1987 (8) TMI 141 - AT - Income Tax

Summary

Issues Involved:
1. Validity of Trust and Direct Assessment in the Status of AOP.
2. Consideration of Material Alterations in the Original Trust Deed.
3. Examination of Genuineness of Trust and Trust Deed.
4. Legitimacy of Protective Assessments on the Assessee-Trust.
5. Condonation of Delay in Filing Reference Applications.

Issue-wise Detailed Analysis:

1. Validity of Trust and Direct Assessment in the Status of AOP:
The Tribunal was asked to determine whether the Trust was validly created and whether it could be assessed directly in the status of an Association of Persons (AOP). The Tribunal confirmed the order of the AAC, holding that a valid Trust stood created and direct assessment could be made in respect of the Trust itself in the status of AOP.

2. Consideration of Material Alterations in the Original Trust Deed:
The Tribunal was questioned on whether its findings were perverse for not considering material alterations made in the original trust deed. The Tribunal dismissed this concern, indicating that the alterations did not affect the validity of the Trust.

3. Examination of Genuineness of Trust and Trust Deed:
There was an issue regarding whether the Tribunal, being the final fact-finding authority, should have examined the genuineness of the Trust and the Trust deed by considering the material alterations confirmed by the Settler. The Tribunal upheld its findings, implying that the genuineness of the Trust and Trust deed was adequately examined.

4. Legitimacy of Protective Assessments on the Assessee-Trust:
The Tribunal had to decide whether it misdirected itself in holding that the Income Tax Officer (ITO) should not have made protective assessments on the assessee-trust in the status of AOP. The Tribunal concluded that the ITO's protective assessments were not warranted, thus rejecting the Commissioner's stance.

5. Condonation of Delay in Filing Reference Applications:
The Tribunal addressed the delay of 132 days in filing the reference applications under Section 256(1). The Commissioner explained the delay due to a mix-up of files and late determination of the tax effect. The Tribunal, however, found that it had no power to condone a delay exceeding 30 days beyond the initial 60 days as per the proviso to Section 256(1). Consequently, the applications were dismissed in limine on the ground of limitation.

Separate Judgments:
The Judicial Member disagreed with the Accountant Member's conclusion, arguing that the reasons for delay should be considered adequate and that the Tribunal could condone the delay beyond 30 days if satisfied with the cause. However, the Third Member, agreeing with the Accountant Member, clarified that the Tribunal's power to condone delay is limited to a further period not exceeding 30 days beyond the initial 60 days. Thus, the majority opinion held that the Tribunal could not condone the delay of 132 days, leading to the dismissal of the reference applications.

Conclusion:
The Tribunal's majority opinion concluded that it lacked the jurisdiction to condone a delay exceeding 30 days beyond the initial 60 days for filing reference applications under Section 256(1). The applications were therefore dismissed on the ground of limitation.