9911796707
TMI Blog1991 (6) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... said trust on 25th June, 1980, the assessee received Rs. 750 as capital in M/s Nalin Knitwear Co. alongwith 5 per cent share of profit in M/s Nalin Knitwear Co. from said Jagdish Family Trust. The ITO examined the details and found that no genuine BOI had come into existence and that the income of the so-called BOI was taxable at the maximum marginal rate in the status of Association of Persons (AOP). A show cause notice was, therefore, issued by letter dt. 24th March, 1984 and assessee filed reply to said notice in which the assessee contended that out of distribution of portion of corpus of the trust, the BOI had been created on the principles of "joint and survivorship and /or the principles of joint "tenancy". The ITO did not accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the trust or any other assessable entity. 3. The assessee filed appeals before the AAC. The AAC has not discussed any of the points mentioned by the ITO. He has observed that since the return was filed in the status of BOI the ITO could not have made assessment in the status of AOP. Reliance was placed on the decision of Bombay High Court in CIT vs. Associated Cement Steel Agencies (1984) 147 ITR 776 (Bom). He directed the ITO to modify the assessment order and adopt the status of BOI and change the tax accordingly. The Department has now come in appeals before the Tribunal and the following common grounds have been raised: 1. The learned AAC has erred in law and on the facts of the case in directing the ITO to adopt the statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntities are mentioned separately but AOP and BOI are clubbed together in cl.(v)of s. 2(31) which indicated that they were inter-changeable. 5. The submission of the learned counsel for the assessee, on the other hand, was that mere fact that AOP and BOI are clubbed together in cl. (v) of s. 2(31) would not mean that they were inter-changeable entities and that when return was filed in one status the ITO was not entitled to change that status and make assessment in another status. Reliance was placed on the above mentioned decision of Bombay High Court and also on the decision in CWT vs. J.K. Srivastava Sons (1983) 34 CTR (All) 319 : (1983) 143 ITR 183 (All), Pannabai vs. CIT (1985) 47 CTR (AP) 91 (FB) : (1985) 153 ITR 608 (AP) (FB) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as BOI have been assessed as AOP after giving opportunity of being heard as to why they should not be assessed in the status of AOP. In these circumstances, it cannot be said that there was any infirmity in the action of the ITO in making assessment in the status of AOP if the facts really justified such assessment. Mere fact that the assessee chose to file return in the status of BOI would not mean that the ITO had no power or jurisdiction to assess the assessee in the status of AOP after giving reasonable opportunity of being heard. 8. When we examine the scheme, we find that s. 4(1) of the Act lays down that income-tax at the rate mentioned in the Central Act would be charged for particular year in accordance with the provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thereafter, if the assessee objects to such an assessment on account of change of status he can do so under s. 143(2) in view of provisions in s. 143(10) (sic). This indicates that ITO has jurisdiction to assess a person in a status other than the one in which he has filed his return and if the assessee is dissatisfied from the assessment under s. 143(1) he can object to it under sub-s. (2) of that section or he may file an appeal under s. 246(c). 9. The view which we have adopted is supported by the decision in CIT vs. D. Seshagiri Rao and Munnilal Shivnarain Kothari vs. CIT. The decision of Bombay High Court in CIT vs. Associated Cement Steel Agencies on which the learned AAC and also the learned counsel for the assessee had relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh High Court in D. Seshagiri Rao and by Rajasthan High Court in Munnilal Shivnarain Kothari referred to above appears to us to be preferable. We may mention here that the mentioned Rajasthan High Court decision has been followed by the Tribunal in ITA No. 1424/Ahd/1987 in the case of Dahyabhai Family Trust's case decided on 14th June, 1990 in preference to the decision of Bombay High Court in CIT vs. Associated Cement Steel Agencies. The plea of the learned counsel for the assessee to the effect that we should take a view different from that taken in ITA No. 1424/Ahd/1987 cannot be accepted because after considering all the decisions we have come to the conclusion that the view mentioned by us above was acceptable. We, accordingly, hold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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