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TMI Blog2024 (3) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... of those mutual funds. First of all he has to ascertain as to in whose case such income should be taxable whether in the hands of the revocable trust or in the hands of the transferor / settler. From the plain reading of Section 61 r.w.s. 63 of the Act, the income arising from revocable transfer of assets is taxable in the hands of the transferor, i.e., the settler of the revocable trust and it is to be clubbed in the total income of the transferor and not in the total income of the transferee of the assets. As already noted that clause 1.2.4 of the trust deed which provides that settler may revoke this trust deed and the entire trust fund shall be reinvested in the settler absolutely. Thus, even as per the terms of the trust deed, the income or any source of investment in the mutual funds was ought to be taxable in the hands of the settler. Thus, even as per law, the income could not have been taxed in the hands of the assessee trust. That apart, if it has been brought on record that already income has been offered in the hands of the settler, then taxing the same amount again in the hands of the trust is wholly arbitrary. If the ld. CIT (A) intended to ask the source, then at le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust had purchased units of mutual funds of Rs. 2,59,21,343/- during the F.Y. 2009-10 relevant to A.Y. 2010-11. Based on this information, action was taken in the hands of the assessee trust and the matter was selected for scrutiny by reopening the proceedings by issuance of notice u/s. 148 on 31/03/2017. As per the assessment order, the notice was returned unserved and further, ld. AO tried to serve the notice through an affixture since assessee did not respond to the notices. Finally, ld. AO issued a show-cause notice to pass the assessment by way of his best judgment assessment. This final show-cause was also not served / responded by the assessee. Accordingly, ld. AO assessed the income at Rs. 2,59,21,343/- on account of purchase of mutual funds. 3. Before the ld. CIT(A) it was submitted that the original trustee i.e. DSP Merrill Lynch Trust Services Ltd. had undergone the various changes and during the F.Y. 2015-16, the original trustee was acquired by the Original Trustee was acquired by Julius Baer Wealth Advisors Pvt Ltd, and the name of the Original Trustee post-acquisition was changed to Julius Baer Trustees India Limited. Further, Julius Baer Trustees India Limited was ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is evident from the return of income of the Settior of the Trust (Refer Fage No. 17 to 39 of the Paper Book) that the Settlor has separately mentioned the income earned by the Appellant in his return of income and the same in duly offered to tax during the year under consideration as per provisions of the Act, there is no requirement of the Trust to offer such income to tax again. In this regard, the Appellant places reliance on the decision in case of India Advantage Fund-I Vs Income Tax Officer (Refer Page No. 22 to 41 of the Legal Book) wherein the Hon'ble Bangalore Tribunal has held that- The basic scheme of section 61 read with section 62 and section 63 is as follows: where under a settlement any income arises to the settlor, it has to be assessed in the hands of settlor, whether the settlement is revocable or irrevocable. If under a settlement any income arises to any other person apart from the settlor such income can still be assessed in the hands of the senior provided the settlement is revocable, liven if a settlement on the face of it is stated to be irrevocable, if the same provides for direct or indirect retransfer of income or assess of the settlement to the set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant furnished only the particulars of gains offered in the hands of Settlor. They did not give any sources for the investment. Hence, the action of the AO is upheld and the grounds taken are dismissed. 6. After hearing both the parties and on perusal of the impugned order as well as material placed on record, we find that there is no dispute that assessee is a revocable trust settled by Mr. Burjor Hormosji Reporter and Mrs. Aloo Burjor Reporter on 08/03/2007. The assessee had purchased units of mutual funds of Rs. 2,59,21,343/- during the A.Y. 2010-11 and the same has already been offered to tax in the income tax return of the settler for the A.Y. 2010-11 in the return of income filed on 31/07/2010. In the said return of income, the settler Mr. Burjor Hormosji had offered the capital gain on mutual funds of Rs. 2,59,21,343/- of the revocable family private trust. The copies of the returns have been filed before us in the paper book which was also filed before the ld. CIT(A). Once, these facts were brought on record, we do not find any reasons as to how the appellate authority can brush aside all those documents and simply endorse the exparte assessment order that the ld. AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He has simply held that assessee has earned income which has not been offered to tax and since assessee has not furnished the return of income, he has assessed the entire mutual fund of Rs. 2,59,21,343/-. It should have been appreciated that assessee has given reason as to why the notices were not served because of the change of the address of the trustees when the proceedings u/s. 148 were initiated. National Faceless Appeal Centre should have at least perused the documents which was filed and also have been incorporated in the impugned order and if there was any query or doubt about the taxability of the income in the hands of the assessee-trust should have been confronted to the assessee. Such a casual way of ignoring of facts and materials placed on record and law vitiates the whole system of justice. It has been further brought on record before us that on similar issue, assessee s case was selected for scrutiny for A.Y. 2011-12 to 2013-14 wherein the notices were served on the correct address. Assessee had brought all these facts on record and ld. AO thereafter had accepted the assessee s contention and no addition was made on account of any income / purchase of investment of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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