Judgment:
1. The Income-tax Appellate Tribunal, Allahabad, has referred the following question of law under Section 256(2) of the Income-tax Act, 1961, hereinafter referred to as 'the Act', for opinion of this court:
Whether, on the facts and in the circumstances of the case, the Tribunal was in law justified in upholding the Deputy Commissioner (Appeals) action in cancelling the order passed under Section 154 of the Income-tax Act, 1961, on February 27, 1989, for the assessment year 1982-83?
2. The present reference relates to the assessment years 1982-83 and 1986-87.
3. Briefly stated the facts giving rise to the present reference are as follows:
(i) The assessee is a trust created by Brig. Kapil Mohan, who had gifted 60,000 equity shares of M.M. Ltd., for the benefit of beneficiaries, i.e., the first son of Shri Rakesh Mohan by a duly executed trust deed dated May 22, 1973. At the time of creation of the trust, Shri Rakesh Mohan was himself a minor and had no son. It was further provided in the trust deed that in the event of the first son of Shri Rakesh Mohan expiring before attaining majority or in the event of Shri Rakesh Mohan not begetting a son, the sole beneficiary of the trust was to be one out of various persons specified in the trust deed depending on the occurrence of alternative and contingent events. On these facts, the Department took the view that since the sole beneficiary of the trust was neither in existence nor was identifiable at the time of creation of the trust, the trust did not fulfil the requirements of Section 6 of the Indian Trusts Act and, therefore, was not a validly created trust.
(ii) For the assessment year 1982-83, the assessee-trust filed a return of income declaring total income of Rs. 58,530. Following the Departmental stand in earlier years in this case also the trust was assessed on the total income of Rs. 58,530 on protective basis. However, at the time of making assessment the Assessing Officer charged the assessee-trust at the normal rates as against the higher rates applicable as per the provisions of Section 164 of the Act, since the assessee was a private trust and the shares were indeterminate. Subsequently, on detecting the above mistake, the Assessing Officer passed an order under Section 154 of the Act on February 27, 1989, thereby charging the tax at 66 per cent, in accordance with the provisions of Section 164 of the Act.
(iii) For the assessment year 1986-87, the assessee-trust filed a return of income declaring a total income of Rs. 49,168. For this year also, the assessment was completed under Section 143(3), on March 3, 1989, the assessee trust on a total income of Rs. 49,168 on a protective basis.
In the appeal for the assessment year 1982-83 against the order under Section 154 passed on February 27, 1989, the Deputy Commissioner (Appeals), Lucknow, vide her order dated March 21, 1991, cancelled the order passed under Section 154 of the Act on the ground that for the assessment year 1980-81 in the wealth-tax cases of Smt. Comila Mohan and Shri Rakesh Mohan, the Commissioner of Wealth-tax (Appeals) and the Tribunal had held that the trust was a validly created one and the shares of the beneficiaries were known and determined and in these circumstances the Assessing Officer was not justified in taking recourse to the provisions of Section 164 of the Act for applying the higher rates of tax as per the provisions of Section 164 of the Act.
(iv) In the appeal against the assessment order under Section 143(3) for the assessment year 1986-87, the Deputy Commissioner (Appeals) following the Tribunal's order in I.T.A. No. 1252(Alld) of 1986 for the assessment year 1983-84 in the case of Smt. Comilla Mohan held that the trust was a valid one and also directed the Assessing Officer to make a substantive assessment in the hands of the assessee-trust.
4. On the Department preferring second appeals against the respective orders of the Deputy Commissioner (Appeals) for the assessment year 1982-83 as well as 1986-87, the Tribunal has passed a consolidated order on November 23, 1993, whereby following the Income-tax Appellate Tribunal's order passed in the cases of Rakesh Mohan and Smt. Comilla Mohan for the assessment year 1980-81 the Tribunal has upheld the Deputy Commissioner (Appeals) action for both the assessment years.
5. We have heard Sri A.N. Mahajan, learned standing counsel for the Revenue and have perused all the orders including the order passed under Section 154 of the Act.
6. Merely because the Revenue had not accepted the decision of the Tribunal and the reference made was pending, it cannot be said that there was any mistake apparent on the record and, therefore, action under Section 154 of the Act was not warranted. We are, therefore, of the considered opinion that the Tribunal has not committed any illegality in upholding the order passed by the Deputy Commissioner (Appeals).
7. In view of the aforesaid discussion, we answer the question referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue.
8. There shall be no order as to costs.