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Facts
The assessee, Shri Naresh Singh, filed four appeals concerning assessment years 2013-14, 2014-15, 2015-16, and 2016-17. The primary issue revolves around a 'protective' addition of Rs. 2,77,95,372/- made by the Assessing Officer under section 69A, which was later converted to a 'substantive' addition. The assessee argued that a protective addition is only valid when there is doubt regarding the hands in which income is to be assessed, and no substantive addition was made elsewhere.
Held
The Tribunal held that a protective addition cannot be made without any evidence or doubt in the Assessing Officer's mind regarding the assessment of income in the hands of a particular assessee. The Tribunal relied on the decisions in Lalji Haridas vs. ITO and DHFL vs. ITO, stating that protective additions are not permissible in proceedings under section 147/148, especially when no substantive addition has been made in any other assessee's hands.
Key Issues
Whether a 'protective' addition made by the Assessing Officer, later converted to 'substantive', is legally valid when no substantive addition was made in any other assessee's hands and no doubt was expressed by the AO regarding the assessment.
Sections Cited
69A, 147, 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA BENCH, AGRA
Before: SHRI SATBEER SINGH GODARA & SHRI MANOJ KUMAR AGGARWAL
ORDER
Per Satbeer Singh Godara, Judicial Member:
The instant batch of four cases pertains to a single assessee herein, namely, Shri Naresh Singh. All other relevant details thereof are hereby tabulated as under:
Sl. Appeal No. Appellant Respondent Order Appealed against No. 1. 390/Agr/2024 Shri Naresh ITO Ward-1, Morena CIT(Appeals), NFAC, Delhi’s Din & order A.Y. 2013-14 Singh No. ITBA/NFAC/S/250/2024- 25/1068178943(1) dated 30.08.2024, involving proceedings under section 147 r.w.s. 144 2 389/Agr/2024 Shri Naresh ITO Ward-1, Morena CIT(Appeals), NFAC, Delhi’s Din & order A.Y. 2014-15 Singh No. ITBA/NFAC/S/250/2024- 25/1068182977(1) dated 30.08.2024, involving proceedings under section 147 r.w.s. 144 3 391/Agr/2024 Shri Naresh ITO Ward-1, Morena CIT(Appeals), NFAC, Delhi’s Din & order A.Y. 2016-17 Singh No. ITBA/NFAC/S/250/2024- 25/1068183313(1) dated 30.08.2024, involving proceedings under section 147 r.w.s. 144 4 435/Agr/2024 ITO Ward-1, Sh. Naresh Singh CIT(Appeals), NFAC, Delhi’s Din & order A.Y. 2015-16 Morena No. ITBA/NFAC/S/250/2024- 25/1068178943(1) dated 30.08.2024, involving proceedings under section 147 r.w.s. 144
Heard both the parties. Case files perused.
It emerges at the outset that the assessee’s instant first and foremost appeal ITA No. 390/Agr./2024 for the assessment year 2013-14 raises a fundamental legal issue of correctness of the impugned section 69A addition of Rs.2,77,95,372/- made by the Assessing Officer in his assessment framed on 29.03.2022 on “protective” basis, which has been converted to a “substantive” one in para 5.6 of the lower appellate discussion.
Faced with this situation we sought to examine the correctness of such a “protective” addition made in the assessment without there being 2 | P a g e even an iota of evidence as to whether any substantive addition had been made in any other assessee’s hands or not. There is no clarity from the Revenue side to this effect. More so, the learned CIT(Appeals) itself has admitted in para 5.6 that there is no substantive addition made in any other assessee’s hands. That being the case we quote age old landmark decision in Lalji Haridas vs. ITO [1961] 43 ITR 387 (SC) that a “protective” addition is applicable only when there arises a doubt in the mind(s) of the Assessing Officer as to in whose hands a particular income has to be assessed. We reiterate that there is no such doubt expressed or any substantive addition was made by the Assessing Officer before making protective addition. We further quote DHFL vs. ITO [2013] 34 taxmann.com 300 (Bom.) that a protective addition also could not be made in section 147/148 proceedings as well. We accordingly quash the impugned “protective” addition converted to substantive one; and, therefore, there is no need for us to delve with the relevant factual matrix at length. The assessee succeeds in his first and foremost legal argument. Thus appeal ITA No. 390/Agr./2024 is accepted.
In the assessee’s latter twin appeals and 391/Agr./2024 for the assessment years 2014-15 and 2016-17, respectively, since raising identical question on merits as well as legality, our foregoing order has to be followed mutatis mutandis herein as well. 3 | P a g e These assessee’s twin appeals & 391/Agr/2024 are allowed in very terms.
Coming to Revenue’s appeal learned Sr.
DR has not disputed the clinching fact even in Revenue’s appeal that this time the Assessing Officer had made a “protective” addition herein as well without there being any corresponding substantive addition. We, thus, reject Revenue’s appeal therefore.
To sum up, the assessee’s instant these appeals 389 & 391/Agr/2024 are allowed and the Revenue’s case ITA No. 435/Agr/2024 is dismissed. A copy of this common order be placed in respective case files.
Order pronounced in the open court on 17.02.2025