Appeal details
Counselvise Citation
[2015] 124 COUNSELVISE.COM (IT) 2686 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 19 day(s)
Appellant
Respondent
Appeal Type
Miscellaneous Application
Pronouncement Date
16-01-2015
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Assessment Year
2004-2005
Appeal Filed On
28-05-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER M.A.NOS. 95, 96, 97, 98 & 99/HYD/2014 ARISING OUT OF ITA.NOS. 576, 577, 578, 579 & 580/HYD/2013 (AYS.2000-01, 2001-02, 2002-03, 2003-04 & 2004-05) THE INCOME TAX OFFICER, WARD-9(4), HYDERABAD VS. HEH THE NIZAM'S JEWELLERY TRUST, HYDERABAD [PAN: AAATH 0477 J] FOR REVENUE : SHRI BANDI RAMAKRISHNA, DR FOR ASSESSEE : NONE DATE OF HEARING : 21-11-2014 DATE OF PRONOUNCEMENT : 16-01-2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THESE MISCELLANEOUS APPLICATIONS ARE FILED AGAINST THE COMMON ORDER OF ITAT IN THE BATCH OF INCOME TAX APP EALS CANCELLING THE PENALTY LEVIED U/S.271(1)(C) OF THE INCOME TAX ACT (ACT). BRIEFLY STATED, ASSESSEE HEREIN IS HOLD ING CORPUS FUNDS FOR AND ON BEHALF OF BENEFICIARIES. INITIALL Y, THE ASSESSMENTS HAVE BEEN COMPLETED ASSESSING CERTAIN I NTEREST RECEIVED IN THE TRUST'S HANDS. HOWEVER, CIT(A) DIR ECTED THE ASSESSING OFFICER TO COMPLETE ASSESSMENTS U/S.161 O F THE ACT TO ASSESSEE INCOMES IN THE HANDS OF RESPECTIVE BENE FICIARIES. 2 MA.NOS.95 TO 99/HYD/2014 IN ITA NOS.576 TO 580/HYD/2013 HEH THE NIZAM'S JEWELLERY TRUST . HOWEVER, THE ASSESSING OFFICER FOLLOWED THE EARLIER ORDER AND AGAIN MADE THE ASSESSMENT IN THE HANDS OF THE TRUST . THE LD.CIT(A) IN THE QUANTUM APPEALS HAD SET ASIDE THE ASSESSMENTS AND DIRECTED THE ASSESSING OFFICER TO A PPLY THE PROVISIONS OF SECTION 161. THE CIT(A) FURTHER NOTE D THAT WHILE GIVING EFFECT TO THE ORDER OF THE CIT(A) (HIS PREDE CESSOR GIVEN IN THE FIRST ROUND OF APPEAL), THE ASSESSING OFFICER I S BOUND TO FOLLOW THE DIRECTIONS AND NOT TO MAKE ANY NEW ENQU IRIES AND TO ADOPT NEW FIGURES. BY RECORDING THE ABOVE FIND INGS, CIT(A) SET ASIDE THE ASSESSMENTS AND DIRECTED THE ASSESSIN G OFFICER TO STRICTLY FOLLOW THE DIRECTIONS AS GIVEN BY THE LD.C IT(A) AND TO GIVE EFFECT TO ITS ORDER AS PER THE PROVISIONS OF L AW. HOWEVER, THE LD.CIT(A) CONFIRMED THE PENALTIES ON THE REASON THAT THE TRUST HAS NOT FILED RETURNS AND THEREFORE, ASSESSIN G OFFICER HAS CORRECTLY INITIATED PROCEEDINGS U/S.147 AND THEREFO RE, THE TRUST IS LIABLE FOR PENALTY. WHEN THE ASSESSMENTS A RE SET ASIDE QUESTION OF LEVY OF PENALTY DOES NOT ARISE. THESE PENALTIES WERE CANCELLED BY THE ITAT ON THE REASON THAT THE AMOUNT S CANNOT BE ASSESSED IN THE HANDS OF THE TRUST BUT ARE TO BE ASSESSED IN THE HANDS OF THE BENEFICIARIES OR IN THE HANDS OF T HE TRUST AS A REPRESENTATIVE OF BENEFICIARY- ASSESSEES. FURTHER, THE ITAT ALSO OBSERVED AS UNDER: 'WE ARE SURPRISED TO NOTE THAT AFTER DIRECTING THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT OF THE TRUST APP LYING THE PROVISIONS OF SECTION 161, THE CIT(A) CONFIRMED THE PENALTY ON THE REASON THAT THE TRUST HAS NOT FILED RETURNS AND THEREFORE, ASSESSIN G OFFICER INITIATED PROCEEDINGS UNDER SECTION 148 AND ACCORDINGLY, THE TRUST IS LIABLE FOR PENALTY. AS CAN BE SEEN FROM THE ABOVE FACTS STATE D, THE TRUST IS A REPRESENTATIVE ASSESSEE AND TO THAT EXTENT OF INCOM E TAX LEVIABLE ON THE INCOMES OF THE BENEFICIARIES, ASSESSMENT CAN BE MADE EITHER IN THE 3 MA.NOS.95 TO 99/HYD/2014 IN ITA NOS.576 TO 580/HYD/2013 HEH THE NIZAM'S JEWELLERY TRUST . HANDS OF THE RESPECTIVE BENEFICIARIES OR IN THE HAN DS OF THE ASSESSEE TO THAT EXTENT ONLY, INDICATING THE TAX LIABILITY O F RESPECTIVE BENEFICIARIES BY CONSOLIDATED ORDER. AS SEEN FROM THE ORDER OF THE ASSESSING OFFICER HE HAS NOT FOLLOWED EITHER OF THE PROCEDURES BUT STILL CONTENDING TO HOLD THAT THE ENTIRE INCOME RECEIVED ON THE FIXED DEPOSIT IS TAXABLE IN THE HANDS OF THE ASSESSEE-TRUST, VIOL ATING THE DIRECTIONS OF THE LEARNED CIT(A) AND ALSO VIOLATING THE PROVISION S OF THE ACT. THE ORDERS OF AO LEVYING PENALTY IS NOT ONLY BAD IN LAW BUT ALSO ON FACTS. IN VIEW OF THIS, WE ARE OF THE OPINION THAT PENALTY LEVIED ON THE SO- CALLED ESCAPEMENT OF INCOME IS NOT CORRECT AND THER EFORE, THE SAME STANDS DELETED. ACCORDINGLY, THE APPEALS OF THE AS SESSEE ARE ALLOWED'. 2. ASSESSING OFFICER HAS RAISED THE MISCELLANEO US APPLICATIONS REQUESTING TO EXPUNGE CERTAIN OBSERVAT IONS MADE THEREIN SUBMITTING THAT THERE ARE DISPUTES BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER ABOUT THE AMOUNT S TO BE ASSESSED. IT WAS THE SUBMISSION OF THE ASSESSING O FFICER THAT WHILE THE DEPARTMENT WAS WORKING OUT THE SHARES OF BENEFICIARIES BASED ON THEIR ARREARS, THE TRUST WIL L DISTRIBUTE THE SAME TO THE BENEFICIARIES BASED ON THEIR CORPUS SHARE HOLDING. THE LD.CIT(A), EXCEPT DIRECTING FOR INVOK ING THE PROVISIONS OF SECTION 161 FOR ASSESSMENT OF TRUST, THERE IS NO SPECIFIC DIRECTION OF THE FIRST APPELLATE AUTHORITY AS TO MANNER OF DISTRIBUTION OF INTEREST INCOME. IT WAS FURTHER SUBMITTED THAT THE ISSUE WAS PENDING BEFORE THE HIGHER APPELL ATE FORUMS AND EXPLAINED THE ISSUES VIDE PARA 3 OF THE MISCELL ANEOUS APPLICATION. WE ARE NOT CONCERNED WITH THE DETAILE D EXPLANATION GIVEN BY THE ASSESSING OFFICER WHY ASSE SSING OFFICER COULD NOT COMPLETE THE ASSESSMENTS AS PER T HE PROVISIONS OF SECTION 161. IT WAS HIS PRIMARY SUBM ISSION THAT 4 MA.NOS.95 TO 99/HYD/2014 IN ITA NOS.576 TO 580/HYD/2013 HEH THE NIZAM'S JEWELLERY TRUST . ASSESSEE NEITHER FURNISHED ANY INFORMATION NOR OFFE RED THE INCOMES IN THE RESPECTIVE BENEFICIARY'S HANDS. 3. WHILE IT WAS THE CONTENTION OF THE ASSESSING OFF ICER THAT NO INFORMATION HAS BEEN FURNISHED BY THE ASSESSEE S O AS TO ENABLE HIM TO COMPLETE THE ASSESSMENTS IN THE HANDS OF RESPECTIVE BENEFICIARIES, ASSESSEE IN THE WRITTEN S UBMISSIONS, HOWEVER, EXPLAINS THAT ENTIRE INFORMATION WAS AVAIL ABLE WITH THE ASSESSING OFFICER. ASSESSEE HAS FILED PARA-WIS E REMARKS TO SUBMIT THAT INCOMES WERE OFFERED IN THE INDIVIDUAL RETURNS OF THE BENEFICIARIES AND THE SAME WERE TAXED AGAIN RES ULTING IN DOUBLE ASSESSMENT. 4. TO THIS WRITTEN SUBMISSIONS OF THE ASSESSE E DT.21-08- 2014, THE ASSESSING OFFICER FILED FURTHER CLARIFICA TIONS STATING THAT ASSESSEE HAS NOT FURNISHED ANY DETAILS TO SUBM IT THAT THE SUBMISSIONS OF THE ASSESSEE-TRUST ARE NOWHERE NEAR THE FACTUAL REALITIES PREVAILING THE CASE. IT WAS FURT HER SUBMITTED THAT THE TWO MAJOR SHAREHOLDERS OF INTEREST INCOM P RINCE MUKKARAM JAH AND PRINCE MUFAKKAM JHA HAVE BEEN FIL ING INDIVIDUAL RETURNS AND IN THEIR INDIVIDUAL RETURNS IT WAS STATED THAT INTEREST INCOME ON THE LIEN AMOUNT WOULD BE OF FERED IN THE RETURN DUE TO BE FILED BY THE HEH THE NIZAM'S JEWEL LERY TRUST AND SO STATING NO INCOME WAS OFFERED BY THE INDIVID UAL BENEFICIARY IN THE RETURN OF INCOME FILED. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS GIVEN IN WRITING, WE ARE OF THE OPINION THAT THERE IS NO NEED TO MODI FY OUR ORDER. THERE MAY BE DIFFICULTIES FOR THE ASSESSING OFFICER IN COMPLETING THE ASSESSMENT IN THE ABSENCE OF ANY CO- OPERATION 5 MA.NOS.95 TO 99/HYD/2014 IN ITA NOS.576 TO 580/HYD/2013 HEH THE NIZAM'S JEWELLERY TRUST . FROM THE ASSESSEE. HOWEVER, IN THE PRESENT CASE, B OTH ASSESSEE AND THE ASSESSING OFFICER SEEMS TO HAVE TA KEN EXTREME POSITIONS WITH REFERENCE TO IMPLEMENTATION OF THE DIRECTIONS OF THE CIT(A). THE ISSUE OF ASSESSMENT IS NOT BEFORE US. WHAT WE WERE CONCERNED IN THE APPEALS IS WITH REFERENCE TO THE LEVY OF PENALTY ON THE ASSESSEE-TRUST. SINC E THERE ARE DIRECTIONS OF THE CIT(A) TO ASSESS THE INCOME IN TH E HANDS OF THE BENEFICIARIES INVOKING THE PROVISIONS OF SECTIO N 161, TRUST IS NOT LIABLE TO BE TAXED ON THE INTEREST INCOME AS ITS OWN. THEREFORE, LEVY OF PENALTY U/S.271(1)(C) IN THE TRU ST CASE DOES NOT ARISE. IN THOSE CIRCUMSTANCES, WE HAVE CANCELL ED THE PENALTIES. WHILE DOING SO, WE HAVE ONLY EXTRACTED THE OBSERVATIONS OF THE LD.CIT(A) IN PARA 5.4 OF HIS OR DER AND MADE THE OBSERVATIONS THAT ASSESSING OFFICER HAS VIOLATE D THE DIRECTIONS OF THE LD.CIT(A). THESE OBSERVATIONS CA NNOT BE CONSTRUED AS ADVERSE OBSERVATIONS AND THEY ARE MADE AS A MATTER OF FACT. HOWEVER, WE MAKE IT CLEAR THAT WE HAVE NOT EXAMINED THE ASSESSMENT RECORDS AND DECIDED THE ISS UE PURELY ON LEGAL PRINCIPLES THAT ASSESSEE-TRUST CANNOT BE V ISITED WITH PENALTIES, ONCE INCOME ARE NOT TO BE ASSESSED IN IT S HANDS DIRECTLY. THEREFORE, EVEN THOUGH IT IS A FACT THAT ASSESSING OFFICER HAS NOT FOLLOWED THE DIRECTIONS OF THE CIT( A) WHILE COMPLETING THE ASSESSMENT, THIS COULD NOT BE CONSID ERED AS ADVERSE REMARKS AGAINST THE ASSESSING OFFICER, AS P ROCEDURE BEING FOLLOWED IN ASSESSMENT IS NOT BEFORE US. WE THEREFORE ARE OF THE OPINION THAT THERE IS NO NEED TO MODIFY THE ORDERS IN THIS REGARD. WE MAKE IT CLEAR THAT THESE OBSERVATI ONS SHOULD NOT BE CONSIDERED AS ADVERSE REMARKS AGAINST ANY IN DIVIDUAL ASSESSING OFFICER OR AGAINST ASSESSING OFFICERS OF THIS ASSESSEE 6 MA.NOS.95 TO 99/HYD/2014 IN ITA NOS.576 TO 580/HYD/2013 HEH THE NIZAM'S JEWELLERY TRUST . IN GENERAL. WITH THESE OBSERVATIONS, MISCELLANEOUS APPLICATIONS ARE REJECTED. ORDER PRONOUNCED IN OPEN COURT ON 16 TH JANUARY, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 16 TH JANUARY, 2015. TNMM COPY TO : 1. THE INCOME TAX OFFICER, WARD - 9(4) , HYDERABAD 2. HEH THE NIZAM'S JEWELLERY TRUST, PURANI HAVELI, HYDERABAD C/O. SHRI RAVINDRA CHENJI, ADVOCATE, C-308, AHUJA E STATE, 4-1-970, ABIDS, HYDERABAD. 3. CIT(A)-XVIII, MUMBAI 4. CIT(A)-VI, HYDERABAD 5. CIT-VI, HYDERABAD 6. D.R. ITAT, HYDERABAD.
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