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JUDGMENT J.M. Shelat, CJ.-By a trust deed dated June 19, 1947, the assessee, Jayantilal Amratlal, settled 80 ordinary shares held by him in Messrs. Jayantilal Amratlal and Co. Ltd. upon trust, known as Jayantilal Amratlal Charitable Trust for the following objects, namely, "For the relief of poor, for education, for medical relief, for advancement of religion, knowledge, commerce, health, safety or any other objects beneficial to mankind." The trust deed was registered with the Charity Commissioner under the Bombay Trust Act (Act XXIX of 1950). Originally, as the recitals in the said deed of trust show, the trust fund consisted of the aforesaid 80 shares of the market value of Rs. 40,000. By his letter dated March 27, 1957, the settlor added to those 80 ordinary shares certain other shares held by him in other companies, bringing the total trust fund to about rupees three lakhs and a little more. Till the assessment year 1957-58, the income-tax department accepted the trust as a valid charitable trust and gave the necessary exemption to the trustees thereof in respect of its income. But while assessing the trust for the assessment year 1958-59, the Income-tax Officer came to the conclusion that section 16(i)( c), proviso I, applied and, therefore, the income of the trust could not be assessed in the hands of the trustees but was assessable in the hands of the settlor, the assessee Jayanti-lal Amratlal. The Income-tax Officer gave the reasons for so holding, (1) that the assessee had de facto control over the income and corpus of the trust and even the charities and temples to receive the benefit would be chosen by him, and (2) that the infringement of section 35(1) of the Bombay Trust Act, 1950, entailed a small penalty which was hardly deterrent. Finding that the assessment of Jayantilal Amratlal for the assessment years 1955-1956 and 1956-1957 was still open, the Income-tax Officer assessed the income of the trust in the hands of the settlor and he passed the assessment orders for the assessment of Jayantilal Amratlal for the assessment of the trust for the assessment years 1958-1959 and 1959-1960 on the same day, i.e., on March 11, 1960. The assessee,…

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