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Facts
The assessee is in appeal against an order of the CIT(A) which upheld an assessment order making a protective addition of Rs. 2,40,28,000/- under section 69 of the Act for unexplained investment in immovable property. The assessee claimed the property belonged to his brother-in-law, Bharat Bomb, and he was only a dummy owner who signed the registry under influence.
Held
The Tribunal held that the Assessing Officer made a protective addition against the assessee without making any substantive addition. The ownership of the property and the source of its payment remained unverified and under litigation, making it impossible to ascertain the actual owner at that stage.
Key Issues
Whether a protective addition can be made against an assessee when no substantive addition has been made and the ownership and source of investment are unverified and under litigation.
Sections Cited
69, 69C, 271(1)(c)
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B-Bench” JAIPUR
Before: SHRI GAGAN GOYAL, AM& SHRI NARINDER KUMAR, JM
vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER .
The assessee is in appeal, while challenging order dated 09.05.2024, passed by Learned CIT(A), relating to the assessment year 2016-17, whereby the appeal filed by the assessee challenging assessment order dated 21.12.2018, has been dismissed.
Vide above said assessment order, the Assessing Officer made a “protective addition” against the assessee, to the tune of Rs. 2,40,28,000/-, Sh. Pavitra Kothari, Ajmer. u/s 69 of the Act, because of unexplained investment said to have been made by him in purchases of immovable property vide sale deed i.e. 506, 5th Floor, South Block, World Trade Park, Jaipur.
Arguments heard. Filed perused.
Ld. AR for the appellant has put forth only one submission i.e. that this is a case where protective addition has been made against the assessee, even when no substantive addition has been made by the Assessing Officer against anyone, and as such, the impugned order deserves to be set aside.
In the course of arguments, we have enquired from Ld. DR for the department as to whether any substantive addition was made against any person as regards the property said to have been purchased in the name of the assessee. Ld. DR for the department has submitted that as per record, no substantive addition has been made regarding the said unexplained investment.
As is available from the assessment order, the assessment of protective addition came to be made against the ngassessee, while observing in para 7 to 9 as under:-
Sh. Pavitra Kothari, Ajmer. “7. Thus, through above submissions, the assessee has claimed that the real owner of the said property is Sh. Bharat Bomb, his brother in law and payment for the same has been borne by him and various bank accounts in the name of Sh. Bharat Bomb and the said property have been attached by Enforcement Directorate, Jaipur. The assessee in support of his claim has submitted a copy of affidavit dated 17.11.2018 signed by him declaring that the property does not belong to him, copy of page no. 47 to 52 of the order of PMLA, New Delhi dated 01.06.2017 which mentions that the real owner of the said property is Sh. Bharat Bomb (Sh. Pavitra Kothari is only a dummy owner) and also contains the list of properties belonging to Sh. Bharat Bomb.
8. In order to verify the claim of the assessee, letter dated 03.12.2018 vide no. 836 has been issued to The Assistant Director, Office of Director of Enforcement, Jaipur. The ED has filed his reply vide letter dated 17.12.2018 which is reproduced hereunder: "with reference to the abovementioned subject, it is intimated that office no. 506, 5th floor, South Block, WTP registered in name of Shri Pritam Kothari was attached by provisional attachment order no. 02/2018 dated 16.05.2018. The attachment has been confirmed by Hon'ble Adjudicating Authority vide order dated 09.11.2018 in OC no. 984/2018(which is replaced by memorandum by ED by 01.06.2017 in OC No. 679/2017. The said property was attached in the hands of Bharat Bomb and remains attached as on date."
On careful examination of the material available on record and from the office of the Enforcement directorate. The matter is still not verifiable that whether the real owner of the impugned property is Shri Bharat Bomb or Shri Pavitra Kothari. The letter of department of Enforcement Directorate also clarifies that the property under question is still in the name of Shri Pritam Kothari. It has already been mentioned and admitted by Shri Pavitra Kothari that the signature appearing on the registry is belong to him and he under influence of Shri Bharat Bomb who is his brother in law has signed the registry. The registry itself shows that actual ownership of the property is still with Shri Pavitra Kothari. Further at the instant time, here I have belief that the matter is still under various litigation. So at this stage the actual ownership of the impugned property cannot be ascertained. And as no details regarding payment of the purchase has been submitted by the assessee and also not shown the same into his capital account. Hence, the sources of payments for this investment remained unverifiable. Therefore, in the interests of revenue, protective addition in the hands of assessee on the account of purchase of said property in contravention of the provisions of section 69C of the LT. Act, 1961. Penalty proceedings u/s 271(1)(c)
In the course of arguments, we have enquired from the Ld. DR for the department as to whether the Assessing Officer arrived at any finding/conclusion as regards sources of payments for the said unexplained investment made in purchase of the abovesaid immovable property. Ld. DR for the department has referred to the assessment order wherein it was observed that sources of payments for the investment remained unverifiable.
On going through para 9 of the assessment order reproduced above, we also find that the Assessing Officer clearly observed that the matter was still not verifiable even on the ownership of the said property i.e. whether Sh. Bharat Bomb was the real owner or as to whether the assessee was the real owner of the said property. He went on to observe that as on the date of framing of the assessment, actual ownership of the impugned property could not be ascertained.
9. In the given facts and circumstances, in absence of any material on the record as regards sources of payments for the investment in the said immovable property, and in absence of any substantive addition, we find Sh. Pavitra Kothari, Ajmer. merit in the contention raised by ld. AR for the appellant that the protective addition made only against the assessee, could not be sustained. Result 10. In view of the above discussion and findings, the appeal is allowed, and the impugned order passed by Learned CIT(A) and the assessment order passed by the Assessing Officer, are hereby set aside. File be consigned to the record room after the needful is done by the office. Order pronounced in the open court on 17/09/2025.