Tribunal upholds order on tax evasion scheme, rejects challenges, and removes remarks.

The Tribunal upheld the Commissioner's order to set aside assessments and conduct fresh assessments after finding the creation of multiple trusts as a tax evasion scheme. The Tribunal rejected challenges to the Commissioner's jurisdiction, validity of notices, and assessments made by the ITO. It concluded that the trusts were illegitimate devices for tax evasion, applying principles from McDowell & Co. Ltd. The Tribunal also ordered the removal of remarks on Mr. Harish Patel's conduct from the Commissioner's order.

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Issues Involved:
1. Jurisdiction of the Commissioner under Section 263 of the IT Act.
2. Validity of the notices issued by the Commissioner.
3. Whether the assessments made by the ITO were erroneous and prejudicial to the interest of Revenue.
4. The legitimacy of the trusts and whether they were created as a device to evade taxes.
5. Application of the principles laid down in the case of McDowell & Co. Ltd. vs. CTO.
6. Remarks about the conduct of Mr. Harish Patel.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Commissioner under Section 263 of the IT Act:
Mr. Patel challenged the jurisdiction of the Commissioner to upset the assessments made by the ITO, arguing that the order was passed beyond the prescribed period of two years. However, the Tribunal found that the Commissioner had invoked his jurisdiction within the subsistence of the period of limitation under the unamended law. The Taxation Laws (Amendment) Act, 1984 extended the period of limitation, and the Commissioner's action was within this extended period. Therefore, the argument regarding jurisdiction was rejected.

2. Validity of the notices issued by the Commissioner:
Mr. Patel argued that the notices issued by the Commissioner were bad in law as they represented a difference of opinion between the Commissioners. The Tribunal found that the Commissioner had disclosed his intention to revise the assessments on valid grounds and provided the appellants with full opportunity to respond. The final order was based on the grounds mentioned in the notices, and there was no illegality, irregularity, or infirmity in the notices. This argument was also rejected.

3. Whether the assessments made by the ITO were erroneous and prejudicial to the interest of Revenue:
Mr. Patel contended that the assessments were neither erroneous nor prejudicial to the interest of Revenue, as the ITO had applied his mind to the facts of the cases. However, the Tribunal found that the ITO had failed to conduct necessary enquiries into the facts of the cases, and the creation of multiple trusts by the same settlor within a short period indicated a device to evade taxes. The Tribunal concluded that the assessments were erroneous and prejudicial to the interest of Revenue, justifying the Commissioner's action under Section 263.

4. The legitimacy of the trusts and whether they were created as a device to evade taxes:
Mr. Patel argued that the trusts were validly executed and there was no intention to avoid taxes. He cited various judgments supporting the creation of multiple trusts. However, the Tribunal found that the trusts were created with the object of evading taxes, as evidenced by the chain of trusts and the lack of ultimate benefit to human beneficiaries. The Tribunal held that the trusts were a device for tax evasion, and the Commissioner was justified in setting aside the assessments.

5. Application of the principles laid down in the case of McDowell & Co. Ltd. vs. CTO:
Mr. Patel contended that the principles in McDowell & Co. Ltd. were not applicable as they were obiter dicta and had not been followed in subsequent cases. The Tribunal, however, found that the principles were applicable to the present cases, as the creation of multiple trusts was a scheme for tax avoidance. The Tribunal noted that the principles in McDowell & Co. Ltd. had been followed by various courts and were relevant to the facts of the present cases.

6. Remarks about the conduct of Mr. Harish Patel:
The Tribunal agreed with Mr. Patel that the Commissioner should not have passed remarks about Mr. Harish Patel's conduct. The Tribunal directed the expunction of such remarks from the Commissioner's order.

Conclusion:
The Tribunal dismissed all the appeals, upholding the Commissioner's order to set aside the assessments and direct fresh assessments after necessary investigations. The Tribunal found that the creation of multiple trusts was a device to evade taxes, and the ITO's failure to conduct necessary enquiries rendered the assessments erroneous and prejudicial to the interest of Revenue.

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