1967 (12) TMI 22 - HC - Income Tax

Whether on a proper interpretation of the deed of conveyance and the deed of settlement the Tribunal is right in holding that the house property being premises Nos. 46A and 46B, Wellesley Street, Calcutta, is not trust property - question is answered in the negative and in favour of the assessee holding that the premises are trust property

Summary

Issues Involved:
1. Whether the house property at premises Nos. 46A and 46B, Wellesley Street, Calcutta, is trust property.
2. Interpretation of the deed of conveyance and the deed of settlement.
3. The onus of proving benami transactions.
4. The applicability of estoppel or res judicata in income tax assessments.

Issue-Wise Detailed Analysis:

1. Whether the house property at premises Nos. 46A and 46B, Wellesley Street, Calcutta, is trust property:
The primary issue was whether the house property should be considered trust property and thus taxed as such, rather than as the individual income of the assessee. The assessee claimed that the property was purchased with funds received from his wife, Sm. Benarasi Debi, and held in trust for her and their sons. The Tribunal, however, held that the property was not trust property, primarily because the assessee had been assessed on the income from this property in previous years without objection.

2. Interpretation of the deed of conveyance and the deed of settlement:
The court examined two key documents: the deed of conveyance dated September 30, 1940, and the deed of settlement executed nearly a year later. The deed of conveyance clearly stated that the assessee received money from his wife to purchase the property and hold it in trust for her and their sons. The deed of settlement reiterated that the money used for the purchase was the wife's stridhan property and that the property was to be held in trust. The court concluded that the deeds clearly indicated the existence of a trust.

3. The onus of proving benami transactions:
The court emphasized that the onus of proving that a transaction is benami lies on the party making the allegation. The Income-tax Officer and the Appellate Assistant Commissioner had concluded that the wife was merely a benamidar for the assessee without gathering sufficient evidence. The court noted that there was no attempt to interrogate the wife or investigate further. The court held that the department failed to discharge its onus of proving that the property was benami.

4. The applicability of estoppel or res judicata in income tax assessments:
The court addressed whether the assessee was estopped from claiming the property as trust property due to his previous acquiescence in being assessed on its income. The court cited several legal precedents to establish that estoppel or res judicata does not apply in income tax assessments. Each year's assessment is independent, and past assessments do not bind subsequent ones. The court concluded that the assessee was not estopped from asserting that the property was held in trust.

Conclusion:
The court ultimately held that there were no materials to support the Tribunal's finding that the property was purchased with the assessee's money and not his wife's stridhan. The court concluded that the property was indeed trust property, as evidenced by the deeds and under Section 92 of the Trusts Act. The question was answered in the negative and in favor of the assessee, with costs awarded to the assessee. The judgment was concurred by both judges, and the court certified costs for two counsel.