P.N. Parashar, Judicial Member - (1.) THESE are 6 appeals by the assessee against a combined order of Ld. DCIT (A), Kanpur dated 28-4-1997 for the assessment years 1985-86, 86-87, 87-38, 88-89, 89-90 and 90-91. The facts concerning these appeals are common and identical grounds have been taken by the assessee in all the 6 appeals. Hence, for the sake of convenience, all these appeals are being decided by a common order.
(2.) Shri S.K. Garg, F.C.A., has appeared on behalf of the assessee-appellant whereas Shri Shambhoo Chopra, the Ld. Sr. D.R. standing counsel, appeared for the department in all these appeals. The assessee-appellant has taken 6 grounds in these appeals but these grounds are very elaborate and are also argumentative. Hence we do not consider it proper to reproduce the same. Instead, we will take up the issues involved in these grounds.
(3.) BEFORE taking up the issues involved in the grounds of appeal, we consider it proper to state the background and the facts leading to the present litigation which are narrated as under. 4.1 There was a family known as Ram Navmiwalas. The family constructed certain temples and dharamshala. Shri Har Govind Prasad Agarwal, in line with the religious activities of the family, executed a Will on 22-11-70 (pp. 20 to 23 of the paper book) and by virtue of this Will, he bequeathed following properties to the deities of Shri Thakur Ram Laxman Jankiji and Shri Hanumanji and to the dharamshala of Ram Bharoselalji Navmiwale :- 1. House No. 15/295-A, Civil Lines, Kanpur. 2. 1000 sq. yards of land out of house No. 15/295, Civil Lines, Kanpur. 4.2 It may be mentioned that the temple of Thakur Ram Laxman Jankiji was established in house No. 43/64, Chowk, Kanpur whereas dharamshala was in house No. 39/13, Meston Road, As stated in the Will, the dharamshala and the temple were constructed long back, perhaps in 1950 or earlier and both the buildings became in dilapidated condition. The testator wanted to get the same reconstructed or renovated. For this purpose, he dedicated his share in house No. 15/295A and 1000 sq. yards of land in house No. 15/295 for arranging renovation and construction of the temples and dharamshala etc. For carrying out this object, he appointed his son Shri Prakash Chandra as 'Sarwahakar' and empowered him to sell or transfer these properties for reconstructing the temples and dharamshala etc. 4.3 Shri Har Govind Prasad Agarwal died on 31-1-1971 and the Will came in operation on his death. Shri Prakash Chandra made an application for registration of trust under Section 12 A of the Income-tax Act on 9-10-1975 (copy available at page 24 of the paper book). The Income-tax Officer made certain queries and rejected the application vide order dated 30-1-1976 (copy available at page 32 of the paper book). Thereafter, vide application dated 6-9-1976 (copy available at page 33 of the paper book), Shri Prakash Chandra Agarwal again moved an application as trustee of the trust under the name of Shri Ram Navmiwala Charitable Trust for registration before the CIT, Kanpur. Again vide letter dated 24-2-1977, the prayer of the trust for registration under Section 12A was rejected (copy available at page 34 of the paper book). The trust again moved an application on 22-4-1977. The trust submitted a detailed reply dated 31-12-1977 (copy available at pages 38 to 44 of the paper book) to the Income-tax Officer and prayed that the trust was a public religious and charitable trust and, therefore, the same should be registered. Ultimately, the registration was granted on the application dated 9-10-1975 by the CIT, Kanpur vide his order dated 11-6-1979 (copy finds place at page 48 of the paper book). 4.4 The assessee trust submitted regular returns from assessment years 1975-76 to 1996-97 and assessments were regularly made by the Income-tax Department, treating the assessee as trust and exempting its income. On the basis of registration granted under Section 12A of the Income-tax Act. Copies of the returns, audit reports, balance sheets, statement of facts etc. and of the assessment or orders have been placed on record by the assessee which are available at pages 49 to 160 of the paper book. 4.5 The assessee had let out property No. 15/295A named as Nai Bhava to the Income-tax Department on 16-6-1994. An application under Section 197 read with Rule 28(i) was filed by the assessee before the Assessing Officer on 4-7-1994 for seeking permission for not deducting tax at source. A copy of this application dated 4-7-1994 is available at page 1 of the Volume 2 of the paper book. The ACIT granted certificate under Section 197(1)(a) of IT Act relating to deduction of tax and conveyed the same vide letter dated 6th July, 1994 to the assessee through Shri P.C. Agarwal, Sarwahakar of the trust. A copy of this letter is available at page 2 of the paper book. 4.6 Another application, seeking permission was filed on 9-9-1994 (copy available at page 4 of the paper book Vol. II). Another application was moved on 12-9-1994 to the same effect. The assessee trust also moved an application on 16-9-1994 for the same purpose and clarified the entire position to the department vide a detailed reply dated 29-9-1994. The certificate issued by the Assessing Officer for non-deduction of tax at source remained valid upto 31-9-1995. The application for non-deduction of tax for the assessment year 1996-97 filed on 27-3-1995 (copy available at page 21 of the paper book Vol. II) was not allowed and a show-cause notice was issued on 8-3-1996 by the Asstt. Commissioner concerned (copy available at page 23/24). Thereafter the certificate granted under Section 197(1) was withdrawn vide order dated 22nd March, 1996 (copy available at pages 32/33 of the paper book). 4.7 The departmental authorities thereafter proceeded to reopen the assessment. In this regard, the Income-tax Officer sought a remand report and after considering the same, he held that the income of the assessee has escaped assessment. A relevant portion of the order of Income-tax Officer for the assessment year 1985-86 is reproduced below :- Held, (1) that the endowment was created by an instrument of dedication and not through the medium of a trust, that the deed of dedication created a legal obligation in the deity and its shebait to hold and apply the income of the endowed properties for the purpose specified in the deed of dedication and for no other purpose, and that the income was therefore derived from property held under a legal obligation wholly for religious purposes and was therefore exempt from tax under Section 4(3)(i). 4.8 The Income-tax Department thereafter made assessment in the assessment years 1985-86 to 1990-91. A detailed order was passed by the Income-tax Officer in assessment year 1985-86 under Section 143(3) assessing deities Shri Thakur Ram Laxman Jankiji, Shri Hanumanji and Dharamshala Ram Bharoselalji as artificial juridical persons. The assessments in subsequent years were made against them in the same capacity. 4.9 The assessee challenged the assessment order of the Assessing Officer before the Ld. Dy. CIT(A) and claimed that the assessments were not justified in the status of artificial juridical person; rather the same should have been made in the status of trust as was done earlier. 4.10 The Ld. CIT(A) did not accept the stand taken by the assessee and upheld the assessment orders by a combined order dated 28-4-1997 which is in appeal before us for all the assessment years under consideration. 4.11 In the setting of above factual background, we proceed to take up for disposal ITA No. 880(A)/1997 for the assessment year 1985-86 which relates to main assessment year and from which assessment year, the assessments have been reopened in the present cases. ITA No. 880 (All.)/1997:;