P.C. Pandit, J.
1. This petition under Articles 226 and 227 of the Constitution has been filed by the Lakshmi Narayan Public Charity Trust, through its sole trustee, Dr. Sarmukh Singh, for quashing the notices dated 26th October, 1965 (annexures 'X-1' to 'X-5' to the writ petition), issued by Shri V, R. Tuteja, Tax Recovery Officer, respondent No. 1.
2. According to the allegations of the petitioner, on 30th April, 1941, S. Narain Singh, father of Dr. Sarmukh Singh, created the Lakshmi Narayan Public Charity Trust, which was duly registered under the Indian Registration Act. The trust deed was amended from time to time and the last amendment was made on 7th March, 1957. S. Narain Singh died on 26th December, 1961. He was the sole trustee as up to 3Ist March, 1964, and on account of his ill-health and old age, Dr. Sarmukh Singh was made the sole trustee with effect from 1st April, 1954, and he had been managing the properties of the trust since that time. This trust was recognised as a charitable trust by the income-tax department since 1944-45. For the year 1951-52, the Income-tax Officer on the 16th March, 1961, held that a sum of Rs, 8,000 had not been shown to have been applied for charitable purposes and the same was liable to tax. Against this order, an appeal was filed by the petitioner-trust and the Appellate Assistant Commissioner by his order dated 28th December, 1961, accepted the appeal and held that it was sufficient for the purposes of exemption if the property from which the income was derived was held under trust wholly for religious and charitable purposes and as per the trust deed in the instant case, the properties which were subject to trust, were held wholly for religious and charitable purposes. He then granted the exemption under Section 4(3)(i) of the Indian Income-tax Act, 1922, and annulled the order of assessment passed by the Income-tax Officer. The trust invested its funds with different institutions and concerns, namely, the Narain Cold Storage (Private) Ltd., Amritsar, respondent No. 2, the Hindustan Embroidery Mills (Pvt.) Ltd., Chheharta, Amritsar, respondent No. 3, and had also purchased Defence Certificate for Rs, 1,000 from the Post Master, Golden Temple, Amritsar, respondent No. 4. The income of the trust from the property it held and the investments which it had made were spent in furtherance of the objects of the trust. The trust maintained a freehospital, a free maternity hospital, one school imparting free education up to primary stage for boys and girls and girl's industrial school giving training in tailoring to widows and girls. A night school was also maintained for imparting education to adults. Free scholarships and donations were made to deserving students and monthly help was given to destitute widows. The trust was not being assessed to any income-tax and there was no liability of the income-tax department which was outstanding against it. Consequently, it was not a 'defaulter' as denned in the Land Revenue Act or the Income-tax Act. For the assessment years 1947-48 to 1951-52, 1953-54 to 1955-56 and 1960-61, S. Narain Singh, founder of the trust, was assessed to an income-tax of Rs. 3,35,687.20. These assessments had been made against S. Narain Singh in his individual capacity, but they had been questioned in appeals, which were still pending and had not been disposed of. After the death of S. Narain Singh, an attempt was made by the department to recover these arrears of income-tax from his sons, who, however, represented that they did not inherit or receive from their father any amount which was recoverable from them, because they were not liable for his liability since he was assessed separately. After this representation, no steps for the recovery of that amount were taken against the three sons of S. Narain Singh. On 26th October, 1965, respondent No. 1 in exercise of his powers under Rule 26 in the Second Schedule to the Income-tax Act, 1961, issued the impugned notices and attached a sum of Rs. 1,00,000 and Rs. 1,09,528.20 lying to the credit of the petitioner-trust with respondent No. 2, a sum of Rs. 93,400 with respondent No. 3, 100 fully paid up shares of respondent No. 2, and a sum of Rs. 1,000 with respondent No. 4. All the said debtors of the trust had been required to pay the attached amounts totalling Rs. 3,13,928.20 to respondent No. 1 and challans had been sent requiring respondents Nos. 2 to 4 to deposit the amounts under those challans in the Government Treasury. That led to the filing of the present writ petition on 15th November, 1965. Learned counsel for the petitioner submitted in the first instance that respondent No. 1 had no jurisdiction to attach the property belonging to the petitioner-trust, which was not a 'defaulter'. It was a legal entity recognised by the income-tax department as a trust created for charitable and religious purposes, the income of which was exempt under Section 4(3)(i) of the Indian Income-tax Act, 1922, corresponding to Section 11(1) of the Income-tax Act, 1961. The action of respondent No. 1 in issuing the impugned notices was wholly without jurisdiction. It was not even mentioned in the said notices that the property though ostensibly in the name of the petitioner-trust really belonged to S. Narain Singh, who was the 'defaulter'. Secondly, it was submitted that respondent No. 1 had no jurisdiction to direct respondents Nos. 2 to 4 to deposit the money inthe Government Treasury. At the utmost the said amounts could have been attached under the law.
3. With regard to the first objection, the position of the department as given in the affidavit dated 1st January, 1966, of Shri B.K. Srivastava Income-tax Officer, Central Circle III, Amritsar, at whose instance these recovery proceedings were taken by respondent No. 1 is :
'Shri Narain Singh Appal retired from postal service in 1926 as Assistant Post-Master, Thereafter, he took to embroidery business. He became an assessee in this business activity from the assessment year 1931-32. Since then he has been assessed in the status of individual. In 1936-37 he was carrying on the business in the name and style of Narain Swadeshi Weaving Mills in partnership with his two sons, Sharvshri Gurdial Singh and Ram Singh. The business flourished and by April, 1940, a private limited company in the name of Hindustan Embroidery Mills Ltd. took the place of the old partnership.
According to the determination of the Special Investigation Circle the wealth in possession of the Late S. Narain Singh Uppal as on 31st March, 1939 was only Rs. 73,333. Subsequent enquiries and determination of wealth by the Income-tax Officer, Special Circle, revealed that the net wealth in possession of Shri Narain Singh Uppal as on 31st March, 1945 was Rs. 9,76,076 approximately.
All this wealth was accumulated in the form of cash and investments in his name in the various businesses, namely, Narain Swadeshi Weaving Mills Ltd., the Hindustan Embroidery Mills Ltd. and Hindustan Rayon and Woollen Textile Mills Ltd. etc., all of which had been floated by him as well as in banks. It is clear that this vast accumulation in wealth represented his secret war profits which were not brought into the assessment for the above years.
In order to avoid detections and reassessments of his correct income, Shri Narain Singh Uppal started showing his hoardings in the names of the trust and his sons and grandsons. This was done ostensibly in the form of donations to the trust and gifts to others. In actual practice, he kept on utilizing all these funds, including those ostensibly donated to the trust, according to his business requirements.
That in view of these large donations, the case of the late S. Narain Singh Uppal was assigned to the Income-tax Officer, Special Investigation Circle, in June, 1953. The above position was discovered as a result of enquiries which started immediately as well as from Shri Narain Singh Uppal's own disclosures. It led to the service of notices under Section 34(1)(a) in respect of the assessment years, namely, 1941-42 to 1945-46. Further proceedings are pending in respect of these years in view of the Full Benchdecision of this honourable court in Shahzada Nand & Sons case,  45 I.T.R. 233 (Punj.) [F.B.] which is under appeal before the Supreme Court of India.
As regards the various trusts mentioned in paragraph 1 of the petition it is submitted that the late S. Narain Singh Uppal always treated the trust properties to be his exclusive properties. The first trust deed dated 30th April, 1941, was a family relief trust, for the benefit of the descendants of the father of the founder and, though others were also to be benefited by this charity, it was expressly mentioned that all cash investments of the trust shall be held with M/s. Uppal and Co. or such institutions which are controlled by them. It may be mentioned here that Uppal and Co., was the family concern of Shri Narain Singh Uppal himself. The property which was the subject-matter of the gift/charity, particularly the 21/2 storeyed building, was not in the sole ownerehip of the author of the trust as his sons also had their share in it.
On 31st July, 3941, another deed was executed in respect of the same property in which Shri Narain Singh Uppal described himself as the sole owner of the property. It is clear from the expression that is in the deeds that despite the first trust deed Shri Narain Singh Uppal still considered himself as the owner of the property which he sought to deal with again as such. This deed is clearly destructive of the genuineness of the first one.
That again on 11th May, 1945, Shri Narain Singh Uppal executed another trust deed in which he declared himself to be '.. . The sole and absolute owner and in unrestricted possession of in his own name, right and title free from all sorts of liens, charges or encumbrances movable and immovable properties specifically enumerated in the schedule attached hereto....' It again shows that the so-called trust was a mere eye-wash and though there was application of income to charity it was a case of Shri Narain Singh Uppal applying his own income and not that of any genuine trust.
On 20th November, 1950, another deed was executed again describing Shri Narain Singh as the sole and absolute owner of the properties. For the first time in this deed it was mentioned that cash investments of the trust fund shall be kept in some scheduled bank. Serious alterations were made regarding the composition of the trustees and it is clear that the late S. Narain Singh Uppal was keen on seeing that the property should remain his and in the effective control of himself, his sons and the petitioner without interference from anybody else. It may be mentioned here that though there is a provision in this deed for the investment of trust money in scheduled banks the money continued to be invested in Shri Narain Singh's business concerns.
The next deed was executed by Shri Narain Singh Uppal on 7th March, 1957. By then he was deep in trouble with the income-tax department. Investigations were going on into his financial affairs and war profits and his unaccounted for wealth had already been discovered as a result of statements called from him. There was thus an urgent necessity of wiping off his connections from the trust. By then Shri Narain Singh had already disposed of his entire accumulated wealth. So retroactively he acknowledged his son, the petitioner, to be the sole trustee with effect from the 1st of April, 1954. This deed is again operative and proceeds on the basis that the entire property of the so-called trust remained in the sole ownership of Shri Narain Singh Uppal. In his connection the recitals in the deed that he had ceased to be the owner of these properties on 1st April, 1954, are noticeable. In fact, the record shows that even after 1st April, 1954, Shri Narain Singh Uppal had been operating as the trustee.
Shri Narain Singh Uppal, if he had genuinely parted with the ownership in 1941, could not repeatedly deal with the trust property as an owner except by resort to the civil court. He could only have dealt with the trust property as a trustee along with other co-trustees. Instead he himself dealt with the trust as if he were the sole and exclusive owner in his own right so as to deal with the trust in all respects including naming the trustees at his sweet free will.
In view of the above facts and other facts which are in the possession of the department it is clear that the property which has been attached is only ostensibly in the name of the trust. In fact it was the property of late S. Narain Singh Uppal right up to the date of his death. It is not denied, however, that the late S. Narain Singh Uppal and his son, Dr. Sarmukh Singh, have been carrying on various charitable activities mentioned in the trust deed in the name of Laxmi Narain Charity Trust. It, however, was merely a case of an application of income of assets which always belonged to the late S. Narain Singh Uppal.
It is true that the late S. Narain Singh Uppal executed various trust deeds between 1940 and 1957, whereby he sought to create some sort of charity trust. A combined perusal of these trust deeds will show that this was done with an ulterior purpose, namely, to set apart and screen away substantial assets from the demands of the revenue......
After going through the factual position relating to the trust and its author, late S. Narain Singh Uppal, the income-tax authorities came to the conclusion that the various assets ostensibly standing in the name of the trust really belonged to the late S. Narain Singh Uppal. These are, therefore, available to the revenue for the realisation of the arrears of tax dues from the late S. Narain Singh Uppal. If the petitioner has any objection to this position taken up by the revenue, it is up to him to raise objectionsbefore the Tax Recovery Officer in the course of recovery proceedings, and ultimately to agitate the matter in the civil courts if the decision goes against him.'
4. Thus, it will be seen that the case of the income-tax department is that the property attached though ostensibly in the name of the petitioner-trust really belongs to the defaulting assessee, namely, S. Narain Singh. It was on this basis that the impugned notices were issued by respondent No. 1. A reading of the notices will indicate that S. Narain Singh has been shown as the defaulter and the property of the petitioner-trust, which was going to be attached by virtue of the impugned notices, belonged to him. This position has been made further clear from the return filed by the income-tax department. It may also be mentioned that the objection that it was not even stated in the impugned notices that the property though ostensibly in the name of the petitioner-trust really belonged to S. Narain Singh was not specifically taken in the writ petition. The Tax Recovery Officer, under the law, is authorised to attach the property ostensibly standing in the name of a person other than the defaulter on the assertion by the income-tax department that the property really belongs to the defaulting assessee (see in this connection the Bench decision of Rajamannar C.J. and Panchapakesa Ayyar J. in C. Dhanalakshmi Ammal v. Income-tax Officer, Madras,  31 I.T.R. 460 (Mad.)). The ostensible owner will then have the right to prefer objections to the attachment before the Tax Recovery Officer, respondent No. 1, in accordance with Rule 11 in the Second Schedule of the Income-tax Act, 1961. He will decide these objections according to law after giving full opportunity to the petitioner and the department. If his decision goes against the petitioner-trust it can file a regular suit in a civil court as provided in Rule 11(6) in the Second Schedule. According to the petitioner, the property attached belongs to the trust, whereas the case of the department is that in reality it is owned by the defaulter, S. Narain Singh. This is a disputed question of fact, which can properly be disposed of in the manner provided in the statute or by a regular civil suit. It cannot be determined in these proceedings under Article 226 of the Constitution.
5. As regards the second objection, in the first place, it has not been specifically taken in the writ petition. Secondly, respondents Nos. 2 to 4 had been asked to deposit the amount in the treasury under Section 222 of the Income-tax Act, 1961. This section fully authorises the Tax Recovery Officer, on the receipt of a certificate from the Income-tax Officer, to recover the amount of arrears due from the assessee as specified therein. This is what has been done in the instant case. In case the objections of the petitioner-trust are accepted by respondent No. 3 or the civil suit filedby them is decided in their favour, they would be entitled to the refund of these amounts.
6. In view of what I have said above, this petition fails and is dismissed, but with no order as to costs.