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TMI Blog2012 (10) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Tribunal. The Tribunal dismissed the appeals. Hence, the present appeals by the Revenue. 2. The Tribunal while dismissing the appeals of the Revenue followed its own Judgment in the case of a connected assessee namely, that of Smt. Indramma (ITA 2785/2005) and Smt.Revathi Raju. The questions of law and the facts in all the appeals are identical. Hence the facts in the case of Smt. Indiramma (ITA 2785/2005) are discussed. 3. The assessee had filed a return of income under Section 139(1) on 31-3-1994 for the assessment year 1992-93 declaring a taxable income of Rs. 3,11,279/-. The return of income was processed under Section 143 (1)(a) of the Act. A search took place in the group belonging to the assessee. During the course of post search investigation it was found that the assessee had not been declaring her beneficial interest received from M/s. A.S.K. Brothers Family Trust in which the assessee was a beneficiary and which has not been offered for income in the hands the assessee. The assessee filed a reply disputing the claim. The same did not find favour with the assessing authority who thereon recomputed the returns including the amount received from the Trust. Aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBDT, a choice was to be made by the Department to tax either the trustee or the beneficiary. He contends that the power has been exercised by the assessing authority under Section 166 of the Act. It clearly provides that nothing in the foregoing Section in this Chapter can prevent the direct assessment of the assessee. The returns said to have been filed under Section 161 comes under the very same Chapter. Therefore, the power exercisable under Section 166 of the Act cannot be curtailed even though an assessment has been made under Section 161. He further contends that a mere filing of a return does not constitute an assessment and hence the assessing officer was justified in reopening the assessment. In support of his case he relies on the Judgment in the case of Mrs. Arundhati Balkrishna v. CIT [1989] 177 ITR 275 wherein it was held, that Section 166 of the Act clarifies that the provisions relating to the liability of a representative assessee will not prevent either the direct assessment of the person on whose behalf or for whose benefit it is receivable, or the recovery from such person, of the tax payable in respect of such income. The ITO has the option either to proceed e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 1992-93 disclosing the interest of the beneficiary. Accordingly an assessment has been made. The beneficiary has also filed Returns as an individual for the said period. Along with the returns she has also appended a note that she is a beneficiary from M/s.ASK Brothers Family Trust and that the share of the beneficiary income for the assessment year 1992-93 has not been included in the above said computation since the said income is assessable in the hands of the trustee. The returns filed have been assessed. Therefore, the order of the assessing officer in adding the beneficial interest, even though the same were assessed in the returns filed by the Trustee is therefore erroneous. That the Tribunal has rightly applied the provisions of law and held that the reopening of the assessment is erroneous. 8. He placed reliance on the Circular issued by the Central Board of Direct Taxes wherein it was stated that it has come to the notice of the Board that the assessment of the same income both in the hands of the trustee and the beneficiaries are being made. Therefore the Income Tax Officer at the time of raising the initial assessment should either choose the trust or the beneficiar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly Trust No. 44, Race Course Road, Bangalore -1 bestowed with 50/420 share of beneficial interest. The assessee had been credited with Rs. 13,635/-as her share of beneficial income. The said income is excluded from the above Computation of Total Income as the Income of the said Trust had suffered tax at maximum marginal rate." The assessing officer came to the conclusion that there is no change of opinion by the assessing officer. That the Department has not taken any stand prior to the reassessment. That the mere processing of a return on an intimation being sent does not amount to taking an opinion. Section 143(1) prohibits taking an opinion and requires the Department to compute the taxes collectable where two opinions are possible. He was of the opinion that the provisions of Section 161 provides only for taxing the income in the hands of the representative assessee whereas Section 166 enables the assessing officer to assess the beneficiary directly. That the choice to assess either the Trustee or the beneficiary directly can be exercised by the assessing officer. Therefore, the assessing officer has exercised his option of assessing the beneficiary under Section 166. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the trustee has filed the returns disclosing the beneficial interest of the beneficiary and the same has been assessed to tax and tax has been paid thereon. Hence, the beneficial income has been taxed. Under these circumstances, the assessing officer has committed an error in bringing to tax the very same amount that has since suffered tax in the returns of the Trustee. It needs no elaboration that income cannot be taxed twice. The very income that has already suffered tax in terms of the return filed by the Trustee, is now sought to be taxed in the hands of the beneficiary. This is not permissible. Hence for this reason also, the order passed by the assessing authority cannot be sustained. Consequently, the view taken by the Appellate Authority and the Tribunal is just and proper and in accordance with law. (c) In the returns filed under Section 139(1) by the beneficiary a note was appended to it. In terms of the note as extracted hereinabove at para-11, the beneficiary has clearly stated that the very same income is assessable in the hands of the trustee which forms part of the return filed by the trustee under Section 161(1) of the Act. While processing the returns under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscretion under Section 166, the same can be invoked only at the time of raising an initial assessment either by the Trust or the beneficiary and whichever may be beneficial to the Revenue. Having once exercised the option it will not be open to the ITO to assess the same income for the same period in the hands of other persons namely the beneficiary or the Trustee. As stated earlier, having accepted the assessments made by the Trust and the beneficiary, the exercise of discretion as vested under Section 166 of the Act is not available to the assessing officer once again. Moreover the said income has suffered tax by the returns filed by the trustee under Section 161. The same income is now sought to be taxed in the hands of the beneficiary in the returns filed under section 139. Under these circumstances, there has been a gross violation of the Circular issued by the Board. In the facts and circumstances of this case, we hold that the Tribunal was justified in holding that the Assessing Officer cannot pass an order of assessment in the hands of the assessee beneficiary by invoking the jurisdiction under section 166 of the Act. For the aforesaid reasons the first substantial questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005 1996-97 21.01.2000 8.11.2000 15.10.2001 18.03.2002 In the case of the sister assessee namely, Smt. Revathi Raju for the assessment year 1992-93 a scrutiny assessment under Section 143(3) of the Act was made. The assessments were concluded in favour of the assessee. All the details pertaining to the beneficiary trust were disclosed therein. Smt. Revathy Raju and these asseesees were the beneficiaries of the very same trust. The facts in all the cases are identical. The note appended along with the returns filed under Section 139(1) of the Act of Smt. Revathi Raju was in identical terms to that of the assessees herein. Identical orders have also been passed for the assessees for all the other years. The assessing officer has proceeded mechanically and has passed identical orders. Even though independent orders have been issued, the orders are one and the same without any change. Under these circumstances, when the case of Smt. Revathi Raju for an assessment under Section 143(3) has been finalised, it is not permissible for the assessing officer to sit over the issue and change his opinion. An opinion formed is based on facts. When the facts are identical, the opinion so fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; ** ** ** (2) Where a return has been furnished under Section 139, or in response to a notice under sub-Section (1) of Section 142, the Assessing Officer shall, if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of his return. Provided that no notice under this sub-Section shall be served on the assessee after the expiry of 12 months from the end of the month in which the return is furnished." Therefore on the relevant date, in terms of sub-Section (1), when an intimation has been sent, such an intimation shall be deemed to be a notice of demand issued under Section 156 of the Act and shall apply accordingly. The intimation under Section 143(1) has been issued and therefore in terms whereof the said intimation shall be de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is warranted." The appellate authority therefore having considered the case of a sister assessee Smt. Revathy Raju, therefore came to the conclusion that the assessing officer could not change his opinion. This was also due to the reason that the assessing officer has mechanically passed the orders in respect to the remaining beneficiaries. It is for this reason that the appellate authority rightly came to the conclusion that the change of opinion is not permissible. The reasoning of the appellate authority is just and proper and in accordance with law. We do not find any error to interfere. (e) The learned counsel appearing for the Revenue, relies on the decision in the case of Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500 to contend that a failure to take steps under Section 143(3) of the Act will not render the assessing officer powerless to initiate re-assessment proceedings even when an intimation under Section 143(1) has been issued. It was held at para-13 of the said Judgment as follows:- "13. One thing further to be noticed is that intimation under s. 143(1)(a) is given without prejudice to the provisions of s. 143(2). Though technically the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two expressions has to be understood in the context the expressions are used. Assessment is used as meaning sometimes "the computation of income", sometimes "the determination of the amount of tax payable" and sometimes "the whole procedure laid down in the Act for imposing liability upon the taxpayer". In the scheme of things, as noted above, the intimation under s.143(1) (a) cannot be treated to be an order of assessment. The distinction is also well brought out by the statutory provisions as they stood at different points of time. Under s. 143(1 )(a) as it stood prior to 1st April 1989, the AO had to pass an assessment order if he decided to accept the return, but under the amended provision, the requirement of passing of an assessment order has been dispensed with and instead an intimation is required to be sent. Various circulars sent by the CBDT spell out the intent of the legislature, i.e., to minimize the Departmental work to scrutinize each and every return and to concentrate on selective scrutiny of returns. These aspects were highlighted by one of us (D.K. Jain, J.) in Apogee International Ltd., v. Union of India [1997] 137 CTR (Del.) 93: [1996] 220 ITR 248 (Del). It ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment under Section 143(3) of the Act has taken place, the subsequent notice issued under Section 148 of the Act therefore would amount to change of opinion, which is impermissible. (f) The returns filed by the trustee and the beneficiary are on various dates as mentioned hereinabove at para 15(a). However, an intimation determining the tax/refund due has been sent under Section 143(1) of the Act. In some of the intimations, a refund has also been made. The notice under Section 148 of the Act dated 21-1-2000 was issued to the assessee, almost 8 years after the date of filing of the returns for the assessment year 1992-93. Subsequently on 8-11-2000 a notice under Section 143(2) was also served. Thereafter, a notice under Section 142(1) of the Act dated 15-10-2001 was issued. The said notices have been issued to all the assessees herein on the said dates. To exercise powers under Section 147 of the Act the assessing officer should have reason to believe that the income chargeable to tax has escaped assessment and consequently, subject to the provisions of Section 143 of the Act, assess or re-assess such income etc. Therefore, it is necessary that the assessing officer should have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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