DINESH KUMAR CHAURASIA,TONK vs. ACIT CEN CIR 3, JAIPUR, JPR

6. The Id. Pr. CIT (Central), Jaipur further seriously erred in law and on facts in as much as interestingly, the Id. PCIT (Central) did not disturb the assessment order but then she passed the impugned order for initiation/source of purchase of immovable property as also sundry creditors. Such a direction, however, on the face of it, is completely beyond jurisdiction as never contemplated by the provisions of Section 263 of the Act. The Id. Pr. CIT thus, has clearly acted beyond jurisdiction and therefore the impugned order deserves to be quashed and set aside.

7. the appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing.”

126.50 Lacs, were to be paid in three installments, i.e. on 15.11.2011, 15.4.2012 and 15.9 2012. As per endorsement on the back side of the agreement, assessee paid Rs. 38 Lacs in cash on 15.11.2011. Sh. Mehra paid balance amount of Rs. 88.50 Lacs during the year under consideration as per terms and condition of the sale agreement. Thus, total payments of Rs. 88.50 Lacs (Rs. 38.00 Lacs + Rs. 50.50 Lacs) in cash were made during the year under consideration. B). During course of assessment proceedings in the case of Sh. Mahendra Mehra for the A.Y. 2012-13, his statements were recorded in which he claimed that above transactions were made on behalf of Sh. Dinesh Chaurasia (the assessee) and sale agreements were made in his names just because of reason that land belongs to ST/SC community which can only be purchased by the person of same community and to subvert the legal prohibitions on sale of such lands, his name was used as purchaser. He also alleged that entire payment was made by Sh. Chaurasia. Considering his statements and the fact that original sale agreements were found at the business premises of the assessee during survey protective addition of Rs. 99 Lacs was also made in the hands of the assessee (Sh. Chaurasia) C) Since the part payment towards sale agreements was made in the year under consideration also and proceeding in the case of Sh. Mahendra Mehra has also been initiated u/s. 147 of the Act for the year under consideration separately to make protective addition in the hands of Sh. Chaurasia, proceeding u/s. 147 is required to be initiated in this case also. D) Analysis of information collected/received The information has been verified with the return of income filed. The issue has already been dealt with during the course of assessment proceedings in the case of Sh. Mahendra Mehra and assessee (Sh. Chaurasia) and protective addition made therein. E) Enquiries made by the A.Q. as sequel to information collected/ received. The said documents have been found from the business premises of the assessee during the course of survey and protective addition was made in the case of assessee for A.Y. 2012-13 for part investment. Hence no separate enquiries are required to be made F) Findings of the A.O. Since original documents were found from the premises of the assessee and the source of investment in purchase of lands is not explained, it can be concluded that the investment in purchase of property to the extent of Rs. 1.64 crores an unexplained in the hands of assessee which has escaped assessment u/s. 147 of the Act on protective basis.

The unexplained investment to the tune of Rs. 164 Lacs on protective basis has escaped assessment in the hands of assessee which is chargeable to tax G) Applicability of the provisions of section 147/151 to the facts of the case; It is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration. No assessment as stipulated u/s. 2(40) of the Act has been made. The return has been simply processed u/s. 143(1) of the Act. In view of the above, provisions of clause (b) of explanation 2 to section 147 of the Act are applicable to the facts of this case and assessment year and hence this is deemed to be a case where income chargeable to tax has escaped assessment.”

3. In view of the above, the case of the assessee was reopened and a notice u/s. 148 of the Act was issued vide dated: 21.03.2020. In response to this notice, the assessee filed a return on 08.03.2021 again declaring the same figure of Rs. 3, 70,630/-. Although, the case was assessed at Rs. 1, 67, 70,630/- (Rs. 3, 70,630/- + Rs. 1, 64, 00,000/-) on protective basis and on substantive basis Rs. 164 Lacs were added in the hands of the buyer on papers mentioned (supra), i.e. Sh. Mahendra Mehra. Nowhere, it’s emanating from records before us that the assessee challenged this order of the AO done on protective basis). Later on, a notice u/s. 263 of the Act vide dated: 04-08-2022 was issued by the office of the Ld. PCIT (Central), Jaipur in the case of the assessee and thereafter further notices were also issued vide dated: 26-09-2022, 02-11-2022, 18-11-2023 and 04-03-2024. In her order the Ld. PCIT (Central), Jaipur alleged that the neither assessee nor his authorised representative attended the matter for hearing and no reply/submission/adjournment ever made to her office.

4. Ultimately, considering the last notice issued by the office of the Ld. PCIT (Central), Jaipur vide dated: 04-03-2024, the order u/s. 263 of the Act was passed Ex-Parte vide dated: 14-03-2024. The assessee being aggrieved with the same preferred the present appeal before us. We have gone through the copy of the reasons recorded u/s. 148 of the Act Dated: 12-03-202 vide page no. 1 to 4 of the paper book, Copies of the notices issued u/s. 263 of the Act as mentioned (supra) and are part of the paper book filed before us, Copies of the submission made by the assessee before the Ld. PCIT (Central), Jaipur, Copies of the assessment order and Ld. CIT(A)’s order in the case of Sh. Mahendra Mehra for A.Y.s 2012-13 and 2013-14 filed by the office of the Ld. CIT, DR and copy of the assessment order in the case of the assessee for immediate preceding A.Y., i.e. 2012-13.

5. It is observed that the case of the assessee was assessed as protective assessment for the preceding year also. It confirms the stand of the Revenue that, in the matter of the assessee, the revenue is firm about the status of the matter, i.e. to be assessed under the protective scheme of assessment. It is further observed that the order of the Ld. CIT (A) in the case of Sh. Mahendra Mehra for A.Y.s 2012-13 and 2013-14 was passed on 12.10.2023 and confirmed the order as substantive assessment, whereas the notice u/s. 263 of the Act was issued first time on 04-08-2022 and final order was passed on 14.03.2024. This chronology of event has its own importance, i.e. when the status of Sh. Mahendra Mehra has been taken as substantive and further confirmed by the Ld. CIT (A), there is no protective assessment stands on its own feet now against the assessee under consideration.

2. Brief facts are that one Madan Mohan Gupta in the course of search and seizure proceedings, under section 132 of the Act made a statement on the basis of reopening of the present assessee's completed assessment for the year 2008-09. In the substantive proceedings, several assessees were subjected to taxation on basis of search and substantive additions were made (as against Navratan Kothari, Vimal Chand Surana (HUF), Kushal Chand Surana and Rajendra Kumar Jain, etc.) for different years falling in the block assessment period. No substantive addition was made, however, in respect of the assessee company. A protective assessment was made on assumption that in the event substantive additions were to be set aside, the assessee was liable to pay this amount. The CIT (A) directed that amounts brought to tax on protective basis ought to be deleted. The CIT (A)'s reasoning was that additions were enhanced in the case of other assessees and some of the amounts were deleted in view of documentary evidence gathered. The CIT (A) made two tabular charts in Para 2.1.8.5. One reflected the amounts added by the AO and the final amount sustained on the basis of assessment of evidence. After discussing all these aspects, the CIT (A) held that additions made on protective basis were not sustainable, in the following terms: "In this case, on the basis of noting on impugned seized documents and evidences gathered during the remand proceedings, and enhancement notice u/s. 251(2) of the Act vide letter dated 21-3-2017 has been given to the assessee. Subsequent to receipt of written compliance from the assessee, following additions are required to be made in assessee's hand as per the detailed discussion made in para 2.1.8.5 with respect to Issues No. 1,2,3,4 & 5 as under :

Sl. ITA No. A.Y. Name Addition made by Addition Relief Balance No. AO sustained Sustained (Final Addition)

10 146/15- 08- M/s. Shri Rs. --- Rs. ---- 16 09 Kalyan Build 14,24,12,650/= 14,24,12,650/- mart (P.) (Protective) Ltd.

As per detailed discussion in above para and in particularly in para 2.1.8.6 no additions of Rs. 14, 24, 12,650/= on protective basis in the hands of assessee company and also on substantive basis in the hands of Sh. Madan Mohan Gupta have been proposed. Accordingly, addition made of Rs. 14, 24, 12,650/= on protective basis in the hands of company is hereby deleted. Assessee's appeal in Gr No. 2 stands allowed."

3. The assessee's appeal with respect to reopening of assessment was allowed. The CIT (A) held that reassessment notice was invalid. The ITAT in its elaborate order discussed the validity of reassessment notice and upheld the order of the CIT (A). It is argued that ITAT did not deal with the grounds of appeal

or the reasoning of the CIT (A) on the issue of deletion of protective assessment made by the AO.

4. This court has considered the grounds of appeal urged by the revenue in support of present appeal under section 260A. Undoubtedly, the court has to consider as to whether a substantial question of law arises in the context of reasoning of the ITAT in holding the deletion of protective assessment. However, what is apparent is that the AO in this case proceeded, without furnishing any reasoning and added amounts to assessee's account imposing tax on it purely on protective basis after the substantive additions in respect of each amount which were made at third parties' end. The CIT (A) in our opinion was correct in his analysis noticing that as against documentary evidence available, only some additions could be sustained even in respect of such third parties. Consequently, in the absence of any reason to involve the present assessee, which had sold the lands to the third party and against whom there was no allegation of withholding material or suppression of facts, nor was anything incriminating recorded, no protective assessment could have been made. 5. for the foregoing discussions, this court is of the opinion that no substantial question of law arises.

8. The ratio laid down above is further confirmed by the Hon’ble Apex Court in the case of the same assessee vide [2021] 127 taxmann.com 281 (SC) PCIT, Central v. Kalyan Build mart (P.) Ltd. In view of the above, we are of the firm view that, the revenue has taken a firm view against Sh. Mahendra Mehra; hence there can’t be any simultaneous proceedings of the same matter and amount against the assessee under consideration.

[2023] 153 taxmann.com 298 (SC) PCIT (Central) v. Panchmukhi Management (P.) Ltd. G.K. Consultants Ltd. v. ITO [IT Appeal No. 1502 (Delhi) of 2013, dated 27-6-2014], [upheld in CIT v. G.K. Consultants Ltd., [IT Appeal No. 86 of 2015, dated 24-5- 2016] High Court] [2024] 167 taxmann.com 358 (Mad.)Ramakrishnan Ramasubramani v. ITO Considering the ratios lay down by the Hon’ble courts and specific chronology of events in the matter, Ground Nos. 1 and 2 raised by the assessee are allowed and order of the Ld. PCIT passed u/s. 263 of the Act is quashed with consequential impact.