2018 (2) TMI 2004 - AT - Income Tax

Penalty levied u/s.271(1)(c) - trust deed does not have the name of the investors and does not specified the beneficial interest income Sec.164 would come into play AND consequential taxation of the interest income from the Fixed Deposits - HELD THAT - A perusal of the order of the Tribunal in own case clearly shows that in the case of the assessee, the Tribunal has given a categorical finding that the assessee is a determinate trust - Tribunal has restored the issue in respect of the correct income that is liable to be taxed to the file of the AO. This being so, it is noticed that the issues on which the penalty has been levied, no more survive. Consequently, we find no error in the order of the Ld.CIT(A) which calls for any interference. Consequently, the appeals filed by the Revenue are dismissed.

Summary

Issues:
Appeal against cancellation of penalty u/s.271(1)(c) for AY 2009-10 and AY 2010-11.

Analysis:
The ITAT Chennai heard an appeal by the Revenue against the cancellation of penalties imposed under section 271(1)(c) for the assessment years 2009-10 and 2010-11. The appeals were related to the same assessee and involved similar issues, so they were disposed of together. The assessee had previously won a case related to the identification of beneficiaries in a trust, leading to the cancellation of penalties. The Revenue argued that the issue of taxability of interest income had been sent back to the AO by the Tribunal. However, the Tribunal found that the trust was determinate as per previous decisions and that the issues for which penalties were imposed no longer existed. Therefore, the Tribunal upheld the order of the CIT(A) cancelling the penalties and dismissed the appeals filed by the Revenue.

The Revenue contended that penalties were imposed due to the trust deed not specifying the names of investors and beneficial interest income, invoking Sec.164. However, the Tribunal had previously established the trust as determinate and had referred the issue of correct income taxation back to the AO. Since the issues for penalty imposition were no longer valid, the Tribunal found no error in the CIT(A)'s decision to cancel the penalties. The appeals by the Revenue were thus dismissed. The Cross-Objections filed by the assessee in support of the CIT(A)'s order were also deemed infructuous and disposed of accordingly. The final decision was pronounced on February 28, 2018, in Chennai.