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Facts
The assessee, a beneficiary of a trust (Galaxy Corporation) with a 20% share, had additions made to their income. These additions were consequential to assessment orders passed in the hands of Galaxy Corporation. An appeal by Galaxy Corporation was pending before the CIT(A).
Held
The Tribunal held that the additions made to the assessee's income were consequential to the assessment in the hands of Galaxy Corporation. Since the appeal of Galaxy Corporation was pending, the Tribunal set aside the impugned order and directed the CIT(A) to adjudicate the assessee's appeal afresh after considering the outcome of Galaxy Corporation's appeal.
Key Issues
Whether additions made to the beneficiary's income, which are consequential to additions made in the hands of the trust, should be adjudicated before or after the appeal of the trust is decided.
Sections Cited
154, 155(2), 143(3), 147
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Income Tax Appellate Tribunal, “J (SMC
(Assessment Year: 2011-2012) Nidhi Kedia Plot No.53, Hotel Legend, Nehru Road, Santacruz (East), Mumbai - 400055.Maharashtra. [PAN:AFDPG9955N] …………. Appellant Vs Income Tax Officer Ward 23(2)(4) Kautilya Bhavan, G Block, Bandra Kurla Complex, …………. Respondent Mumbai - 400050, Maharashtra. Appearance For the Appellant/Assessee : Shri N. R. Agrawal For the Respondent/Department : Shri Asif Karmal Date Conclusion of hearing : 24.06.2025 Pronouncement of order : 27.06.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the order dated 31/03/2025, passed by the Additional/Joint Commissioner of Income Tax (Appeals) – 2, Gurugram [hereinafter referred to as the ‘CIT(A)’], whereby the Ld. CIT(A) had dismissed the appeal of the Assessee against the Assessment Order, dated 28/03/2012, passed under Section 154 read with Section 155(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year 2011-2012.
The Assessee has raised following grounds of appeal :
1. The learned CIT(Appeals) erred in confirming the addition of Rs.20,91,693/- being share of profit from Assessment Year 2011-2012 Galaxy Corporation.”
3. The relevant facts in brief are that the Assessee, a resident individual, was a beneficiary in private specific Trust (namely, Galaxy Corporation) having 20% share. For the Assessment Year 2011-2012, the Assessing Officer of Galaxy Corporation passed the Assessment Order under Section 143(3)/147, dated 29/12/2019, determining the income of Galaxy Corporation as INR.1,12,25,165/-. Hence, the Assessing Officer of the Assessee passed Order, dated 15/02/2019, under Section 154 read with Section 155(2) of the Act determining income of the Assessee at 22,45,033/- [20% of income of INR.1,12,25,165/- determined in the hands of Galaxy Corporation] and made an addition of INR.20,91,693/- as against returned income of INR.1,53,340/-. Being aggrieved, the Assessee preferred appeal before the Learned CIT(A) which was dismissed vide order dated 31/03/2025 which has been impugned by way of the present appeal.
The Learned Authorized Representative for the Assessee submitted that an appeal was filed before Commissioner of Income-Tax (Appeals) – 32, Mumbai in the case of Galaxy Corporation (PAN AAATG0086G) on 09/01/2019 and the same was pending adjudication. Therefore, the Learned CIT(A) was requested to await adjudication of the said appeal since the additions were made in the hands of the Assessee-beneficiary as a consequence of the additions made in the case of Galaxy Corporation-private specific trust. However, the Learned CIT(A) incorrectly rejected the aforesaid request and dismissed the appeal preferred by the Assessee. Per contra, the Learned Departmental Representative placed reliance upon the orders passed by the authorities below.
We have considered the rival submissions. On perusal of record, we find that it is admitted position that additions made in the hands of the Assessee were consequential to the assessment framed in the Assessment Year 2011-2012 hands of Galaxy Corporation. On perusal of Order dated, 15/02/2019 passed by the Assessing Officer under Section 154 read with Section 155(2) of the Act it is clear that the Assessee was a beneficiary of the private specific trust (i.e. Galaxy Corporation) to the extent of 20%. Therefore, out of income of INR.1,12,25,165/- determined in the hands of the Galaxy Corporation 20% of the same (i.e. INR.22,45,033/-) was treated as income of the Assessee (as against the returned income of INR.1,53,340/-). Thus, an addition of INR.20,91,639/- was made in the hands of the Assessee. Clearly, the addition made in the hands of the Assessee is consequential to the additions made in the hands of the Galaxy Corporation. Since, the appeal preferred by the Galaxy Corporation is pending before CIT(A), we deem it appropriate to set aside the impugned order dated, 31/03/2025, passed by the CIT(A) with the directions to the CIT(A) to adjudicate the appeal preferred by the Assessee afresh after taking into consideration the result of the appeal preferred by the Galaxy Corporation. The Assessee is directed to take necessary steps to expedite the hearing of the appeal preferred by the Galaxy Corporation before the first appellate authority. In terms of the aforesaid, Ground No.1 raised by the Assessee is allowed for statistical purposes.
In result, the present appeal preferred by the Assessee is allowed for statistical purposes.
Order pronounced on 27.06.2025.