GAURI ANANYA EDUCATIONAL BENEFICIARY TRUST,KANPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(1), KANPUR, KANPUR

Because various adverse observations and allegations made by the lower authorities are contrary to the facts, material & evidences available on record.

(B) In this case the return filed by the assessee u/s 139 of the I.T. Act was processed u/s 143(1) of the Act vide intimation dated 23/04/2018. The assessee has filed income in the status of the AOP/BOI i.e. Association of Persons/Body of Individuals. In the aforesaid intimation u/s 143(1) of the Act, tax was levied on the assessee at maximum marginal rate (“MMR” for short). The AOP/BOI is assessed at MMR when the shares of persons in the AOP/BOI are not specified. The assessee did not file any appeal against intimation issued u/s 143(1) of the Act. However the assessee filed application u/s 154 of the Act seeking rectification claiming that the assessee should not have been taxed at MMR. Vide order dated 24/07/2018, Centralized Processing Centre (CPC) of the Income Tax Department rejected the assessee’s application for rectification. The assessee filed appeal against the aforesaid order dated 24/07/2018, in the office of the learned CIT(A). The learned CIT(A), vide impugned appellate order dated 14/01/2023 dismissed the assessee’s appeal. The relevant portion of the order of the learned CIT(A) is reproduced as under:

(B.1) The present appeal has been filed by the assessee against the aforesaid impugned appellate order of learned CIT(A). During appellate proceedings in Income Tax Appellate Tribunal, following particulars were filed from the assessee’s side:

(C) At the time of hearing, the learned Counsel for the assessee submitted that in the return filed by the assessee there was no indication that the share of the beneficiaries of the assessee trust were not specified. He drew our attention to copy of extract from return of income filed by the assessee; wherein the space provided for stating percentage of shares of the beneficiaries (if determinate) has been left blank by the assessee. He submitted that in the absence of any information regarding the specific shares of the beneficiaries of the trust, provided in the return of income, the CPC of Income Tax Department erred in presuming that shares of the beneficiaries were not specified or determinate. Therefore, he contended that CPC should neither have taxed the assessee at MMR in the aforesaid intimation dated 13/04/2018 nor should the CPC have rejected the assessee’s application for rectification u/s 154 of the Act vide aforesaid order dated 24/07/2018. He placed reliance on order of Single Member Bench of the Income Tax Appellate Tribunal, Lucknow in the case of Dhariya Beneficiary Trust vs. DCIT in wherein the Bench consisting of Single Member, decided similar issue in favour of the assessee. In all fairness, however, he conceded that the aforesaid order dated 18/09/2014 of the ITAT, being passed by a Bench consisting of Single Member, is not binding on the Division Bench consisting of us as two Members.

(D) The learned Departmental Representative drew our attention to impugned order of the learned CIT(A) wherein, in para 9.13 of the order, the learned CIT(A) has given a categorical finding that the share of beneficiaries in the trust were unknown and indeterminate. This finding has been given by the learned CIT(A) after perusal of the trust deed of the assessee trust. In response to a specific query of the Bench, learned Counsel for the assessee accepted that the share of the beneficiaries in the assessee trust was not specified in the trust deed and remained unknown and indeterminate.

(E) We have heard both sides. We have perused the materials on record. It is not in dispute that the shares of the beneficiaries of the assessee trust are not specified in the trust deed and therefore, the respective shares of the beneficiaries remained unknown and indeterminate. When this fact is considered, the impugned order of the learned CIT(A) cannot be assailed because the rectification sought for by the assessee u/s 154 of the Act was inconsistent with regard to the trust deed of the assessee trust. The submissions of the learned Counsel for the assessee amount to claim that the assessee should get the benefit of its own failure to specify the shares of the beneficiaries, is unacceptable. Moreover, if the assessee had any grievance from the intimation dated 13/04/2018 issued u/s 143(1) of the Act then the assessee should have filed appeal against the intimation in the office of the learned CIT(A); which the assessee failed to do. Once the assessee did not file appeal against intimation u/s 143(1) of the Act, the intimation attained finality. Thereafter, intimation could have been rectified u/s 154 of the I.T. Act only if there was a mistake apparent from record.

However, on consideration of the trust deed, it is found that there is no error in taxing the assessee on MMR for the reason that respective shares of the beneficiaries of the assessee trust remained unspecified and indeterminate. In view of the foregoing, the impugned order of the learned CIT(A) is sustained and the appeal filed by the assessee is dismissed. All grounds of appeal are treated as disposed of in accordance with the above; and are treated as dismissed for statistical purposes.

(F) In the result, the appeal is dismissed for statistical purposes.