Debottor Trust Estate of Rammohan Mullick, Kolkata V. ITO, Ward - 42(4), Kolkata, Kolkata

ITA 178/KOL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9253 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 31-01-2011
• Court: TRIBUNAL
• Department Lawyers: P P SARKAR
• Assessee Lawyers: B CHAKRABORTY
• Keywords: Opportunity of being heard; Set aside
• Section: 143(3); 12AA

Judgement Text

, SMC(C) , , IN THE INCOME TAX APPELLATE TRIBUNAL SMC(C) BENCH : KOLKATA () BEFORE , ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM] / I.T.A NO. 178/KOL/2011 !' !' !' !'/ // / ASSESSMENT YEAR: 2006-07 DEBOTTAR TRUST ESTATE OF RAMMOHAN VS INCOME-TAX OF FICER, WD-42(4), KOLKATA MULLICK (PAN-AAATD 5679 A) ( $% /APPELLANT ) (&'$%/ RESPONDENT ) FOR THE APPELLANT: SHRI B. CHAKRABORTY FOR THE RESPONDENT: SHRI P. P. SARKAR () / ORDER THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A)-XXXII, KOLKATA IN APPEAL NO.248/CIT(A)-XXXII/08-09/42(4)/R&T/KOL VIDE DATED 23.09.2010. THE ASSESSMENT WAS FRAMED BY ITO, WARD-42(4), KOLKATA U /S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASS ESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 04.03.2008. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING ACTION OF ASSESSING OFFICER IN TREATING THE TRUST AS AN AOP DESPITE THE ASSESSEE BEING A TRUST AS A REPRESENTATIVE ASSESSEE UNDER PROVISIONS OF SECTION 160(1)(IV) OF THE ACT. FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING SEVEN GROUNDS: 1.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XXXII, KOLKATA, ( HEREINAFT ER REFERRED TO AS THE LD. CIT(A)) ERRED IN LAW WHILE IGNORING THE MATERIALS FACTS THAT SHRI HEMENDRA MULLICK WHO HAD FILED THE RELEVANT RETURN OF INCOME AS A TRUSTEE OF THE DEBOTTOR TRUST ESTATE OF RAMMOHAN MULLICK WAS A REPRESENTATIVE ASSESSEE IN TERMS OF THE PROVISIONS OF SECTION 160(L)(IV) OF THE I.T. ACT, 1961 AND AS SUCH HE WAS LIABLE TO ASSESSMENT IN HIS OWN NAME IN RESP ECT OF THE INCOME OF THE ABOVENAMED DEBOTTOR TRUST ESTATE AND WAS ALSO LIABL E TO PAY TAX IN RESPECT THEREOF IN HIS REPRESENTATIVE CAPACITY IN LIKE MANN ER AND TO THE SAME EXTENT AS PROVIDED IN SECTION 161(1) OF THE SAID ACT IN THE I NSTANT CASE AND FOR THAT THE IMPUGNED APPELLATE ORDER DATED 23.09.2010 PASSED BY THE LD. CIT(A) IS EPLETE1Y ARBITRARY, ERRONEOUS AND WHOLLY BAD IN LAW IN THE I NSTANT CASE. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) WAS WHOLLY UNJUSTIFIED TO CONFIRM THE ASSESSMENT MADE O N THE DEBOTTOR TRUST ESTATE 2 OF RAMMOHAN MULLICK IN THE STATUS OF AN A.O.P. A S WRONGLY MADE BY THE LD. ASSESSING OFFICER IN THE INSTANT CASE AND FOR THAT THE IMPUGNED APPELLATE ORDER IS WHOLLY ARBITRARY, ERRONEOUS AND THOROUGHLY ILLEGAL IN THE INSTANT CASE. 3. THAT THE LD. CIT(A) ERRED IN LAW A8 WELL AS IN FACTS BY IGNORING THE MATERIAL FACTS THAT LD. ASSESSING OFFICER WHILE MAKING THE R ELEVANT INCOME-TAX ASSESSMENT ON DEBOTTOR TRUST ESTATE OF RAMMOHAN MULLICK AS P ER ASSESSMENT ORDER DATED 04.03,2008 PASSED UNDER SECTION 143(3) OF THE I.T.ACT,1961 HAD WRONGLY ISSUED AND SERVED THE RELEVANT NOTICE OF DEMAND DAT ED 04.03,2008 UPON THE TRUSTEE, M/S. DEBOTTOR TRUST ESTATE OF RAMMOHAN MUL LICK IN. THE STATUS OF AOP IN THE INSTANT CASE AND FOR THAT THE SAID NO TICE OF DEMAND IS ERRONEOUS ARBITRARY AND THOROUGHLY ILLEGAL IN TERMS OF THE PR OVISIONS OF SECTION 156 OF THE OF THE I.T. ACT,1961 READ WITH RULE 15 OF THE I.T. RULE, 1962 IN THE INSTANT CASE. 4. THAT ON THE FACES AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) WAS WHOLLY UNJUSTIFIED TO COMPLETELY IGNORE THE MATERIA L FACTS THAT THE LD. I.T.O., WHILE PASSING THE RELEVANT ASSESSMENT ORDER DATED 0 4.03.2008, WAS SUFFERING FROM GROSS MISCONCEPTION ABOUT THE FACTS AND CIRCUM STANCES OF THE CASE AND WAS UNDER A WRONG IMPRESSION TO THE EFFECT THAT THE AS SESSEE WAS CLAIMING EXEMPTION U/S.12A UNDER I.T.ACT,61 AND HENCE WAS FI LING NIL RETURN OF INCOME IN THE INSTANT CASE AND FOR THAT THE SAID ASSESSMEN T ORDER WAS TOTALLY MISCONCEIVED, ARBITRARY, ERRONEOUS AND WHOLLY BAD I N LAW IN THE INSTANT CASE. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) WAS WHOLLY UNJUSTIFIED TO IGNORE THE MATERIAL FACTS THA T THE ALLEGATIONS OF THE LD ASSESSING OFFICER IN THE RELEVANT ASSESSMENT ORDER TO THE EFFECT THAT THE ASSESSEE WAS CLAIMING EXPENSES WHICH ARE PERSONAL IN NATURE AND ALSO CLAIMING DEDUCTION WHICH WERE NOT ACCORDING TO SECTION 57 OF THE I.T. ACT, IN THE CASE OF INCOME FROM OTHER SOURCES WERE COMPLETELY ARBITRARY AND WERE N OT BASED ON ANY MATERIAL AND/OR EVIDENCES AVAILABLE ON RECORD AND FOR THAT T HE IMPUGNED APPELLATE ORDER IS ALSO ERRONEOUS AND BAD IN LAW IN THE INSTANT CAS E. 6 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE ID. CIT(A) ERRED IN LAW WHILE IGNORING THE MATERIAL FACTS THAT THE ASSE SSMENT OF INCOME FROM HOUSE PROPERTY AMOUNTING TO RS,42,420/- IN THE HANDS OF T HE ASSESSEE IN THE STATUS OF AN A.O.P. AS MADE BY THE LD. I.T.O. IN THE INSTANT C ASE, WAS WHOLLY ARBITRARY, ERRONEOUS AND THOROUGHLY ILLEGAL IN TERMS OF THE PR OVISIONS OF SECTION 26 OF THE I.T. ACT, L961 IN THE INSTANT CASE. 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) ERRED ON FACTS AS WELL AS IN LAW WHILE DRAWING HIS CONCLUSIO N TO THE EFFECT THAT THE SAID DEBOTTOR TRUST ESTATE OF RAMMOHAN MULLICK IS A P RIVATE DISCRETIONARY TRUST AND THAT THE MAIN DISPUTE IN THIS APPEAL IS WHETHE R THE INCOME OF THE TRUST SHALL BE ASSESSED IN THE HANDS OF THE TRUST OR IN THE HAN DS ITS BENEFICIARIES AS MENTIONED IN THE IMPUGNED APPELLATE ORDER AND FOR T HAT THE SAID ORDER IS ERRONEOUS, TOTALLY MISCONCEIVED AND WHOLLY BAD IN L AW IN THE INSTANT CASE. 3. AT THE OUTSET, IT IS NOTICED FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS ASSESSED THE INCOME FROM HOUSE PROPERTY AND INC OME FROM OTHER SOURCES AS INCOME OF THE TRUST AS AN AOP AND TAXED ACCORDINGLY. THE A O NOTED THAT THE ASSESSEE TRUST IS 3 NOT A REGISTERED TRUST UNDER SECTION 12AA OF THE AC T. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND CONTENDED THAT THE ASSESSE E TRUST IS REPRESENTATIVE ASSESSEE IN TERMS OF PROVISIONS OF SECTION 160(1)(IV) OF THE AC T. THE CIT(A) AFTER REPRODUCING VARIOUS GROUNDS RAISED BEFORE HIM AND AFTER REPRODU CING THE SUBMISSIONS OF THE ASSESSEE IN HIS APPELLATE ORDER FROM PAGES 4 TO 21 AND AFTER REPRODUCING PROVISIONS OF SECTION 160(IV) OBSERVED AS UNDER: I HAVE CONSIDERED THE APPELLANTS SUBMISSION, AOS OBSERVA TIONS AND OTHER MATERIALS ON RECORD INCLUDING WILL OF SRI RAM MOHUN MULLICK. THE APPELLANT IS PRIVATE DISCRETIONARY TRUST AND FILED ITS RETURN OF INCOME SHOWING NIL INCOME. THE RESPECTIVE RETURNS OF BENEFICIARIES I.E IDOLS/ DEITIES HAVE ALSO BEEN FILED BY THE TRUSTEE AS REPRESENTATIVE. ASSESSEE SEPARATELY FOR THE ASSESSMENT YEAR 2006- 2007 AND INCOME IN THESE RETURNS CONSISTS ONLY ONE NINTH SHARE OF INCOME FROM THE SAID TRUST. THE MAIN DISPUTE IN THIS APPEAL IS WHETHER THE INCOME OF THE TRUST SHALL BE ASSESSED IN THE HANDS OF THE TRUST OR IN T HE HANDS ITS BENEFICIARIES. IT HAS BEEN OBSERVED FROM THE TRUST DEED THAT THE SHARES OF BENEFICIARIES ARE NOT KNOWN OR INDETERMINATE. IT HAS ALSO BEEN OBSERVED T HAT NONE OF THE BENEFICIARIES HAS ANY OTHER INCOME CHARGEABLE UNDER THIS ACT EXCE EDING THE MAXIMUM AMOUNT NOT CHARGEABLE TO TAX IN THE CASE OF AN ASSOCIATION OF PERSONS OR IS A BENEFICIARY UNDER ANY OTHER TRUST. THEREFORE, IN MY OPINION THE INCOME OF THE TRUST S HALL BE ASSESSED AS PER PROVISIONS OF SECTION 164 OF THE INCOME TAX ACT, 19 61. THE SAID SECTION PROVIDES AS UNDER: (THE PROVISION OF SECTION 164 OF THE ACT NEED NOT B E REPRODUCED) THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF THE PROVISO (I) & (II) TO SECTION 164 OF THE INCOME TAX ACT, 1961 THE ACTION OF THE A.O TO COMPUTE THE INCOME OF THE TRUST AS ON AOP IS JUSTIFIED. IT HAS ALSO BEEN NOTED THAT THE ARGUMENTS AND CASE LAWS CITED BY THE APPELLANT CENTRE AROUND SECTION 160, 161 & 26 OF THE I T ACT, 1961 WHEREAS APPLICABLE SECTION TO THE APPELLANTS CASE SHALL BE SECTION 164 OF THE INCOME TAX ACT, 1961. IT HAS ALSO BEEN NOTED THAT MOST OF THE CASE LAWS CITED BY THE APPELLANT ARE NOT RELEVANT BECAUSE THEY ARE RELATED TO ASSESSMENT YEARS PRIOR TO INSERTION OF SECTION 164 OF THE INCOME TAX ACT, 1961 IN THE STATUTE. THEREFORE, THE CASE LAWS RELIED UPON BY THE APPELLANT IN SUPPORT OF HIS CONTENTION, ARE DIS TINGUISHABLE AND IT IS NOT NECESSARY TO DISCUSS THEM IN DETAIL. IN RAISAHEB SETH GHISALAL MODI FAMILY TRUST VS. CI I, BHOPAL (1984) 149 ITR 0724 IT WAS HELD THAT ON A BARE READING OF THE TRUS T DEED IT IS CLEAR THAT SHARE OF THE BENEFICIARIES IN THE INCOME OF THE TRUST ARE NO T, DETERMINATE AND THE TRUSTEES WERE AUTHORISED TO SPEND ONLY SO MUCH INCOME OF THE TRUST AS WAS NECESSARY FOR MEETING THE ESSENTIAL REQUIREMENTS OF THE BENEFICIA RIES, WHICH FROM THE NATURE OF THINGS WERE BOUND TO THE UNEQUAL AND FOR THEIR OVER ALL ADVANCEMENT. THE TRUSTEES WERE NOT REQUIRED TO SPEND EQUALLY ON THE BENEFICIARIES BUT ACCORDING TO THEIR NEEDS. IN THE CIRCUMSTANCES, THE TRIBUNAL DID NOT COMMIT ANY ERROR IN HOLDING THAT THE SHARES OF THE BENEFICIARIES IN THE TRUST WERE NOT SPECIFIED AND 4 WERE IND ETERMINATE AND IN HOLDING THAT THE PROVISIONS OF S. 164(1) OF THE ACT WERE ATTRACTED. THEREFORE, ON THE BASIS OF ABOVE DISCUSSION ALL GR OUNDS OF APPEAL OF THE APPELLANT ARE DISMISSED AND ORDER OF THE AO IS CONF IRMED. IN THE RESULT THE APPEAL IS DISMISSED. 4. WHEN THIS WAS POINTED OUT TO THE LD. COUNSEL FOR THE ASSESSEE THAT NEITHER ASSESSING OFFICER NOR CIT(A) HAS CONSIDERED THE ISS UE IN TERMS OF THE PROVISIONS OF SECTION 160(1)(IV) AND MOREOVER, THE ASSESSING OFFI CER HAS NOT EXAMINED THE ISSUE AT ALL, WHETHER THE ASSESSEE TRUST IS TO ASSESSED IN THE CA PACITY OF REPRESENTATIVE ASSESSEE IN TERMS OF PROVISIONS OF SECTION 160(1)(IV) OF THE AC T OR NOT. AT THIS STAGE, I CANNOT EXAMINE THE DOCUMENTS AND INVESTIGATE THE ISSUE. O N THIS, THE LD. COUNSEL FOR THE ASSESSEE AGREED THAT THE ISSUE BE SET ASIDE TO ASSE SSING OFFICER FOR DECIDING AFRESH AFTER CONSIDERING ALL THE DOCUMENTS AND ARGUMENTS OF THE ASSESSEE. THE LD. DR ALSO FAIRLY CONCEDED THE POSITION. I, IN THE INTEREST OF NATURA L JUSTICE DIRECT THE ASSESSING OFFICER TO PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD AND A LSO PROVIDE OPPORTUNITY TO PRODUCE DOCUMENTS. ACCORDINGLY, DECIDE THE ISSUE. THE ASSE SSING OFFICER WILL INDEPENDENTLY EXAMINE THE CASE OF THE ASSESSEE WHETHER IT FALLS U NDER THE PROVISIONS OF SECTION 160(1)(IV) OF THE ACT, BEING A TRUST TO BE ASSESSED IN THE CAPACITY OF REPRESENTATIVE ASSESSEE, OR NOT, AFTER GOING THROUGH THE DOCUMENT S PRODUCED BEFORE HIM AND ARGUMENTS MADE. HENCE, THIS APPEAL OF THE ASSESSEE IS SET ASI DE TO THE FILE OF THE ASSESSING OFFICER. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. 6. ORDER PRONOUNCED IN OPEN COURT ON 16 TH DAY OF MARCH, 2011. SD/- , (MAHAVIR SINGH) JUDIC IAL MEMBER ( *+ *+ *+ *+) )) ) DATED 16 TH DAY OF MARCH, 2011 ,- ./ 0 JD.(SR.P.S.) 5 () 1 &2 3(2!4- COPY OF THE ORDER FORWARDED TO: 1 . $% / APPELLANT DEBOTTAR TRUST ESTATE OF RAMMOHAN MULLI CK, 39, JATINDRA MOHAN AVENUE, KOLKATA-700 005 2 &'$% / RESPONDENT, ITO, WARD-42(4), KOLKATA. 3 . ) / THE CIT(A), KOLKATA 4. ) ( )/ CIT, KOLKATA 5 . ;< & / DR, KOLKATA BENCHES, KOLKATA '2 &/ TRUE COPY, ()=/ BY ORDER, / /ASSTT. REGISTRAR .