DCIT, CIR-36, KOLKATA, Kolkata V. M/s The Trustees, Estate of Late R. D. Mehta, Kolkata

ITA 1268/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0850 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 07-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KALYAN NATH
• Assessee Lawyers: P J BHIDE FCA LD
• Keywords: Maximum Marginal Rate; Rule of consistency; Question of law
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BEN CH, KOLKATA BEFORE : SHRI P.M. JAGTAP, ACCOUNTANT MEMB ER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 1268/KOL/2015 A.Y 2013-14 DEPUTY COMMISSIONER OF INCOME-TAX,CIR-36 KOLKATA APPELLANT VS. M/S. THE TRUSTEES, ESTATE OF LATE R.D.MEHTA PAN: AAAAT3477B RESPONDENT APPELLANT BY : SHRI KALYAN NATH, SR.DR RESPONDENT BY : SHRI P.J. BHIDE, FCA, LD.AR 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. 2. THE ONLY ISSUE IS TO BE DECIDED AS TO WHETHER TH E CIT-A IS JUSTIFIED IN HOLDING THE INCOME RELATABLE TO THE TR UST WOULD BE ASSESSABLE IN THE HANDS OF BENEFICIARIES IN THE FAC TS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THE CASE RELEVANT TO ISSUE IN HAND ARE THAT THE ASSESSEE IS A TRUST AND FILED RETURN OF INCOME BY D ECLARING 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 ITA NO. 1268/KOL/2015 M/S. THE TRUSTEES ESTATE OF LATE R.D.MEHTA 2 THE TRUSTEES WAS FROM HOUSE PROPERTY AND OTHER SOUR CES 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 SPECIF IC BENEFICIAL INTEREST IN THE TRUST ESTATE AND ACCORDINGLY, THE TOTAL INCO ME WAS ALLOCATED AMONGST THE SAID SIX (6) BENEFICIARIES. THE ASSESSE E CONTENDED THAT THE SAID INCOME IS NOT ASSESSABLE IN THE HANDS OF T HE TRUSTEES, BUT, IT SHOULD BE ASSESSED IN THE HANDS OF VARIOUS BENEFICI ARIES AND ANNEXED PAN OF EACH BENEFICIARY ALONG WITH THE SAID RETURN AND PLACED RELIANCE ON THE ORDER OF THE CO-ORDINATE BENCH OF THIS TRIBU NAL IN ASSESSEES OWN CASE IN ITA NO. 1799/KOL/08 AND STATED THAT THE TRIBUNAL QUASHED THE ORDER OF AO ON SIMILAR ISSUE. CONSIDERI NG THE SAME, THE CIT-A CANCELLED THE IMPUGNED DEMAND RAISED BY CPC, BANGALORE. RELEVANT PORTION OF WHICH IS REPRODUCED HEREIN BELO W:- 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 B EEN 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/DEEME D TOTAL INCOME HAS NOT BEEN ALTERED. HOWEVER, THE FIGURE AT SERIAL NO 32 (RELAT ING TO THE TAX DETAILS)HAS BEEN TAKEN AT RS.28,40,676 BY THE AO, WHEREAS THE FIGURE WAS COMP UTED 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 HO N'BLE ITAT AND LD. CIT(A) SUBMITTED BEFORE ME, IT IS SEEN THAT AFTER ELABORAT E DISCUSSION, THE HON'BLE ITAT (A BENCH) KOLKATA HAS HELD IN ITA NO. 1799(KOL) OF 200 8 DATED 22.12.2008 CONFIRMED THAT THE INCOME RELATABLE TO THE TRUST WOULD BE ASSESSAB LE 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 T O BE LOOKED AT CLOSELY. THERE ARE A PLETHORA OF CASE LAWS RELATING TO THE P OWERS UNDER 143(1) AS UNDER THE HEADLINES. 1. HARAYANA OILS & SOYA LTD VS ACIT (2012) 50 SIT 11(DEL)(URO) 2. ARUNLAL CHAMPAKLAL (HUF) VS ITO (2003) 86 ITO 7 07 (MUM) 3. DCIT VS SURYA SHAKTI ADVISORY PVT LTD (ITA NO 5 73/KO1/12 DATED 23.08.2012) 4. MS AMBALA CENTRAL COOPERATIVE BANK LTD VS ITO W ARD - 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 POWER S OF THE CPC TO MAKE THE KIND OF ADJUSTMENTS DONE IN THIS CASE ARE NOT PERMI SSIBLE 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 CONTEN TION 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 S TRENGTH, AND IS REQUIRED TO BE FOLLOWED. ACCORDINGLY, I FIND THAT T HE 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 ITA NO. 1268/KOL/2015 M/S. THE TRUSTEES ESTATE OF LATE R.D.MEHTA 3 DECISION OF THE HON'BLE ITAT IN THE ASSESSEES' OWN CASE. I THEREFORE CANCEL THE SAID ORDER. 4. BEFORE US THE LD. DR SUBMITS THAT THE APPELLANT REVENUE FILED AN APPEAL BEFORE THE HONBLE HIGH COURT OF CALCUTTA U/S. 260A OF THE ACT CHALLENGING THE ORDER DT: 30-04-08 PASSED BY KO LKATA BENCH OF TRIBUNAL IN ASSESSEES 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,CP C, BANGALORE. 5. ON THE OTHER HAND, THE LD. AR SUBMITS THAT THE H ONBLE HIGH COURT OF CALCUTTA BY ITS ORDER DT. 9-8-2010 AND PLA CED ON RECORD THE SAME AND SUBMITS THAT THE HONBLE HIGH COURT OF CAL CUTTA ADMITTED THE APPEAL FILED BY THE REVENUE AND FRAMED A QUEST ION OF LAW RELATING TO ISSUE IN HAND. 6. FURTHER, LD. AR SUBMITS AGAIN, ON 6-5-2014, WHEN THE MATTER WAS LISTED, THE HONBLE HIGH COURT DIRECTED THE APP ELLANT REVENUE TO RECONSTRUCT THE RECORDS AND FILE THE SAME IN THE DE PARTMENT WITHIN SIX WEEKS FROM THE DATE AS INFORMAL PAPER BOOK AFTER SE RVING THE COPY THEREOF UPON THE RESPONDENT, FAILING WHICH THE MATT ER SHALL STAND DISMISSED WITHOUT FURTHER REFERENCE TO THIS BENCH A ND ARGUED THAT THE APPELLANT REVENUE DID NOT SUBMIT ANY PAPER BOOK SO FAR THE ASSESSEE. 7. THE LD.AR FURTHER SUBMITS THAT THERE WAS NO CONT RARY ORDER FROM THE HONBLE HIGH COURT OF CALCUTTA SO FAR. TH EREFORE, THE ORDER PASSED BY THIS TRIBUNAL IS IN FORCE AND BINDING ON THE APPELLANT REVENUE. THE LD.AR ALSO SUBMITS THAT THE CIT-A PASS ED A WELL REASONED ORDER BY HOLDING THAT THE INCOME OF THE TR UST IN THE A.Y UNDER CONSIDERATION SHALL BE ASSESSED IN THE HANDS OF THE BENEFICIARIES AND IN SUPPORT OF WHICH PLACED RELIAN CE ON THE ORDER DT: 28-03-1980 OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y 1975-76 AND REFERRED TO PAGES 43-47 OF THE PAPER BOOK. THE LD. AR ALSO ITA NO. 1268/KOL/2015 M/S. THE TRUSTEES ESTATE OF LATE R.D.MEHTA 4 PLACED RELIANCE ON THE RECENT ORDER DT. 30-04-2008 IN ITA NO. 1915/KOL/2006 FOR A.Y 2004-05 IN ASSESSEES OWN CAS E 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 ASSE SSS OWN CASE AND THE ALSO POINTED OUT THAT THE APPELLANT REVENUE DID NOT BRING ON RECORD ANY ORDER CONTRARY TO THE ORDERS ABOVE AND P RAYED TO DISMISS THE GROUNDS RAISED BY THE REVENUE IN THIS REGARD. 8. HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. WE FIND THAT THE ISSUE INVOLVED IN THIS APPEAL WAS DECIDED BY TH IS TRIBUNAL IN A.Y 2004-05, WHEREIN, THE TRIBUNAL IN TURN PLACED RELIA NCE ON THE ORDER DT. 28-03-1980 FOR THE A.Y 1975-76 IN ASSESSEES OW N 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 WITH OUT TAXING IT IN THE HANDS OF TRUST AND TO ASSESSE THE SAME IN THE HANDS OF BENEFICIERIES. RELEVANT PORTION OF WHICH IS REPRODUCED HEREIN BELO W:- ORDER DT. 30-04-2008 ITA NO. 1915/KOL/2006 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 O F THE BENEFICIARIES AND IN VIEW OF THE ITAT DECISION AND SUBSEQUENT ORDERS OF THE APPELLAT E AUTHORITIES AND ASSESSMENT ORDERS, THERE WAS NO JUSTIFICATION FOR THE A.O TO T AX 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 T HE 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 INC OME TAX ACT. THUS THE AO HAD EXCEEDED HIS JURISDICTION U/S. 143(1) OF THE I.T A CT 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) C ANNOT ALSO BE CONSIDERED CORRECT BECAUSE IT ARISES OUT OF AN INVALID ORDER AND IS NO T 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. 9. THE LD.DR COULD NOT BRING ON RECORD ANY ORDER CO NTRARY TO THE FINDING GIVEN BY THIS TRIBUNAL IN ASSESSEES OWN CA SE 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 HONBLE HIGH COURT OF CALCUTTA RESPECTIVELY. RELEVANT PORTION OF WHICH ARE REPRODUCED HEREIN BEL OW:- ITA NO. 1268/KOL/2015 M/S. THE TRUSTEES ESTATE OF LATE R.D.MEHTA 5 ORDER DT. 6 TH MAY, 2014 OF HONBLE CALCUTTA HIGH COURT: THE COURT :- IT IS SUBMITTED BY THE LEARNED COUNSE L 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 PER MITTED 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 FURT HER REFERENCE TO THIS BENCH. ORDER DT. 09.08.2010 OF HONBLE CALCUTTA HIGH COURT : THE COURT HAVING HEARD MR.AGARWALA AND HAVING GON E THROUGH THE IMPUGNED JUDGMENT AND ORDER OF THE LEARNED TRIBUNAL THE APPE AL 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 I N 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 T HE RESPONDENT. ALL PARTIES SHALL ACT ON A XEROX SIGNED COPY OF THI S ORDER ON USUAL UNDERTAKINGS. 10. FROM THE ABOVE TWO ORDERS OF HONBLE HIGH COURT OF CALCUTTA, WE FIND THAT HONBLE 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 PREVIOU S YEAR ON THE POINT INVOLVED HEREIN IS APPLICABLE IN THIS CASE OR NOT? 11. THE SAID APPEAL AGAIN CAME UP FOR HEARING BEFOR E THE HONBLE HIGH COURT OF CALCUTTA ON 6-5-2014 AND IT WAS NOTIC ED BY THE HONBLE HIGH COURT OF CALCUTTA THAT THE PAPERS RELATING TO APPEAL IN QUESTION WERE NOT TRACEABLE IN THE REGISTRY. ACCORDINGLY, DI RECTED THE APPELLANT REVENUE TO RECONSTRUCT THE RECORDS AND FILE THE SAM E IN REGISTRY WITHIN SIX WEEKS FROM THE DATE. BUT, HOWEVER, NEITH ER THE LD. DR NOR THE LD.AR BRINGS ON RECORD REGARDING THE STATUS OF THE APPEAL BEFORE THE HONBLE HIGH COURT OF CALCUTTA TO SHOW THAT WHE THER 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 ASS ESSEES OWN CASE IN ITA NO.1915/KOL/2006 FOR A.Y 2004-05 HOLD TO ACCEPT THE RETURNED INCOME AS FILED FOR THE A.Y UNDER CONSIDERATION WIT HOUT ASSESSING THE ITA NO. 1268/KOL/2015 M/S. THE TRUSTEES ESTATE OF LATE R.D.MEHTA 6 INCOME IN THE HANDS OF ASSESSEE. THEREFORE, THE GR OUND(S) RAISED BY THE REVENUE ARE DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 06-12-2017 SD/- SD/- P.M. JAGTAP S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 06-12-2017 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPLICANT/DEPARTMENT : THE DCIT, CIR-36, KOLKATA AAYKAR BHAVAN POORVA, 110 SHANTI PALLI, E M BYE PAS S, 4 TH FLOOR, KOLKATA-107. 2 RESPONDENT/ASSESSEE: M/S. THE TRUSTEES, ESTATE OF L ATE R.D MEHTA, 91, METCALFE STREET, KOLKATA-13. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER SR.P.S, HEAD OF OFFICE ITAT KOLKATA