The respondent (assessee) claims to be a Trust. For the assessment years 1986-1987 and 1987-1988 the Assistant Commissioner of Income Tax, Circle-1(4), Hyderabad, issued a notice under Section 148 of the Act to file a return of income, in vain. The Assessing Officer, therefore, issued notice under Section 142(1) of the Act calling upon the Trust of the assessee to file the return of the income and produce the relevant books of accounts. When the case was heard, earlier Trust sent a letter dated 02.02.1990 stating that under bona fide impression that there was no liability of income tax, they did not file the returns; registration granted by the Commissioner was cancelled; the appeals filed were pending before the Appellate Tribunal; and that there was no statutory obligation to respond to the notices. After conducting enquiry, the Assessing Officer assessed the total income at Rs.2,70,000/- and levied the tax and interest under Sections 139(8) and 217 of the Act. The Assessing Officer observed that the Trust funds were invested in M/s.B.K.Industries and that loans were advanced to Sri B.Kishanlal in violation of Section 13(1)(d) of the Act, and therefore, the Trust is not exempted under Sections 11 and 12 of the Act for the relevant assessment year. A similar order was passed for the assessment year 1987-1988 also. The appeals filed by the assessee-Trust were allowed by the Commissioner of Income Tax (Appeals), and the appeals
