MEERA AGARWAL,GWALIOR vs. ACIT, GWALIOR

ITA 172/AGR/2024Status: DisposedITAT Agra05 February 20254 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 the impugned protective additions deserved to be deleted. The reasoning was that the Assessing Officer's own discussion in the assessment orders indicated that the corresponding substantive addition was to be made in the hands of M/s. Chemist Tower, a partnership firm in which the assessee is a partner. The Assessing Officer had also noted that necessary information was being sent to the concerned Assessing Officer for that purpose. The Tribunal found this to be a clinching factual position. It reasoned that a protective addition, in the absence of a corresponding substantive assessment in any other person's hands, does not satisfy the test of law. The Tribunal relied on the Supreme Court's landmark decision in Lalji Haridas Vs. ITO (1961) 43 ITR 387 (SC), which established that a protective addition arises when there is doubt in the Assessing Officer's mind as to whose hands the income should be taxed. Since the assessment orders themselves pointed to substantive addition in another entity's hands, the protective addition in the assessee's hands was deemed unsustainable. The Tribunal quashed the three impugned assessments framed on 21.03.2014. All other pleadings on merits were rendered academic.

What were the facts?

The assessee, Smt. Meera Agarwal, filed three appeals (ITA Nos. 172, 173 & 174/Agr/2024) before the Income Tax Appellate Tribunal (ITAT), Agra Bench, for assessment years 2006-07, 2007-08, and 2012-13. These appeals challenged orders passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, dated 10.07.2023, which upheld protective additions made under section 143(3) of the Income-tax Act, 1961. The assessee did not appear before the Tribunal, and the appeals were proceeded ex-parte. The appeals were filed with a delay of 236 days, which was condoned in the interest of justice. The disputed amounts were Rs. 24,43,000/-, Rs. 71,45,900/-, and Rs. 1,08,25,000/- for the respective assessment years.

What were the issues?

1. Whether the learned lower authorities have rightly added the impugned protective additions of Rs. 24,43,000/-, Rs. 71,45,900/-, and Rs. 1,08,25,000/- for assessment years 2006-07, 2007-08, and 2012-13 respectively, in light of the alleged seized material found during a search. Assessee's contentions: The assessee did not appear before the Tribunal and made no submissions. The appeals were proceeded ex-parte. Revenue's contentions: The Revenue, through the CIT(DR), argued that the learned lower authorities correctly made the impugned protective additions based on seized material. The Revenue relied on the Supreme Court's decision in PCIT Vs. Abhisar Buildwell Pvt. Ltd. (2023) 454 ITR 212 to support its argument.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AGRA BENCH, “DB” AGRA

Before: SHRI SATBEER SINGH GODARAAND

Hearing: 05.02.2025Pronounced: 05.02.2025

This assessee’s three appeals 172, 173 & 174/Agr/2024 for assessment years 2006-07, 2007-08 and 2012-13 arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2023-24/1054255086(1); ITBA/NFAC/S/ 250/2023-24/1054255292(1) and ITBA/NFAC/S/250/2023- 24/1054255521(1), all dated 10.07.2023, involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

Cases called twice. None appears at the assessee’s/appellant’s behest. She is accordingly proceeded ex- parte.

Identical delay of 236 days in filing the assessee’s instant three appeals is condoned in the larger interest of justice.

Learned CIT(DR) vehemently argues during the course of hearing that both the learned lower authorities have rightly added the impugned protective additions of Rs. 24,43,000/- lakhs, Rs.71,45,900/- and Rs. 1,08,25,000/-; assessment year-wise respective going by the alleged seized material found during the course of search herein carried out on 08.07.2011, which deserves to be upheld in the light of hon’ble apex court’s recent landmark decision of PCIT Vs. Abhisar Buildwell Pvt. Ltd. (2023) 454 ITR 212.

We have given our thoughtful consideration to the assessee’s pleadings all along and the Revenue’s foregoing vehement contentions and we find no reason to sustain the impugned protective additions for the precise reason that the learned Assessing Officer’s identical detailed discussion in all these three

2 | P a g e cases makes it clear that the corresponding substantive addition “is to be made” in case of M/s. Chemist Tower, a partnership firm (wherein the appellate is a partner) and the necessary information is being sent to the concerned Assessing Officer separately. This being the clinching factual position emanating from the case records, we hold that any protective addition in absence of the corresponding substantive assessment in any other person’s hands, does not satisfy the test of law going by the hon’ble apex court’s landmarks decision in Lalji Haridas Vs. ITO (1961) 43 ITR 387 (SC). Their lordships have settled the issue long-back in assessee’s favour that a protective addition arises wherein there is a doubt in the Assessing Officer’s mind(s) as to in whose hands particular receipt of income is to be taxed.

We thus conclude that the impugned protective addition without there being any substantive addition made in the course of the assessment in the assessee’s/partner’s hands deserves to be deleted. These three impugned identical assessments framed on 21.03.2014 are hereby quashed in very terms. Ordered accordingly. All other pleadings on merits stand rendered academic.

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