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Facts
A search was conducted on Shri Sanjeev Kejriwal, who admitted to an accommodation entry business through his wife's proprietorship concern, Smt. Ritu Kejriwal (the assessee). The AO made an addition of Rs. 14,65,442/- on a substantive basis in the husband's hands and on a protective basis in the assessee's hands. The CIT(A) upheld the assessment reopening but reduced the protective addition on the assessee.
Held
The Tribunal dismissed the Revenue's appeal, noting that the tax effect was below the monetary limit stipulated by CBDT Circular No. 5/2024, and the case, involving an accommodation entry provider, did not fall under the exceptions. Furthermore, as a substantive assessment for the same income was made on the husband, the protective assessment on the assessee became infructuous and was liable to be cancelled.
Key Issues
1. Whether the Revenue's appeal, having a low tax effect, falls under the exceptions of CBDT Circular No. 5/2024 for accommodation entry providers. 2. Whether a protective assessment can be sustained when a substantive assessment for the same income has already been made on another entity.
Sections Cited
250, 147, 144, 132, 132(4), 148
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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
order
: February 18th, 2025 ORDER
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the Revenue is against the order of the Ld. Commissioner of Income Tax (Appeals)- 27, Kolkata [hereinafter referred to as “the Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2018-19 dated 12.07.2024, which has been passed against the assessment order u/s 147/144 of the Act, dated 15.02.2023.
1.2. None appeared on behalf of the assessee and the case was heard with the assistance of the Ld. Sr. DR.
2. The Revenue is in appeal before the Tribunal raising the following grounds of appeal:
“1. That on the facts and in the circumstances of the case, the Ld. CIT(A), Kolkata has erred in deleting the addition of Rs.9,76,961/- out of Rs. 14,65,442/- Undisclosed income by earning commission on accommodation entries.
That on the facts and in the circumstances of the case and in law, the amount of Rs. 9,76,961/- out of Rs. 14,65,442/- Undisclosed income by earning commission on accommodation entry is in the nature of case related to accommodation entry falling within the exceptional clause (h) of the para no.3.1 of further filing of appeal as per CBDT circular No.5/2024 vide F.No. 279/Misc.l42/ 2007/ ITJ(Pt), dated- 15.03.2024.
3. That the dept, craves leave to add, modify or alter any of the ground(s) of appeal and/or adduce additional evidence at any time during the appeal proceedings.”
Brief facts of the case as culled out from the records are that a search and survey operation u/s 132 of the Act was conducted in the “6.2.2. In view of the above judicial pronouncements, it can be inferred that in the case of the assessee as there are several seized incriminating materials which depicts the fact that income for the current AY may had escaped assessment, the reopening of the assessee’s case even after expiry of four years from the end of relevant assessment is legitimate. Hence, the contention of the assessee is not accepted. Therefore, these grounds of appeal
filed by the assessee are dismissed”
4. Aggrieved with the order of the Ld. CIT(A), the Revenue has filed the appeal before this Tribunal. At the outset, it was informed that the tax effect was below the monetary limit as it was only Rs. 1,08,554/-. The Ld. Sr. DR relied upon ground no. 2, as per which this is a case of exception under clause (h) under para 3.1 for filing appeal as per the CBDT Circular No. 5/2024 dated 15.03.2024. We have gone through the Circular and it mentions cases involving organized tax evasion including cases of bogus capital gain/loss through penny stocks and cases of accommodation entries. The Bench was of the view that the case of the accommodation entry provider does not come under the exception as the exception relates to cases of organized tax
7. Similar question was considered by the Supreme Court in Lalji Haridas v. ITO [1961] 43 ITR 387 , where their Lordships observed as under: "... If in the proceedings taken against Lalji it is finally decided that it is Lalji who is responsible to pay tax for the income in question it may not become necessary to make any order against Chhotalal. If, however, in the said proceedings Lalji is not held to be liable to pay tax or it is found that Lalji is liable to pay tax along with Chhotalal it may become necessary to pass appropriate orders against Chhotalal. When we suggested to the learned counsel that we propose to make an order on these lines they all agreed that this would be a fair and reasonable order to make in the present proceedings." (p. 393) Similarly, the Allahabad High Court also had an occasion to consider similar questions in the case reported in Smt. Hemlata Agarwal v. CIT [1967] 64 ITR 428 .
It is, therefore, clear that the protective assessment made against Smt. Dayabai only to meet a situation that in case the assessment of Vinit Talkies is not made, this assessment could become operative, cannot now be
Hence, on both the counts i.e. on account of tax effect as well as on the facts of the case, the addition in the hands of the assessee is not liable to be sustained and the appeal is not maintainable and is hereby dismissed.
In the result, the appeal filed by the Revenue is dismissed.