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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI KULDIP SINGH & SHRI GAGAN GOYAL
Per : Kuldip Singh, Judicial Member:
The appellant, Shri Arvind Navrang Singh (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 22.01.2021 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2011-12 on the grounds inter-alia that :- “1. On the facts and in the circumstances of the case and in law the Ld.CIT(A) erred in confirming the addition on protective basis.
On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in holding the addition as unexplained income of appellant on protective basis even after the Hon'ble Income Tax Settlement Commission has passed its order u/s 245D(4) concluding the amount of Rs.1,70,00,000/- as an income of M/s MAAD Realtors and Infra Ltd.
The appellant craves leave to add, alter or delete all or modify any or all the above grounds of appeal”
2. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : on the basis of search and seizure operation carried out under section 132 of the Income Tax Act, 1961 (for short ‘the Act’) on 31.07.2014 in MAAD Group of cases including residential premises of Shri Arvind Navrang Singh (assessee), notice under section 153A of the Act was issued for A.Y. 2009-10 to 2014-15. The assessee filed his return of income in response to the notices issued under section 153A of the Act for the A.Y. 2009-10 to 2014-15 and regular return of income was filed for A.Y. 2015-16. Necessary notices were issued to the assessee to which he has duly responded. During the course of search at the office premises of M/s. MAAD Realtors and Infra Ltd. loose paper No.8 of 1 was found and seized which is a computer print out and ledger accounts of various parties in the books of M/s. MAAD Realtors and Infra Ltd. for the period from 01.04.2004 to 26.04.2011. It is also recorded in the lose paper No.8 that the assessee has lent a loan of Rs.1,70,00,000/- to M/s. MAAD Realtors and Infra Ltd. in cash during 15.11.2010 to 28.12.2010. Declining the contentions raised by the assessee that there is no entry in the books of accounts of the assessee in A.Y. 2011-12 qua the cash loan of Rs.1,70,00,000/- and the assessee has failed to explain the source of these funds, the AO proceeded to make the addition thereof being undisclosed income and thereby framed the assessment under section 143(3) read with section 153A of the Act.
3. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition by dismissing the appeal. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing present appeal.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
Undisputedly cash loan of Rs.1,70,00,000/- lent to M/s. MAAD Realtors and Infra Ltd. by the assessee during A.Y. 2011-12 has already been assessed as unaccounted income of M/s. MAAD Realtors and Infra Ltd. by the Settlement Commission, Mumbai. It is also not in dispute that the Ld. CIT(A) has made the addition in question as protective one merely on the ground that order of the Settlement Commission has not been accepted by M/s. MAAD Realtors and Infra Ltd. as they have gone in writ petition before Hon’ble Bombay High Court. It is also not in dispute that it has never been case of the Revenue that the amount of Rs.1,70,00,000/- belongs to the assessee.
In the backdrop of the aforesaid undisputed facts the sole question arises for determination in this case is: “As to whether in the face of order passed by the Settlement Commission under section 245D(4) of the Act that amount of Rs.1,70,00,000/- the addition in question, is income of M/s. MAAD Realtors and Infra Ltd., the Ld. CIT(A) has the power to make the addition in question of Rs.1,70,00,000/- as unexplained income of the assessee on protective basis?”
To proceed further it is necessary to peruse the provisions contained under section 245-I of the Act which are extracted for ready perusal as under: “Order of settlement to be conclusive. 245-I. Every order of settlement passed under sub-section (4) of section 245D shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force.”
Bare perusal of the provisions contained under section 245-I goes to prove that when the order has been passed by the Settlement Commission under section 245D(4) of the Act it shall be conclusive and shall not be reopened in any proceedings under this Act or under any other law for time being in force. In these circumstances the order passed by the Ld. CIT(A) is not sustainable in the eyes of law. Moreover, when as per order dated 29.05.2018 Settlement Commission has passed the order under section 245D(4) of the Act holding the amount of Rs.1,70,00,000/- being the income of the M/s. MAAD Realtors and Infra Ltd., making the same addition in the hands of the assessee would amount to double taxation. Even as a judicial protocol the Ld. CIT(A) is legally obliged to follow the order passed by the Settlement Commission being the higher authority on quasi judicial side. So when the order passed by the Settlement Commission (supra) has not been disturbed by the higher judicial forum Ld. CIT(A) had no authority under the Act to decide the same.
Identical issue has also been decided by the Hon’ble Rajasthan High Court in case of CIT vs. Sobhrajmal (D.B. IT Reference Application No.34 of 1994). The co-ordinate Bench of the Tribunal in case of Parasmal Dangi vs. ACIT [IT(SS)A] No.40/Mad/1997 has also decided the identical issue that “there cannot be two assessments in respect of same income where the AO had made substantive addition in case of certain person, he could not make protective assessment of the same addition in the hands of the assessee and the same is unsustainable in law”.
Moreover, in the face of the undisputed fact that the Revenue Department has never challenged the order passed by the Settlement Commission (supra) the Ld. CIT(A) has exceeded his power to make the addition in the hands of the assessee on protective basis. Even otherwise when substantive addition has already been made in the hands of M/s. MAAD Group by the Settlement Commission, which order has attained finality till date the same addition could not be made on protective basis in the hands of the assessee.
The co-ordinate Bench of the Tribunal in case of Saipem Uk Limited vs Deputy Director Of Income Tax (2007) 108 ITD 545 (Mum), 2008 298 ITR 113 (Mum) while deciding the identical issue also observed that the right to make protective assessment is given to the ITO but not to the appellate authorities. So when the substantive addition is already made in the hands of M/s. MAAD Realtors and Infra Ltd. the addition in the hands of the assessee qua the same amount is not sustainable in the eyes of law, hence ordered to be set aside.
In view of what has been discussed above, the appeal filed by the assessee is hereby allowed.
In view of the matter stay petition filed by the assessee is dismissed having been become infructuous.
Order pronounced in the open court on 28.06.2023.