Appeal details
Counselvise Citation
[2016] 121 COUNSELVISE.COM (IT) 3920 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-12-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
C
Next Hearing Date
31-10-2016
Assessment Year
2013-2014
Appeal Filed On
20-07-2016
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , .. ' #$, & '( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NOS.2177 & 2185/MDS/2016 * +* / ASSESSMENT YEARS : 2014-15 & 2013-14 M/S ANISH KUMAR EDUCATION TRUST, NO.160, LINGHI CHETTY STREET, CHENNAI - 600 001. PAN : AAATA 6595 N V. (1) THE ASSISTANT COMMISSIONER OF INCOME TAX, CPC, P.O. BOX NO.2, ELECTRONIC CITY P.O., BENGALURU 560 100. (2) THE INCOME TAX OFFICER, NON-CORPORATE WARD 11(1), CHENNAI. (-./ APPELLANT) (/0-./ RESPONDENT) ./ ITA NOS.2178 & 2190/MDS/2016 * +* / ASSESSMENT YEARS : 2014-15 & 2013-14 M/S ANISHKUMAR FEMALE CHILD TRUST, NO.160, LINGHI CHETTY STREET, CHENNAI - 600 001. PAN : AAATA 0989 J V. (1) THE ASSISTANT COMMISSIONER OF INCOME TAX, CPC, P.O. BOX NO.2, ELECTRONIC CITY P.O., BENGALURU 560 100. (2) THE INCOME TAX OFFICER, NON-CORPORATE WARD 11(1), CHENNAI. (-./ APPELLANT) (/0-./ RESPONDENT) ./ ITA NOS.2179 & 2187/MDS/2016 * +* / ASSESSMENT YEARS : 2014-15 & 2013-14 M/S ARCHANA FEMALE CHILD TRUST, NO.160, LINGHI CHETTY STREET, CHENNAI - 600 001. V. (1) THE ASSISTANT COMMISSIONER OF INCOME TAX, CPC, P.O. BOX NO.2, ELECTRONIC CITY P.O., BENGALURU 560 100. 2 I.T.A. NOS.2177 TO 2190/MDS/16 PAN : AAATA 6601 P (2) THE INCOME TAX OFFICER, NON-CORPORATE WARD 11(1), CHENNAI. (-./ APPELLANT) (/0-./ RESPONDENT) ./ ITA NOS.2180 & 2184/MDS/2016 * +* / ASSESSMENT YEARS : 2014-15 & 2013-14 M/S ARCHANA MALE CHILE TRUST, NO.160, LINGHI CHETTY STREET, CHENNAI - 600 001. PAN : AAATA 6600 N V. (1) THE ASSISTANT COMMISSIONER OF INCOME TAX, CPC, P.O. BOX NO.2, ELECTRONIC CITY P.O., BENGALURU 560 100. (2) THE INCOME TAX OFFICER, NON-CORPORATE WARD 11(1), CHENNAI. (-./ APPELLANT) (/0-./ RESPONDENT) ./ ITA NOS.2181 & 2186/MDS/2016 * +* / ASSESSMENT YEARS : 2014-15 & 2013-14 M/S ANISHKUMAR WIFE TRUST, NO.160, LINGHI CHETTY STREET, CHENNAI - 600 001. PAN : AAATA 6596 R V. (1) THE ASSISTANT COMMISSIONER OF INCOME TAX, CPC, P.O. BOX NO.2, ELECTRONIC CITY P.O., BENGALURU 560 100. (2) THE INCOME TAX OFFICER, NON-CORPORATE WARD 11(1), CHENNAI. (-./ APPELLANT) (/0-./ RESPONDENT) ./ ITA NOS.2182 & 2188/MDS/2016 * +* / ASSESSMENT YEARS : 2014-15 & 2013-14 M/S ANISHKUMAR MARRIAGE TRUST, NO.160, LINGHI CHETTY STREET, CHENNAI - 600 001. V. (1) THE ASSISTANT COMMISSIONER OF INCOME TAX, CPC, P.O. BOX NO.2, ELECTRONIC CITY P.O., BENGALURU 560 100. 3 I.T.A. NOS.2177 TO 2190/MDS/16 PAN : AAATA 0990 R (2) THE INCOME TAX OFFICER, NON-CORPORATE WARD 11(1), CHENNAI. (-./ APPELLANT) (/0-./ RESPONDENT) ./ ITA NOS.2183 & 2189/MDS/2016 * +* / ASSESSMENT YEARS : 2014-15 & 2013-14 M/S ANISHKUMAR MALE CHILD TRUST, NO.160, LINGHI CHETTY STREET, CHENNAI - 600 001. PAN : AAATA 6597 Q V. (1) THE ASSISTANT COMMISSIONER OF INCOME TAX, CPC, P.O. BOX NO.2, ELECTRONIC CITY P.O., BENGALURU 560 100. (2) THE INCOME TAX OFFICER, NON-CORPORATE WARD 11(1), CHENNAI. (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANTS BY : SHRI J. PRABHAKAR, FCA /0-. 1 2 / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT ' 1 3& / DATE OF HEARING : 01.11.2016 45+ 1 3& / DATE OF PRONOUNCEMENT : 27.12.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: ALL THE APPEALS OF THE ASSESSEES ARE DIRECTED AG AINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-13, CHENNAI. SINCE COMMON ISSUE ARISES FOR CONSIDERATI ON IN ALL THESE 4 I.T.A. NOS.2177 TO 2190/MDS/16 APPEALS, WE HEARD THESE APPEALS TOGETHER AND DISPOS ING OF THE SAME BY THIS COMMON ORDER. 2. SHRI J. PRABHAKAR, THE LD. REPRESENTATIVE FOR TH E ASSESSEES, SUBMITTED THAT THE ASSESSEES FILED RETURNS OF INCOM E FOR ALL THE ASSESSMENT YEARS ELECTRONICALLY AND THE SAME WERE P ROCESSED UNDER SECTION 143(1) OF THE INCOME-TAX ACT, 1961 (I N SHORT 'THE ACT'). IN THE COURSE OF PROCESSING THE RETURNS, THE ASSESS ING OFFICER CHANGED THE STATUS OF THE ASSESSEES AS AOP AND LEVI ED TAX UNDER SECTION 164(1) OF THE ACT AT MAXIMUM MARGINAL RATE. ACCORDING TO THE LD. REPRESENTATIVE, SECTION 143(1) OF THE ACT I S ONLY TO MAKE PRIMA FACIE ADJUSTMENT AND NOT TO MAKE ANY ADJUSTMENT WITH REG ARD TO DEBATABLE ISSUE. ACCORDING TO THE LD. REPRESENT ATIVE, THE STATUS OF THE ASSESSEES AND LEVY OF TAX AT MAXIMUM MARGINA L RATE UNDER SECTION 164(1) OF THE ACT ARE DEBATABLE ISSUE, THER EFORE, IT CANNOT BE A SUBJECT MATTER OF PROCEEDING UNDER SECTION 143 (1) OF THE ACT. IN OTHER WORDS, ACCORDING TO THE LD. REPRESENTATIVE , IF THE ASSESSING OFFICER INTENDS TO CHANGE THE STATUS OF THE ASSESSE ES AND LEVY TAX AT MAXIMUM MARGINAL RATE UNDER SECTION 164(1) OF TH E ACT, HE HAS TO TAKE NECESSARY STEP TO SCRUTINIZE THE MATTER AFT ER GIVING OPPORTUNITY TO THE ASSESSEE BY ISSUING A NOTICE. I N THE GUISE OF 5 I.T.A. NOS.2177 TO 2190/MDS/16 MAKING PRIMA FACIE ADJUSTMENT, THE STATUS OF THE ASSESSEE AND RATE OF TAX CANNOT BE CHANGED AT ALL. 3. PLACING RELIANCE ON THE JUDGMENT OF BOMBAY HIGH COURT IN W.P.NO.2424 OF 2016 IN SHAPOORJI PALLONJI AND CO. P VT. LTD. V. DCIT, A COPY OF WHICH IS FILED BY THE ASSESSEES, TH E LD. REPRESENTATIVE FOR THE ASSESSEES SUBMITTED THAT IN THE CASE BEFORE BOMBAY HIGH COURT, WHEN THE RETURN WAS PROCESSED UN DER SECTION 143(1) OF THE ACT, THE ASSESSEE REQUESTED THE ASSES SING OFFICER FOR REFUND. THE ASSESSING OFFICER INFORMED THE ASSESSE E THAT INSPITE OF HIS EFFORTS TO PROCESS THE RETURN OF INCOME, THE IT D APPLICATION WAS NOT ALLOWING TO PROCESS THE RETURN FOR TECHNICAL RE ASONS. IN THOSE CIRCUMSTANCES, THE BOMBAY HIGH COURT DIRECTED THE C HIEF COMMISSIONER OF INCOME TAX TO MAKE AN ATTEMPT TO RE SOLVE THE ISSUE ON WAR-FOOTING TO ENSURE THAT THE COMPUTER SY STEM RUNS IN ACCORDANCE WITH ENACTMENT. IN THIS CASE ALSO, ACCO RDING TO THE LD. REPRESENTATIVE, WHEN THE ASSESSEES HAVE FILED THEIR RETURNS IN THE STATUS OF INDIVIDUAL, THE SAME CANNOT BE CHANGED TO AOP WHILE PROCESSING THE RETURN UNDER SECTION 143(1) OF THE A CT. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEAL S) IS NOT JUSTIFIED IN DISMISSING THE APPEAL OF THE ASSESSEE. 6 I.T.A. NOS.2177 TO 2190/MDS/16 4. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE-TRUSTS ARE BENEFICIARIES OF SUGUNA CHILDREN FAMILY TRUST. THE SOURCE OF INCOME FOR THE TRUST WAS THROUGH THE PARENT TRUST, THE INCOME FROM HOUSE PROPERTY AND INTEREST INCOME FROM FIXED DEPOS IT WITH SUGUNA INDUSTRIES. THE CIT(APPEALS) BY PLACING RELIANCE O N THE JUDGMENT OF APEX COURT IN CWT V. TRUSTEES OF H.E.H. NIZAMS FAM ILY (REMAINDER WEALTH) TRUST (108 ITR 555), FOUND THAT THE REVENUE HAD THE OPTION TO ASSESS THE BENEFICIAL INTEREST EI THER IN THE HANDS OF THE TRUSTEE IN A REPRESENTATIVE CAPACITY OR ASSESSE E DIRECTLY IN THE HANDS OF THE BENEFICIARY. IN BOTH THE CASES, WHAT WAS TAXED WAS THE INTEREST OF THE BENEFICIARY FOR THE TRUST PROPE RTIES AND NOT THE CORPUS OF THE TRUST PROPERTIES. THEREFORE, ACCORDI NG TO THE LD. D.R., THE CIT(APPEALS) FOUND THAT THERE IS UNCERTAINTY IN THE TRUST AND VESTING OF INCOME IN THE HANDS OF THE FUTURE BENEFI CIARIES, HENCE, THE SHARES OF ALLOCATION ARE TREATED AS INDEFINITE AND UNCERTAIN, THEREFORE, THE INCOME OF THE TRUSTS IS LIABLE FOR T AXATION AT MAXIMUM MARGINAL RATE UNDER SECTION 164(1) OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEES 7 I.T.A. NOS.2177 TO 2190/MDS/16 ADMITTEDLY FILED THEIR RETURNS OF INCOME ELECTRONIC ALLY AND THE SAME WERE PROCESSED UNDER SECTION 143(1) OF THE ACT. TH E QUESTION ARISES FOR CONSIDERATION IS WHEN THE ASSESSING OFFI CER PROCESSED THE RETURNS UNDER SECTION 143(1) OF THE ACT, WHETHE R HE CAN CHANGE THE STATUS OF THE ASSESSEES AND LEVY TAX AT MAXIMUM MARGINAL RATE? WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SE CTION 143(1) OF THE ACT. SECTION 143(1) OF THE ACT ENABLES THE ASS ESSING OFFICER TO MAKE PRIMA FACIE ADJUSTMENT ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. CHANGING OF STATUS IS SOMETHING OUTSIDE THE PURVIEW OF THE PRIMA FACIE ADJUSTMENT UNDER SECTION 143(1) OF THE ACT. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT CHANGING OF STATUS OF THE ASSESSEES CANNOT BE MADE WHILE PROCES SING RETURN UNDER SECTION 143(1) OF THE ACT. THEREFORE, THIS T RIBUNAL IS UNABLE TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. ACC ORDINGLY, THE SAME ARE SET ASIDE. HOWEVER, IT IS MADE CLEAR THAT IT I S OPEN TO THE ASSESSING OFFICER TO TAKE UP THE MATTER FOR SCRUTIN Y AS PROVIDED UNDER THE PROVISIONS OF THE INCOME-TAX ACT. 6. WITH THE ABOVE OBSERVATION, THE APPEALS OF THE A SSESSEES STAND ALLOWED. ORDER PRONOUNCED ON 27 TH DECEMBER, 2016 AT CHENNAI. 8 I.T.A. NOS.2177 TO 2190/MDS/16 SD/- SD/- ( . . ' #$ ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) & / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 27 TH DECEMBER, 2016. KRI. 1 /3#8 98+3 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. ' :3 () /CIT(A)-13, CHENNAI 4. PRINCIPAL CIT-8, CHENNAI-34 5. 8; /3 /DR 6. * < /GF.
Mehul