable portions of movable property to be given inter vivos for religious purposes, that is to say, for purposes which the court will hold to be conducive to religious benefit or for the furtherance of religion as these are understood in Hinduism today. Although the manager may alienate for optional as well as obligatory religious purposes, not every gift which appeals to the donor as dharmika will meet this requirement. Gifts for proper purposes, but of excessive amount are invalid in toto (See Introduction to Modern Hindu Law by J. Duncan M. Derrett, 1963 Edn., p. 267). In Guramma v. Mallappa : [1964]4SCR497 , the court was concerned with a gift in favour of a daughter or sister as a provision for maintenance. Upholding such right, it was held that it is not possible to lay down a hard and fast rule prescribing the quantitative limits of such a gift as that would depend on the facts of each case and it can only be decided by courts, regard being had to the overall picture of the extent of the family estate, the number of daughters to be provided for and other paramount charges and other similar circumstances. It was pointed out that the validity or the reasonableness of a gift does not depend upon the plurality of documents but on the power of the father to make a gift and the reasonableness of the gift so made. It would thus appear that the reasonableness of the gift, apart from the authority of a father/manager to make it, will depend upon various circumstances which have to be pleaded and proved before such a gift can be asked to be upheld. In the present case, apparently, there is no such plea. The entire case of the plaintiffs/appellants at all stages had been that the suit property was a self-acquired property of Paluram Dhanania which he could alienate without any fetters. Even at the stage of trial, this stand alone was maintained. The trial court was not even asked to give a finding on this aspect of the case which has been raised for the first time in this appeal. Apparently, this issue involves determination of various facts as indicated above. It is not correct to say, as was argued by the learned counsel for the appellants, that it was the defendant who ought to have pleaded that the gift made by Paluram was not within reasonable limits. We are clearly of the opinion that it is the plaintiffs/ appellants who wanted to justify the gift in favour of the deity and it was for them to have pleaded and proved the reasonableness of that gift. They failed to do so and, therefore, cannot be heard to justify the gift on the ground that it was within reasonable limits. The extent of the property held by the joint family of Paluram Dhanania was never in issue. The parties also did not place on record the liabilities and burden of the family. In the absence of this material, it is not possible to hold that the gifts by Paluram to the deity were within reasonable limits. We, therefore, reject the contention on behalf of the appellants that the gifts under the documents (Exs. P-1 and P-2) are otherwise valid having been made by the karta of a family and within reasonable limits.

10. On the above findings, it is not necessary to deal with the question whether the endowments made under the deeds, Exs. P-l and P-2 are fictitious, nominal and bogus and not real and were made only with a view to defeat the recovery of the taxes due against the joint family. We are, however, of the opinion that on the facts of the present case the lower court has rightly found that what is apparent is not real and that Paluram Dhanania had executed the two documents only with a view to defeat and defraud the Revenue and to save the property from being proceeded against for the recovery of income-tax and wealth-tax dues against the family. We say so because there appears to be no apparent need for making such dedications. At the time the first of these two documents, namely, Ex. P-l, was executed in the year 1953, the assessee, namely, the HUF was under liability to pay huge amount of income-tax. This is clear from the statement of Shri Ronel Daniel (D.W. 1), who was then the ITO. He has deposed that by the assessment order, dated 30th November, 1952, a sum of Rs. 1,05,000-9 was assessed as income-tax against the HUF of Paluram for the year 1950-51, which was not paid up to March 26, 1955. A demand notice was issued on 30th November, 1952, in that behalf which was received by Paluram on December 15, 1952. A show cause notice was also issued and that was received on January 14, 1953. Paluram applied for extension of time to pay the tax [see also Exs. D-1C, D-2C, D-3C, D-4C and D-5]. Similarly for the next year, the joint family was assessed to tax. It is true that a clearance certificate (Ex, D-8C) was issued in favour of the family on March 19, 1953. That too shows that tax was due against the family. Assessment proceedings for future years were pending. The recitals in the two documents are also not without significance. Paluram described the property as his self-acquired property although he dealt with it as the joint Hindu family property, constituted and appointed himself as the first shebait, the shebaitship was always to remain with some person of his family and the income of the property allegedly dedicated to the deity was to be applied first in the maintenance and repair of the said property and payment of cesses, nazul taxes and other outgoings in respect of the same, the remuneration of the pujari and other servants was to be paid from the gross income and only the remainder was to be applied for the daily worship of the said deity. Why it became necessary to dedicate 10 more houses only after a period of two years is not known at all. It is also in evidence that except one or two houses, the remaining property even after the alleged dedications remained in physical occupation of Paluram, his sons, the plaintiffs and their relations. It also cannot escape notice that the alleged temple is situated and the idol is installed within the precincts of a residential bungalow known as 'Sewa Kunj' and there is no evidence of appointment of pujari or of the performance of any religious functions although the purpose of the dedications is shown to be the worship of the deity.

11. Learned counsel for the appellants in his attempt to justify the creation of the trust and the gift to the deity, relied upon the following circumstances:

(i) the issuance of the clearance certificate (Ex. D-8C) by the I.T. authorities ;

(ii) payment of rent to the trust by the income-tax department in respect of some of the suit houses ;

(iii) sale of other properties by Paluram between February 3, 1955, and November 20, 1956, without any objection on behalf of the I.T. Dept. ; and,

(iv) Paluram being a man of substance.

12. Learned counsel also placed reliance upon decisions of the Supreme Court in Dasaratharami Reddi v. Subba Rao AIR 1957 SC 797, Ramchandra Shukla v. Shree Mahadeoji AIR 1970 SC 458, and S. Shanmugham Pillai v. K. Shanmugham Pillai : [1973]1SCR570 ), and certain other decisions. In one of these decisions, i.e., S. Shanmugham Pillai's case, it has been observed in para. 32 that a dedication may be either partial or complete, and whether or not it is so would naturally be a question of fact to be determined in each case on the terms of the relevant document, if the dedication in question was made under a document. It was further pointed out that in such a case it is always a matter of ascertaining the true intention of the parties and that such an intention must be gathered on a fair and reasonable construction of the document considered as a whole. Their Lordships further observed (p. 2076) :

'If the income of the property is substantially intended to be used for the purpose of a charity and only an insignificant and minor portion of it is allowed to be used for the maintenance of the worshipper or the manager, it may be possible to take the view that dedication is complete. If, on the other hand, for the maintenance of charity a minor portion of the income is expected or required to be used and a substantial surplus is left in the hands of the manager or worshipper for his own private purposes, it would be difficult to accept the theory of complete dedication.'

13. In our opinion, the above circumstances pointed out by the learned counsel for the appellants lend no support to his contention and are not such as may negative the inference drawn by us above regarding the fictitious nature of the two documents (Exs. P-1 and P-2). The clearance certificate itself mentions that more than Rs. 70,000 was then due as income-tax against the HUF on March 19, 1953, when the same was issued. The sale of other properties by Paluram has hardly any bearing upon the question. The very fact that Paluram had been requesting for time to arrange for payment of amount of tax due militates against his being a man of substance. Even otherwise, merely because he was a man of substance, it cannot be held on the face of the other circumstances which we have highlighted above that he had a genuine desire to make a dedication. It is true that some amount as rent was paid by the I.T. Dept. for its occupying some of the suit houses. In the absence of any receipts, however, it is difficult to say who collected the rent and who the landlord was. Even otherwise, we are not inclined to hold that merely for this reason the dedication can be held as genuine. From what we have stated above, we are clearly of the opinion that the alleged gift of the property to the idol was a mere scheme for making the property inalienable and from the scrutiny of the two deeds (Exs. P-1 and P-2), we are satisfied that there had been no genuine divestiture in favour of the idol and the endowments were only sham. From these circumstances, the lower court has rightly found that there was no real gift in favour of the deity, Paluram, the author of these two documents, did not have the slightest intention to dedicate any property to the deity, but by the device of creation of the trust, the real purpose was to shield the property from being proceeded against by the income-tax authorities for recovery of income-tax dues of the HUF. Under somewhat similar circumstances, such an inference was drawn by a Division Bench of this court in Omprakash v. Union of India : [1983]144ITR247(MP) .

14. Learned counsel for the appellants further argued that the I.T. Dept. has registered the appellants' trust under Section 12A of the I.T. Act, 1961 and, therefore, the respondent is precluded from contesting its validity. The lower court has found against the appellants on this issue also, and, in our opinion, rightly. A significant fact in this regard is that the suit was filed on October 13, 1972, while Section 12A was included in the I.T. Act by Finance Act, 1972, with effect from April 1, 1973. Apparently, therefore, the registration relied on by the appellants was done during the pendency of the suit. This has been made clear by the appellant, Gopaldas Gupta (P.W. 5), in para. 91 of his deposition where he has disclosed that the application for registration was made on August 11, 1973, when the suit was obviously pending. He has further deposed that while making the application he concealed the fact that the suit property was attached by the Department for recovery of the dues and that the civil suit regarding the appellants' title over the suit property was pending. For this reason alone, the plea so raised by the appellants must be rejected. Again, what Section 12A envisages is that the provisions of Sections 11 and 12 shall not apply to the income of any trust or institution unless an application for registration of the trust or the institution is made in the prescribed form before the specified date. The form prescribed for this purpose is Form No. 10A and the relevant rule is Rule 17A of the I.T. Rules, 1962. It will appear from the form and the rule that it does not envisage any enquiry as to the nature and character of any specific property as the property of the trust. All that Sections 11 and 12 deal with is that the income of the trust or institution shall not be taken into account for assessing the income of the trust. Section 12 specifically deals with voluntary contributions received by a trust created wholly for charitable and religious purposes and further provides that such contribution for the purpose of Section 11 be deemed to be income derived from the property held under trust wholly for charitable or religious purposes. Section 13(1) of the Act provides that nothing contained in Sections 11 and 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof any part of the income from the property held under a trust for private religious purposes which does not enure for the benefit of the public. There is no averment in the plaint that the property held by the alleged trust was not for private religious purposes and its income enured for the benefit of the public. Instead, from the recitals of the two documents (Exs. P-1 and P-2), it is manifest that what Paluram purported to create was an institution only for private religious purposes and the income was not to enure for the benefit of the public. That being so, Sections 11 and 12 of the Act are not attracted. The registration of the trust, therefore, made during the pendency of the suit is wholly inconsequential and we hold accordingly.

15. Lastly, for the appellants it was argued that the order dated 28th January, 1959 (Ex. P-3), followed by another order (Ex. P-6), dated September 27, 1971, directing release of the suit property from attachment and sale for recovery of dues against the HUF of Paluram Dhanania has become final and binding between the appellants on the one hand and the I.T. Dept. on the other as no suit was filed challenging those orders within one year. This contention also, in our opinion, is not sound and has to be rejected. At the relevant time the recovery of such dues was being made through the Tahsildar to whom a revenue recovery certificate was forwarded. The rules embodied in Sch. II of the Madhya Pradesh Land Revenue Code, 1954, contained the procedure to be adopted by the Tahsildar while making the recovery. According to those Rules, any third person aggrieved by an attachment of properties was entitled to file an objection that the properties were not liable to attachment/sale for recovery of dues against the defaulter. On receipt of such objection, the recovery officer was obliged to investigate into the claim/objection preferred and then either to allow or reject the objection. Rule 13(2) (sic) of the said Rules was as follows:

'12(2) (sic) The person against whom an order is made under Sub-rule (1), may, within one year from the date of the order, institute a suit to establish the right which he claims to the property attached or proceeded against ; but subject to the result of such suit, if any, the order shall be conclusive.'

16. Similar provision can now be found in various clauses in Part I of tbe Second Schedule to the I.T. Act, particularly Clause 11(6). Admittedly, when by order dated 28th January, 1959 (Ex. P-3), the Tahsildar upheld the objection of the appellants and released the property from attachment, no suit was filed by the Department as contemplated under the Rules. Ordinarily, therefore, that order would have become final. But what is striking in the present case is that the Tahsildar concerned, after the receipt of the objection to the attachment of the property, did not care to notice the Department at whose instance the property was attached. The proceedings went on and culminated in the order, Ex. P-3, without any notice to the Department and in its complete absence. It is thus clear that the rules of procedure and natural justice were completely violated and the order passed in the absence of the Department and behind its back is rendered a complete nullity. In Ujjam Bai v. State of Uttar Pradesh AIR 1962 SC 1621, it was held that an adjudication by a quasi-judicial authority is without jurisdiction when it is made in violation of the principles of natural justice. It is, therefore, clear that where an order is passed without giving an opportunity of hearing to the parties affected, the order is apparently in violation of fundamental principles of judicial procedure and is, therefore, a nullity (See also Bhupendra Singh v. Gopal Kunwar Umath : AIR1970MP91 ). In Kiran Singh v. Chawan Paswan : [1955]1SCR117 , it was held that an invalidity of a decree for the reason of its being without jurisdiction could be set up whenever and wherever it is sought to be enforced and relied upon, even in collateral proceedings. A defect of jurisdiction in respect of the subject-matter of an action strikes at the very authority of the court to pass an order and cannot be cured by consent. A Division Bench of the Nagpur High Court in State v. Anwarbi AIR 1953 Nag. 133, considered a similar provision contained in Order 21, Rules 58 and 63, of the CPC prior to its amendment by the Civil Procedure (Amendment) Act 104 of 1976, and held that a judgment-debtor, who has not been impleaded in the proceedings under Order 21, Rule 58, CPC, is not bound by the adverse decision. Such a decision, therefore, cannot be said to be conclusive or final against a person not a party to the claim proceedings and he shall always be at liberty to raise such a question in any subsequent proceedings. In the present case also, the Department cannot be said to be strictly a party to the proceedings before the Tahsildar (Shri Bose) and to the consequent order passed, vide Ex. P-3. In any case, in the absence of any notice of those proceedings to the Department, the order cannot be held to be binding upon the Department. The subsequent order (Ex. P-6) passed by Shri Jha, in fact, does not decide any question/issue and does not deal with the question of attachability of the suit property on. its merits. The Tahsildar passing that order, Ex. P-6, just refused to proceed with the realisation of the dues by attachment of the suit property by reference to the order (Ex. P-3). As we have held that the order (Ex. P-3) will not preclude the Department from proceeding to attach the property as that of the joint family of Paluram Dhanania, the order, Ex. P-6, is entirely inconsequential. We are, therefore, of the opinion that the Department was at liberty to proceed to realise the income-tax dues against the HUF of Paluram Dhanania by attachment and sale of the property in suit. The appellants are not entitled to the declaration sought for by them in the suit and their claim has rightly been dismissed.

17. No other point was pressed.

18. The appeal fails and is dismissed with costs. Counsel's fee as per schedule.


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