TMI Blog2007 (8) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... financial control would imply ownership of property or the acquiring of rights in such property, the receipt of income from such property and it is use by the appellant among other things. There is nothing on record that clinches this issue beyond doubt. Further even if the statements of Mrs. D.D. Syiem and Ms. T. Blah to diverge on some issues it would not still ipso facto make the appellant the owner of the St. Peter's Higher Secondary School and College in the absence of any other facts or evidence to support such a supposition." 5. The revenue is in appeal before us and relied on the order of intimation. 6. The learned DR relied on the order of the Assessing Officer. 7. The learned Counsel of the assessee submitted affidavit filed by Ms. Dancy Dora Syiem, which is brought on record at page 16 of the paper book swearing that she is the proprietor of St. Peter's Higher Secondary School and College, Shillong-793 003 and Mr. Peter Thorose has been appointed as Principal of the school and college since inception on honorary basis. The affidavit is not controverted. The assessee has filed photocopy of the P.F. Challan which is at page 5 of the paper book dated 15-1-2006 showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd College was run as per the dictate of Mr. Peter Thorose who is the son of Mr. Alexander Aviet Thorose, proprietor of St. Peter's School, Shillong. He accordingly, taxed the income from St. Peter's Higher Secondary School and College determined at Rs. 34,10,000 in the hands of the assessee. 3. The Ld. CIT(A) as per his impugned order dated 17-6-2005 held that financial control of the aforestated St. Peter's Higher Secondary School and College would imply ownership of property or the acquiring of right in such property and the receipt of income and use thereof by the assessee could not be established beyond doubt. He accordingly allowed the appeal of the assessee on this issue. 4. On careful consideration of the orders of the lower authorities and other issues with due respect I am of the opinion that the issue was not properly examined by the lower authorities. The Ld. CIT(A) has mainly relied on the statement of Ms. Dancy Dora Syiem and her assistant Mrs. Blah whereas the Assessing Officer has rejected their claim of ownership of the institute in view of contradiction in their statements and other such reasons discussed in the assessment order dated 25-9-2003. It is very cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... she was concerned only with the academic matter and had no knowledge of financial matters I, therefore, do not agree with my Ld. Brother on this issue. The assessment is accordingly set aside with the direction that the Assessing Officer should finalise fresh assessment, in view of the directions given above. 5. As a result, the appeal of the Department, is treated as allowed for statistical purpose. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 In this appeal there is difference of opinion between the Members of the Bench. Therefore, the following questions are referred to the Hon'ble President of the Income-tax Appellate Tribunal under section 255(4) of the Income-tax Act, 1961 for opinion of the Third Member. The questions framed are as under: (I) "Whether the learned CIT(A) in the facts and circumstances of the case, has rightly allowed the appeal of the assessee without considering all the relevant facts and without obtaining the report of the Assessing Officer on the necessary enquiries directed to be made by his predecessor"? THIRD MEMBER ORDER Per Vimal Gandhi, President.- On account of difference between the Ld. Members of Gauhati Bench of I.T.A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two:- (i) To abuse the provisions of section 10(26) of the Act, wherein local resident Scheduled Tribals are exempted from the Income-tax Act; and (ii) To misuse the concept of the prevailing custom amongst the Khasi Tribe that inheritance is to go to the daughter. Therefore, the names of Ms. D.D. Syiem and Ms. T. Blah were used and it was claimed that they had inherited sufficient properties. 2.3 However, the Assessing Officer observed that he did not believe the above claim. He held as under:- "To simply and obviously put it, Ms. Dancy D. Syiem and Mrs. T. Blah have been used as Benamidars of Mr. Peter Thorose. This Block assessment of Mr. Peter Thorose is therefore, being passed treating him, by virtue of both direct and circumstantial evidence, as the Real Owner of St. Peter's Higher Secondary School and College." 2.4 The Assessing Officer also made protective assessment of income of School in the hands of Mr. A.A. Thorose, observing as under:- "Nonetheless, considering that the office of the Higher Secondary School and College is being run from the same office of the St. Peter's School, and that Ms. Dancy D. Syiem is an employee of the St. Peter's School, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll examine the evidences of sources of the investment to ascertain the truth. 3. It appears that School/College was run on a rented building. You will call for the documents regarding hiring of the building and ascertain the person from whom the building was hired and also the person who has hired the building. 4. The main source of income of the school/college will be fees collected from the students. You will examine how those fees were collected and what was done with the amounts collected. Are books of account maintained for income and expenditure? Who has maintained the books of account or records? All the persons involved should be thoroughly examined. You will ascertain who is the person in charge of the affairs. 5. Is there any Bank account for the school/college? Whether the deposits and withdrawal in the bank account of Mr. Peter Thorose related to the income or expenditure of the school? Has Ms. Dancy Syiem maintained bank account and whether the deposits and withdrawals related to the income and expenditure of the school? 6. You have mentioned that seized documents marked SK 4 is the last will of Mr. A.A. Thorose. You will ascertain what is the ultimate fate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing orders. The Ld. Judicial Member after considering statement of Ms. D.D. Syiem and Mrs. T. Blah agreed with the order of Ld. CIT(A). Further, on the basis of affidavit of Ms. D.D. Syiem available at page-16 of the paper book that assessee, Mr. Peter Thorose, was Principal of School and College since inception and on the basis of photocopy of P.F. challan showing Ms. D.D. Syiem as proprietress, the Ld. Judicial Member held that Mr. Thorose was honorary Principal of the Institution. He also relied upon certificate from Vijaya Bank to the effect that Ms. D.D. Syiem was the owner of St. Peter's School and College and Mr. Peter Thorose was its Principal. He held that the above facts were not controverted by the revenue. In the light of above documentary evidence, Ld. Judicial Member did not find any merit in this case. In his proposed order, he dismissed the appeal of the department. 5. The Ld. Accountant Member did not agree with the above view of the Ld. Judicial Member. He observed that in the assessment order dated 25-9-2003, the Assessing Officer had found ambiguous and contradictory claims of ownership advanced by certain individuals. The Assessing Officer observed that Highe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted that case of benami was not fully established although there were some indications that financial control of Higher Secondary School and College was with the assessee. He relied upon the following decisions:- (a) Smt. Prabhavati S. Shah v. CIT [1998] 231 ITR 1 (Bom.) (b) Jt. CIT v. Swarup Vegetable Products Industries Ltd. [2005] 96 ITD 468 (Delhi). The Ld. Departmental Representative further argued that when enquiries were started by Ld. CIT(A), whose powers are coterminous with that of the Assessing Officer, it was necessary that the matter should have been carried to its logical conclusion. This was not done and, accordingly, the impugned order of the Ld. CIT(A) suffered from an error which could be rectified by remanding the case back to the Assessing Officer. The Ld. Departmental Representative, accordingly, supported the order of the Ld. Accountant Member. 7. The learned counsel for the assessee, on the other hand, argued that the assessee was Principal of School and College and this claim was never disputed or controverted in any statement or document. There was no evidence on record to show that he was proprietor or owner of the School. He further filed co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hool. In the said constitution, the assessee is shown as Headmaster- Joint Secretary, Mr. A.A. Thorose is shown as donor and Ms. D.D. Syiem as Teachers' Representative. (b) Annexure-2 contains details of inspection report and throws no light on the ownership of the property. (c) Annexure-3 is letter dated 25-11-1989 from Mr. A.A. Thorose, Principal of St. Peter's School to Ms. D.D. Syiem, Headmistress. In the letter, she is authorized to open classes for higher education as per her wish and use the school at no cost. (d) Annexure-4 is copy of salary receipt register which shows receipt of salary mainly by Jailin Blah. (e) Annexures-5, 6 7 are letters from the assessee to Joint D.P.I., Shillong, Director of Higher and Technical Education, Government of Meghalaya, Shillong and to the Director of College Development Council, Shillong respectively relating to permission for starting classes XI and XII and college. In all these letters written by the assessee it is clear that these are written as Principal of the Institution. 8.2 Apart from above, the assessment order is full of extracts from statements of Ms. D.D. Syiem, Mrs. T. Blah and those of assessee which contains con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Member has allowed an opportunity to the revenue which they did not ask for and are not interested in the background that according to them, case of benamidar already stands proved. Therefore, the order proposed by the ld. Accountant Member, in my view, is not justified. The reasons for the above view may once again be summarized as under:- (i) It is a search case and proceedings under section 158BC and 158BD have already been taken. Longest arm available to the revenue has already been utilized. Jurisdiction under section 158BD were not legally assumed. (ii) Burden of proof to establish case of Benamidar as asserted by revenue was not discharged. This is held by ld. CIT(A) in unequivocal terms and not disputed by both the ld. Members of the Tribunal. (iii) Ld. CIT(A) again as per letter dated 5-8-2004 allowed one more opportunity to the Assessing Officer to carryon further investigation. Nothing was done. It is reasonable to infer that either further inquiry was not possible or did not yield any fruitful result. This inference is possible from the grounds of appeal raised by the revenue before the Tribunal. (iv) The revenue has not asked for not has shown that they have a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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