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TMI Blog2019 (3) TMI 910X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the AO had clearly verified the record of Mr. Mahesh Kumar Khetan to come to the conclusion that his income exceeded the maximum limit of the income which is not chargeable to tax. AO had exceeded his jurisdiction in exercising his powers u/s 154 of the Act. It was clearly a debatable issue and as held by the Hon'ble Supreme Court in the case of T.S. Balaram vs. Volkart Bros [1971 (8) TMI 3 - SUPREME COURT] a mistake apparent from the record must be patent mistake on which there can be no two opinions. Therefore, according to me, the initiation and exercise of powers u/s 154 of the Act by the AO is not sustainable. Even on merits, we find that the Trustees are not the beneficiaries in any way and there is a sole beneficiary who has no other income but the income generated by the Trust. The assessee Trust is not carrying on any business but is only managing the income from other sources for the benefit of the beneficiary. Therefore, even on merits, we are not inclined to accept the order u/s 154 of the Act. - Decided in favour of assessee. - 1472/Hyd/2018, 1473/Hyd/2018, 1474/Hyd/2018, 1475/Hyd/2018, 1476/Hyd/2018, 1477/Hyd/2018, 1478/Hyd/2018, 1479/Hyd/2018, 1480/Hyd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts circumstances of the case. 2. The Appellate Commissioner ought not to have upheld the order passed u/s.154 changing the tax rate from individual to maximum marginal rate u/s.167B. 3. The Appellate Commissioner ought to have seen that the issue of changing the tax slab was debatable and thus the order could not be rectified u/s.154. 4. The Appellate Commissioner ought not to have confirmed the order of the A.O in determining the tax rate u/s.167B ignoring the fact that the appellant is a specific trust for the benefit of an individual and the share being determinate. 5. The Appellate Commissioner ought to have exercise his powers by determining the Appellant in the status of an individual, notwithstanding the fact that the Appellant itself has declared to be an AOP. 6. Any other grounds which the appellant may urge either at or before the date of hearing . 3. As regards the validity of the proceedings u/s 154, the learned Counsel for the assessee submitted that the assessee was formed on 23.01.2004 by the settler Smt. Vidya Devi Khetan for the benefit of a minor, Master Krishna Kumar Khetan, who was aged six months at the time of creation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income and the AO had noticed that the assessee was erroneously taxed at the individual tax rates and hence it was a mistake apparent from the record and the AO has correctly exercised the jurisdiction u/s 154 of the Act. Thus, he prayed for upholding the orders of the authorities below. 8. Having regard to the rival contentions and the material on record, we find that the assessee has been filing its returns of income from the A.Y 2007-08 and it has been taxed at individual tax rates only. The assessment years before us are 2013-14, 2014-15 and 2015-16. It is for the first time that the AO has treated the assessee as an AOP and held that it is being taxed at individual tax rates, whereas it should be taxed u/s 167B of the Act. Therefore, in order to apply the provisions of section 167B(2), he invoked the provisions of section 154 of the Act. 9. At the outset, I consider it necessary to examine whether the said provision is applicable to the assessees before us. For the sake of convenience and ready reference, the relevant provision is reproduced hereunder: Section 167B(2) in The Income- Tax Act, 1995 (2) Where, in the case of an association of persons or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had clearly verified the record of Mr. Mahesh Kumar Khetan to come to the conclusion that his income exceeded the maximum limit of the income which is not chargeable to tax. The learned DR had placed reliance upon the judgment of the Hon'ble Supreme Court in the case of CIT vs. Keshri Metal (P) Ltd (Supra) wherein the Hon'ble Supreme Court had held that reference to a document outside the control and law is impermissible while applying the provisions of section 154 of the Act. The relevant paragraph is reproduced hereunder for ready reference: 6.We have heard learned Counsel. We do not agree that the question raises a pure question of fact; to that extent, the High Court was in error. But it was not in error in coming to the conclusion that there was no occasion for rectification. Under the provisions of Section 154 there has to be a mistake apparent from the record. In other words, a look at the record must show there has been an error, and that error may be rectified. Learned counsel for the revenue has not been able to satisfy us that it shows any apparent error upon the record. Reference to document outside the record and the law impermissible when applying the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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