JUDGMENT S.K. Keshote, J.
1. The Revenue has filed this application under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the 1961 Act"), praying therein that the Income-tax Appellate Tribunal, Allahabad Bench, Allahabad, be directed to draw up a statement of the case and refer the questions of law as mentioned in paragraph 3 of this application to this court for decision therein.
2. Briefly stated, the facts of the case are that on August 26, 1987, a search under Section 132(1) of the 1961 Act by the concerned income-tax authorities was conducted on the business and residential premises belonging to Shri Subhash Kumar and Shri Tagore Kumar, both sons of the late Sri Laxmi Prasad. While the Department was proceeding against these two aforesaid persons under Section 132(5) of the Act, some of the unexplained assets and documents were claimed as belonging to an association of persons styled as Messrs, Laxmi Prasad and Sons. They stated that their father, late Laxmi Prasad, during his lifetime executed a registered will on November 24, 1977, whereunder after his death movable and immovable assets owned by him will become the property of his two sons named above. Sri Laxmi Prasad was reported to have died on April 30, 1979, and, consequently, the said movable and immovable property/assets willed to them became the property of both of his sons, namely, Sri Subhash Kumar and Sri Tagore Kumar, under the said will. A case has been built up by these two persons that in pursuance of the will dated November 24, 1977, executed by the late Sri Laxmi Prasad, a trust in the name and style of Messrs. Laxmi Prasad and Sons Ltd. was created by them.
3. During the course of assessment proceedings, the Deputy Commissioner of Income-tax (Assessment), Allahabad, after a careful consideration of the facts found that the alleged trust or association of persons had enjoyed taxable income right from the assessment years 1982-83 to 1988-89. It has been held by the said authority that the registered will dated November 24, 1977, did not create any trust. The fact has also been noticed by the said authority that even during the search and seizure no mention whatsoever had been made of the aforesaid trust or association of persons. As per the said authority, the facts which have come from the records indirectly suggest the idea of the trust, association of persons was an afterthought of Sri Subhash Kumar.
4. Messrs. Laxmi Prasad and Sons (assessee) had filed returns in the capacity of an association of persons for the assessment year 1982-83 relevant for the previous year ending on March 31, 1982, on July 8, 1988, in which a total income of Rs. 20,920 has been disclosed. Originally, the return had been filed in the office of the Deputy Commissioner of Income-tax (Assessment), Basti, which was later on transferred to the office of the Deputy Commissioner of Income-tax (Assessment), Allahabad, on April 10, 1989. The return which had been filed on July 8, 1988, is beyond the statutory time-limit and could not be regarded as a valid one. The Deputy Commissioner of Income-tax concerned started proceedings under Sections 147(a)/148 of the 1961 Act by issuing notice under Section 148 on April 17, 1989, after obtaining the previous approval by the Commissioner of Income-tax, Allahabad.
5. A written reply dated April 24, 1989, has been filed by the assessee which was received in the office of the Deputy Commissioner of Income-tax (Assessment), Allahabad, on April 27, 1989, wherein the assessee stated that the return which has been filed by it on July 8, 1988, be treated to have been filed in compliance with the notice issued to it under Section 148 of the 1961 Act. Thereafter, the assessment proceedings were taken up. After recording the findings as mentioned above, the Deputy Commissioner of Income-tax (Assessment), Allahabad, vide its order dated July 31, 1989, observed that the return has been filed by the assessee, Messrs. Laxmi Prasad and Sons/association of persons, claiming it to be the income of the trust, hence the assessment has been made on protective basis to safeguard the interests of the Revenue pertaining to the general stand taken in other assessment years as a whole, where it has been held to be belonging to Sri Subhash Kumar, in his individual capacity, and has been assessed as such on substantive basis. Accordingly, the protective assessment has been made on a total income of Rs. 20,920.
6. The assessee against the said order of the Deputy Commissioner of Income-tax (Assessment), Allahabad, dated July 51, 1989, passed under Sections 143(3)/148 of the 1961 Act pertaining to the assessment year 1982-83 filed an appeal before the Commissioner of Income-tax (Appeals), Allahabad, bearing Appeals Nos. 433/DC (Asstt.)/(Alld.) of 1989-90, on September 15, 1989. The appellate authority, vide its order dated May 18, 1990, allowed the said appeals and the order of the Deputy Commissioner of Income-tax (Assessment), Allahabad, making a protective assessment has been ordered to be cancelled and the assessment made by the said authority was ordered to be treated as a substantive assessment of the trust/association of persons, Messrs. Laxmi Prasad and Sons. Relying on its own decision in respect of the same assessee for the assessment year 1983-84 in Appeal No. 427/DC(A)/(Alld.) of 1989-90, dated December 18, 1989, it has been held that a trust was created under the will executed by the late Sri Laxmi Prasad and the income arising out of the estate held by him had to be assessed in the status of an association of persons in the hands of Sri Subhash Kumar (assessee) on a substantive basis.
7. The Revenue against the said order of the Commissioner of Income-tax (Appeals), Allahabad, dated December 18, 1989, for the assessment year 1982-83 filed an appeal bearing No. I. T. A. No. 1946/(Alld.) of 1990 before the Income-tax Appellate Tribunal, Allahabad Bench, Allahabad (hereinafter referred to as "the Tribunal"). The Tribunal, vide its order dated January 6, 1991, dismissed the appeal of the Revenue and the finding of the Commissioner of Income-tax (Appeals), Allahabad, has been affirmed.
8. Thereafter, the Revenue filed an application under Section 256(1) of the 1961 Act together with the statement of facts and prayed that the statement of the case be drawn up and the questions of law as framed in paragraph 4 of the said application be referred to this court for decision. The Tribunal, vide its order dated May 6, 1992, rejected the said application of the Revenue. Paragraph 5 of the said order dated May 6, 1992, reads as under :
"5. In appeal, the learned Commissioner of Income-tax (Appeals) held that if any association of persons styled as Messrs. Laxmi Prasad and Sons had come into existence as a result of the will left by the late Laxmi Prasad, while arriving at this conclusion, the learned Commissioner of Income-tax (Appeals) had accepted the contention of the assessee interpreting the contents of the will as creating a trust/association of persons. The Revenue, being aggrieved, came up in second appeal before the Tribunal. The Tribunal treating the facts stated above vis-a-vis the contents of the will upheld the order of the learned Commissioner of Income-tax (Appeals). The Tribunal had arrived at the finding while appreciating the entire facts on record and had discussed the same in detail in its order. The factum of executing the will and its contents were not denied to either the assessee or the Department. The creation of the trust did not require any conditions precedent, but could be created even orally. Here, in this case, the deceased, Laxmi Prasad, while executing the will had clearly expressed his desire, i.e., property will go only to his two sons and it disinherited the third son but also provided some obligations to be discharged by his two sons inheriting his entire property. This provision of certain obligations to be discharged on the part of his two sons inheriting the property created a trust and the share being indeterminate the assessment of the trust was to be made as an association of persons. From the facts mentioned above, we find that the findings arrived at by the Tribunal confirming the order of the learned Commissioner of Income-tax (Appeals) is nothing but a finding of fact and the appreciation of the evidence on record and, in our opinion, no question of law arises out of the said order of the Tribunal. We accordingly decline to refer the alleged questions to the court for opinion."
9. Now, against the aforesaid order of the Tribunal dated May 6, 1992, the Revenue has filed the present application under Section 256(2) of the 1961 Act before this court on October 28, 1992.
10. Learned counsel, Sri Shekher Srivastava, appearing for the Revenue, has argued that both the Commissioner of Income-tax (Appeals), Allahabad, and the Tribunal have completely misread and misconstrued the documents registered as will dated November 24, 1977, executed by the late Sri Laxmi Prasad. The findings of both the said authorities that a trust is contemplated under the aforesaid will is perverse on the face of it. The trust/association of persons which is alleged to have been created by the assessee in pursuance of the will dated November 24, 1977, is of no help or avail as there is no specific direction in the will referred to above for the creation of any trust whatsoever. A plain reading of the will dated November 24, 1977, gives out that the inferences which has been drawn therefrom by the said authorities are incorrect. The mere fact that a trust has been created after the search which has been made of the business and residential premises of Sri Subhash Kumar and Sri Tagore Kumar under Section 132(1) of the 1961 Act gives out that the interpretation which has been given or the construction which has been made to the will by the authorities is incorrect. Both the appellate authorities have not considered the fact that the alleged trust/association of persons had enjoyed taxable income right from the assessment years 1982-83 to 1988-89, but no return whatsoever has been filed. Not only that the returns have not been filed by the assessee for the aforesaid assessment years but the returns of wealth-tax of the trust/association of persons have also not been filed before its detection in the search. In support of his arguments, learned counsel appearing for the Revenue has placed reliance on the decisions in the cases of Mahesh Anantrai Pattani v. CIT [1961] 41 ITR 481 (SC) (sic), Oriental Investment Co. P. Ltd. v. CIT [19691 72 ITR 408 (SC) and Addl. CIT v. Symonds Distributors (P.) Ltd. [1977] 108 ITR 947 (All).
11. He argued that the question of interpretation of the considered document is a pure question of law. On the other hand, Sri Rajesh Kumar, learned counsel for the assessee, has argued that in the case both the appellate authorities have decided the matter on the basis of the facts which are made part of the record. It is a case where the findings of fact have been recorded by the first appellate authority and the same have been affirmed by the Tribunal. It is not a case of any interpretation or construction of the document but it is a case which has been decided on its own facts. He argued that even the Deputy Commissioner of Income-tax (Assessment), Allahabad, has assessed the assessee as an association of persons though on a protective basis.
12. We have considered the arguments which have been advanced by learned counsel for the parties. The copy of the will dated November 24, 1977, has been filed by the Department along with the present application under Section 256(2) of the 1961 Act and we have also gone through the contents thereof. We are satisfied that nowhere in the said will the late Sri Laxmi Prasad directed creation of any trust. An important fact had been ignored by both the appellate authorities that under the will, neither the trust has been named, nor any word has been specifically stated for creation of a trust. Even by reading of the will, it does not come out that the late Sri Laxmi Prasad was even intending for creation of any trust whatsoever. The names of the trustees have also not been mentioned, nor has it been mentioned as to how the trust will be created and what will be its objects and who will be its trustees, etc.
13. Both the appellate authorities have lost sight of the important question that the document has to be considered, construed and interpreted in the light of the surrounding facts which have come up on the record during the course of search or before passing the order of assessment. Admittedly, none of his sons, namely, Sri Subhash Kumar and Sri Tagore Kumar, have ever come up with the case that the creation of the trust was there prior to the date of the search made by the authorities of the Department of their business and residential premises. It is understandable in case a trust had been created earlier to the said search but in the present case no trust has been claimed to be constituted. No returns of income-tax or wealth-tax have been filed by the trust/association of persons, though, admittedly, it has enjoyed taxable income during the assessment years 1982-83 to 1988-89. These facts are relevant and material to decide whether the will executed by the late Sri Laxmi Prasad contemplates the creation of any trust as well as whether both Sri Subhash Kumar and Sri Tagore Kumar ever thought or were under the belief that their father put an obligation upon them to keep the property given to them under the will dated November 24, 1977, in the trust/association of persons.
14. The argument of learned counsel for the assessee that it is a pure question of fact is not acceptable. It is a matter to be considered as to whether in the background that after the search the property was tried to be declared to be of the trust and whether any trust is to be created or contemplated under the will dated November 24, 1977, are questions of interpretation or construction of a document.
15. So far as the second argument of counsel for the assessee is concerned it will suffice to say that the Deputy Commissioner of Income-tax (Assessment), Allahabad, has rightly assessed the association of persons on protective basis. It is not a case where the property which has been claimed by Sri Subhash Kumar to be of the association of persons is accepted to be so.
16. In the result, this application is allowed. The Income-tax Appellate Tribunal, Allahabad Bench, Allahabad, is directed to draw up a statement of the case and refer the questions of law mentioned in its order dated May 6, 1992, to this court for decision. There shall be no order as to costs.