ITO, NEW DELHI vs. SH. ANUJ KUMAR, NEW DELHI

This appeal by the Revenue is preferred against the order of the CIT(A)-XXV, New Delhi dated 21.10.2011 pertaining to A.Y 2008-09.

The solitary grievance of the Revenue is that the ld. CIT(A) has erred in deleting the addition of Rs. 73.85 lakhs made by the Assessing Officer on account of undisclosed income held by the Assessing Officer.

Briefly stated, the facts of the case are that as per the ITS information, the Assessing Officer came to know that the assessee has deposited Rs. 74,85,500/- in Kotak Mahindra Bank for acquiring bonds/debentures. The assessee was asked to explain the source of the deposit made in the said bank account. On receiving no plausible reply, the Assessing Officer called for information from Kotak Mahindra Bank and on perusal of the statement of account given by the bank, the Assessing Officer found that most of the cheques were issued in favour of Shri Ajay Taneja. Statement of Ajay Taneja was recorded on 8.12.2010 and on the strength of the same, the Assessing Officer came to the conclusion that the cash deposited in the bank account are undisclosed money of Taneja Group run by Shri Ajay Taneja and since the assessee being a Nepali national and an employee with Taneja’s has no means either to conduct a business or to pay the alleged payments. Accordingly, the Assessing Officer made the addition of Rs. 74,85,500/- in the hands of the assessee on protective basis.

The assessee strongly agitated the matter before the ld. CIT(A). After considering the facts and submissions, the ld. CIT(A) was of the view that the assessment has to be made on substantive basis in the case of the assessee as the assessee is having his own business and has been filing regular return of income. After considering the returned income of the assessee, vis a vis the turnover, the ld. CIT(A) was convinced that the addition of Rs. 1 lakhs would meet the ends of justice. He accordingly confirmed the addition of Rs. 1 lakh and directed the AO to delete the addition of Rs. 73,85,500/-.

The Bench asked the ld. DR to furnish the details of substantive additions made in the hands of Shri Ajay Taneja or any other person. The ld. DR could not furnish such details. On the other hand, he pointed out that no substantive additions have been made in the hands of any other member of the Taneja Group.

In our considered opinion, if no substantive additions have been made in any other hands, there is no room for addition to be made on protective basis in the hands of the assessee. In our considered view, there cannot be any protective assessment without there being a substantive assessment. We, therefore, decline to interfere with the finding of the ld. CIT(A).

In the result, the appeal of the Revenue is dismissed.