Trust exemption under agricultural income-tax cannot be rejected on suspicion without fair notice and evidence.

Exemption under section 4(b) of the Tamil Nadu Agricultural Income-tax Act could not be denied on a finding that the trust status was doubtful when earlier assessments had treated the assessee as a trust and the Revenue had not disputed that character before the Tribunal. The Tribunal's insistence on the trust deed without prior notice, and its reliance on suspicion rather than evidence, deprived the assessee of a fair opportunity to explain the application of trust income. The order rejecting exemption was therefore unsustainable, and the matter was remitted for fresh disposal in accordance with law.

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Issues: Whether the assessee was entitled to exemption under section 4(b) of the Tamil Nadu Agricultural Income-tax Act on the footing that the properties were held under trust for charitable or religious purposes.

Analysis: The assessee had been treated as a trust in earlier assessment proceedings, and the Revenue had not disputed that character before the Tribunal. The Tribunal nevertheless rejected the exemption by doubting the existence of the trust and by calling for the trust deed without prior notice, depriving the assessee of a fair opportunity to place all relevant facts, including the manner in which the trust income was applied. A factual finding that departs from the parties' own stand and rests on suspicion rather than evidence cannot be sustained.

Conclusion: The rejection of the exemption was unsustainable and the matter had to be sent back for fresh consideration.

Final Conclusion: The Tribunal's order was set aside and the matter was remitted for fresh disposal in accordance with law.

Ratio Decidendi: A finding on trust status and exemption cannot be upheld when it is reached without fair notice and without evidentiary foundation, especially where it contradicts the consistent position of the parties and earlier accepted assessments.

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