1990 PLP 206 (PTD)

(v) an association of persons or a body of individuals, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding sub‑clauses;" It is beyond dispute that "person" includes a plurality of individuals. The next section that has to be looked at is section 5 of the Wealth‑tax Act. That talks of exemption in respect of certain assets. Section 14 occurring in Chapter IV in relation to the assessment of an assessee throws an obligation on the assessee to file a return of wealth in the prescribed form if his net wealth is assessable under the Act. Subsection (2) states that notwithstanding anything contained is subsection (1), if the Wealth‑tax Officer is of the opinion that the net wealth is assessable, he may serve a notice on the assessee calling upon him to file a return. Then comes the important section, which has a bearing on this case, namely, section

17. That deals with wealth escaping assessment as the marginal note clearly indicates. That section is extracted in full. "17. (1) If the Wealth‑tax Officer‑‑ (a) has reason to believe that by reason of the omission or failure on the part of any person to make a return under section 14 of his net wealth or the net wealth of any other person in respect of which he is assessable under this Act for any assessment year or to disclose fully and truly all material facts necessary for assessment of his net wealth or the net wealth of such other person for that year, the net wealth chargeable to tax has escaped assessment for that year, whether by reason of under‑assessment or assessment at too low a rate or otherwise; or (b) has, in consequence of any information in his possession, reason to believe, notwithstanding that there has been no such omission or failure as is referred to in clause (a), that the net wealth chargeable to tax has escaped assessment for any year, whether by reason of under‑assessment or assessment at too low a rate or otherwise; he may, in cases falling under clause (a), at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that assessment year, serve on such person a notice containing all or any of the requirements which may be included in a notice under subsection (2) of section 14, and may proceed to assess or reassess such net wealth and the provisions of this Act shall, so far as may be, apply as if the notice had issued under that subsection. (2) Nothing contained in this section limiting the lime within which any proceeding for assessment or reassessment may be commenced, shall apply to an assessment or reassessment to be made on such person in consequence of or to give effect to any finding or direction contained in an order under section 23, 24, 25, 27 or 29: Provided that the provisions of this subsection shall not apply in any case where any such assessment or reassessment relates to an assessment year in respect of which an assessment or reassessment could not have been made at the time the order which was the subject‑matter of the appeal, reference or revision, as the case may be, was made by reason of any provision limiting the time within which any action for assessment or reassessment may be taken." Section 147 of the Income‑tax Act which is in pari materia with section 17 of the Act also deals with a similar situation of income escaping assessment. As far as the assessment year 1974‑75 is concerned, Dr. Debi Pal would urge that the letter of the Income‑tax Officer dated September 11, 1978, will show that a return had been filed because it mentions about the balance‑sheet. Therefore, without a return being filed, the question of furnishing a balance‑sheet would not arise. The subsequent proceedings dated September 19, 1978 and September 20, 1978 also make this clear. Then again, a notice under section 16A of the Act was issued on October 21, 1978, for determining the market value of the assets as on June 30, 1973. That relates to the assessment year 1974‑

75. Having regard to the terms of section 16A of the Act, that section could be invoked only in a case where the value of the asset as returned is in accordance with the estimate made by a registered valuer, if the Wealth‑tax' Officer, is of opinion that the value so returned is less than its fair market value. As a matter of fact, the matter did not rest there. A date was fixed for inspection. That came to be cancelled. Therefore, notwithstanding the fact that a return was filed, the counter‑affidavit takes the stand that section 17 had come to be invoked because the respondent had reason to believe, by reason of the omission on the part of the appellant‑trust to furnish a return of wealth under section 14(1) of the Act, that wealth chargeable to tax has escaped assessment. That this is palpably wrong is the contention. In opposition to this, Mrs. Nalini Chidambaram, learned counsel for the respondent, would submit that in response to the notice under section 17 issued on March 17, 1983, the assessee‑trust has filed a "nil" return of wealth on April 18, 1983, and claimed exemption under section 5(1) of the Act. That letter dated April 18, 1983, from the trust to the respondent reads as follows: "In reply to your notice under reference, we state as follows: Our trust is a public charitable trust entitled to exemption under section 5(1) of the Wealth‑tax Act and hence we are not assessable to wealth‑tax. The Department has also accepted the judgment of the Hon'ble High Court, Madras, dated February 3, 1981, made in the six reference cases holding that our trust is a public charitable trust entitled to exemption under section 11 of the Income‑tax Act, since no appeal has been filed to the Supreme Court by the Department. However, without prejudice to our claim regarding exemption, we are filing a `nil' return..." Thereafter, the respondent issued a notice under section 16(2) of the Act for the production of the documents and account books. The reason for invocation of section 17 is that the applicability of the provisions of section 21A has to be considered and that involves consideration of the user or application of the properties and income of the assessee‑trust during the relevant year, namely, 1974‑

75. The counter‑affidavit further proceeds to say that should the appellant satisfy the respondent that the provisions of section 21A are not attracted to it, and then the respondent would have no option but to grant exemption under section 5(1)(i) of the Act. Therefore, such a factual enquiry cannot be gone into under Article 226 of the Constitution. For the year 1975‑76, admittedly, no return was filed by the assessee. Here again, the stand of the Revenue is that the applicability of section 21A requires to be examined. Whether such a stand is tenable is the question. For the invocation of section 17(1), it appears to our mind that two conditions are necessary. They are: (1) The Wealth‑tax Officer must have reason to believe; (a) by reason of omission or failure on the part of any person to make a return under section 14 of his net wealth; or (b) failure to disclose fully and truly all material facts; (2) the net wealth chargeable to tax has escaped assessment. This position has been made clear in several decisions. Let us first refer to the decision in Chhugamal Rajpal v. S.P. Chaliha (1971) 79 ITR 603 (SC). That case clearly lays down that the officer must have some prima facie ground before him for taking action under section 148 of the Income‑tax Act, 1961. Though that case relates to section log of the Income‑tax Act, that section corresponds to section 17 of the Wealth‑tax Act. Therein, it has been observed as follows (a p.607): "In other words, he must have some prima facie grounds before him for taking action under section

148. Further his report mentions: `Hence proper investigation regarding these loans is necessary'. In other words, his conclusion is that there is a case for investigating as to the truth of the alleged transactions. That is not the same thing as saying that there are reasons to issue notice under section

148. Before issuing a notice under section 148, the Income‑tax Officer must have either reasons to believe that by reason of the omission or failure on the part of the assessee to make a return under section 139 for any assessment year to the Income ?tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year on alternatively, notwithstanding that there has been no omission or failure as mentioned above on the part of the assessee, the Income‑tax Officer has, in consequence of information in his possession, reason to believe that income chargeable to tax has escaped assessment for any assessment year. Unless the requirements of clause (a) or clause (b) of section 147 are satisfied, the Income‑tax Officer has no jurisdiction to issue a notice under section

148. From the report submitted by the Income‑tax Officer to the Commissioner, it is clear that he could not have had reasons to believe that by reason of the assessee's omission to disclose fully and truly all material facts necessary for his assessment for the accounting year in question, income chargeable to tax has escaped assessment for that year; nor could it be said that he, as a consequence of information in his possession, had reasons to believe that the income chargeable to .tax has escaped assessment for that year." In Calcutta Discount Co. Ltd. v. I.T.O. (1961) 41 ITR 191 (SC), it has been observed as follows (at p.199): "To confer jurisdiction under this section to issue notice in respect of assessments beyond the period of four years, but within a period of eight years, from the end of the relevant year, two conditions have, therefore, to be satisfied. The first is that the Income‑tax Officer must have reason to believe that income, profits or gains chargeable to income‑tax have been under‑assessed. The second is that he must have also reason to believe that such `under‑assessment' has occurred by reason of either (i) omission or failure on the part of an assessee to make a return of his income under section 22, or (ii) omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year. Both these conditions arc conditions precedent to be satisfied before the Income‑tax Officer could have jurisdiction to issue a notice for the assessment or reassessment beyond the period of four years, but within the period of eight years, from the end of the year in question." From this it is clear that two conditions require to be satisfied. They are that: (i) the Officer must have reason to believe that net wealth has escaped assessment; and (ii) such escapement is due to the non‑riling of the return or omission or I failure to disclose all material facts in the return. In I.T.O. v. Lakhmani Mewal Das (1976) 103 ITR 437, 439 (SC), the headnote reads as under: "Two conditions have to be satisfied before an Income‑tax Officer acquires jurisdiction to issue notice under section 148 in respect of an assessment beyond the period of four years but within a period of eight years from the end of the relevant year, viz., (i) the Income‑tax Officer must have reason to believe that income chargeable to tax has escaped assessment, and (ii) he must have reason to believe that such income has escaped assessment by reason of the omission or failure on the part of the assessee (a) to make a return under section 139 for the assessment year to the Income‑tax Officer, or (b) to disclose fully and truly material facts necessary for his assessment for that year. Both these conditions must co‑exist to confer jurisdiction on the Income‑tax Officer. It is also imperative for the Income‑tax Officer to record his reasons before initiating proceedings as required by section 148(2)." In C.W.T. v. Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust (1977) 108 ITR 555 (SC), it has been held as follows (headnote): "Section 3‑of the Wealth‑tax Act, 1957, imposes the charge of wealth tax `subject to the other provisions' of the Act, and these other provisions would include section

21. Being made expressly subject to section 21, section 3 must yield to that section in so far as section 21 makes special provisions for assessment of the trustee of a trust. Therefore, whenever assessment is made on a trustee, it must be made in accordance with the provisions of section

21. Every case of assessment on a trustee must necessarily fall under section 21 and he cannot be assessed apart from and without reference to the provisions of that section." In Sheo Nath Singh v. AAC of I.T. (1971) 82 ITR 147 (SC), which arose under the old Income‑tax Act, at page 152, it is observed as follows: "It is abundantly clear that the two reasons which have been given for the belief which was formed by the Income‑tax officer hopelessly fail to satisfy the requirements of the statute. In a recent case, Chhugmal Rajpal v. S.P. Chaliha (1971) 79 ITR 008 (SC), which came up before this Court a similar situation had arisen and under the directions of the Court, the Department produced the records to show that the Income ?tax Officer had complied with the conditions laid down in the statute for issuing a notice relating to escapement of income. There also, the report submitted by the Officer to the Commissioner and the tatter's orders thereon were produced. In his report, the Income‑tax Officer referred to some communications received by him from the Commissioner of Income‑tax, Bihar and Orissa, from which it appeared that certain creditors of the assessee were mere name‑lenders and the loan transactions were bogus and, therefore, proper investigation regarding the loans was necessary. It was observed that the Income‑tax Officer had not set out any reason for coming to the conclusion that it was a fit case for issuing a notice under section 148 of the Income‑tax Act, 1961. The material that he had before him for issuing notice had not been mentioned. The facts contained in the communications which had been received were referred to only vaguely and all that had been said was that from those communications, it appeared that the alleged creditors were mere name‑lenders and that the transactions were bogus. It was held that from the report submitted by the Income‑tax Officer to the Commissioner it was clear that he could not have had reasons to believe that on account of the assessee's omission to disclose fully and truly all material facts, income chargeable to tax had escaped assessment. In our judgment, the law laid down by this Court in the above case is fully applicable to the facts of the present case. There can be no manner of doubt that the words reason to believe' suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income‑tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income‑tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. The Court can always, examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the Court." In this legal background, we will analyse the position for the assessment year 1974‑

75. Point No. I.‑‑Since there was a factual controversy as to whether the return was filed or not, we will take it that the return had not been filed for 1974?75 just as for the succeeding year. Even then, the question would be whether section 17(1) of the Act could be invoked? It is not even stated before us by the Revenue that this is a case to which section 21A is applicable. On the contrary, the stand taken by the Revenue is that "the applicability of the provisions of section 21A has to be considered". To our mind it is clear that on such a stand, there is hardly any scope for the invocation of section 17(1) because the Officer must have reason to believe. The words "has reason to believe" are stronger than the words "is satisfied" as was pointed out by the Supreme Court in Ganga Saran and Sons P. Ltd. v. I.T.O. (1981) 130 ITR

1. Therefore, to enable the authority to rind out the applicability of section 21A, there is no necessity on the part of the assessee to file a return. Such an insistence is not borne out by the statutory requirements. To put it in other words, for investigation as to the applicability of section 21A, no power is conferred to issue notice under section 17(1). What the Revenue wants to do now is to conduct a roving enquiry. It is also settled law that the reasons must have reasonable nexus. They must be relevant and have a bearing on matters in regard to which the officer is required to entertain the belief before he can issue the notice. As a matter of fact, the Supreme Court points out in Ganga Saran and Sons P. Ltd. v. I.T.O. (1981) 130 ITR 1, 11 as follows: "It is well‑settled as a result of several decisions of this Court that two distinct conditions must be satisfied before the Income‑tax Officer can assume jurisdiction to issue notice under section 147(a). First, he must have reason to believe that the income of the assessee has escaped assessment and, secondly, he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. If either of these conditions is not fulfilled, the notice issued by the Income‑tax Officer would be without jurisdiction. The important words under section 147(x) are `has reason to believe' and these words are stronger than the words `is satisfied'. The belief entertained by the Income‑tax Officer must not be arbitrary or irrational. It must be reasonable or, in other words, it must be based on reasons, which are relevant and material. The Court, of course, cannot investigate into the adequacy or sufficiency of the reasons which have weighed with the Income‑tax Officer in coming to the belief, but the Court can certainly examine whether the reasons are relevant and have a bearing on matters in regard to which he is required to entertain the belief before he can issue notice under section 147(a). If there is no rational and intelligible nexus between the reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could reasonably entertain the belief, the conclusion would be inescapable that the Income‑tax Officer could not have reason to believe that any part of the income of the assessee had escaped assessment and that such escapement wits by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts and the notice issued by him would be liable to be struck down as invalid:' Where, therefore, it is not even the definite stand of the Revenue that section 21A is applicable to the appellant‑trust as a result of which it is found that the net wealth of the trust has escaped assessment, we are unable to see as to how section 17(1) could be invoked. So far, we have proceeded on the footing that no return for 1974‑75 had been filed. But, the proceedings do show that the return had been filed. Where, therefore, the proceedings above referred to including the proposed valuation do show that the return had been filed, it must be actually found that the return is incomplete in its particulars or does not disclose fully and truly all the material facts. Such a finding is totally wanting in this case. However, that need not detain us because, as we had observed above, in order to find out the applicability of section 21A, section 17(1) cannot be invoked at all. It requires to be stated that, at all relevant times, the stand of the appellant‑assessee has always been that the ruling in CIT v. Thanthi Trust (1982) 137 ITR 735 (Mad.) has become final and is binding between the assessee and the Revenue, as a result of which the trust is exempt under section 5(1) of the Act. We cannot subscribe to the view that, in response to the notice dated September 11, 1978, the assessee filed a "nil" return and that it did not disclose fully and truly all material facts and, therefore, section 17(1) could be invoked. The short answer to this is that there is not even a finding that section 21A is applicable to the assessee and by reason of that its net wealth has escaped assessment. It is all the more surprising that based on the judgment in CIT v. Thanthi Trust (1982)137 ITR 735 (Mad.) for the subsequent years, namely, 1977‑78, 1978‑79 and 1980‑81, when only "nil" demand notices were issued and when no proceedings were initiated for the assessment year 1979‑80, how could there be a sudden change in the character of the trust. Even earlier to these assessment years, the position was the same because, on March 31, 1979, Wealth‑tax Officer wrote to the trust saying that the wealth‑tax proceedings for the assessment years 1965‑fib, 1900‑67, 1967‑68 and 1969‑70 were dropped. No proceedings were initiated for assessment of the net wealth of the trust in respect of the assessment years 1970‑71, 1971‑72 and 1972?

73. Therefore, it cannot be as if by any strange situation in respect of the assessment years in question alone, the applicability of section 21A to the trust requires to be examined. In I.T.A. Nos. 21 and 41 of 1972‑73, the Appellate Assistant Commissioner set aside the assessment for the year 1974‑1/5 on the very day when the impugned notice had come to be issued, namely, March 24, 1984. It cannot be by a curious act of coincidence. Therefore, the very basis of relying on the returns of the assessee under the Income‑tax Act for invoking section 17(1) is not tenable. Thus, it is clear that there is no possibility of invoking section 17(1) at all in this case. Point No. 2.‑‑ According to Mrs. Nalini Chidambaram, learned counsel for the respondent, after the introduction of section 21A, there is an obligation on the part of every assessee to file a return. Section 21A was inserted by the Finance Act 16 of 1972 with effect from April 1, 1973. It is clear by a reading of the marginal note that it relates to assessment in cases of diversion of property or of income from property held under trust for public charitable or religious purposes. By a careful reading of the said section, we Find that it does not even indirectly suggest the filing of a return. The section merely enables an assessment being made if there is a diversion of funds. We do not find the basis for the argument that after the introduction of section 21A, there is an obligation on the part of the assessee to file a return. However, reliance is placed by the Revenue on Managing Shebaits of Bhukailash Debutter Estate v. WTO (1977) 106 ITR 904 (Cal.). At page 908, the following passage occurs: "This position manifests a lacuna in the present provision of law. The position, therefore, is that if the trustees hold the property for public purpose of a charitable or religious nature and if they misapply or commit breach of trust, they will continue to enjoy exemption under the Wealth‑tax Act. This position should receive consideration by the Legislature in order to bring it at par with the provisions of the income‑tax Act. But until that is done, in my opinion, the petitioners are entitled to succeed on the point that there were no grounds for believing that the wealth of the assessee had escaped assessment or had been under assessed." This, in our considered view, does not advance the case of the Revenue, Section 14(1) of the Act categorically lays down that only if the net wealth is assessable, there is an obligation on the part of an assessee to file a return. In the instant case, having regard to the dictum laid down in CIT. Thanthi Trust (1982) 137 ITR 735 , which is binding between the parties, and, further, having regard to the fact that exemption was granted to the trust with regard to the assessment years prior to the years in question and "nil" demand notices were issued for the years posterior to the years in question, could it be now said that there is any obligation on the part of the appellant trust to file a return. We are unable to see as to how it could ever be contended that after the, introduction of section 21A, every trust ought to file a return. According to Mrs. Nalini Chidambaram, otherwise, even a trust which is not exempt need not file a return. First of all, this is no answer to circumvent section 14(1) of the Act. Secondly, the argument tends to ignore the power ?l tile Wealth‑tax Officer under section 14(2). Where, therefore, the assessee takes up a positive stand that no return need be filed, merely because of section 21A, the assessee is not obliged to file a return. Only when there is an obligation to file a return and if in spite of that no return is filed, section 14(2) could be invoked. In response to that, if no return is filed, section 16 is there for the wealth-tax Officer to invoke. Then again, penalty is imposable under section 18 of the Act for failure to furnish a return, or to comply with a notice or for concealment of assets. All these provisions are not there without any purpose. If, therefore, there is nee obligation on the part of the assessee to rile a return, it could not be said that his net wealth has escaped assessment. In this connection, we may usefully refer to the decision' in Modi Charitable Fund Society v. I.T.O. (1983) 142 ITR 818 (All.) wherein the headnote reads as follows: "(ii) Since the petitioner was under no statutory obligation to file the return for the relevant year, it could not be said that income chargeable to tax had escaped assessment by reason of its omission or failure to file the return. The petitioner‑society had been granted a certificate of exemption and therefore, there could be no omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the relevant year. Therefore , clause (a) of section 147 would not apply to the present case." This point is elaborated at page 823, wherein the following observation is found; "Coming to the merits of the case, the undisputed facts are that the society was granted a certificate of exemption under section 4(3) of the 1922 Act by the Income‑tax Officer, A‑Ward, Meerut, on February 17, 1958. Thus, it was under no obligation to file a voluntary return under section 22(1) of that Act or section 139(1) of the 1961 Act when the latter Act came into force. After the insertion of subsection (4A) in section 139 of this Act from April 1, 1971, the assessee was under a statutory obligation to file a voluntary return of its income. In compliance with that provision, the assessee did file a voluntary return for the first time for the assessment year 1971‑

72. It claimed that its income was exempt from tax and that contention was accepted for 1971?72 and 1972‑

73. The assessee continued to file voluntary returns up to the assessment year 1977‑

78. For the assessment years 1973‑74 and 1974?75, the Income‑tax Officer assessing the assessee took a different view and held that the income of the assessee was not exempt from tax. Against those assessment orders, the assessee filed appeals before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner accepted the assessee's contention and held that its income was exempt from tax under section 11 of the 1961 Act. The Income‑tax Officer then took up the matter in appeals before the Tribunal. These appeals have been decided by the Delhi Bench‑B, Delhi, by its consolidated order dated April 7, 1982. The Tribunal has confirmed the view taken by the Appellate Assistant Commissioner and in doing so has rightly relied upon the decision of the Supreme Court in Addl. CIT v. Surat Art Silk Cloth Manufacturers Association (1980) 121 ITR 1 (SC). It would be seen that there could be escapement of assessment under clause (a) of section 147 by reason of the omission or failure on the part of the assessee to make a return under section 139 or to disclose fully and truly all material facts necessary for his assessment for that year. This clause would not apply to the present case because the assessee being under no statutory obligation to file a return for the assessment year under consideration, it cannot be said that income chargeable to tax has escaped assessment by reason of its omission or failure to file the return. The same is the case with regard to the other condition because the assessee had been granted a certificate of exemption. Thus, there could be no omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for this year." In this connection, it is necessary to note that under section 139(4A) of the Income‑tax Act, 1901, even if a trust is exempt, the income‑tax return will have to be filed. But, unfortunately, for the Revenue, there is no corresponding provision in the Wealth‑tax Act to that effect. Therefore, section 21A of the Wealth‑tax Act cannot be invoked because it is merely an enabling provision to make an assessment if there is a diversion of the funds of the trust. In the case on hand, the categorical stand of the trust is that it is exempt under section 5(1) of the Wealth‑tax Act. If that be so, there is no statutory obligation on its part to file a return. This is an important point to be borne in mind. However, as we have already stated, if at all section 17(1) could be invoked in a case where no return is riled, it could be done subject to the satisfaction of two conditions, namely, the Wealth‑tax Officer having reason to believe‑‑ (i) that the net wealth has escaped assessment; and (ii) that the escapement is due to the failure to file a return or by reason of the failure to disclose fully and truly all the material facts in the return filed. That is not the case here. Therefore, we conclude that it cannot be contended, as is contended on behalf of the Revenue, that after the introduction of section 21A, there is an obligation on the part of every trust to file a return. The contention of Dr. Debi Pal has, therefore, to be accepted in this regard. Point No. 3.‑‑No doubt, the point relating to notice has come to be taken only in the reply affidavit. Nevertheless, since it goes to the root of the matter, namely, the question of jurisdiction, we allowed both the sides to address the arguments on that aspect. We now set out the impugned notice. "To: M/s. Thanthi Trust, 46, E.V.K. Sampath Road, Madras.7. I have reason to believe that your net wealth chargeable to tax for the assessment year 1975‑76 ‑has escaped assessment within the meaning of section 17 of the Wealth‑tax Act. I, therefore, propose to assess the said net wealth that has so escaped assessment. I hereby request you to deliver to me within 35 days of the receipt of this notice, a return in the attached form of your net wealth chargeable to tax alongwith such other particulars as are required to complete the form for the said assessment year. Sd???.. Wealth‑tax Officer, Central Circle VI, Madras. 34." This notice has been addressed to the Thanthi Trust. It is well‑settled law that a trust is not a juristic person or a corporate person. In Thiagesar Dharma Vanikam v. CIT (1963) 50 ITR 798, 807 (Mad.), it is stated thus: "A trust is an institution which has no corporate personality. It is not a legal person. The word `trust' is a convenient and a compendious description of the trustees, the beneficiaries and the subject‑matter of the trust. Sometimes, the expression `trust' is used to denote the trustees. For example, when the trustees carry on a business, we generally say that the trust is doing so. When we refer to the fact that the trust is owning properties, we only refer to the interest of the beneficiaries in the property, as in Indian law there is no line dividing title into legal and equitable. The trustees of a trust in India have no title to the trust properties; the properties only vest in them for administration and management. The instrumentality of the trustees to hold and manage trust properties should not cause any misapprehension of the real position of the trustees vis‑a‑vis the trust. They occupy a representative position representing the trust and they are not strangers to the trust. When the trustee acts, it is only the trust that acts, as the trustee fully represents the trust. A business carried on the behalf of a trust rather indicates a business which is not held in trust, than a business of the trust run by the trustees." In Trustees of Gordhandas Govindram Family Charity Trust v. CIT (1973) 88 ITR 47, 52 (SC), it was laid down as follows: "Now, let us turn to the other question, viz., whether the trust in question can be considered as a trust created for public purpose of a charitable or religious nature. As seen earlier, the trust in question was created primarily for the benefit of the members of the family of Gordhandas Govindram Seksaria. That is clear from the title given to the trust as well as from the various provisions to which we have made reference earlier. Therefore, it is not possible to hold that the trust in question is a trust for any public purpose. It is clearly a private trust. The character of the trust in question came to be considered by the Bombay High Court in Trustees of Gordhandas Govindram Family Charity Trust v. CIT (1952) 21 ITR 231, 237 (Bon.), under section 4(3)(i) of the Indian Income‑tax Act. After examining the various provisions, the High Court opined that it was not a trust for charitable purpose within the meaning of the Indian income‑tax Act, 1922. It was held that the primary purpose of the settler was to benefit the members of his family and remotely and indirectly to benefit the general public. We agree with that conclusion. The decision in the above case came up for consideration by this Court in Trustees of the Charity Fund v. CIT (1959) 36 ITR 513; (1959) Supp. 2 SCR 923 (SC). This Court did not differ from the view taken by the High Court, but distinguished the same." As rightly urged by Dr. Dehi Pal, section 21(1) of the Wealth‑tax Act clearly postulates that wealth‑tax shall he levied upon and recoverable from the manager of the trustee. Section 21(2) gives an option to the Wealth‑tax Officer to levy either on the trustee or on the beneficiary. These provisions do not apply to a public charitable trust since the beneficiary is indefinite. That is why section 21A specifically provides for assessment on the trustee since the beneficiary is indefinite. The decision in C.W.T. v. Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust (1977) 108 ITR 555(SC), is a useful citation in this regard wherein the headnote reads as under: "Section 3 of the Wealth‑tax Act, 1957, imposes the charge of wealth‑tax `subject to the other provisions' of the Act, and these other provisions would include section

21. Being made expressly subject to section 21, section 3 must yield to that section in so far as section 21 makes special provision for assessment of the trustee of a trust. Therefore, whenever assessment is made on a trustee, it must he made in accordance with the provisions of section

21. Every case of assessment on a trustee must necessarily fall under section 21 and he cannot he assessed apart from, and without reference to the provisions of that section." Therefore, it is the trustee who is assessable. Section 41 of the Act lays down the procedure in relation to the service of notice. That makes it very clear that the notice must be served on the person. It is clear by a reading of the decision in CIT v. Thayahvalli Mulla Jeevaji Kapasi (1967) fife ITR 147 (SC) that service of notice is not a procedural requirement. At page 153, it was laid down as follows: "Counsel for the respondent contended that in failing to follow up the information that the respondent was in `Bombay or in Ceylon', the Income‑tax Officer was guilty of negligence, and, therefore, service by affixing cannot be regarded as duly made. Counsel relied upon the decision of the Madras High Court in Myitkyina Trading Depot v. Deputy Tahsildar (1957) 32 ITR 393 (Mad.), and the decision of the Calcutta High Court in Gopiram Agarwalla v. First Addl. I.T.O. (1959) 37 ITR

493. In Myitkyina Trading Depot's case (1957) 32 ITR 393. an unregistered firm which had its business mainly in Rangoon and had a branch office in Madras was assessed for the assessment year 1939‑

40. Proceedings for assessment were commenced against the firm after the partners had left for Burma and notice was served after the business was closed by affixing it on the house in which the respective wives of the partners resided, and proceedings for reassessment were completed ex parte. Assessments for the subsequent years 1940‑41 and 1941‑42 were also completed in their absence. On these facts, the Madras High Court held that there was no proper or due service of the notice under section 34 on the assessee and the substituted service by affixture did not constitute due service. The Court pointed out that at the material time, the two partners of the respondent‑firm were resident in a country occupied by Japan which was at war with India and postal communication between India and Burma was severed. In the circumstances, the Court held that service by affixing the notice at the known residence of the partners, where their respective wives resided, could not be regarded as due service. In Gopiram Agarwalla's case (1959) 37 ITR 493 (Cal.), it was held that the mere fact that the `serving officer did not find the party to be served with the notice at his address' is not sufficient to establish that he cannot be found. It must be shown not only that the serving officer went to the place at a reasonable time when he would be expected to be present, but also that if he was not found proper and reasonable attempts were made to find him either at that address or elsewhere. If after such reasonable attempts, the position still was that the party is not found, then and then only can it be said that he cannot be found. The principle laid down in that case is unexceptionable, but it has, in our judgment, no application in this case." It is also clear from this ruling that service of notice alone gives jurisdiction. Then the next question is, whether it is a curable defect. In our considered view, section 42C cannot cure the defect because this is not a procedural defect since the service of notice on the proper person alone gives jurisdiction for the authority concerned. It is so vital in character. The following observations in Sasikumar (P.N.) v. CIT (1988) 170 ITR 80, 84, 85 and 86 (Ker.) make this position very clear:???????????? Page 84 ?? It is settled law that the issue of a notice under section 148 of the Income‑tax Act is a condition precedent or a matter of jurisdiction to the validity of any reassessment order to be passed under section 147 of the Act. It is also settled law that if no such notice is issued or if the notice issued is invalid or not in accordance with the, law or is not served on the proper person in accordance with law, the assessment would be illegal and without jurisdiction. The notice should specify the correct assessment year and should be issued to the particular assessee:' Pages 85 and 86: " Such a fundamental infirmity cannot be called a `technical objection' or a mere `irregularity' and such vital infirmity cannot be cured or obliterated by relying on section 292B of the Income‑tax Act. It is not a case of a notice issued or served, but which is beset with any mistake, defect or omission. This is a case of `no notice' to the assessee'. As stated by the Calcutta High Court in Sunrolling Mills P. Ltd v. I.T.O. (1986) 1010 1TR 412, 416, section 292B does not empower the Income‑tax Officer to act without jurisdiction. In that case, the Calcutta High Court held that section 292B does not authorise the Income‑tax Officer to convert a proceeding under section 147(b) of the Act into a proceeding under section 147(a) and that action cannot be justified by taking recourse to section 292B of the Act. It is not a mere technicality and it is a question of jurisdiction. We are of the view that the said reasoning will apply in this case also. On this basis, we hold that the Appellate Tribunal was in error in holding that section 292E is applicable in the instant case and in reversing the orders of the Appellate Assistant Commissioner for these four assessment years." One other case that can be usefully referred to in this connection is Sewlal Daga v. CIT (1965) 55 ITR 406 (Cal.). Therein, the third headnote reads as follows: "Held, that the notice which was issued and served in the instant case was obviously invalid and the proceedings before the Income‑tax Officer were, consequently, illegal and void. The service of notice on the assessee was a condition precedent to the assumption of jurisdiction by the Income‑tax Officer under section

34. Consent cannot confer jurisdiction upon a Court if the Court has no jurisdiction and the reassessment proceedings were invalid. From this point of view, we rind that the observation in Thiagesar Dharma Vanikam v. CIT (1963) 50 ITR 798 (Mad.) extracted above cannot be held to be applicable to the present case. Once we come to the conclusion that the trust is not an assessable unit, we are unable to see how the decision in Coimbatore Club v. WTO (1985) 153 1TR 172 (Mad.), which relates to a club which is an association of persons and wherein the term "individual" came up for interpretation and it was held that a body of individuals would fall within the meaning of the term "individual", could advance the case of the Revenue. Therefore, in this case, we hold that the notice itself is invalid. For all these reasons, we allow these appeals. However, there will be no order as to costs. Z.S./698/T?????????????????????????????????????????????????????????????????????????????????????????? Appeals allowed.