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2013 (12) TMI 1304 - AT - Income TaxLevy of penalty under section 271(1)(c). - taxability of income in the hands of trust or beneficiary - applicability of provisions of Section 61(1) - Held that:- Following CIT vs. T.A.V. Trust [2003 (3) TMI 39 - KERALA High Court] - By virtue of the provisions of s. 161(1) of the Act income from property received by the trust cannot be treated as income from property in the representative assessment which has to be made on the trustee - In the case of a trust which is having income from business as well as income from house property, by virtue of the provisions of s. 161(1A) of the Act, the income from the business earned by the trust shall be taxed at the maximum marginal rate treating it as a single unit and the income from house property has to be assessed in the hands of the trustee in the manner provided in s. 161(1) of the Act - The trust is a representative assessee and to that extent of income tax leviable on the incomes of the beneficiaries, assessment can be made either in the hands of the respective beneficiaries or in the hands of the assessee to that extent only, indicating the tax liability of respective beneficiaries by consolidated order - The Assessing Officer has not followed either of the procedures but still contending to hold that the entire income received on the fixed deposit is taxable in the hands of the assessee- trust, violating the directions of the learned CIT(A) and also violating the provisions of the Act - The orders of AO levying penalty is not only bad in law but also on facts - Penalty cannot be levied - Decided in favour of assessee.
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