C.M. Lodha, C.J.
1. This judgment will dispose of Income-tax Reference No. 20/71 and Wealth-tax Reference No. 18/71, made by the Income-tax Appellate Tribunal, Delhi Bench 'C'. The assessment years under consideration in the income-tax reference are 1962-63 to 1966-67, whereas those, in wealth-tax reference are 1964-65 to 1966-67.
2. There were five reference applications under Section 256(1) of the I.T. Act, 1961, in respect of five assessment years. Similarly, there were three reference applications under Section 27 of the W.T. Act, 1957. The Tribunal consolidated the five reference applications in the income-tax matter and the three reference applications in the wealth-tax matter and has made a consolidated reference in the income-tax as well as wealth-tax matters. The points involved in both the references are identical. The questions referred in both the references are the same which read as under :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in determining the status of the assessee as Hindu undivided family ?'
3. Let us now turn to the facts. The assessee, Thakur Ummed Singh, was a jagirdar in the erstwhile State of Jaipur. He held the jagir of Santha and was the last jagirdar as the jagir came to be resumed under the Land Reforms and Resumption of Jagirs Act, 1952. Up to the assessment year 1957-58, he tiled the return of his income in the status of an individual and was assessed to tax in that status. However, for the assessment years under consideration, i.e., 1962-63 to 1966-67, he filed the return in the status of an HUF. But the ITO did not accept the assessee's status as an. HUF and assessed him as an individual. Copies of the assessment orders passed by the ITO have been enclosed with the reference and are marked annexs. A-1 and A-5. Aggrieved by the orders of the ITO, the assessee filed appeals before the AAC, A-Range, Jaipur, who by a consolidated order dated 31st July, 1968, allowed the assessee's appeals and accepted the assessee's claim to be assessed in the status of an HUF in respect of his income from immovable properties situated in the town of Jaipur. A copy of the AAC's order has also been submitted and marked annex, B.
4. Dissatisfied with the order of the AAC, the revenue went up in appeal before the Income-tax Appellate Tribunal, but the Tribunal dismissed the appeal by its order dated 28th May, 1970 (annex. C). Thereupon, the department made an application before the Tribunal to state a case and refer the question of law arising out of its order to this court for decision. This is how the matter has come up before us.
5. Learned counsel for the Commissioner has urged that under Section 27(2) of the I.T. Act, the holder of an impartible estate is liable to be assessed as an individual owner of all the properties comprised in the estate. He has submitted that no evidence was put on the record by the assessee to show how the property which had been treated as individual property of the assessee up to the assessment year 1957-58, became an HUF property during the assessment years under consideration. It is submitted that no documents whatsoever were produced before the AAC to show that the property in question had been put into the hotchpotch and had thus become joint family property. On the other hand, Mr. Ranka, learned counsel for the assessee, has urged that on the facts found by the Tribunal the assessee has rightly been held to be entitled to be assessed as an HUF. He has argued that the house property situated in the town of Jaipur cannot be considered as an impartible estate.
6. In this connection, he has also argued that the assessee had filed his returns as an HUF continuously from the assessment year 1962-63 onwards and, therefore, it should be inferred from his conduct that he had treated the property as belonging to the joint Hindu family and not as his personal property.
7. The first point that requires determination is whether the property in question which consists of houses and shops situated in the city of Jaipur can be said to be part of the impartible estate. The assessee was undoubtedly a jagirdar and held a State grant from the former Ruler of Jaipur till the grant was resumed under the Rajasthan Land Reforms and Resumption of Jagirs Act and compensation was paid to him in lieu thereof. The relevant law: dealing with the question of State grant is to be found in Jaipur Matmi Rules, 1945, which will be hereinafter referred to as 'the Rules '. In Clause (1) of Rule 4 a 'State grant' has been defined as under :
''State grant' means a grant of an interest in land made or recognised by the Ruler of the Jaipur State and includes a jagir muamla, suba, istimrar chakot, badh, bhom, inam, tankha, udak, milak, aloofa, khangi, bhog or other charitable or religious grant a site granted free of premium for a residence or a garden, or other grant of a similar nature.'
8. Rule 5 lays down that all State grants shall be subject to matmi with certain exceptions with which we are not concerned. Rule 8 further provides that a State grant shall be attached pending matmi. Rule 13 provides that the eldest real son of the last holder or if such son is dead, such son's eldest real son or eldest real grandson is entitled to succeed, unless in the opinion of the Ruler he is unfit to succeed by reason of serious mental or physical defect or disloyalty. Rule 16 lays down under what conditions a grant is liable to be resumed. Rule 20 provides for levy of matalba matmi as laid down in appendix 'C' to the Rules.
9. Thus, a perusal of the Rules would show that the State grant would be governed by the rule of primogeniture and is consequently impartible. But the question is whether a house property situated in an urban area would be included in the State grant. As already stated above, a State grant has been defined to mean a grant and interest in land made or recognised by the Ruler of the Jaipur State. Thus, according to the several provisions of Jaipur Matmi Rules, to which we have already referred, what the law really makes impartible is the grant, of an interest in the land, made by the Ruler and not properties de hors the grant. Apart from that it has been found by the Tribunal that the present properties were not resumed when the jagir of the assessee was resumed under the Rajasthan Land Reforms and Resumption of Jagirs Act. It has further been found by the Tribunal that the house property in question is ancestral. These are the facts found by the Tribunal. No objection appears to have been raised by the revenue before the Tribunal, while making the prayer for a reference to this court, that the findings of the Tribunal were based on no evidence. In these circumstances, the findings of fact arrived at by the Tribunal have to be accepted. These findings of fact, as already stated above, are : (i) that the properties in question were not resumed ; and (ii) that the properties are ancestral. The other relevant finding which is of course a mixed finding of fact and law arrived at by the Tribunal is that the property is not impartible. This finding finds support from the definition of the term 'State grant' to which we have referred above.
10. Learned counsel for the assessee has further pressed upon us that in any case the assessee has declared his unequivocal intention of treating the property as that of an HUF by filing returns in the status of an HUF continuously during the years under consideration and even thereafter and, therefore, it would be reasonable to presume that the property in question was a part of the HUF property. In support of this submission learned counsel has relied upon Mohan Rao v. Satyanarayana : 84ITR685(AP) and Thakur Hari Singh v. CIT . In Thakur Hari Singh's case this court observed as follows (p. 279):
'It is noteworthy that the assessee has been filing his returns as a Hindu undivided family for quite a number of years. In the assessment year preceding the assessment year we are considering the department had accepted the status of the assessee as that of a Hindu undivided family. Therefore, the course of conduct of the assessee as also what he had declared in the returns show that he had expressed the intention about this property being treated as the property of the Hindu undivided family. According to Rule 19A of the Income-tax Rules, the return has to be verified and the assessee has to sign the same as a solemn document.'
11. Similarly, in Mohan Rao's case : 84ITR685(AP) it was held that it was manifest from the conduct of the 1st defendant, in the absence of any explanation, that the statement in the return was deliberately made out of his own volition abandoning or giving up his interest in the self-acquired property and impressing it with the character of joint family property and the fact that the ITO did not accept his statement was of no consequence.
12. It is true that in the present case the assessee had filed returns in the status of an individual up to the year 1957-58, but it is trite that the principle of res judicata cannot be pressed into service in a matter like this.
13. In view of what we have observed above, we hold that, in the facts and circumstances of the case, the Tribunal was right in determining the status of the assessee as an HUF. The question is thus answered in the affirmative. However, the parties are left to bear their own costs.