- (1.) THE Income Tax Appellate Tribunal Delhi Bench B New Delhi has referred the following question of law under section 256(1) 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 right in law in holding that the protective assessment has to be treated as substantive assessment as the assessing officer failed to indicate about the real owner of the income -
(2.) BRIEFLY stated the facts giving rise to the present Reference are as follows: "The present Reference relates to the Assessment Year 1984 -85. The respondent -assessee filed return of income on 5 -11 -1985 in the status of individual (trust) showing an income of Rs. 1,93,398, which was revised on 19 -1 -1987 showing nil income with a note that the income of the trust is liable to be assessed in the individual hands of each beneficiary as provided under section 161 of the Act. However, the assessment was completed on 24 -3 -1987 on an income of Rs. 1,93,398 on protective basis in the status of the assessing officer and the tax was charged at the maximum marginal rate with the observation that the trust was not genuine. It was also noted that a substantive assessment would be made in the hands of the real owner of the income. Feeling aggrieved the assessee preferred an appeal before the Commissioner of Income Tax (appeals), Agra, who vide order dated 24th March, 1988 had held that protective assessment be made on the income and in the status shown by the assessee and thus he directed the assessing officer to include the income of the trust only after considering the material in the substantive assessment in the hands of the real owner during this year and on the basis of the returned income and status shown by the assessee trust. On further appeal before the Tribunal, the Tribunal allowed the appeal holding that it was necessary to indicate who was the real owner and the order did not indicate the same in these circumstances the assessment framed on the assessee was to be treated as substantive assessment."
(3.) WE have heard the learned counsel for the parties. The learned Standing Counsel appearing for the Revenue submitted that the Tribunal was not correct in holding that in the absence of indicating about the real owner of the income no protective assessment can be made and the only course left open to the assessing officer was to make a substantive assessment. He submitted that the Apex Court in the case of has categorically held that when there was a doubt as to which person among two was liable to be assessed, parallel proceedings might be started against both; and also laid down an equitable procedure to be followed to make protective assessment. He further submitted that it is settled law that where there is doubt or ambiguity about the real entity in whose hands a particular income is to be assessed, the Assessing Authority is entitled to have recourse to making protective assessment in the case of one and regular assessment in the case of other. According to him if the assessing officer is not aware as to who is the real owner of the income even in that case protective assessment can be made where return has been filed by a person.;