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

ITA 83/LKW/2023

AI Insights

The case involves the Gauri Ananya Educational Beneficiary Trust, which appealed against the order of the Commissioner of Income Tax (Appeals) concerning the taxation of its income at the maximum marginal rate (MMR) due to unspecified shares of beneficiaries. The Trust argued that there was no apparent mistake in the record justifying the application of section 154 of the Income Tax Act, 1961. However, both the CIT(A) and the Tribunal found that the shares were indeed unspecified and indeterminate, and the Trust's failure to specify the shares in the trust deed precluded rectification under section 154. The Tribunal also emphasized that the Trust should have initially appealed the intimation under section 143(1) if it had grievances, which it failed to do.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779814 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 13-03-2023
• Other Referred Cases: Dhariya Beneficiary Trust vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R.R.N. SHUKLA
• Assessee Lawyers: P.K. KAPOOR
• Keywords: Principle of natural justice; Maximum Marginal Rate
• Section: 154; 139

Judgement Text

"I.T.A. No.83/Lkw/2023 Assessment Year:2017-18 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘B’, LUCKNOW BEFORE SHRI KUL BHARAT, VICE PRESIDENT AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A. No.83/Lkw/2023 Assessment Year: 2017-18 Gauri Ananya Educational Beneficiary Trust 133/185, M Block, Kidwai Nagar Kanpur-208012 PAN:AACTG6466C Vs. Dy.C.I.T., Circle-1(1)(1), Kanpur. (Appellant) (Respondent) O R D E R PER ANADEE NATH MISSHRA:A.M. (A) This appeal vide I.T.A. No.83/Lkw/2023 has been filed by the assessee for assessment year 2017-18 against impugned appellate order dated 14/01/2023 (DIN & Order No.ITBA/NFAC/S/250/2022- 23/1048716573(1) of Commissioner of Income Tax (Appeals) [“CIT(A)” for short]. The assessee has raised the following grounds: “1. The learned CIT(A), National Faceless Appeal Centre, New Delhi was wrong in law & on facts in not accepting the contention of Appellant by Shri P. K. Kapoor, C. A. Respondent by Shri R.R.N. Shukla, Addl. CIT (D.R.) Printed from counselvise.com I.T.A. No.83/Lkw/2023 Assessment Year:2017-18 2 the appellant about the non applicability of the provision of section 154 of the Income Tax Act, 1961. 2. The learned CIT(A), National Faceless Appeal Centre, New Delhi has failed to appreciate the following submission in relation to the non applicability of provisions of section 154 of the Income Tax Act, 1961:- (i) That the order of the learned Assessing Officer passed u/s 154 was not a valid order because there was no apparent mistake of record & the provisions of section 154 were not at all applicable to the facts of the case. (ii) That the beneficiary trust was not engaged in the business & there was no adventure in the nature of trade. (iii) That the provisions of section 164(1) read with section 161 were not applicable to all the facts of the case as there were two beneficiaries in the trust and each having equal share i.e. 50%. 3. That the CIT(A), National Faceless Appeal Centre, New Delhi has also failed to appreciate & consider the various decisions cited before him. 4. Because various adverse observations and allegations made by the lower authorities are contrary to the facts, material & evidences available on record. 5. Because the order of Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi is against the principle of natural justice erroneous and not tenable in law and on facts.” (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 Printed from counselvise.com I.T.A. No.83/Lkw/2023 Assessment Year:2017-18 3 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: Printed from counselvise.com I.T.A. No.83/Lkw/2023 Assessment Year:2017-18 4 Printed from counselvise.com I.T.A. No.83/Lkw/2023 Assessment Year:2017-18 5 Printed from counselvise.com I.T.A. No.83/Lkw/2023 Assessment Year:2017-18 6 Printed from counselvise.com I.T.A. No.83/Lkw/2023 Assessment Year:2017-18 7 Printed from counselvise.com I.T.A. No.83/Lkw/2023 Assessment Year:2017-18 8 (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: Printed from counselvise.com I.T.A. No.83/Lkw/2023 Assessment Year:2017-18 9 Printed from counselvise.com I.T.A. No.83/Lkw/2023 Assessment Year:2017-18 10 (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 I.T.A. No.456/Lkw/2014, 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 Printed from counselvise.com I.T.A. No.83/Lkw/2023 Assessment Year:2017-18 11 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. Printed from counselvise.com I.T.A. No.83/Lkw/2023 Assessment Year:2017-18 12 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. (Order pronounced in the open court on 15/10/2025) I agree with the view of Accountant Member Sd/. Sd/. (KUL BHARAT) (ANADEE NATH MISSHRA) Vice President Accountant Member Dated:15/10/2025 *Singh Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. Concerned CIT 4. D.R. ITAT, Lucknow Printed from counselvise.com "