Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, : ‘D’ BENCH, KOLKATA
Before: Shri P.M. Jagtap & Shri S.S.Viswanethra Ravi
Date of Hearing : 12-09-2017 Date of Pronouncement : 06-12-2017 ORDER Shri S.S.Viswanethra Ravi, JM:
This appeal by the Revenue is against the order dt. 28-07-2015 of the CIT-A, 10, Kolkata for the A.Y 2013-14.
The only issue is to be decided as to whether the CIT-A is justified in holding the income relatable to the Trust would be assessable in the hands of beneficiaries in the facts and circumstances of the case.
The brief facts of the case relevant to issue in hand are that the assessee is a Trust and filed return of income by declaring a total income at Rs. Nil. The said return was processed u/s. 143(1) of the Act by raising a demand of tax of Rs.25,49,620/- by the CPC, Bangalore in the hands of the Trust. Against which the assessee filed appeal before the CIT-A contending that the total income derived by 2 M/s. The Trustees Estate of Late R.D.Mehta the Trustees was from house property and other sources and the income worked out to Rs. 82,77,770/-. The assessee further stated that the said total income has been received by the Trustees for and on behalf of six (6) beneficiaries, who have specific beneficial interest in the Trust estate and accordingly, the total income was allocated amongst the said six (6) beneficiaries. The assessee contended that the said income is not assessable in the hands of the trustees, but, it should be assessed in the hands of various beneficiaries and annexed PAN of each beneficiary along with the said return and placed reliance on the order of the Co-ordinate Bench of this Tribunal in assessee’s own case in and stated that the Tribunal quashed the order of AO on similar issue. Considering the same, the CIT-A cancelled the impugned demand raised by CPC, Bangalore. Relevant portion of which is reproduced herein below:-
“03. I have carefully perused the order of the CPC dated 16/10/14,bearing communication reference no. CPC/1314/A5/1412563398, wherein, till serial no.28 (being the deemed total income u/s 115JC) the figure had been taken at Rs.94,68,920/-in the computation u/s143(1), This is the same as provided by the taxpayer/ assessee in the return of income. In summary the total income/deemed total income has not been altered. However, the figure at serial no 32 (relating to the tax details)has been taken at Rs.28,40,676 by the AO, whereas the figure was computed at NIL by the assessee/ taxpayer. Therefore though the total income has not been altered the tax has been calculated in the hands of the Trust by the AO,CPC. In the Written submissions and the orders of the Hon'ble ITAT and Ld. CIT(A) submitted before me, it is seen that after elaborate discussion, the Hon'ble ITAT (A Bench) Kolkata has held in of 2008 dated 22.12.2008 confirmed that the income relatable to the Trust would be assessable in the hands of the beneficiaries. The same has also been allowed by the CIT(Appeals) in the years under consideration in Appeals No 186 & 213 / CIT(A)-XX/ Circle-36 / 07-08 Kol dated 8th July, 2008, as the decision of the Hon'ble ITAT were binding in nature. Also the powers of the A.O. or the A.O.(CPC) need to be looked at closely. There are a plethora of case laws relating to the powers under 143(1) as under the headlines.
Harayana Oils & Soya Ltd vs ACIT (2012) 50 SIT 11(Del)(URO) 2. Arunlal Champaklal (HUF) vs ITO (2003) 86 ITO 707 (Mum) 3. DCIT vs Surya Shakti Advisory Pvt Ltd (ITA No 573/Ko1/12 dated 23.08.2012) 4. Ms Ambala Central Cooperative Bank Ltd vs ITO Ward - 1, Ambala (ITA No 332/Chd/2012 dated 23.05.2012) 5. CG Lucy Switchgear Ltd vs ACIT (CPC) Bangalore 6. CIT vs M/s Raj Fastners Pvt Ltd (Rajasthan High Court, 02.01.2014) From then above decisions it emerges that the powers of the CPC to make the kind of adjustments done in this case are not permissible under law. Also, in this case the CPC appears to have acted without knowledge of the matters as decided by the Hon'ble ITAT in the earlier years. The A.R's contention that the rule of consistency emerging from the decision of the Bombay High Court in the case of CIT-vs- Tata Auto comp Systems Ltd., reported in 374 ITR 516 (Para-7) has necessary strength, and is required to be followed. Accordingly, I find that the order of the AO( CPC) is beyond the purview of Sec 143( 1) of the Income Tax Act, 1961, as also not in conformity with the 3 M/s. The Trustees Estate of Late R.D.Mehta
decision of the Hon'ble ITAT in the assessees' own case. I therefore cancel the said order.”
Before us the ld. DR submits that the appellant Revenue filed an appeal before the Hon’ble High Court of Calcutta u/s. 260A of the Act challenging the order dt: 30-04-08 passed by Kolkata Bench of Tribunal in assessee’s own case for the A.Y 2004-05. He also submits that the said order of the Tribunal is not binding on Revenue as it attained no finality and prayed to allow the appeal of the Revenue and restore the order of demand raised by the AO,CPC, Bangalore.
On the other hand, the ld. AR submits that the Hon’ble High Court of Calcutta by its order dt. 9-8-2010 and placed on record the same and submits that the Hon’ble High Court of Calcutta admitted the appeal filed by the revenue and framed a question of law relating to issue in hand.
Further, ld. AR submits again, on 6-5-2014, when the matter was listed, the Hon’ble High Court directed the appellant Revenue to reconstruct the records and file the same in the department within six weeks from the date as informal paper book after serving the copy thereof upon the respondent, failing which the matter shall stand dismissed without further reference to this Bench and argued that the appellant Revenue did not submit any paper book so far the assessee.
The ld.AR further submits that there was no contrary order from the Hon’ble High Court of Calcutta so far. Therefore, the order passed by this Tribunal is in force and binding on the appellant Revenue. The ld.AR also submits that the CIT-A passed a well reasoned order by holding that the income of the Trust in the A.Y under consideration shall be assessed in the hands of the beneficiaries and in support of which placed reliance on the order dt: 28-03-1980 of this Tribunal in assessee’s own case for A.Y 1975-76 and referred to pages 43-47 of the paper book. The Ld. AR also 4 M/s. The Trustees Estate of Late R.D.Mehta placed reliance on the recent order dt. 30-04-2008 in for A.Y 2004-05 in assessee’s own case and referred to pages 66-69 of the paper book. The Ld.AR argued that the issue in hand covered by the orders of this Tribunal in assess’s own case and the also pointed out that the appellant revenue did not bring on record any order contrary to the orders above and prayed to dismiss the grounds raised by the revenue in this regard.
Heard both the parties and perused the records. We find that the issue involved in this appeal was decided by this Tribunal in A.Y 2004-05, wherein, the Tribunal in turn placed reliance on the order dt. 28-03-1980 for the A.Y 1975-76 in assessee’s own case held that the AO cannot assess the income in the hands of the trustees and directed the AO to accept the return of income without taxing it in the hands of trust and to assesse the same in the hands of beneficieries. Relevant portion of which is reproduced herein below:-
Order dt. 30-04-2008 A.Y 2004-05 “9. We have carefully considered the issue. It is very clear that the income of the assessee has been held to be taxable in the hands of the beneficiaries and in view of the ITAT decision and subsequent orders of the appellate authorities and assessment orders, there was no justification for the A.O to tax the assessee at maximum marginal rate and not to allocate the income in the hands of the respective beneficiaries. It is also seen that the action of the AO is invalid because the tax has been levied at maximum marginal rate while processing the return u/s. 143(1) of the Income Tax Act and without giving any notice of hearing u/s. 143(2) of the Income Tax Act. Thus the AO had exceeded his jurisdiction u/s. 143(1) of the I.T Act while taxing the income in the hands of the assessee trust at the maximum marginal rate and not in the hands of the beneficiaries. The decision of the learned CIT(A) cannot also be considered correct because it arises out of an invalid order and is not in accordance with the decision of the ITAT in the case of the assessee for the assessment year 1975-76 as per order dated 28.3.80 ( supra). We, therefore, vacate the orders of the lower authorities and direct the AO to accept the returns of income u/s. 143(1) of the I.T Act without taxing it in the hands of the Trust. “
The ld.DR could not bring on record any order contrary to the finding given by this Tribunal in assessee’s own case for the A.Y 2004-05. The ld.AR placed on record the orders dt. 9-8-2010 and 6- 5-2014 passed by the Hon’ble High Court of Calcutta respectively. Relevant portion of which are reproduced herein below:- 5 M/s. The Trustees Estate of Late R.D.Mehta
Order dt. 6th May, 2014 of Hon’ble Calcutta High Court: “The Court :- It is submitted by the learned Counsel for the appellant that the matter is pending for consideration. It is reported by the Registry of this Court that papers are not traceable. As prayed, learned Counsel for the appellant is permitted to reconstruct the records and file the same in the department within six weeks from the date as informal paper book after serving copy thereof upon the respondent, failing which the matter shall stand dismissed without further reference to this Bench.”
Order dt. 09.08.2010 of Hon’ble Calcutta High Court: “The Court Having heard Mr.Agarwala and having gone through the impugned judgment and order of the learned Tribunal the appeal is admitted on the following of law relating to Assessment Year 2004-05 for rendering our decision – “Whether on the facts and circumstances of the case the decision of the Tribunal rendered in respect of the same assessee in previous year on the point involved herein is applicable in this case or not? “ Let requisite number of paper books be filed within two months from date. Notice of appeal be served by the department upon the respondent. All parties shall act on a Xerox signed copy of this order on usual undertakings.
From the above two orders of Hon’ble High Court of Calcutta, we find that Hon’ble High Court of Calcutta framed a question of law as below:-
“Whether on the facts and circumstances of the case the decision of Tribunal rendered in respect of the same assessee in previous year on the point involved herein is applicable in this case or not? 11. The said appeal again came up for hearing before the Hon’ble High Court of Calcutta on 6-5-2014 and it was noticed by the Hon’ble High Court of Calcutta that the papers relating to appeal in question were not traceable in the registry. Accordingly, directed the appellant Revenue to reconstruct the records and file the same in registry within six weeks from the date. But, however, neither the ld. DR nor the ld.AR brings on record regarding the status of the appeal before the Hon’ble High Court of Calcutta to show that whether the said appeal is pending or not. Since nothing was brought on record either of the parties before this Tribunal, we, therefore, by placing reliance on the order dt. 30-04-2008 of this Tribunal in assessee’s own case in for A.Y 2004-05 hold to accept the returned income as filed for the A.Y under consideration without assessing the 6 M/s. The Trustees Estate of Late R.D.Mehta income in the hands of assessee. Therefore, the ground(s) raised by the revenue are dismissed.
In the result, the appeal of the revenue is dismissed as indicated above. Order pronounced in the open court on 06-12-2017