Trust property and benami ownership in income tax cannot be fixed by earlier assessments or unproven presumptions.

Deeds of conveyance and settlement indicated that the funds were received subject to a trust for the benefit of the assessee's wife and sons, and that the property was acquired from that trust money; the later settlement deed was treated as declaratory of an existing trust. The revenue failed to produce material to prove benami ownership, so the burden remained on the department to displace the trust character of the property. Prior assessments did not create estoppel or res judicata in later income-tax years, because each assessment year is a separate unit and an erroneous earlier assessment does not bind subsequent years.

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Issues: Whether the house property at 46A and 46B, Wellesley Street, Calcutta, was trust property and not the assessee's individual property; whether the revenue had discharged the burden of proving that the wife was only a benamidar and the property belonged beneficially to the assessee; and whether prior assessments could operate as estoppel or res judicata against the assessee in subsequent assessment years.

Analysis: The deeds of conveyance and settlement showed that money was received by the assessee subject to a trust for the benefit of his wife and sons, that the property was purchased out of that trust money, and that the later settlement deed was declaratory of the existing trust. The Court held that the revenue led no material to prove benami ownership and that the onus to displace the trust character of the property lay on the department. It further held that assessment in earlier years, even if accepted or not challenged to the highest forum, could not create estoppel or res judicata in income-tax proceedings for a later year, since each assessment year is a separate unit and past erroneous assessments do not bind subsequent years.

Conclusion: The property was held to be trust property, the assessee was to be assessed as trustee and not in his individual capacity, and the reference was answered against the revenue and in favour of the assessee.

Ratio Decidendi: In income-tax proceedings, the revenue must prove that property standing in another's name is really benami, and an assessment made in an earlier year does not operate as estoppel or res judicata to bind a later year's assessment.

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