Judgment

HEGDE, J.: These appeals by certificate arise from the decision of the Calcutta High Court in Income-tax References Nos. 78 and 79 of 1964 on its file. Those were References under S. 66 (2) of the Indian Income-tax Act, 1922 (which for the sake of brevity will hereinafter be referred to as the Act,). The question referred to the High Court seeking its opinion is:

"Whether in the facts and circumstances of the case and on a proper interpretation of the Deed of conveyance and the Deed of Settlement the Tribunal is right in holding that the house property being premises Nos. 46A and 46B, Wellesly Street, Calcutta is not Trust property?"

2. The circumstances under which that question came to be referred may now be set out.

3. The assessment years with which we are concerned in these appeals are 1958-59 and 1959-60, the previous years being the Diwali Samy. 2013-2014 and 2014-15. In the course of the assessment proceedings relating to those years, the assessee claimed before the Income-tax Officer that the income of the property at premises Nos. 46A and 46B, Wellesley Street, Calcutta should not be taxed in his hands as it was Trust property in his hands. The Income-tax Officer rejected that claim and included that income in the total income of the assessee. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal affirmed the decision of the Income-tax Officer. An application under S. 66 (1) was rejected by the Tribunal on the ground that no question of law arose from its order. But the High Court on an application by the assessee under S. 66 (2) directed the Tribunal to state a case and submit the question mentioned earlier to it for obtaining its opinion. After hearing the parties, it answered the question in favour of the assessee. The Commissioner has appealed against the order of the High Court.

4. The premises in question were purchased by the assessee on September 13, 1940 purporting to act as the Trustee of the Trust created by his wife, Sm. Benarsi Debi, for a consideration of Rs. 1,85,000/-. The income of those premises had been assessed as the income of the assessee ever since the purchase of those premises. We shall presently refer to the earlier proceedings.

5. During the assessment of the assessee for the assessment year 1942-43, the assessee put forward the claim that the income of the premises in question was not his income and therefore that income should not be brought to tax in his hands and in support of that claim he produced the conveyance executed in his favour on September 13, 1940 and the Deed of Settlement executed by his wife on September 10, 1941, nearly about a year after the conveyance. At that stage, it is seen from the records, the Income-tax Officer asked the assessee as to the source from which his wife got that amount. The assessee, apart from saying that it was her stridhana property appears to have been unable to disclose any source from which his wife could have got the amount from which the premises were purchased. The only further fact he appears to have informed the Income-tax Officer was that two lakhs of rupees were all along lying in the hands of his father-in-law. It was not the assessee s case that the said amount was either deposited in any Bank or the same was advanced to others. No material was placed before the Income-tax Officer to show that his wife had any independent source of income. The case of the assessee was that his wife had under an oral Trust created for the benefit of herself and her children left in his hands two lakhs of rupees. The Income-tax Officer rejected the version put forward by the assessee and consequently he came to the conclusion that the consideration for the sale was paid by the assessee. In the result he brought to tax the income from the premises purchased in the hands of the assessee. In appeal the Appellate Assistant Commissioner affirmed the order of the Income-tax Officer. Evidently before the Tribunal, it was urged on behalf