Ajit Kumar Sengupta, J. - (1.) In this writ application, the petitioners, who are the trustees of a public charitable trust known as the Birla Seva Trust (in short "the Trust"), have challenged an order of attachment dated June 7, 1977, under Rule 26(1)(ii) of the Second Schedule to the Income-tax Act, 1961 '(in short "the Act"), issued by the Tax Recovery Officer-II (Income-tax), Jaipur (in short "the TRO"), on the trust in respect of an alleged demand bt tax against a private trust, known as Raja Baldeodas Birla Santatikosh Trust (in short "the private trust"). The petitioners have also challenged an order dated June 22/27, 1977, passed by the said Tax Recovery Officer rejecting the claim of the trust that the said shares were not liable to be attached for the alleged tax dues of the said private trust. The petitioners have also challenged a notice of attachment dated February 15/17, 1977, under rule 31, and a letter dated November 9, 1977, of the Tax Recovery Officer in respect of the said shares and/or dividend accruing thereon.
(2.) The facts of the case are that the Birla Seva Trust was created under a deed of trust dated June 15, 1977. The office of the trust is situated at Calcutta. The trust is the owner of, inter alia, 2,01,875 ordinary shares of Pilani Investment Corporation Ltd. (in short the "said shares"). The shares were received by the trust from another public charitable trust called Birla Jankalyan Trust which in its turn had received the same from a private discretionary trust known as Raja Baldeodas Birla Santatikosh (in short the "private trust"). In respect of the said shares owned by the trust a declaration under Section 153B(1) of the Companies Act, 1956, was duly filed with the public trustee on August 14, 1972. The income from the said shares has been received by the trust and utilised for public charitable purposes in accordance with the objects of the valid trust.
(3.) The facts and circumstances giving rise to the alleged tax demand against the said private trust are, inter alia, as under : (a) The said private trust was created by a deed dated May 20, 1943, by the late Jugal Kishore Birla for the benefit of the male descendants of Raja Baldeodas Birla, their wives, widows and daughters. The said private trust, in May 1943, had received from a limited company diverse shares for being held for useful objects. The settlor and the major beneficiaries of the said private trust and the said limited company which had given the said shares decided that the said shares should be made over to a public charitable trust and, accordingly, the same were made over to the said Birla Jankalyan Trust on March 30, 1964. (b) After the said shares were transferred by the said private trust to Birla Jankalyan Trust the income and/or wealth relating to the said shares were not assessed in the hands of the private trust for the assessment years 1964-65 to 1969-70. (c) For the first time in the assessment year 1970-71, the Income-tax Officer assessing the said private trust took the view'that the trustees of the said private trust could not donate the said shares to the said Birla Jankalyan Trust and the said donation was void ab initio. He, accordingly, assessed the income in respect of the said shares in the hands of the said private trust and raised a demand. Similar assessments were made by him for the assessment years 1971-72 to 1974-75. For the assessment year 1970-71, the appeal of the said private trust against the said order of assessment was allowed by the Appellate Assistant Commissioner of Income-tax, but on further appeal by the Income-tax Officer, the Jaipur Bench of the Income-tax Appellate Tribunal (in short "the Tribunal") upheld the order of the Income-tax Officer and held that the transfer of the said shares by the said private trust was void and the income was liable to be assessed in the hands of the said private trust. Against the said order of the Tribunal, Jaipur Bench, a reference is pending before the Rajasthan High Court. (d) For the assessment years 1971-72 to 1974-75, the Appellate Assistant Commissioner dismissed the appeals of the said private trust against the said orders of assessments of the Income-tax Officer following the said decision of the Tribunal, Jaipur Bench, for the assessment year 1970-71. The said private trust preferred appeals against the said orders of the Appellate Assistant Commissioner for the said assessment years 1971-72 to 1974-75 to the Tribunal, Jaipur Bench. During the pendency of the said appeals before the Tribunal, Jaipur Bench, the Central Board of Direct Taxes transferred the income-tax cases of the said private trust to Calcutta and the said appeals before the Tribunal, Jaipur Bench, were transferred to the Calcutta Bench. (e) The said appeals of the private trust for the assessment years 1971-72 to 1974-75 were heard by the Calcutta Bench of the Tribunal which differed from the view taken by the Jaipur Bench of the Tribunal in the appeal for the assessment year 1970-71 and held that the transfer of the said shares to the said Birla Jankalyan Trust by the said private trust was not void but was at best voidable and that the income in respect of the said shares was not the real income of the said private trust and could not be assessed in its hands. The appeals of the said private trust for the said assessment years 1971-72 to 1974-75 were accordingly allowed. At the instance of the Department, the Tribunal referred to this court questions of law arising out of its said order which, inter alia, were (i) whether the transfer of the said shares by the said private trust to Birla Jankalyan Trust was valid or void or voidable and (ii) whether the income in respect of the said shares was the real income of the said private trust assuming that the said transfer was void. The said reference was numbered as Income-tax Reference No. 313 of 1980 (see [1991] 190 ITR 578), in this court. (f) The Income-tax Officer, Calcutta, gave effect to the said orders of the Jaipur and Calcutta Benches of the Tribunal for the assessment years 1970-71 to 1974-75 and the demands raised against the said private trust for the assessment years 1971-72, 1972-73, 1973-74 and 1974-75 were set aside. The purported demand against which the purported order of attachment was passed by the Tax Recovery Officer now stands restricted to the assessment year 1970-71 in view of the contrary decision of the Jaipur Bench of the Tribunal.;