9911796707
TMI Blog2024 (3) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... ual funds. 2. The brief facts are that assessee is a Revocable Private Trust settled by Mr. Burjor Hormosji Reporter and Mrs. Aloo Burjor Reporter on 08/03/2007. The trustee of the assessee was DSP Merrill Lynch Trust Services Limited. The trust was a revocable trust during the life time of the settler. During the F.Y. 2015-16, the assessee trust was revoked by settler on 13/11/2015 pursuant to the provisions of the trust deed. The assessee trust had not filed its return of income and accordingly, it was identified as non-Filler in Cycle-2 of Non-Filler Management System (NMMS) under Priority P-2 category. As per the AIR information, it was noted that the trust had purchased units of mutual funds of Rs. 2,59,21,343/- during the F.Y. 2009-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to the notice of the ld. CIT (A) and as per the law, the assessee being a revocable trust, it was not required to offer the income earned for tax purpose because the income was to be shown by the settler of the trust and also the settler of the trust had duly discharged their obligation and offered to tax income earned by the trust as per the provisions of Section 61 of the Act. Following clause of the trustee was also referred and relied upon:- "1.2. "During the lifetime of the Settlor: 12.1 1.2.2. 1.2.3. 1.2.4. The Settor may, by instrument in welling, revoke this That Deed and the trusts constituted hereunder either in whole or in part. Such revocation shall take effect upon the receipt of such written instrument by the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.4 The appellant claimed that they were not required to offer income earned from sale of mutual fund as the Settlor of the trust had discharged his obligation and offered to tax the income earned by the appellant as capital gains tax in his return filed for the relevant A.Y. 2010-11 as per Sec 61 of the IT Act. Further, it was stated that as the income earned by the appellant was admitted in the hands of the Settlor, it cannot be once again added in the hands of the trust. 5. Ld. CIT(A) without even bothering to see the provisions of the law and the facts brought on record by the assessee has confirmed the action of the ld. AO in the following manner:- "4.5 It is pertinent to mention here that it is not the issue dealt in the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority can brush aside all those documents and simply endorse the exparte assessment order that the ld. AO has reopened the assessment to ascertain the sources and not the income earned out 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. Section 61 of the Act reads as under:- "61. All income arising to any person by virtue of a revocable transfer of assets shall be chargeable to income-tax as the income of the transferor and shall be included in his total income." 7. Further, the meaning of term revocable transfer has been defined in Section 63 which reads as under:- "63. For the purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... least same should have been confronted to the settler before stating that ld. AO reopened the case to ascertain the sources and not the income earned out of those mutual funds. Nowhere in the assessment order, the ld. AO had stated that he is questioning the source of mutual funds. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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