1. All these twelve appeals involve some common questions. They are, therefore, disposed of by this single order.
2. The question in dispute involved is the inclusion of the income from a single storeyed building in the premises No. 6/1, Dilwarganj Road, Calcutta, in the total income of the assessee and the value of the said property in the total wealth of the assessee. This property was settled by Smt. Bhawari Devi Gadhaiya on 17-4-1964 upon trust on Shri Nem Chand Gadhaiya for the benefit of Shri Sneh Kumar Gadhaiya, the assessee, in all the present cases. It appears that initially the assessee and the trust filed separate returns of income and wealth in relation to their properties and the property in dispute was excluded by the assessee from his own income and wealth. Assessment was also made by the ITO/WTO as such, but in relation to the wealth-tax assessment for the assessment year 1971-72, the WTO reopened the proceedings under Section 17 of the Wealth-tax Act, 1957 ('the Act') on the ground that the settlor had specifically mentioned that the trust would terminate on the assessee's attaining the age of 21 years. Although the sole trustee in the case had filed the wealth-tax return of the trust but the fact that the sole beneficiary of the trust was having separate assets other than the trust asset, was not disclosed by him. Moreover, the assessee had attained majority on 3-8-1970 and the return of wealth had been filed for the first time signed by him in relation to the assessment year 1970-71. In this return again the assessee had not disclosed wealth held by the trust which was solely for his benefit. In these proceedings the assessee's contention was that the assessment had already been made on the trust in relation to the income and wealth of this property and the same income/wealth could not be reassessed in the hands of the present assessee. The WTO, however, rejected the assessee's contention because, according to him, the assessment on the trust could be made only if the shares of the beneficiary or beneficiaries themselves were unknown or indeterminate. Since the assessee was the sole beneficiary, the question of assessing his wealth in the hands of the trustees as representative did not arise. At the same time the assessee was bound in law to disclose his assets of all descriptions which formed part of his net wealth. Since the assessee had not done so, the plea that the trust wealth had already been assessed was of no avail to him. He, therefore, included the value of the property in dispute in the net wealth of the assessee for all the five years in question.
3. The assessee went in appeal before the AAC and it was contended on his behalf that the wealth of the trust had been separately assessed to tax in the hands of the trust and, therefore, a second assessment and levy of tax on the same wealth could not be made. The property in question continued to remain vested in the trust and was never transferred to the assessee till the year 1975 which would be relevant for the assessment year 1976-77 onwards. There was no omission or failure on the part of the assessee to include the property in dispute in his wealth. There was no provision either in the form of the return or in the Act requiring an assessee to include the wealth belonging to a trust in the individual return of the beneficiary and the assessee was not legally bound to do so. Neither Section 271(1)(c) of the Income-tax Act, 1961 ('the 1961 Act') nor Section 17(1)(c) of the 1957 Act was applicable. The department had the option to assess the trust or the beneficiary directly and once the assessment was completed the department was not authorised to assess the same wealth in the hands of the beneficiary even for rate purposes. She, therefore, allowed all the appeals filed by the assessee in relation to inclusion of this property in her net wealth.
4. The revenue has come up in second appeal before us. In relation to income-tax matters, the ITO similarly initiated proceedings under Section 147 of the 1961 Act on the ground that although the sole trustee in this case had filed the income-tax returns of the trust but the fact was that the sole beneficiary of the trust was having separate income other than the trust income which fact had not been disclosed by the trustee. On attaining the age of majority on 3-8-1970 the assessee filed his own returns of income starting from the assessment year 1970-71 in which again he had not disclosed the income from the said trust. Therefore, it was a fit case for reopening the earlier assessments. The assessee's contention in these proceedings was again the same, that is, since the income had already been assessed in the hands of the trust, it could not again be added in the assessee's personal income. For exactly similar reasons, the ITO overruled the assessee's contention and added back the income from this property to the income already assessed. The assessee similarly filed appeals before the AAC and relied upon some instructions of the Board. Reliance was also placed on some authorities on the subject. The AAC was of the opinion that although the department had exercised the option of assessing the trust but in this particular case the assessee was the sole beneficiary and, therefore, he was liable to show the income of the trust in his hands. The argument of the representative of the assessee that the trust was already being separately assessed was of no value because he had not shown the income of this trust, in his individual return. The right procedure was that the income of the trust should have been taken in the hands of the sole beneficiary. Therefore, the clubbing of the income in the hands of the assessee was fully justified because he was the sole beneficiary of this income. She, therefore, dismissed all the appeals filed by the assessee in this behalf.
The assessee has come up in second appeal before us in the income-tax matters.
5. We have heard the representatives of the parties at length in both these matters. The main contention raised on behalf of the assessee was that both the ITO and the WTO had already assessed the assessee's income and wealth in dispute through Shri Nem Chand Gadhaiya, trustee of the trust and, therefore, the income or the wealth could not be re-included in the income of wealth of the assessee. For this purpose, reliance was placed upon a number of authorities, for example, the decision of the Bombay High Court in the case of Trustees of Chaturbhuj Raghavji Trust v. CIT  50 ITR 693, in which it has been held that Section 41 of the Indian Income-tax Act, 1922 ('the 1922 Act') provided for two alternative methods, namely, either to tax the income in the hands of the trustees or to tax it directly in the hands of the person on whose behalf the income was receivable under the trust, and one of them having been availed of by the Income-tax Department in making the direct assessment which was a valid assessment under Section 41(2), the other alternative of taxing the income in the hands of the trustees was no longer available to the department. Reference was next made to the decision of the Gujarat High Court in the case of CWT v. Kum. Manna G.Sarabhai  86 ITR 153. Lastly, reference was also made to CIT v.Trustees of Miss Gargiben. Our attention was also drawn to Circular No.157 [F. No. 228/8/73-IT (A-II)], dated 26-12-1974--Taxmann's Direct Taxes Circulars, Vol. 1, 1980 edn., p. 563--in which it has been mentioned that the general principle was to charge total income only once. Reiterating the earlier instructions in this regard, the Board directed the ITOs to keep the question of assessment under Section 41(2) of the 1922 Act and under Section 166 of the 1961 Act open at the time of raising the initial assessment either of the trust of the beneficiary, because once the option was exercised, it would not be open to the ITO to assess the same income for the assessment year in the hands of the other person, namely, the beneficiary or the trustee.
Reference was also made to another Circular F. No. 45/78/66-ITJ(5), dated 24-2-1967--Taxmann's Direct Taxes Circulars, Vol. 1, 1980 edn., p. 564--where the Board had itself pointed out an interesting case, in which the assessee was one of the beneficiaries of the trust and the shares of the beneficiaries were known and determinate. The ITO raised an assessment on the trustees taxing the income of the trust in their hands at the appropriate rate and to the amount which would have been recoverable in the hands of the beneficiaries. While dealing with the case of one of the beneficiaries the ITO again included the share income from the trust for the rate purpose. The reason advanced by him was that the amount of tax leviable should be the same whether the income from the trust was assessed in the hands of the trustee or in the hands of the beneficiary. The Board, however, advised that Section 41 of the 1922 Act corresponding to Section 166 of the 1961 Act gave an option to the department to tax either the representative assesses or the beneficial owner of the income. Once the choice was made by the department, it was no longer open for it to go behind it and assess the other at the same time. The inclusion of the share income from the trust in the total income of the beneficiary for rate purpose would virtually amount to double taxation which could not be resorted to.
Therefore, the ITOs were advised to keep this point in view while raising the initial assessment on the trust/ beneficiaries.
6. It was argued on behalf of the department that the assessee had not disclosed in any of his returns that he was the sole beneficiary of the trust, and, therefore, the property and income of the same was liable to be included in his individual assessment of wealth/income. The present instructions of the Board and the authorities on the subject would not help the assesses inasmuch as the exercise of option by the departmental authorities could be only relevant when they had the full facts before them. Since the ITO/WTO assessing the present assessee did not know about the fact of the assessee being also the sole beneficiary from a trust, it cannot be said that he had exercised the option to exclude the said income/wealth from the assessee's personal assessments. We, however, are of the opinion that at least the ITO/WTO assessing the trust could have entered into this inquiry. After all when the said officer knew that the assessee was the sole beneficiary of the trust in question, he could have informed the ITO/WTO about the assessment of the income/wealth of the trust of which the assessee was the sole beneficiary and should have held up his hands till then as has been advised by the circulars of the Board referred to. Since he had not chosen to do so, there appears to be force in the assessee's contention that it is not open to the department now to add the same income/wealth in the personal assessments of the assessee.
7. These remarks would, however, be applicable only till 3-8-1970, because, according to the deed of trust, on the assessee's attaining the age of 21 years the entire trust property had to be transferred to the assessee absolutely and for ever. Therefore, from the assessment year 1974-75 onwards, the property in dispute would be liable to be included in the individual assessment of the assessee both for the purpose of his income and wealth-tax assessments. It was contended on the assessee's behalf that the actual transfer of the property by the trustees had been effected on 15-12-1975 and before that the assessee had not become the legal owner of the property, which as such could not be included in his net wealth, nor the income thereof could be added to his income. It was contended that before the property could be included for the purpose of wealth-tax, the assets should belong to the assessee on the relevant valuation date. According to the deed of the trust, the asset had to be actually transferred to the assessee by the trustees which had not been actually done till 15-12-1975. For income-tax purposes, reliance was placed upon a decision of the Calcutta High Court in the case of CIT v. Ganga Properties Ltd.  77 ITR 637 which lays down that beneficial ownership is not known to Indian law and the annual value of property would have to be included only in the hands of the person who is the legal owner thereof. We are afraid this argument of the assessee's representative has not impressed us. The word 'belonging' has to be taken in its usual sense. Clause 7 of the trust deed reads as under : ... On his attaining the age of 21 years by the said Sneh Kumar Gadhaiya the trust created by these presents shall come to an end and the trust property will absolutely vest on the said Sneh Kumar Gadhaiya. But it the said Sneh Kumar Gadhaiya dies before he attains the age of 21 years his heirs will become beneficiaries of the trust property in place of the said Sneh Kumar Gadhaiya and the trust created by these presents will come to an end on the attainment of 21 years by the youngest of the said heirs and then the trust property will absolutely vest on the said heirs.
A perusal of the same would show that the vesting of the said property in the assessee was not dependent upon trustees having re-transferred the property to him. The trust stood terminated on the assessee's attaining the age of 21 years, and as such, the transfer in favour of the assessee was not absolutely necessary though it was provided for in the trust deed. Do we mean to say that if the transfer was not effected for 30 years, the property would still continue to be owned by the trust and vest in the trustees The answer to this is simple 'No'. If the trust stands extinguished, the property stands vested in the beneficiary, i.e., the assessee, and is liable to be included in his net wealth, consequently, the income thereof is also liable to be added to his income. In this we may refer to the recent judgment of the Madras High Court in the case of P. Joseph Swaminathan v. CIT  145 ITR 198 wherein it has been held that the basis for liability for income from the property is the ownership of the property. However, the 1961 Act does not pin down the assessing authorities to the registered owner of the house property as decisive of the question of assessability. In whosoever's name the house property may stand or be registered as such, it would yet be within the province of the ITO to find out who the real owner of the property is. Same is the view taken by a Special Bench of the Tribunal in ITO v. R.K. Sawhney  2 SOT 103 (Delhi.) The matter was recently considered by 'A' Bench of the Tribunal (to which one of us was a party) in the case of Onkarmal Madanlal [IT Appeal Nos. 2045 and 2046 (Cal.) of 1982] wherein by its order dated 30-1-1984, the issue was restored to the file of the ITO to decide the same afresh after going through the entire facts and circumstances of the case and the technical plea of the assessee that it could not be taxed because it was not the registered owner was negatived. In this behalf we may further point out that if the trust has already been assessed, those assessments are bad in law and void and we are fully confident that the same would be ultimately annulled by the authorities as was the case before the Hon'ble Supreme Court in the case of C.R. Nagappa v. CIT  73 ITR 626, wherein their Lordships have made similar observations at page 633 of the report.
8. In the result, the matters qua the assessment years 1969-70 to 1973-74 are decided in favour of the assessee both for the income-tax as well as wealth-tax purposes so that the departmental appeal numbers, i.e., WT Appeal Nos. 1058 to 1060 (Cal.) of 1982, are dismissed.
Similarly, the assessee's appeal numbers, i.e., WT Appeal Nos. 642 to 645 (Cal.) of 1983 as well as IT Appeal No. 482 (Cal.) of 1983 are allowed. Qua the later years, i.e., 1974-75 and 1975-76, the matter is decided against the assessee both in relation to income-tax as well as wealth-tax so that the departmental appeal Nos. 1061 and 1062 (Cal.) of 1982 are allowed and the assessee's appeal Nos. 646 and 647 (Cal.) of 1983 are dismissed.