DIPAK KUMAR SEN ,J. - (1.) THE facts relevant and proceedings leading up to this reference are, inter alia, that Sangit Kala Mandir Trust, the assessee, is a trust constituted by a deed of trust dated December 3, 1959. The trust was constituted for the promotion of science, literature, fine arts and sports and for other such religious, charitable, social and other objects as specified in the deed. The objects as specified under cl. 2 of the trust deed which are relevant are, inter alia, as follows: " 2(a) To advance, promote and encourage education of all kinds, literary, physical, moral, aesthetic, scientific, cultural, technical, industrial and general; (p) To organise, hold and/or arrange to be held periodically kavi sammelans, mushairas, qawalis, dances, dramas, cinema shows, essay and story competitions, debates, recitations, symposia and other cultural and literary programmes and social gatherings for the benefit of the public and to invite poets, artists and literatures and other learned persons to participate therein ; (y) To collect, raise and receive subscriptions, donations and gifts, in cash or in kind for all or any of the objects hereinbefore mentioned and to apply the same in accordance with the conditions prescribed by the donors and agreed to by the trustees but not contrary to the above objects; and ........"
(2.) CLAUSE 8 of the trust deed is as follows: "In the course of actual carrying out of the object of the trust, the trustees shall be entitled with the trust funds to carry on such business or businesses on behalf of the trust as they may think fit from time to time and to close and restart any such business provided that all such businesses shall be carried on upon trust to utilise all profits that may be derived from such business or businesses wholly for the purposes mentioned above. Provided further that for the purpose of carrying on such business, the trustees shall be entitled to do all acts, matters and things which an ordinary businessman is entitled to do including the use of the trust funds for the purposes of such business. "In the asst. yr. 1971-72, the relevant accounting year ending on December 31, 1970, the assessee was assessed to income-tax. The ITO found that the income of the trust was exempt under s. 11 of the IT Act, 1961. The ITO further found that in the accounting year concerned, the trust in any event had no taxable income.
(3.) THE CIT, on an examination of the records, came to the conclusion that the assessment as made by the ITO was patently erroneous and prejudicial to the interests of the Revenue. The Commissioner thereupon initiated proceedings under s. 263 of the IT Act, 1961, on a notice to the assessee to show cause why the assessment should not be set aside and a fresh assessment be made in accordance with law.;