9911796707
TMI Blog1990 (5) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... ary trust and maximum marginal rate should have been applied to it. The learned CIT was further of the opinion that the creation of the appellant-trust was part of a scheme to divert the income and pay little amount of tax by playing fraud on revenue and therefore, the principles laid down in the Supreme Court decision in the case of McDowell Co. Ltd. v. CTO [1985] 154 ITR 148 were applicable to it. He, therefore, issued necessary notice to the appellant-trust and after hearing it passed the effective order in para-6 on the following lines :-- "The settlor made the trust out of natural love and affection. In the very first year, i.e., assessment year 1978-79, the income earned was Rs. 29,897 which was distributed among the four beneficiaries, viz. (1) Nikita N. Patel (2) Naimesh N. Patel (3) Swi N. Patel and (4) Gokul M. Patel. The revised return was filed indicating that there were five beneficiaries instead of four and income was distributed among 5 beneficiaries which include Smt. Madhurikaben Patel. For the subsequent years, there has been change in beneficiaries from time to time and also income has gone up and in the assessment year 1982-83, income as already indicated, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing the income in the real hands after making necessary inquiries. As a result of this order, the assessment made in the hands of the beneficiaries will be required to be rectified. This should be done by the ITO as a consequential effect." 3. Aggrieved against the above order of the learned CIT, the appellate-trust has come up in appeal before us. 4. Shri N.C. Amin, Advocate, appearing for the appellant trust has vehemently urged that the ITO had made assessment after making necessary enquiries into the nature and character of the trust. It was submitted that the appellant-trust was a specific trust and had been assessed in that status in the past as also in following years. It was thus submitted that the learned CIT had no jurisdiction under section 263 to have set aside the assessment and to have asked the ITO to reframe the same after conducting proper enquiries and investigations. In this behalf the learned counsel relied upon the cases of Padmavati Jaykrishna Trust v. CWT [1966] 61 ITR 66 (Guj.), R.H. Pandit v. CIT [1972] 83 ITR 136 (Bom.), Gee Vee Enterprises v. Addl. CIT [1975] 99 ITR 375 (Delhi), CWT v. Trustees of H.E.H. Nizam's Family (Remainder Wealth) Trust [1977] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, or cancelling the assessment and directing a fresh assessment. It may be noted that section 263 empowers the Commissioner either to make assessment himself or to cancel the same and direct a fresh assessment, after he has found the assessment made by the ITO erroneous and prejudicial to the interest of Revenue. If the learned Commissioner chooses to make assessment himself, then the findings recorded by him on the points on which he had chosen to make assessment would be said to be final giving wide jurisdiction to the Tribunal to appreciate such finding. If however, the learned CIT has not chosen to make assessment himself while exercising powers under section 263 but has chosen to cancel the assessment and directing a fresh assessment, then certainly it may be stated that he had not recorded his final findings on the merits of those points which had made his satisfaction regarding the assessment being erroneous and prejudicial to the interest of Revenue. In that case, since the assessee would be having full opportunity of being heard by the ITO and also leading evidence in support of his claim, the Tribunal, we think, should not take upon itself the responsibility of conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 897 by assessment year 1978-79 and at Rs. 1,11,042 in the year under consideration. The learned CIT has pointed out that the balance sheet showed total assets side at Rs. 4,35,700 in the year under consideration. These facts could have gone to make satisfaction of the learned CIT requiring further enquiries and investigations into the case. 10. At this stage, it would be proper if the order as passed by the ITO in this case be reproduced in extenso. "The assessee has filed return of income and in response to notice u/s. 143(2), Shri J.S. Pandit attended from time to time. Statement of income along with balance sheet has been filed. Assessee has income from property and other sources. Against income shown assessee has shown claim of deduction u/s. 80C and 80L of Rs. 3385. Since the assessee is a trust and the income is to be assessed in the case of the beneficiaries, assessee is not entitled to any deduction u/s. 80L and 80C. Subject to the above remarks total income of the assessee is computed as below :-- Rs. Income from property as per statement filed ...... 1,10,842 Income from other sources as per statement filed..... 1,635 ----------------- Net total income : 1,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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