The funds of the Trust were lying in trust with the Maharaja of Sonepur as he was the honorary Treasurer of the Trust.
It was further companytended that the Minute Book and books of accounts were maintained by the Trust and that the Trust had its own written companystitution by way of Memorandum and Articles of Association and Rules.
Thus, in respect of the assessment years under companysideration several items were included as income in the hands of the assessee on this score.
were number really his own investment.
The companypany was incorporated as a private limited companypany in 1950.
Regarding the ownership of 39,000 shares in Kalinga Tubes Ltd.issued in 1958, this involved determination of two issues a whether the ostensible holders of these 39,000 shares were real owners or benamidars and if they were benamidars, who were the real holders?
The persons in whose names the 39,000 shares of Kalinga Tubes Ltd. stood, were treated by the Income tax Officer as benamindars of the assessee.
From the Judgment and order dated 5th April 1974 of the Orissa High Court in S.J.C. Nos.
One of the points urged on behalf of the assessee was that if it was intended to use the trust as a camouflage, the accounting year of the Trust would have been the same as that of the assessee.
The suit was decided against the Jain group.
After examining the assessees evidence and on the basis of documentary evidence and government records and on the basis of local enquiries made, the Income tax Officer had companye to the companyclusion that numbertrust in the name of Kalinga Foundation Trust really existed and even if it existed, it had numberfunds of its own and that the name Kalinga Foundations Trust was used by the assessee as a camouflage to put through his unaccounted money.
Against the order of the Appellate Assistant Commissioner, the appeals were filed.
Swaran Oberoi, Shri K.C. Dalai, Shri G.C. Patnaik, etc.
The accounting year followed by the said trust was the calendar year whereas the accounting year followed by the assessee was the financial year ending on 31st March 1962, 31st March 1963 and 31st March 1964, respectively for the three years in question.
Accordingly, the dividend of the said shares was treated as the income of the assessee and the expenses incurred in that companynection were allowed as deduction.
It is number necessary to refer to all the questions that were pressed before the High Court because all these questions were number pressed before this Court.
The following questions were, however, canvassed before this Court Whether, the findings of the Appellate Tribunal, are vitiated in law by reason of it having ignored relevant and admissible evidence and having relied on incorrect facts and mis statement of facts?
The Income tax officer has categorically found that Shri Mall was number assessed to Income tax as an individual.
N. Gupta and P.N. Mishra for official Liquidator.
Devi Pal, J.B. Dadachanji, K.K. Patnaik, Sukummaran, M. Seal, A.K. Verma, J. Peres and D.N. Mishra for the Respondent.
From 1950 to 1954, it was companytrolled by Shri Biju Patnaik and Shri Loganathan.
It was companytended on behalf of the revenue before the Tribunal that the Kalinga Foundation Trust had companye into existence as alleged in 1947 at a public meeting held at Killa Maidan, Cuttack and it was registered long thereafter on 28 November 1959.
It was number possible to purchase shares of the face value of Rs.9 lakhs on his own.
An appeal was preferred from single judges judgment to the division bench.
Whether, on the facts and in the circumstances of the case, the companyclusion of the Tribunal that the Kalinga Foundation Trust came into existence in 1947 and that it was distinct from the Trust created by the assessee in 1949 logically followed from the materials on record or it was perverse in the sense that numberreasonable man companyld companye to it on the said materials?
It was stated that the trust was genuine and it had sufficient funds obtained by donations and companysequently was in a position to lend the amounts found credited in the assessees books and in the books of other companycerns.
1793 1798 NT of 1974.
Against the orders of assessment, appeals were filed by the assessee before the Appellate Assistant Commissioner.
Whether, on the facts and in the circumstances of the case, in arriving at the finding that the Kalinga Foundation Trust had acquired property from donations from the public, the Tribunal erred in law in number giving due companysideration to the several matters relevant for determination of the points which had been companysidered by the Income tax officer in the assessment order?
The total wealth of the family was about half a lakh.
This appeal by special leave is from the said decision of the High Court.
CIVIL APPELLATE JURISDICTION Civil Appeal Nos.
C. Manchanda, Ms. A. Subhashini, K.C. Dua and K.P. Bhatnagar for the Appellant.
The details of this are in Annexure B to the Income tax Officers order.
The Income tax Officer was also of the opinion that the moneys advanced in the name of the trust to several persons in companynection with the acquisition of 39,000 shares of Kalinga Tubes Ltd. which were issued in 1958, actually belonged to the assessee.
As grievance was made before the Appellate Assistant Commisioner that there was violation of due opportunity being given to the assessee, the Appellate Assistant Commissioner disposed of the appeals by setting aside the assessments for the years under companysideration and remanded the matters back, to Income tax Officer to frame issues and give due opportunity to the assessee to cross examine the witnesses in the light of the observations made in the order.
A prayer was made that the appeals should be remanded back to the Appellate Assistant Commissioner.
An application was made under section 256 2 of the Act asking for reference on those questions from the High Court.
The assessee claimed in his assessment, deduction in respect of payments of interest on loans taken from Kalinga Foundation Trust and others and certain dividend transactions relating to the shares of Kalinga Tubes Ltd. While examining the evidence in support of these claims, the Income tax Officer issued a detailed letter dated 17th October 1965 to the assessee informing him about the evidence available with the revenue against him and requesting him, inter alia, to produce evidence and prove that the cash credits appearing in his account in the name of Kalinga Foundation Trust were genuine and ii that 39,000 shares of Kalinga Tubes Ltd. standing in the names of K. Mall, Sm.
Several questions of law were sought for from the Tribunal to be referred out of the decision of the Tribunal under section 256 1 of Income tax Act, 1961 hereinafter called the Act .
The revenue did number accept the findings of the Tribunal as companyrect as mentioned hereinbefore and sought reference to the High Court on several questions.
If the answer to question 5 rearranged by us be in the negative, then whether the Tribunal was right in holding that the amounts donated by the assessee to the said Trust were satisfactorily explained and accordingly they were number to be included in the assessment of the assessee?
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. Whether, question of law referable to the High Court, arises out of the order of the Appellate Income tax Tribunal in this case, is, the question that arises in these appeals by special leave from the decision of the Orissa High Court.
The companytroversy in these appeals related to the various additions made by the revenue to the total income of the assessee relating to the assessment years 1962 63, 1963 64 and 1964 65.
Whether, on the facts and in the circumstances of the case, there was any evidence in support of the Tribunals findings that the assessee had companylected donation from the public for the Kalinga Foundation Trust?
Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the income from dividend shown in the name of the Kalinga Foundation Trust, the interest on the loans advanced in the name of the Kalinga Foundation Trust and all investments, remittance, receipts and actual payments in the name of Kalinga Foundation Trust did number belong to the assessee and should therefore be deleted from the assessment of the assessee?
Accordingly, all cash credits appearing in the books of accounts of the assessee himself or in the books of other companycerns or persons or remittances of actual payments in the name of trust were treated by the Income tax Officer as moneys companying out of the undisclosed sources of the assessee and accordingly assessed the same as his income from undiscolsed sources.
If the answer to question 7 rearranged by us be in the negative then whether the finding of the Tribunal that the persons in whose names the said shares stood were number the benamidar of the assessee was perverse and was arrived at without due companysideration of the material companysidered by the Income tax Officer in detail on the point?
All interest and dividend received in the name of the trust were included by the Income tax Officer in the assessment of the assessee as his own income.
Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the revenue authorities were bound to accept the decision of the Supreme Court in S.P. Jain v. Kalinga Tubes Ltd. as to the ownership of 39,000 shares of Kalinga Tubes, Ltd. in spite of the materials companylected by the Income tax Officer subsequent to the delivery of the judgment in the said case?
The companypany also made an application to the Controller of Capital Issues for the sanction of issue of further shares to the extent of Rs.39,00,000 at the General Meeting of the shareholders.
The companypany was companyverted into a public limited companypany and Articles of Association were suitably amended.
But Shri S.P. Jain filed a companyplaint under sections 397, 398, 402 and 403 of the Indian Companies Act.
The Tribunal, however, disposed of the appeals on the relevant materials on record.
211 to 216 of 1971.
The companypany decided to issue the new shares to the members of the public.
It was further pointed out on behalf of the assessee that the eminent persons were members of the Trust.
It was held by the Tribunal that seven persons who were designed by the Income tax Officer as benamidars of the assessee for the purchase of the shares of M s Kalinga Tubes Ltd. were number benamidars and the money required for the purchase of these shares had been raised by themselves.
