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Facts
The assessee filed three appeals against orders involving protective additions made under section 143(3) for assessment years 2006-07, 2007-08, and 2012-13. The appeals were filed with a delay of 236 days, which was condoned. The assessee did not appear for the hearing and was proceeded ex-parte.
Held
The Tribunal held that a protective addition can only be made when there is doubt in the Assessing Officer's mind regarding the hands in which income is to be taxed. In this case, it was clear that any substantive addition was to be made in the hands of a partnership firm, M/s. Chemist Tower, of which the assessee was a partner. Since no substantive addition was made in the assessee's hands, the protective additions were not sustainable.
Key Issues
Whether protective additions made to the assessee's income are sustainable without a corresponding substantive addition in the assessee's hands.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, AGRA BENCH, “DB” AGRA
Before: SHRI SATBEER SINGH GODARA & SHRI M. BALAGANESH
PER SATBEER SINGH GODARA, JM
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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These assessee’s three appeals 173 & 174/Agr/2024 are allowed in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open court on 5th February, 2025 Sd/- Sd/- (M. BALAGANESH) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 5th February, 2025. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra
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