Trust recitals yield to human probabilities where evidence is lacking; property income remained taxable in the assessee's hands.

A document reciting a trust arrangement does not bind the taxing authority when surrounding circumstances and human probabilities show the recital to be unreal. The Tribunal's rejection of the alleged trust, based on evidence and fact-finding, was treated as a finding of fact; absent perversity, no referable question of law arose for High Court interference in reference jurisdiction. The assessee also failed to prove the claimed source of funds said to belong to his wife, and his prior acceptance of assessment in his own hands was a relevant circumstance, though not conclusive. The property income was therefore assessable in the assessee's hands, and the trust claim failed.

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Issues: (i) Whether the High Court was justified in directing a reference on the ground that a question of law arose from the Tribunal's finding regarding the trust character of the property and the source of the consideration. (ii) Whether the income from the property was liable to be assessed in the assessee's hands or was trust income.

Issue (i): Whether the High Court was justified in directing a reference on the ground that a question of law arose from the Tribunal's finding regarding the trust character of the property and the source of the consideration.

Analysis: The Tribunal had not construed the documents as a matter of legal interpretation; it had rejected the recitals as unreal on the basis of surrounding circumstances and concluded that the alleged trust was not genuine. That conclusion was a finding of fact reached by the final fact-finding authority on relevant evidence. Unless such a finding is shown to be perverse, unsupported by evidence, or based on irrelevant material, no question of law arises for the High Court to interfere with under reference jurisdiction.

Conclusion: The High Court was not justified in directing a reference on this footing, and no referable question of law arose from the Tribunal's order.

Issue (ii): Whether the income from the property was liable to be assessed in the assessee's hands or was trust income.

Analysis: The assessee failed to establish the alleged source of the funds said to belong to the wife and the surrounding circumstances made the story improbable. The authorities were entitled to test the documents against human probabilities and surrounding facts, and to treat the recital of trust as untrue when the evidence did not support it. The assessee's long acceptance of assessment in his own hands was also a relevant circumstance, though not conclusive by way of estoppel or res judicata.

Conclusion: The income was taxable in the assessee's hands and the claim that it was trust property was rejected.

Final Conclusion: The answer given by the High Court was set aside and the reference was answered in favour of the department, restoring assessment of the property income in the assessee's hands.

Ratio Decidendi: A recital in a document does not bind the taxing authority where surrounding circumstances and human probabilities show it to be unreal; findings of fact by the final fact-finding authority cannot be interfered with in reference jurisdiction unless they are perverse, unsupported by evidence, or based on irrelevant considerations.

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