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TMI Blog1985 (1) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... ls and residential premises and that the revised return was filed only during the assessment proceedings and after enquiries. The ITO did not regard the revised return as valid under section 139(5) of the Income-tax Act, 1961 (' the Act ') and proceeded to decide the question on the basis of the contentions raised before him that the income from the schools did not belong to the assessee. There were two kinds of schools run by the assessee, one the primary and pre-primary and the other a high school. With regard to the former, a trust called ' Haeems Education Trust ' was started on 28-4-1970 and registered soon thereafter with the Charity Commissioner and regarding the latter another trust called ' Nelson Education Trust ' was started in 1966 and duly registered in that year. The assessee stated before the ITO that the former trust was created because the Ahmedabad municipal corporation made it compulsory that the primary schools be owned by a public charitable trust, if recognition from the school board was desired. He duly produced the following documents before the ITO : (a) Copy of the trust deed. (b) Copy of the registration certificate under the Bombay Public Trusts Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trusts were not real. To put it in the words of the ITO at the end of para 11 of his order : " These facts are discussed to show the manner of execution of the trust and to pierce the veil of unreality." 4. The AAC has confirmed the order of the ITO, relying upon the same grounds as those of the ITO. According to him, the assessee had not fulfilled the conditions prescribed in section 12A(a) of the Act, because the original registration was not renewed as no account had been filed by the trust with the Charity Commissioner. He has further observed that the trustees of both the trusts are either family members or closely connected with the assessee. 5. Before us, the learned counsel for the assessee relied upon a number of documents which were placed before the ITO. He also relied upon the audited accounts in respect of the trust for the high school, showing the grant therein for the year ended on 31-3-1974 and argued that the assessee had acted upon the trust. However, his most important argument was that the Charity Commissioner's certificate regarding the trust was a judgment in rem and the ITO could not go behind it. The implication was that if the trust duly recognised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. But, on an examination of the other sections, such as sections 18 to 22A, sections 70 to 72 and sections 79 and 80, it is clearly shown that the Legislature intended to make decisions given under this Act also to be final and conclusive and binding on all parties and to have the same effect as a judgment in rem." However, the High Court has subsequently gone on to state as follows : " These cases clearly indicate that the schemes framed under section 92 precluded the assertion of any private rights. It is not necessary for me to decide, but on a prima facie view, it appears to me that schemes framed under section 50 of the present Act should have the same effect. As I have pointed out above, the scheme of these other sections mentioned by me also appears to be to provide a complete machinery and to provide for exclusion of jurisdiction of civil court to decide these questions." This last quotation shows that the High Court itself has stated that it was not necessary for it to decide the question whether the order of the Charity Commissioner was a judgment in rem or not. It rather chose to rest its decision on the fact that a complete machinery had been provided by the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ouster of jurisdiction of a civil court by the Bombay Public Trusts Act. Moreover, in our view, we should be slow in drawing an inference that a certain order of a judicial authority is a judgment in rem because that would bind persons, who are not parties to the proceedings. At best, the legal position emerging from the judgments is that the doctrine of the judgment in rem would apply only to the civil courts and not to the ITO having statutory authority. Section 41 of the Indian Evidence Act, 1872 enumerates these kinds or judgments. There is no basis for expanding the categories mentioned therein. In any case, in the aforesaid two judgments in the cases of Thobhandas Jivanlal Gajjar and Keshavlal Punjaram, the High Court has stated that the statutory authority, i.e., the ITO, has exclusive jurisdiction for the purposes of assessment to decide the question even though once decided by a civil court. It is true that the Court was not concerned there with the decision of the Charity Commissioner but then in the case of Ishwarlal Nanalal, the Court was not concerned with the jurisdiction of the ITO. Under section 80 of the Bombay Public Trusts Act, it is the civil court's jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In this connection, it is significant that under the 1961 Act, a special power has been given to consider the genuineness of the firm on the question of its registration but no such power is given regarding the trust. It may be true that the assessee might have committed many serious irregularities and taken incorrect or inconsistent stand. For those things, separate action under other laws may be taken but that will not displace the existence of the trust. 9. The learned AAC has stated that the assessee had not renewed registration with the Charity Commissioner but that has nothing to do with the existence of the trust which depends upon the fulfilment of section 6. His view that the assessee has not fulfilled the conditions prescribed in section 12A, also has no basis because that section does not require any renewal of registration but only registration. The AAC has also held that since the assessee had not proved spending of the income for charitable purpose, sections 11 and 12 would have no application. That, however, does not mean that the income can be regarded as the income of the assessee. We, therefore, hold that the income of the trust cannot be regarded as the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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