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TMI Blog1983 (12) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... ing aggrieved, objected to this addition and preferred an appeal before the Commissioner (Appeals), who vide his order dated 13-10-1978 deleted the aforesaid addition following the decision of the Madras High Court in the case of CIT v. M.M. Muthiah [1977] 109 ITR 463. 3. The department being further aggrieved, preferred an appeal before the Tribunal and the Tribunal, by its order dated 22-9-1979 in IT Appeal No. 94 (Mad.) of 1979 partly allowed the appeal and restored the matter relating to the assessability of the said refund of principal of the annuity deposit to the file of the ITO. The ITO on making enquiries as per the directions of the Tribunal passed the modification order, which was appealed before the Commissioner (Appeals). The Commissioner (Appeals) followed the decision in the case of CIT v. S.M. Ebrahim [1982] 134 ITR 599, of the Hon'ble Madras High Court, where their Lordships held that the refund of annuity deposit could be taxed only in the hands of original depositor, if alive ; and such refund could not be taxed in the hands of either the nominee or the executor of the legal representative as it makes no difference if the depositor nominated any person or not. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the executor of the estate of the deceased, and as such it is to be taxed in hands (the assessee). 6. Apart from it, Shri T.S. Srinivasa Iyer died on 26-8-1969 and the annuity deposit referred to above are deposited by Shri S. Balasubramanian, the assessee, in the capacity of executor of the estate of the deceased as per the report of the ITO, said to be quoted in the impugned order, and, hence, it was contended that it means that these deposits are made by the assessee. There is no proof on record that the sum of Rs. 19,770, referred to above, was deposited by Shri S. Balasubramanian (the assessee) on behalf of the deceased and these deposits are made from the income of the estate of the deceased or HUF funds. The assessee has not brought any material on record to show these all and in particular, the copy of application for payment of annuity or the letter of refund given by the RBI to identify the deposits and the person who received back the money which the assessee was duty bound to do to discharge the onus upon him to prove the claim in respect of the aforesaid amount of Rs. 19,770, particularly when he was supposed to do so as per the order of the Tribunal dated 22-9-1979 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the deposit was made by the assessee not in his individual capacity as assessee but in his capacity as an executor, the refund of annuity deposit could be held to be exempt in the hands of the assessee on the authority of the ruling of the Madras High Court in the case of S.M. Ebrahim (as I understand it). 2. I would like to retrace to facts in this case to make my point explicit. The assessee is the estate of late Shri T.S. Srinivasa Iyer assessed in the status of AOP. In the assessment year under appeal (1976-77), there was a refund of annuity deposit of Rs. 42,654 which was assessed to tax under the head 'Income from other sources'. On appeal, the Commissioner (Appeals), following the decision of the Madras High Court in the case of M.M. Muthiah held that the amount of the refund was not liable to tax. The revenue appealed to the Tribunal contending that the Madras High Court decision was inapplicable to the facts of the case on the ground that the deposit itself was made by the legal representative and not by the deceased and, therefore, the amount of refund was taxable in his hands. The Tribunal found that the annuity deposit was paid on 26-4-1974 pursuant to an asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posit was made and in which capacity the refund was received so that if there is identification between the two, so to say both are one, the amount of refund could be brought to tax. 4. It was pursuant to the order of the Tribunal that the ITO called for the necessary information and found that the deposit in question was in respect of the assessment year 1966-67 and that the liability to pay the deposit arose in the status of joint family and that the deposit was made on 26-4-1974 of Rs. 1,58,160 by Shri S. Balasubramanian as representative of the estate of late Shri T.S. Srinivasa Iyer, and out of that amount Rs. 19,770 was refunded by Shri S. Balasubramanian as representative of the estate of late Shri T.S. Srinivasa Iyer. That means the sum of Rs. 19,770 in question was a part of Rs. 1,58,160, the annuity deposit raised on the HUF of late Shri T.S. Srinivasa Iyer for the assessment year 1966-67. There was, thus, a liability of Rs. 1,58,160 relating to the HUF which had to be discharged by the assessee. It is an undeniable fact that the assessee got funds of the HUF, as its legal representative. Out of those funds, he discharged the liability of the joint family. Thus, the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion reached by my learned brother that there was no proof on record to show that the amount of deposit was made from the income of the estate of the deceased or HUF funds. In fact, this was the finding given by the Tribunal in its earlier order. At any rate the ITO's report as tabulated in the assessment order clearly shows, to my mind, that the deposit was made by the assessee on behalf of the deceased, viz., joint family and that these deposits were made from the income of the deceased or the HUF funds because the HUF funds and the personal funds got mixed up thereafter and the inference cannot be otherwise and there could not be any direct material to show this aspect. Neither the contemplated copy of the application for payment of annuity deposit nor the letter of refund given by the RBI would show as to wherefrom the funds have come for the purpose of making this deposit. It is for this reason I am inclined to think that the Commissioner (Appeals) has not properly appreciated the report given by the ITO. 6. My learned brother mentioned that the assessee deposited as executor of the estates and, therefore, no inference can be drawn from this fact that he is not the deposito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o facts are found the amount in question would not be chargeable to tax. Since these facts are not available on record, we deem it fit to set aside the orders of the authorities below and restore the matter to the Income-tax Officer for a fresh disposal in accordance with law." The ITO in giving effect to this order again disallowed the claim of the assessee at a sum of Rs. 19,770 out of the sum of Rs. 42,654. In appeal, the Commissioner (Appeals) confirmed it. In the Tribunal, the Judicial Member confirmed the impugned order for the disallowance of Rs. 19,770 on following the decision of the Madras High Court in the case of and the order of the Tribunal dated 27-9-1979 held in that thereby the assessee has not proved the claim for the sum of Rs. 19,770 as it is manifest from concurrent finding on the records that this amount was deposited by the assessee in the individual capacity and since the assessee has failed to rebut it by furnishing the documentary evidence as required by the order of the Tribunal while the learned Accountant Member took the view otherwise. Thus, from these facts the following questions are referred for determination by the Third Member : "1. When there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the estate of late Shri T.S. Srinivasa Iyer subsequent to that date on Shri S. Balasubramanian, the son of late Shri T.S. Srinivasa Iyer. In the assessment made for 1976-77, the ITO included a sum of Rs. 42,654 received by the assessee as refund of annuity deposit. On the Commissioner (Appeals) holding this amount as not includible in the total income by virtue of the decision of the Madras High Court in the case of M.M. Muthiah, the department appealed to the Tribunal. The Tribunal set aside the assessment with a direction to the ITO to examine certain details and for fresh disposal according to law. 2. The ITO went into the details and traced the origin of the annuity deposit refund to the following table : -------------------------------------------------------------------------------------------------------------------------------------------------- Sl. Assess- Date of Amount of Refund Name of Name of receiver No. ment year deposit deposit amount depositor of refund of Rs. Rs. deposit ------------------------------------------------------------------------------------------------------------------------------------------------- 1 2 3 4 5 6 7 ------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. When the matter came up before the Tribunal, the learned Judicial and Accountant Members passed separate orders--the former upholding the order of the Commissioner (Appeals) and the latter deleting the addition. It is, thus, on a point of difference between the two learned Members that the matter has been referred to me as a Third Member. It requires to be mentioned that the learned Judicial Member referred the following two questions : "1. When there is concurrent finding of the authorities below on the question of fact and there is no material on the record to show that such finding is based upon misreading or misconceiving the material on record or perverse, whether even then the Appellate Tribunal is within its powers to interfere with or disturb such concurrent finding ? 2. When there is an order of the Tribunal dated 22-9-1979 vide which it sent back the matter for fresh determination placing onus of proof on the assessee to prove by producing material on record--the copy of challan form for the deposited amount of annuity in dispute and to prove the identity of the depositor and source of the deposits and the assessee failed to do so, then can it be held by the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t finding of facts and its acceptability in any adversary forum may not apply to the income-tax proceedings where there is a unique third stage of appeal which is fixed as the final fact finding authority in the Tribunal. The Tribunal has wide powers under the Act both of investigation and enquiry for finding out the correct facts and also for purpose of deciding the appeal. If in respect of any concurrent finding of facts by the authorities below the Tribunal were disabled from interfering with those facts either for the sake of finding out the facts correctly or for doing justice, the wide powers given to the Tribunal would be rendered illusory and may even frustrate the purpose of the Act. In my opinion, there is no justification to limit the powers of the Tribunal where the statute has not provided for it even on any analogy with civil litigation or any other basis. 6. The parties were heard in respect of the taxability of the refund of annuity deposits. The learned counsel for the assessee referred to the facts of the case and stressed the point that as pointed out in the learned Accountant Member's detailed order, the person who paid the annuity deposit was different from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it. Dispute arose with regard to the last sum of Rs. 19,770 for the reason that the person who made the deposit and the person who received the refund are the same. Factually this appears to be incorrect for several reasons. In the first place, according to the rules of the annuity deposit scheme, when a deposit is made in a particular year, the refund of a portion of the deposit (during that period one-tenth was refunded in every subsequent year) starts from the very next year. A sum of Rs. 1,58,160 was paid on 26-4-1974. The refund from that would start from the year 1975 onwards, which would correspond to the assessment year 1976-77. But the sum of Rs. 19,770 would include not merely this amount but also refunds relating to the earlier deposits made up to ten years (of course, limited to the time when the deposit was made). The sum of Rs. 19,770, therefore, to its full extent does not represent refunds out of this amount deposited by Shri S. Balasubramanian. The learned representative for the department has pointed out that a portion of this amount must have come from the deposit of Rs. 1,58,160. To that extent the depositor must be deemed to have received the refund thus exposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be distributed in the particular manner which the law provides for. Even if, therefore, Shri S. Balasubramanian received it from the bank on production of a succession certificate, etc., such a receipt would be only a receipt in the capacity of an agent on behalf of the estate of late Shri T.S. Srinivasa Iyer, which would include all the heirs who would be entitled to a share in the property. As a matter of fact, therefore, and, in law, the refund of annuity deposit has been received by the heirs of late Shri T.S. Srinivasa Iyer who died intestate. I have no hesitation, therefore, in holding that the person who paid the annuity deposit relating to the assessment year 1966-67 was a representative assessee of the late assessee whereas the person who received the refund was an agent of the several heirs of late Shri T.S. Srinivasa Iyer. The two capacities are entirely different, though donned by the individual Shri S. Balasubramanian. The ratio of the Madras High Court decision in M.M. Muthiah's case clearly applies to this case. I agree with the learned Accountant Member that the sum of Rs. 19,770 is not includible in the income of the estate of late Shri T.S. Srinivasa Iyer. 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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