AJIT K.SENGUPTA, J. - (1.) THE assessee is a trust to which the provisions of s. 11 of the IT Act, 1961, applied. The assessee received Rs. 59,411 in the asst. yr. 1967-68 and Rs. 56,590 in the asst. yr. 1968-69 as voluntary contribution from two other trusts, namely, Rawatmull Nopany Family Trust and Shri Rameshwarlal Nopany Family Trust. The ITO held that these donations were hit by the provisions of s. 12(2) of the said Act and so he included them in the income of the property held by the assessee-trust and applying the provisions of s. 11 of the Act taxed the accumulation in excess of the permitted 25 per cent. On appeal, it was contended before the AAC that the two paying trusts were family trusts whose incomes were not exempt under s. 11 of the said Act and so their donations to the assessee did not come within the ambit of s. 12(2). Again, even assuming that they did, the accumulations were less than the permitted percentage. The AAC agreed with the assessee on both the counts and reversed the finding of the ITO. The Department went in appeal against the said order of the AAC. The Departmental Representative pointed out that the AAC was not correct in saying that the two paying trusts were subject to s. 11 and at the same time in holding that their donations did not come under the provisions of s. 12 of the Act. The learned advocate for the assessee, on the other hand, pointed out that the remark of the AAC was a clear mistake as was apparent from the reasoning and decision of the order of the AAC. He produced copies of the deeds of settlement relating to the two paying trusts and submitted that the finding of the AAC was quite in order.
(2.) THE Tribunal held that the two donor trusts were family trusts whose incomes were not exempt under s. 11 of the said Act and, hence, they are trusts to which the provisions of s. 11 do not apply. Consequently, they do not come under s. 12(2) of the Act. However, the Tribunal held that the observation of the AAC that "the family trusts were assessed on the entire income as s. 11 had been applied" is obviously a mistake. As the trusts were assessed, s. 11 did not apply to them. The Tribunal, therefore, held that the ITO was not correct in invoking s. 12(2) of the said Act. The Tribunal proceeded on the footing that the paying trusts are trusts to which the provisions of s. 11 did not apply. The Department filed a miscellaneous application and submitted that the finding of the Tribunal that the two donor trusts were family trusts, whose incomes were not exempt under s. 11, is not based on facts. From the assessment orders of the two donor trusts, it would be evident that both the donor trusts were exempt from assessment to the extent permissible under s. 11 of the Act. Since the income of the two donor trusts were exempt under s. 11, s. 12(2) of the Act will apply to the assessment of the assessee-trust. Accordingly, the Revenue filed the said miscellaneous application wherein the Revenue asked that the order of the Tribunal be cancelled or suitably modified in the light of the facts gathered from the assessment orders of the donor trusts. At the time of hearing of the miscellaneous application before the Tribunal, it was argued that the AAC decided the issue on an erroneous assumption of facts which the Tribunal confirmed. Since the correct facts have been brought on record, the Tribunal should rehear the appeal. The Tribunal, however, dismissed the said miscellaneous application, inter alia, on the following grounds: "We have carefully considered the submissions made by both the sides and are in agreement with the submission made by the learned counsel for the assessee. May be that the AAC proceeded on an erroneous basis in so far as he thought that the two donor trusts had been assessed on their income and were not exempted under s. 11 of the Act, but then, the Department should have brought this fact to the notice of the Tribunal at the time of hearing of the Departmental appeal. We have reproduced relevant extracts of the Tribunal's order. We do not find that the attention of the Tribunal was drawn either to the records of the two donor trusts or to the fact that 70per cent of their income was exempted under s. 11 of the Act in their assessments. In the miscellaneous application on behalf of the Department, we also do not find any assertion that the Departmental Representative brought to the notice of the Tribunal the facts which are now stated in the miscellaneous application. Therefore, we can confidently say that the facts mentioned in the miscellaneous application did not form part of the materials on record before the Tribunal at the time of the hearing of the appeal, and the miscellaneous application is not entertainable in view of the decision of the Calcutta High Court relied upon on behalf of the assessee. What the Department, in effect, was asking for, was a review of the Tribunal's order which, in the stated circumstances, the Tribunal has no power to do. The right of review in the circumstances as claimed by the Departmental Representative cannot be assumed unless expressly given by the statute or by the rules having the force of statute. The power which the Departmental Representative wants us to exercise is not ancillary or incidental to the powers of hearing of the appeal and actually represents the right of review which has not been given to the Tribunal as stated above"
(3.) ON the aforesaid facts, a reference application was filed by the Department suggesting the following three questions of law: "1. Whether, on the facts and in the circumstances of the case, the Tribunal had no evidence or had relied on irrelevant materials to hold that the incomes of the two trusts, viz., Rawatmull Nopany Family Trust and Rameshwarlal Nopany Family Trust, had not been exempted from tax under s. 11 of the IT Act, 1961, and had been assessed on the contributions made by them to the assessee-trust and whether such finding was otherwise unreasonable or perverse ? 2. Without prejudice to question No. (1), whether, on the facts and in the circumstances of the case and on a correct interpretation of the deeds of settlement in respect of Rawatmull Nopany Family Trust and Rameshwarlal Nopany Family Trust, the Tribunal erred in law in holding that the provisions of s. 11 of the IT Act, 1961, did not apply to the said trusts ? 3. Without prejudice to the above, whether, on the facts and in the circumstances of the case and on a correct interpretation of the deeds of settlement in respect of Rawatmull Nopany Family Trust and Rameshwarlal Nopany Family Trust, and in particular the direction to the trustees of the trusts that they should apply and hand over seventy per cent. of the net income of the trust properties every year to the trustees of the assessees' trust and/or Manav Vikash Vidyalaya Trust, the Tribunal was correct and justified in holding that the contributions of the two family trusts received by the assessee-trust would be exempt in its hands without being subject to the conditions of s. 11?" ;