A. C. SEN J. - This is a reference under section 66(2) of the Income-tax Act, 1922, at the instant of the assessee. The question that has been referred to us for our opinion is as follows :
The fact may briefly be stated thus : In the course of the assessment proceedings for the assessment years 1958-59 and 1959-60, the assessee claimed before the Income-tax Officer that the income of the house property consisting of premises Nos. 46A and 46B, Wellesley Street, Calcutta, should be treated as income derived from trust property and hence should be taxed not in his hands as his individual income but as income derived by him as trustee from trust property. It appears that the assessee filed two returns - one in his own name, viz., Shri Durga Prosad More in the capacity of trustee to the estate of Sm. Benarasi Debi declaring total income at Rs. 34,380. It was stated by the representative of the assessee before the Income-tax Officer that the said house property should not be taxed in the hands of the assessee as it was a trust property but should be taxed separately. In the deed of sale dated 30th September, by which the aforesaid premises were purchased, the assessee has been described as a trustee, being a party thereto as of the fourth part. In the recitals we get the following assertions :
'Whereas Sm. Benarasi, wife of the said trustee, has set apart and made over certain sums to the trustee to have and to hold the same upon trust for investing the same in immovable properties for the maintenance of herself during her lifetime with the rents, issues and profits thereof after payment of all outgoings and on her death to hold the same in trust for her sons............ for their maintenance during their minority and on their attaining majority upon trust to make over the same to the said sons absolutely in equal shares and whereas as such trustee as aforesaid and with a portion of the money made over to him for the purposes of the aforesaid trust the said trustee became desirous of purchasing the said premises No. 46A, 46B, Wellesley Street, and whereas the vendor has agreed with the trustee for an absolute sale to him of the said land........ for the sum of rupees one lakh and eighty-five thousand free from all encumbrances.............. Now this indenture witnesseth that, etc.'
Therefore, in the deed of conveyance it is clearly stated that the assessee got from Sm. Benarasi a certain sum of money with the direction that the money was to be utilized for purchasing the premises in question and that the said premises were to be held in trust for the benefit of Benarasi and her two sons.
Nearly after one year another deed known as the deed of settlement was executed by the between Sm. Benarasi and the assessee. The relevant portion of the recitals in the deed of settlement runs thus :
'This indenture between Sm. Benarasi, wife of Durga Prosad More..... and Durga Prosad More, son of Jagannath More.......... hereafter called the trustee : Whereas the settlor was possessed of and absolutely entitled to a considerable amount of money as her absolute stridhan property.......... and whereas the settlor requested the trustee to act as trustee of such trust and the trustee agreed to act as such trustee and whereas the settlor gave the said sum of rupees two lakhs to the trustee absolutely to hold the same upon the trust hereafter mentioned and to invest the same in suitable immovable or other properties....... and whereas out of such money the trustee has invested a sum of Rs. 1,85,000 (rupees one lakh eighty-five thousand) in the purchase of premises Nos. 46A and 46B, Wellesley Street......... and whereas it is desirable that the terms upon which the trustee is holding the trust properties, the trusts and his duties and powers should be recorded in a document.............. It is hereby declared as follows,.............'
The recitals clearly indicate that this document is merely in the nature of a declaration of trust. The conveyance dated 30th September, 1940, indicates that the money was received by the assessee on the basis of an oral agreement to hold the said money for the benefit of his wife and the two sons and with the further obligation to utilize a part of the money towards purchase of some house property to be held in the same manner. Therefore, the documents clearly state that the assessee received the money from his wife subject to the trust aforesaid and that the money was the stridhan property of the wife. There is nothing in these two documents to indicate that the money really belonged to the assessee himself.
The Income-tax Officer, however, treated the sum of Rs. 1,85,000 utilized for the purchase of the said house property as belonging to the assessee. He, therefore, treated the house property in question as the property belonging to the assessee. In other words, in the opinion of the Income-tax Officer, the wife is nothing but a benamidar of the assessee. Still, we do not find that any attempt was made by the Income-tax Officer to gather facts or materials in support of this conclusion. the only reason offered by the Income-tax Officer would appear from the following extract from the assessment order :
'I find from records that this property was purchased for a sum of Rs. 1,85,000 on September 30, 1940, in the name of Smt. Benarasi Devi and the income from this property for the assessment year 1942-43 assessed in the hands of the assessee and the assessee did not object to the same. The assessee, however, went on appeal against the orders of the Income-tax Officer assessing the income from this property in the hands of the assessee for the assessment years 1943-44 to 1948-49, but the appeals were dismissed and it was held that the Income-tax Officer was right in assessing the income from this property in the hands of the assessee.'
The Appellate Assistant Commissioner affirmed the assessment made by the Income-tax Officer. He also seems to have adopted the reasoning given by the Income-tax Officer. He said as follows :
'I may mention that the appellant himself is responsible to a considerable extent for the inclusion of the income from this property in his total income.'
On further appeal the Income-tax Appellate Tribunal also affirmed the decision of the authorities below. The Tribunal too thinks that the assessee having allowed himself to assessed in respect of the income derived from the house property in question year after year and having failed to adduced any fresh evidence, there is no reason why this assessment year in question. This is what the Tribunal said in its order :
'The matter came up to the Tribunal and the assessee did not succeed in satisfying the Tribunal that the house properties were purchased not by the assessee himself in his individual capacity but as a trustee to that estate. Having failed in all those previous years, it was expected that if the assessees claim was genuine, he should have come armed with evidence of unimpeachable character. Unfortunately, however apart from the two documents..... no further materials have e been brought to our notice to justify the claim made by the assessee. Under these circumstances we are confirmed in our view that the action taken by the departmental authorities........... is correct.'
So far as the assessment for the two years with which we are concerned, we find that the tax authorities had no materials before them which supported the finding that the house property in question was purchased by the assessee with his own money and not with the stridhan of his wife. All of them proceeded on the footing that the assessee allowed himself to be assessed in respect of the income of this house property year after year since the assessment year 1942-43. According to them he should not be permitted to say, in the absence of any positive evidence adduced by him, that the money with which the house property was purchased really belonged to his wife. It is well settled that in the case of benami, the onus is upon the department to prove that the person whose name appears in the document is merely a name-lender. The Appellate Assistant Commissioner made a feeble attempt to prove that the department had discharged the onus. He quoted a portion from the report of the Income-tax Officer made in connection with the assessment for the assessment year 1942-43. The portion quoted runs thus :
'There is a separate set of accounts for this property and the accounts were closed on 30th September, 1941. .......... The reason submitted by the assessee is that the assessee never considered this amount as his own but as belonging to his wife, Benarsari Debi. According to this submission as contended by the party it was her stridhan. Questioned as to how this stridhan was built up the party is unable to give any satisfactory explanation not to speak of any tangible evidence but only reiterates that the money had been lying with his father-in-law for the last few years....... As the assessee has failed to produce any evidence relating to the stridhan character of the amount, the transaction is treated as benami, i.e., the real owner of the property is the assessee though it stands in the name of the assessees wife.'
Mr. Pal, appearing on behalf of the revenue, also relies strongly on this passage. But a close examination of the above passage makes it clear that the Income-tax Officer in the assessment year 1942-43, instead of discharging the onus of proving that the money did not belong to the wife, called upon the assessee to prove that the money did not belong to his wife. The assessee stated that for the last few years the money was lying with his father-in-law. But there is nothing in the order of the Income-tax Officer to say that there are other circumstances which make the explanation highly improbable. Therefore, in the report of the Income-tax Commissioner relating to the assessment year 1942-43 there is nothing to show that the onus lying upon the department had been discharged.
It is settled law that an apparent state of affairs must be taken to be real unless the contrary is proved. The to documents, namely, the deed of sale and the deed of settlement, show that the money belonged to the wife. It is for the department to establish by cogent evidence that the real owner was the assessee and not the wife. The onus undoubtedly lies upon the department. I have already shown that the department failed to discharge this onus even for the assessment year 1942-43. So far as the assessment years 1958-59 and 1959-60, the subject matter of the present reference are concerned, on attempt has been made by the department to discharge the onus. Therefore, the finding that the money really belonged to the assessee is wholly unwarranted.
If any authority is needed for the proposition that the apparent state of affairs must be taken to be real, reference may be made to the case of Ramkinkar Banerji v. Commissioner of Income-tax 1. In that case it has been further stated that there is no presumption that a property standing in the name of a married lady does, in fact, belong to her husband. It, therefore, follows that in the instant case simply because the money stood in the name of the assessees wife, the assessee could not be presumed to be the real owner.
The Appellate Assistant Commissioner has stated that there is material to show that the real ownership of the property has been consider by the Income-tax Officer to make the assessment for the assessment year 1942-43. It is true that he tried to ascertain the real ownership. But he did not proceed in the manner warranted by law. The Appellate Assistant Commissioner has given detailed account of the past history with regard to the assessment of this house property. He has indicated that for the assessment years 1942-43 to 1945-46, the appellant unsuccessfully endeavoured to agitated the point relating to the inclusion of the income from this property in his total income before the Appellate Tribunal. He further pointed out that the appellant himself in some of the appeals did not raise this question in his grounds of appeal. He has drawn our attention to the order passed by the Tribunal on August 23, 1951, dismissing the appeals relating to the assessment years 1943-44 to 1949-49. It seems that in that order dated August 23, 1951, the Tribunal made it clear that it would be open to the assessee to raise the point in a subsequent assessment if he was so advised. He dismissed the appeals primarily on the ground that in spite of the above direction contained in the order of the Tribunal, he did not come forward with any new materials to substantiate his claim that the money really belonged to his wife. It goes without saying that in doing so he really placed the onus on the assessee which he was not justified in doing.
If we turn to the order of the Tribunal, we hind that the Tribunal also was labouring under a misconception. The deed of settlement came into existence nearly a year after the deed of conveyance. The Tribunal therefore thinks that the case of the assessee being the purchaser in the capacity of a trustee looks incompatible. We fail to understand why this case should appear to be incompatible. In the deed of conveyance it is clearly stated that he received the money for the benefit of his wife and the two sons with the specific direction to utilize part of the money in the purchase of house property to be held for the benefit of the wife and here sons. The deed of settlement executed nearly one year thereafter is merely declaratory in nature. Therefore, we do not agree with the Tribunal hold that 'the case of assessee being the purchaser in the capacity of the trustee looks incompatible.' The Tribunal seems to think that the trust deed is completely silent about the oral trust on which the assessee received the money before the purchase of the house property. Here also we cannot see eye to eye with the Tribunal. In the deed of conveyance itself it is clearly stated that the money was received by him impressed with the trust and that trust necessarily was oral in nature. Therefore, the Tribunal is not correct in saying that 'the case of the trust having been originally made orally therefore cannot stand.'
A reference may be made to section 92 of the Trusts Act in this connection. The said section runs thus :
'Where a person contracts to buy property to be held on trust for certain beneficiaries and buys the property accordingly, he must hold the property for their benefit to the extent necessary to give effect to the contract.'
From the deed of conveyance it is clear that the assessee contracted to buy the property to be held in trust for the beneficiaries mentioned in the recitals of the said deed of sale. Therefore, in our opinion, apart from the deed of settlement created later on, he must be regarded as a trustee for the benefit of his wife and the two sons under the provisions of the Indian Trusts Act.
We accordingly hold that there are no materials on record to support the finding of the Tribunal that the money with which the house property in question was purchased really belonged to the assessee and not to his wife. We further hold that he is to be regarded as a trustee of the house property not only on the basis of the two deeds but also under section 92 of the Trusts Act and that he is to be assessed as such.
Mr. Pal, appearing on behalf of the revenue, tried to justify the order passed by the Tribunal and the other authorities by drawing our attention to the conduct of the assessee. We have noticed above that the income this house property was assessed in the hands of the assessee, ever since the assessment year 1942-43. So the question for consideration is whether the assessee is estoppel from saying that the house property in question is held by him as trustee and not in his personal capacity.
It is also settled law that there cannot be any question of estoppel or res judicata in the matter of assessment. Mr. Ginwalla, counsel for the assessee, drew our attention to a number of decisions on this point. We may refer to some of them. He read our certain passages from the judgment of Lord Atkin delivered in Absalom v. Talbot (H.M. Inspector of Taxes). He drew our special attention to the following passage at page 192 :
'The taxpayer has for years prepared his count on the footing of centering the whole of the marginal payments at their face value, and the uncertainty of the payments is satisfactorily met by allowances made in subsequent years for bad debts. There seems to have been some doubt on both sides as to whether these allowances in subsequent years are in accordance with law, doubts which are reflected in the judgment in the Court of Appeal...... But the practice of the taxpayer, acqueiscing in the claim of the Inland Revenue, is of little value, when the practice is sought to be put upon a legal footing.'
This case clearly indicates that acquiescence on the part of the assessee cannot be the foundation of assessment. In the present case also we find that the income-tax authorities tried to justify the inclusion of this income in the total income of the assessee on the footing that he acquiesced in this income being assessed in his hands year after year.
Lord Hanworth M. R. quoted with approval in Commissioners of Inland Revenue v. Sneath the following observation of Lord Parker in Brooks v. Commissioner of Inland Revenue :
'........ but it seems to me that, where there is a statutory provision requiring an estimate to be made for a statutory purpose and by a statutory authority, the principle of estoppel cannot be invoked to render the provision nugatory in case where such principles might otherwise have applied.'
His Lordship in another place observed as follows :
'It is the amount of the assessment to be made upon the facts of the case before them that is determined by them...... The High Court may revers, affirm or amend the determination in respect of which the case has been stated or remit the matter to the Commissioners with the opinion of the court thereon. It is difficult to attribute to such a determination of an assessment in amount, the decision of a lis inter partes.'
Mr. Ginwalla drew our attention to the following passage in the judgment of Lord Atkin in Commissioner of Income-tax v. P. R. A. L. Muthukaruppan Chettiar :
'Counsel for the respondent pointed our that the contention of the Commissioner in this case was the contrary of that made by him in the previous case in Madras which was successful in the High Court. He protested strongly against the Commissioner in successive cases blowing hot and cold. But that is a privilege not confined to Commissioner of Income-tax and its exercise cannot influence judicial determination of the law.'
The Supreme Court also took a similar view in Dwarkadas Kesardeo Morarka v. Commissioner of Income-tax Judgment in this was delivered by Shah J., who towards the end observed as follows :
'In the matter of assessment of income tax, each years assessment is complete and the decision arrived at in a previous year on materials before the taxing authorities cannot be regarded as binding in the assessment for the subsequent years.'
Mr. Ginwalla drew our special attention to a Bench decision of our High Court in Asit Kumar Ghosh v. Commissioner of Income-tax. In that case a receiver, pursuant to a direction given by the High Court, applied in certain assessment proceedings to be substituted in place of the previous receiver. The question arose whether he could take the plea that he was not liable to pay any income-tax. The judgment of the court was delivered by Chakravartti C.J. The learned chief Justice pointed our that estoppel is only a rule of evidence and a cause of action and that in any event estoppel cannot be the basis of liability to assessment under the Indian Income-tax Act, 1922. Relevant passage runs thus :
'As to the two contentions urged by Mr. Meyer, the first is really a plea of estoppel. I do not, however, see how if the Act, does not authorise the assessment of the assessee for the income which had neither been received by him nor received by the executors on his behalf, there could be an estoppel against the statute. Estoppel is only a rule of evidence and not cause of action. In any event, estoppel is not a basis of liability to assessment under the India Income-tax Act, and, therefore, the assessment of a person for an amount of income to which he is a stranger cannot be based on the ground that he himself wanted to be assessed on it.'
We respectfully agree with the above observations made by the learned Chief Justice. In the present case also the assessee cannot be made liable in respect of the income which does not really belong to him. Therefore, in our opinion, the argument advanced by Mr. Pal on behalf of the revenue that the orders of the income-tax authorities can be justified having regard to the past conduct of the assessee cannot be accepted.
We accordingly accept this reference. The question, therefore, must be answered in the negative and in favour of the assessee, The assessee will get his costs from the revenue.
P. B. MUKHARJI J - I agree.
The question requiring an answer from this court has two parts, one relates to the facts and circumstances and the other relates to the proper interpretation of the deed of conveyance and the deed of settlement. The question as framed is in these terms :
'Whether, in the facts and circumstances of the case and on a proper interpretation of deed of conveyance and the deed of settlement, the Tribunal is right in holding that the house property being premises Nos. 46 A and 46 B, Wellesley Street, Calcutta, is not true property.'
So far as the interpretation of the deeds is concerned, there cannot, in my opinion, be any controversy whatever. The deeds are clear.
The first is the deed of conveyance dated the 30th September, 1940. In this deed the endorse were the Kotharia in three parts who were conveying the property to the assessee, Durga Prosad More, expressly describing him as the 'trustee'. No doubt the third party describing him as a trustee will not make him a trustee but the fact is that strangers and third parties took him as a trustee but the fact is the strangers and third parties took him as a trustee and treated him as a trustee and conveyed their own property as trustee on a sale. That means that by reputation and notoriety the assessee was a trustee already on the 30th September, 1940. It is not alleged either in the facets or even suggested anywhere that this description was deliberately a false description or in any way otherwise incorrect.
It also describes that such trustee is to carry out the trust in respect of this property by the use of the words 'to hold the same upon trust for investing the same in immovable properties for the maintenance of herself during her lifetime with the rent issue and profits thereof after payment of all outgoing and on her death to hold the same in trust of her sons, Debi Prosad More and Badri Prosad More, for their maintenance during their minority and on their attaining majority upon trust to make over the same to the said sons absolutely in equal shares.'
This provision in the conveyance of the 30th September, 1940, therefore, clearly records an existing trust and the chairman of the trust. It is further recited in the deed of conveyance :
'And whereas as such trustee as aforesaid and with a portion of the money made over to him for the purposes of the aforesaid trust the said trustee became desirous of purchasing the said premises Nos. 46 A, 46 B, Wellesley Street.....'
This conveyance or sale deed, therefore, expressly recognises an existing trust.
The deed of settlement is clear enough. It is dated the 10th September, 1941. It creates this trust. It recites that the money belongs to the settler, Srimati Benarasi, wife of the assessee, Durga Prosad more. The husband is made the trustee. It expressly recite that the settler was possessed of and absolutely entitled to a considerable amount of money as an absolute stridhan property. It also expressly recites that out of such money the trustee had invested a sum of Rs. 1,85,000 in the purchase of the said premises Nos. 46 A and 46B, Wellesly Street. Therefore the interpretation of this deed is clear that it creates a trust and recognises the trust already in operation.
Therefore, the part of the question that relates to the interpretation of these two deeds, one of conveyance and the other of trust must be answered in favour of the assessee. The interpretation of these two deeds leaves no doubt that the premises Nos. 46 A and 46 B, Wellesley Street, were and are trust properties.
The other part of the question relates to 'the facts and circumstances of the case'. Does the fact or the circumstance of the case lead to any conclusion contrary to what these two deeds record They do not. The admitted facts are, (1) there is no proof and no charge against the assess that he had concealed any income of his own; (2) there is not evidence whatever that the assessee as husband advanced this money to the wife and thereby concealed his own income; (3) the assessee has throughout kept separate accounts of his own income and the income of the trust properties and has returned such income separately without any concealment or any evasion, and (4) the assess when asked definitely produced before the taxing authorities both the sale deed as well as the trust deed to show that properties in question were trust properties.
The other compelling fact and circumstance of the case are that the assessee in previous years did protest and grumble against the taxing authoritiesinclusion of the trust properties as his own property. He did make appeals to the Appellate Assistant Commissioners and Tribunal but he failed in those years. The fact remains that after failing in the Tribunal he did not come up before the High Court for ultimate redress.
Now the contention of the taxing authorities is that the assessee, therefore, must be deemed to have accepted the assessment of the taxing authorities in the past years and with it is the implicit acceptance that this property is the assessees own property and not trust property. This is the only feature or fact or circumstance on which the taxing authorities rely.
Two major question, therefore, arise, one relates to the burden of proof. The other relates to estoppel or res judicata in income-tax proceedings.
Taking up the question of burden of proof it is settled that the burden of proving that particular transaction such as the trust contained in the deed of trust and mentioned in the deed of conveyance is not a trust must be upon the party who says that it is not so. It means that the taxing authority is to show that these deeds do not represent the real state of affairs. The burden of proving that the wife is only a benamidar for the assessee and that the assessee is the real owner lies upon the revenue. This has been the settled law ever since the decision of Sir Dinshaw Petit v. Commissioner of Income-tax where property stands in the name of the wife, it has been held that, in the absence of any evidence that she is a benamidar for her husband, she must be taken to the real owner : see the decision of In re L. Sheo Narain Lal where it is distinctly laid down that :
'If the house stands in the name of the wife, the presumption is that she is the owner thereof. It is for the persons alleging that she is the mere benamidar for her husband to prove the allegation either by direct or circumstantial evidence.'
It is interesting to observe that in that case the Tribunal had disbelieved the wifes statement that she had received cash and jewellery from her father and father-in-law on ceremonial and other occasions and had come to the finding that it must have come from the assessee and, therefore, he was assessable but then the Division Bench of the High Court presided over by the learned Chief Justice of that court came to the Conclusion that 'the mere fact that the statement of assessees wife was disbelieved by the Tribunal would not entitle the Tribunal to hold that half the sale price must have been contributed by the assessee.'
The same view is taken by two other decisions in Ramkinkar Banerjee v. Commissioner of Income-tax 1 and Sovaram Jokhiram v. Commissioner of Income-tax.
Now what are the facts here. The assessee himself had said that the money belonged to his wife with which this property was purchased. No enquiry was made by the taking authorities. The wife was not interrogated. No statement was called from the wife. No statement was called from the father-in-law. The deed itself shows that the wife was claiming this money as her stridhan property. Surely the income-tax authorities sought to discharge their onus in such a case by leaving the question to the husband and by only saying that they do not believe the husbands statement. There should have been enquiries and investigations by the taxing authorities and they were clothed with enough powers in that respect to enquire from the wife and the wifes father about the source of the money. This is particularly so when on the record there is no charge or allegation against the assessee-husband that the had concealed his income.
No doubt in an appropriate case where the assessee purchased his property with his own money and for himself but benami, that it, in the name of another, the taxing authority is entitled to hold that the transaction was not genuine and that the beneficial interest on the property and income really belonged to the assessee, as in such decisions as Sinclair v. Inland Revenue Commissioner and Dalchand & Sons v. Commissioner of Income-tax but them such finding must be on some evidence and on some facts. The taxing authorities cannot just set at naught solemn registered deeds worked for years, observed and carried out.
It has been held in Gopi Nath Agarwal v. Commissioner of Income-tax that the finding of a Tribunal that a transaction is a benami one is a finding of fact. No doubt that is so but it would be set aside by the court if there is no evidence to support it. We have no hesitation in holding that there is no evidence here in this case which can justify the conclusion that these premises in Wellesley Street are not trust properties. In this connection it will be appropriate to record Beaumont C.J.s observation in Commissioner of Income-tax v. Gokaldas Hukumchand There the Bombay High Court set aside the finding of the department that the minor sons of the assessee who were admitted to the benefits of a certain partnership (in which the assessee was a not a partner) were mere nominees of their father. Beaumont C.J. observed :
'Now, all these facts undoubtedly give rise to a suspicion that the two minor sons are really nothing but nominees of the assessee. The question really is whether these facts not only give rise to a suspicion, but justify the inference of fact drawn by the Income-tax Officer that the minors were mere nominees of the assessee. I do not think that they do justify such an inference, though they certainly give rise to suspicion.'
Here the facts do not give rise even to suspicion. The facts show that the deeds were treated as genuine. They were observed as genuine. They were put forward as genuine and acted upon. When the said premises were included in the assessees own income the assessee did protest. There was no attempt at concealment, there was no attempt at prevarication. There was no attempt to slur over the facts by the assessee in this case.
On these principles, therefore, we have no hesitation in holding that the burden of proof has not been discharged by the income-tax authorities to displace the fact proved by the assessee as well as by the two deeds of trust and conveyance.
The other question for decision in the present reference is one of res judicata. Highest judicial decisions and authorities, as I read them, are in favour of the conclusion that the finding or decision of the income-tax authorities in previous year, is not res judicata generally and, therefore may be departed from in any subsequent year. The well-known decision of Hanworth M. R. in Inland Revenue Commissioner v. Sneath is the leading authority on the point. The propositions are clear. If the department wrongly arrived at a certain finding in the past year and the assessee accepted it instead of taking the matter higher, that can give the assessee no claim to have the mistake repeated in a subsequent year in his favour. Equally, on the other side, the assessee may discover that in past years he had paid tax on an erroneous basis or had returned as income that which was not assessable as his income at all and such past practice would not debar him in any later year from making any return on a correct basis. The Privy Council decision in King v. British Columbia Fir and Cedar Lumber Company Limited is also relevant on the point. Lord Blanesburgh, delivering the judgment of the Privy Council, observed at page 445 :
'.......... that the mere fact that income tax was inadvertently paid by the respondents thereon is not to prejudice them to the extent to which in these proceedings it is not established that these money were liable to the brought into charge.'
Lord Atkin in Absalom v. Talbot also observed at page 192 :
'..... the practice of the taxpayer, acquiescing in the claim of the Inland Revenue, is of little value, when the practice is sought to be put upon a legal footing.'
In the Privy Council case in Broken Hill Proprietary Co. Ltd. v. Municipal Council of Broken Hill Lord Carson made similar observations in these terms :
'The decision of the High Court related to a valuation and a liability to a tax in a previous year, and no doubt as regards that year the decision could not be disputed. The present case relates to a new question - namely the valuation for a different year and the liablility for that year. It is not eadem questio, and, therefore, the principle of res judicata cannot apply.'
A different note was struck by the Privy Council in Hoystead v. Commissioner of Taxation. Lord Shaw, who delivered the judgment of the Privy Council in that case, came to the conclusion that the Commissioner of Taxation in that case was estopped, since although in the previous litigation no express decision had been given whether the beneficiaries were joint owners, it being assumed and admitted that they were, the matter so admitted was fundamental to the decisions so given.
This decision in Hoysteads case has, however, come up for adverse criticism in Society of Medical Officer of Health v. Hope by Lord Keith as follows :
'Much reliance was placed by counsel for the appellants on the judgment of the Privy Council in Hoystead v. Commissioner of Taxation. That authority is not binding on this House, and the point was never taken in the case that a decision on liability to assessment to tax for on e year is not conclusive of liability to assessment in a later year. The judgment would seem to conflict with what was said a month earlier in Broken Hill Proprietary Co. Ltd. v. Municipal Council of Broken Hill by a Board differently constituted (where Lord Carson rejected a plea of res judicata, in words already quoted above)..... In my opinion, that is that position here, and I do not find it necessary to examine Hoysteadd case further, beyond observing that some of the things that were said in that case are not, I think, entirely consistent with what was said in New Brunswick Railway Co. v. British and French Trust Corporation Ltd. or with what I regard as essential to a successful pleas of res judicata, a common medium concluded in the two actions.'
Finally in a still later decision in Mohamed Falil Abdul Gaffoor, The Trustees of the Abdul Gaffoor Trust v. Commissioner of Income-tax, Colombo the House of Lords definitely refused to follow Hoysteads decision and Lord Radcliffe, delivering the judgment of the House of Lords at pages 600-601, observed :
'Their Lordships are of opinion that it is impossible for them to treat Hoysteads case as constituting a legal authority on the question of estoppels in respect of successive years of tax assessment. So to treat it would bring it into direct conflict with the contemporaneous decision in the Broken Hill Case and to follow it would involve preferring a decision in which the particular point was either assumed without argument or not noticed to a decision, in itself consistent with much other authority, in which the point was explicitly raised and explicitly determined.'
IT is on there grounds that the House of Lords in Gaffoors case came to the conclusion that the respondent was not estopped by the 1954 decision of the Board of Revenue from challenging the appellants claim that the income of Abdul Gaffoor Trust was exempt from tax under section 7 of the Income-tax Ordinance which was considered in that case. In this connection the Supreme Courts observation in New Jehangir Vakil Mills Co. Ltd. v. Commissioner of Income-tax may also be noticed.
I am, therefore, disinclined to follow the broken authority of Hoysteads case. But even there the Privy Council opinion on estoppel and res judicata rested on special features which are absent in the present reference before us. There the question of estoppel was raised which Lord Shaw at pages 163-164 in Hoystead v. Commissioner of Taxation noticed in this way :
'It is, however, necessary to examine carefully the argument presented against such estoppel. It amounts to this - that in the former case it was not matter of decision that the appellants were joint owners, but was matter of admission.'
Later on at page 165 Lord Shaw proceeds to observe :
'Very numerous authorities were referred to. In the opinion of their Lordships it is settled, first, that the admission of a fact fundamental to the decision arrived at cannot be withdrawn and a fresh litigation started, with a view of obtaining another judgment upon a different assumption of fact; secondly, the same principle applies not only to an erroneous admission of a fundamental fact, but to an erroneous assumption as to the legal quality of that fact. Parties are not permitted to begin fresh litigations because of new views they may enter in of the law of the case, or new versions which they present as to what should be a proper apprehension by the court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted litigation would have no end, except when legal ingenuity is exhausted. IT is a principle of law that this cannot be permitted, and there is abundant authority reiterating that principle. Thirdly, the same principle -namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken. The same principle of setting parties rights to rest applies and estoppel occurs.'
Finally, at page 168 of the report, Lord Shaw observes :
'It might be sufficient to say, in answer to the entire argument on this head, that whether the point as to joint ownership depended upon admission of fact upon evidence led or upon argument upon construction of a statute, that is, as already stated, nothing to the point in considering the question of estoppel. There would be no quieting of litigation unless the judgment was taken as it stands. It is plain that the res in the present case was adjudged, that res being, in figures, that six times 5,000/-. should be the suitable deduction from the assessed property.'
This decision in Hoystead v. Commissioner of Taxation has to be understood in its proper light. There the judgment was the judgment of the High Court which set at rest the point of joint ownership. As Lord Shaw noticed at page 163 at the beginning of the judgment :
'The parties treated the answers of the High Court to the questions stated as covering the whole ground of the appeal.'
Although he also points out :
'The attention of the justice who heard the appeal was not directed to the question whether the beneficiaries under the will of Charles Campbell were taxable as joint owners and he did not in fact decide that question.'
Here, an attempt was made by the taxing authorities to rely on this principle enunciated by Lord Shaw to Shaw that this point, viz., whether the property was trust property or not was res judicata. The present reference before us is wholly distinguishable from the facts before the Privy Council in Hoysteads case. In this case there was no decision by the High Court. There was no competent court which decided the point of title in this reference. What is more, the income-tax authorities in this case did not even decide that these two deeds of conveyance and trust were sham deeds. In this connection the observations of the Tribunal that 'the case of the trust having been originally made orally, therefore, cannot stand' is clearly unsupported by the facts, evidence and circumstances of the case. We have already indicated how the assessee was known as a trustee by reputation even to outsiders. There was no decision of any court of competent jurisdiction on this point of whether the property is trust property or the property of the assessee. That question has come up for the first time before this court. Therefore, there cannot be any estoppel or res judicata on this point in the facts and circumstances of this case even on the strength of Lord Shaws observations in Hoysteads case.
Attention has already been drawn by my learned brother to the observation of Chakravartti C.J. in Asit Kumar Ghosh v. Commissioner of Income-tax with which we associate ourselves.
In a very recent decision of the Supreme Court in M. M. Ipoh v. Commissioner of Income-tax, Shah J. settles and decided the point of res judicata in these terms at page 118 :
'The doctrine of res judicata does not apply so as to make a decision on a question of fact or law in a proceeding for assessment in one year binding in another year. The assessment and the facts found are conclusive only in the year of assessment : the findings on questions of facts may be good any cogent evidence in subsequent years, when the same question falls to be determined in another year, but they are not binding and conclusive.'
As against all these massive circumstances, facts, evidence and great authorities, we are unable to hold that the mere fact that the assessee did not carry his protests beyond the Tribunal to this court in previous years concludes this question of the real nature and character of the two deeds of conveyance and trust as res judicata in this case. It is necessary in these circumstances to have a total view of the matter which would include the statements made by the assessee, his conduct and the probabilities, Indeed, as was so clearly pointed out by the Supreme Court in Uddhavdas Kewalaram v. Commissioner of Income-tax in these terms :
'It is for the income-tax authorities to prove that a particular receipt is taxable. In deciding whether an item of receipt is taxable as income, the Tribunal may consider the evidence in the light of the statements made by the assessee, his conduct and the probabilities, but in arriving at its conclusion there must be a fair and reasonably full review of the evidence.'
Therefore, for these reasons, I agree with the answer proposed by my learned brother that the question raised must be answered in the negative and in favour of the assessee holding that the premises Nos. 46A and 46B. Wellesley Street, Calcutta, are trust property.
I agree as to the order of costs. Certified for two counsel.