2021 (5) TMI 863 - AT - Income Tax

Addition both in the hand of the Trust as well as in the hands of the assessee - trustee - double addition - HELD THAT - There is no dispute to the fact that the amount was the fixed deposit made in the assessment year 1999-2000. But similar addition in A.Y. 1999-2000 in assessment order dated 31.12.2007 was made in the name of the Trust, Satya Sai Education Trust and was already taxed. CIT(A) in the order dated 25.1.2007 adjudicating the appeal of the assessee has categorically held that for Assessment years 2000-2001 and 2001-2002, the fixed deposits were of the Trust and not of this Assessee. Therefore, the impugned addition made by the A.O. and confirmed by the learned CIT(A) is not sustainable, being double addition, has no legs to stand, as such, the same needs to be deleted. Further, the impugned fixed deposits were already assessed in the hand of the Trust much prior to the date of this Assessment, therefore, the contention of ld D.R. that the addition made in the hand of the Trust was on protective basis, hence he added it is added on substantive basis in the name of the assessee is not acceptable. DR did not controvert the very relevant part that on maturity, the amount of FD was received and credited to the account of the Trust not to the assessee When the fixed deposits were of the Trust and treated as income of the Trust, the same amount made in the name of the assessee is directed to be deleted because this amounts to double taxation. - Decided in favour of assessee. Consequential addition being treated as interest income is also directed to be deleted. Addition being agricultural income - find no positive substance in the contention of the ld A.R., therefore, same is confirmed

Summary

Issues Involved:
1. Jurisdiction and authority of the Reassessment Order.
2. Double taxation of the same income.
3. Reliance on the statement of a trustee without examining the appellant's evidence.
4. Legality of consequential additions.

Issue-wise Detailed Analysis:

1. Jurisdiction and authority of the Reassessment Order:
The appellant argued that the Reassessment Order passed by the Assessing Officer (A.O.) was "without jurisdiction and without the authority of law," and thus should be quashed. The Tribunal examined the initiation of reassessment proceedings under Section 147, which was based on an allegation made by a trustee, S.K. Balabantaray, claiming that the Fixed Deposits (FDs) in the name of Satyasai Educational Trust were actually the appellant's income. The Tribunal found that the A.O. initiated reassessment proceedings without concrete evidence, relying solely on the trustee's allegation, making the reassessment order unsustainable and illegal.

2. Double taxation of the same income:
The appellant contended that the amount of ?28,00,000 was already taxed in the hands of the Trust and should not be treated as the appellant’s income. The Tribunal noted that the same amount had been included in the Trust’s income and taxed accordingly. The Tribunal also observed that for subsequent assessment years (2000-2001 and 2001-2002), similar additions were deleted by the CIT(A) and confirmed by the ITAT, establishing that the FDs belonged to the Trust. Therefore, the addition of ?28,00,000 in the appellant's hands amounted to double taxation, which is not permissible under the law.

3. Reliance on the statement of a trustee without examining the appellant's evidence:
The appellant argued that the A.O. and CIT(A) erred in making additions based on the statement of S.K. Balabantaray without considering the appellant's explanations and evidence. The Tribunal found that the A.O. relied on the trustee's allegations without substantial evidence and ignored the appellant's explanations. The Tribunal emphasized that the fixed deposits were already assessed in the hands of the Trust, and the maturity amount was credited to the Trust’s account, not the appellant’s, reinforcing that the FDs were not the appellant's undisclosed income.

4. Legality of consequential additions:
The appellant challenged the consequential additions of ?51,083 as interest income on the ?28,00,000 and ?60,000 as agricultural income. The Tribunal directed the deletion of the ?51,083 interest income addition, as it was consequential to the deletion of the ?28,00,000 addition. However, the Tribunal found no positive substance in the appellant's contention regarding the ?60,000 agricultural income and confirmed this addition.

Conclusion:
The Tribunal allowed the appeal in part. It deleted the addition of ?28,00,000 and the consequential interest income of ?51,083, recognizing these as instances of double taxation and unsupported by concrete evidence. However, the Tribunal upheld the addition of ?60,000 as agricultural income due to lack of substantive evidence from the appellant. The appeal was thus partly allowed, with the order pronounced on 19/5/2021.