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2. The brief facts are that assessee is a Revocable Private Trust settled by Mr. Burjor Hormosji Reporter and Mrs. Aloo Burjor Reporter on 08/03/2007. The trustee of the assessee was DSP Merrill Lynch Trust Services Limited. The trust was a revocable trust during the life time of the settler. During the F.Y.2015-16, the assessee trust was revoked by settler on 13/11/2015 pursuant to the provisions of the trust deed. The assessee trust had not filed its return of income and accordingly, it was identified as non-Filler in Cycle-2 of Non-Filler Management System (NMMS) under Priority P-2 category. As per the AIR information, it was noted that the trust had purchased units of mutual funds of Rs.2,59,21,343/- during the F.Y.2009-10 relevant to A.Y.2010-11. Based on this information, action was taken in the hands of the assessee trust and the matter was selected for scrutiny by reopening the proceedings by issuance of notice u/s.148 on 31/03/2017. As per the assessment order, the notice was returned unserved and further, ld. AO tried to serve the notice through an affixture since assessee did not respond to the notices. Finally, ld. AO issued a show-cause notice to pass the assessment by way of his best judgment assessment. This final show-cause was also not served / responded by the assessee. Accordingly, ld. AO assessed the income at Rs.2,59,21,343/- on account of purchase of mutual funds.
3. Before the ld. CIT(A) it was submitted that the original trustee i.e. DSP Merrill Lynch Trust Services Ltd. had undergone the various changes and during the F.Y.2015-16, the original Reporter Family Private Trust trustee was acquired by the Original Trustee was acquired by Julius Baer Wealth Advisors Pvt Ltd, and the name of the Original Trustee post-acquisition was changed to Julius Baer Trustees India Limited. Further, Julius Baer Trustees India Limited was acquired by Warmond Trustees & Executors Private Limited and post-acquisition the name of Julius Baer Trustees India Limited was changed to Warmond Fiduciary Services Limited. Thus, it was submitted that notices could not be served to the assessee because of change in the address of the trustee when the proceedings were initiated. Apart from that, another important fact, it was brought to the notice of the ld. CIT (A) and as per the law, the assessee being a revocable trust, it was not required to offer the income earned for tax purpose because the income was to be shown by the settler of the trust and also the settler of the trust had duly discharged their obligation and offered to tax income earned by the trust as per the provisions of Section 61 of the Act. Following clause of the trustee was also referred and relied upon:-

6. After hearing both the parties and on perusal of the impugned order as well as material placed on record, we find that there is no dispute that assessee is a 'revocable trust' settled by Mr. Burjor Hormosji Reporter and Mrs. Aloo Burjor Reporter on 08/03/2007. The assessee had purchased units of mutual funds of Rs.2,59,21,343/- during the A.Y.2010-11 and the same has already been offered to tax in the income tax return of the settler for the A.Y.2010-11 in the return of income filed on 31/07/2010. In the said return of income, the settler Mr. Burjor Hormosji had offered the capital gain on mutual funds of Rs.2,59,21,343/- of the revocable family private trust. The copies of the returns have been filed before us in the paper book which was also filed before the ld. CIT(A). Once, these facts were brought on record, we do not find any reasons as to how the Reporter Family Private Trust appellate authority can brush aside all those documents and simply endorse the exparte assessment order that the ld. AO has reopened the assessment to ascertain the sources and not the income earned out of those mutual funds. First of all he has to ascertain as to in whose case such income should be taxable whether in the hands of the revocable trust or in the hands of the transferor / settler. Section 61 of the Act reads as under:-

(ii) it, in any way, gives the transferor a right to re-assume power directly or indirectly over the whole or any part of the income or assets;
(b) "transfer" includes any settlement, trust, covenant, agreement or arrangement."

8. Ergo, from the plain reading of Section 61 r.w.s. 63 of the Act, the income arising from revocable transfer of assets is taxable in the hands of the transferor, i.e., the settler of the revocable trust and it is to be clubbed in the total income of the transferor and not in the total income of the transferee of the assets. We have Reporter Family Private Trust already noted that clause 1.2.4 of the trust deed which provides that settler may revoke this trust deed and the entire trust fund shall be reinvested in the settler absolutely. Thus, even as per the terms of the trust deed, the income or any source of investment in the mutual funds was ought to be taxable in the hands of the settler. Thus, even as per law, the income could not have been taxed in the hands of the assessee trust.