ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, TRICHY, TRICHY vs. SELLAPPAGOUNDER RAMASAMY KARTHIC, KARUR

The Grounds raised by the Revenue reads as under:- 1. The Order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts and in law.

Brief facts of the case are as follows: The assessee is an individual. A search u/s.132 of the Act was conducted in the residential premises of the assessee on 25.03.2021. During the course of search, certain loose sheets were found and seized. On examination of loose sheets, it was seen that a sum of Rs.77,08,000/- was deposited during the period. For the relevant assessment year 2021-22, assessee filed his return of income on 25.02.2022 admitting total income of Rs.37,40,710/-. The AO on the basis of the finding of the search, selected the assessee’s case for complete scrutiny. The AO, on the basis of

Aggrieved, assessee filed appeal before the CIT(A). Before the CIT(A), the assessee stated that the entries represent deposits made in the bank accounts of various family members and HUFs out of opening cash balances and regular disclosed income already offered to tax. The assessee further explained that the figures reflected in the loose sheets represented only proposed or planned deposits and the actual deposits as per the bank statements aggregated only to Rs.48,79,000/-. Considering the submissions of the assessee and the materials placed on record, the CIT(A) deleted the addition made by the AO.

Aggrieved, Revenue is in appeal before the Tribunal. The Ld.DR relied on the finding of the AO.

The Ld. AR submitted that the Ld.CIT(A) has categorically deleted the impugned protective addition by holding that, in the absence of any corresponding substantive addition having been

The Ld. AR further submitted that the assessee had demonstrated, by way of documentary evidence, that the family members and HUFs had sufficient disclosed income as well as opening cash balances to explain the impugned deposits. The aggregate disclosed income and opening balances were substantially higher than the amounts deposited in the bank accounts, and due taxes on such income had already been discharged through advance tax and TDS. Accordingly, the Ld. AR submitted that the material placed on record clearly establishes that the deposits were sourced out of disclosed and taxed income and, therefore, no unexplained income survives for invoking the provisions of section 68 of the Act. It was thus contended that any further addition would amount to double taxation of the same income, which is impermissible in law.

We have heard the rival submissions and perused the material available on record. On perusal of the order of the Ld. CIT(A), we note that the impugned addition was made by the Assessing Officer purely on protective basis. The Ld. CIT(A), after examining the facts on record, deleted the addition by holding that no corresponding substantive addition had been made and sustained in the hands of any other person and, therefore, the protective addition in the hands of the present assessee was not sustainable in law. It is pertinent to note that the Revenue, in the present appeal, has not raised any specific ground challenging the categorical finding of the Ld. CIT(A) that, in the absence of a corresponding substantive addition, the protective addition itself is unsustainable. In the absence of any challenge to such finding, the same has attained finality.

We further note from the assessment order that the AO himself has recorded a finding that the impugned deposits belonged to various identified individuals named in the seized documents and that substantive additions would be considered in their respective hands. However, except in the cases of Smt. Karthic Sakthipriya and Smt. Ramasamy Poongodi, no substantive additions were made in the hands of other identified

It is a settled principle that protective addition can be made only where there exists uncertainty or ambiguity regarding the person in whose hands a particular income is assessable. In the present case, there was no such ambiguity, since the identities of the persons to whom the deposits belonged were clearly discernible from the seized materials themselves. Once the Revenue has accepted that the deposits pertain to identified persons, sustaining a standalone protective addition in the hands of the assessee is legally untenable.

We also find merit in the contention of the assessee that documentary evidences were furnished demonstrating sufficient disclosed income and opening cash balances in the hands of family members and HUFs to explain the impugned deposits. The materials placed on record indicate that the aggregate disclosed income and opening balances were sufficient to cover the deposits and taxes thereon had also been duly discharged.

In view of the above facts and circumstances, we find no infirmity in the order of the Ld. CIT(A) deleting the impugned protective addition. Accordingly, the order of the Ld. CIT(A) is upheld and the grounds raised by the Revenue are dismissed.

In the result, the appeal filed by Revenue is dismissed.