SUMUKH COMMERCIAL PVT LTD.,MUMBAI vs. DCIT CC 1(1), MUMBAI

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ITA 2499/MUM/2019Status: DisposedITAT Mumbai03 December 2021AY 2008-096 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that a protective addition cannot be sustained when a substantive addition for the same amount has been made in the hands of another assessee. Therefore, the protective addition made in the hands of the assessee companies was deleted.

What were the facts?

The assessee companies received unsecured loans which the Assessing Officer treated as accommodation entries and added on a protective basis. A substantive addition was made in the hands of a third party, Mr. Praveen Kumar Jain, for the same loans.

What were the issues?

Whether a protective addition can be made in the hands of an assessee when a substantive addition for the same income is made in the hands of another person.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VIRTUAL COURT

Before: SHRI S. RIFAUR RAHMAN, HONBLE & SHRI PAVAN KUMAR GADALE, HONBLE & Sumukh Commercial Pvt. Ltd., v.

For Appellant: Shri Hemant Chimanlal Leuva
Hearing: 14.09.2021Pronounced: 03.12.2021

2 & 2501/MUM/2019 (A.Y: 2008-09) Sumukh Commercial Pvt. Ltd., & Spurti Computech Pvt. Ltd., O R D E R PER S. RIFAUR RAHMAN (AM) 1. These appeals are filed by different assessees of same group against different orders of the Learned Commissioner of Income Tax (Appeals)–47, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 26.02.2019 for the A.Y. 2008-09.

ITA.No. 2499/MUM/2019 (A.Y. 2008-09).

2.

Inspite of issue of notice none appeared on behalf of assessee nor any adjournment was sought. Thus, we proceed to dispose of this appeal on hearing Ld. DR on merits.

3.

At the time of hearing, it is brought to our notice by Ld. DR that the credit appearing in the case of assessee from Sparko group as per the details available on record, is nothing but the accommodation entries in the guise of unsecured loans. Assessing Officer observed that the above loan is bogus loan and the genuineness of which is not proved. However, the assessee company is running, operate and controlled by Mr. Praveen Kumar jain (for short “PKJ”) for conducting the business of providing accommodation entries. Accordingly, he submitted that the loan appearing in the books of assessee company was added in the hands of 3 & 2501/MUM/2019 (A.Y: 2008-09) Sumukh Commercial Pvt. Ltd., & Spurti Computech Pvt. Ltd., PKJ on substantive basis and the same loan is added in the hands of the assessee on protective basis u/s. 68 of the Act. Aggrieved assessee preferred an appeal before the Ld.CIT(A) and Ld.CIT(A) observed in his order at Para No. 22.5 that in view of the facts and circumstances and various judicial pronouncements, the ground raised by the assessee hereby allowed with the comments that the same shall be revived if the addition made in the case of PKJ is deleted in the appellate proceedings.

4.

Aggrieved assessee preferred an appeal before the ITAT raising following grounds in its appeal: - “The appellant has preferred an appeal against the order dated 26.02.2019 passed by Id. CIT (A) 47 u/s. 250 of The Income Tax Act, in pursuance of appeal filed against assessment order dated 19.03.2016 passed u/s. 153C r.w.s. 143 (3) of the Income Tax Act, Following are the grounds of appeal without prejudice to one another: I. The learned Commissioner of Income Tax (Appeal) has deleted addition made by Learned Assessing office on protective basis u/s.68 as unexplained cash credit amounting to Rs. 12.50 Crores with comments / observation / order that the same shall revive if the addition in the case of Third Party / Shri Praveen Kumar Jain is deleted in the appellate proceedings. The appellant craves to add, amend or alter the grounds of appeal at the time of or before the hearing of appeal.”

5. Considered submissions of Ld. DR and material placed on record, we observed from the record that substantive addition was made in the hands of PKJ and protective assessment was made in the hands of the 4 & 2501/MUM/2019 (A.Y: 2008-09) Sumukh Commercial Pvt. Ltd., & Spurti Computech Pvt. Ltd., assessee company and we further observed that the Ld.CIT(A) agreed with the assessee that protective assessment cannot be made when substantive assessment is made in the hands of the PKJ. Further, he made an observation that in case the addition is deleted in the hands of the PKJ the addition in the hands of the assessee may be revived. After considering the fact on record we observed that the protective assessment cannot be sustained due to the fact that the Assessing Officer cannot proceed with two additions for the same amount in two different hands. As per various judicial pronouncements protective addition cannot be made in the hands of the assessee when substantive addition is made in the hands of the another assessee with proper evidences on record. Therefore, we deem it fit and proper to agree with the finding of the Ld.CIT(A) without considering his comments on revival of the assessment and we deem it fit and proper to delete the protective addition made in the hands of the assessee. Accordingly ground raised

by the assessee is allowed. ITA.No. 2501/MUM/2019 (A.Y.2008-09)

6. Assessee has raised following grounds in its appeal: - “The appellant has preferred an appeal against the order dated 26.02.2019 passed by Id. CIT (A) 47 u/s. 250 of The Income Tax Act, in pursuance of appeal filed against assessment order dated 21.03.2016 passed u/s. 153C r.w.s. 143 (3) of the Income Tax Act, Following are the grounds of appeal without prejudice to one another

5 & 2501/MUM/2019 (A.Y: 2008-09) Sumukh Commercial Pvt. Ltd., & Spurti Computech Pvt. Ltd., I. The learned Commissioner of Income Tax (Appeal) has deleted addition made by Learned Assessing office on protective basis u/s. 68 as unexplained cash credit amounting to Rs. 6.00 Crores with comments / observation / order that the same shall revive if the addition in the case of Third Party / Shri Praveen Kumar Jain is deleted in the appellate proceedings. II. The appellant craves to add, amend or alter the grounds of appeal at the time of or before the hearing of appeal.

7.

Facts being identical to the case of Sumukh Commercial Pvt. Ltd., in ITA.No. 2409/Mum/2019, the decision taken therein shall apply mutatis-mutandis to the appeal for this appeal also. Grounds raised by the assessee are allowed.

8.

In the result, appeal filed by both the assessees are allowed as indicated above.

Order pronounced on 03.12.2021 as per Rule 34(4) of ITAT Rules by placing the pronouncement list in the notice board.

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