Law:

Section:

Section 22, read with section 148 of the Income-tax Act, 1961 [Corresponding to section 9, read with section 34 of the Indian Income-tax Act, 1922] - Income from house property - Chargeable as - Assessee was HUF-karta created trust of certain joint family properties during 1942 and 1946, for charitable purposes - Said entitlement deeds were declared null and void when karta's son filed a suit in 1949 - In original assessment income from trust properties were not included in assessable income of HUF but when ITO was apprised of result of aforesaid said suit, he took action under section 34 of 1922 Act and included income from trust properties in assessable income - Whether result of suit was undoubtedly a definite information showing that assessee had been undervalued and, hence, proceedings initiated under section 34 of 1922 were valid - Held, yes - Whether when trust deeds were avoided by decree, its legal effect was that settlement deeds were avoided from dates of those deeds and legal title of trustee became diverted from inception - Held, yes - Whether, therefore, assessee became liable to include in its income, bona fide annual value of subject matter of trust from 1942 onwards - Held, yes FACTS The assessee was a HUF consisting of the father and his minor sons. The father and manager executed certain regigtered trust deeds during 1942 to 1947 settling certain houses of the HUF, for the benefit of some public charities, appointing himself as trustee. During the accounting years from 1942 to 1946, the income from those properties were not included in the income of the HUF and subjected to tax as the department did not doubt the validity of the trust deeds. When the karta's son instituted a suit in the year 1949, it was declared that the trust deed was null and void and not binding on the family properties. The department thereupon took action under section 34 and issued a notice and completed reassessment from 1942 onwards. Besides disputing the legality of the action under section 34, the assessee contended that as the alienations effected by the karta were only voidable at the instance of the other coparceners, they were good until they were repudiated by…

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