DCIT (CENTRAL), BHOPAL vs. SHAILENDRA SHARMA, BHOPAL

ORDER 1

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma Per: Vijay Pal Rao, JM:

These are 3 appeals out of which 2 by assessee and one by the department directed against the composite order of CIT (Appeal) dated 9th June, 2023 for the assessment year 2011-12, 2013-14 and 2015-16 respectively.

For the Assessment year 2011-12 the assessee has raised following grounds of appeal:

1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Ld. Assessing Officer in making the addition of Rs.10,05,000/- as investment from undisclosed sources.

2. The solitary issue arises in this appeal is whether in facts and circumstances of the case and in law the CIT (Appeal) erred in upholding the addition of Rs.10,05,000/- made by the AO on account of investment from undisclosed sources.

A.Y Date of Total Date of Total Additional filing of Income filing of Income income return u/s (Rs.) return u/s declared in offered (In 139(1) 153A Return u/s Rs.) 153A(Rs.) 2010-11 10/01/2011 4,46,900 26/10/2016 4,46,900 Nil 2011-12 30/03/2012 14,86,450 26.10.2016 14,86,450 Nil 2012-13 26.11.2012 13,71,100 26.10.2016 13,71,100 Nil 2013-14 05/11/2013 13,57,300 26.10.2016 14,57,300 Nil 2014-15 31/03/2015 14,07,100 26.10.2016 14,07,100 Nil 2015-16 13/03/2016 9,82,450 26/10/2016 09,82,450 Nil 16-17 10.11.2016 5,50,490 NA NA ---

4. During the course of assessment proceedings the A.O issued questionnaire u/s 142(1) and asked assessee to furnish relevant details of immovable properties along with supporting documentary evidence of the ownership of the properties, mode of payment and source of income for making investment. In response he furnished 3

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma details of immoveable properties vide letter dated 31st August, 2017. From the documents submitted by the assessee the A.O noted that assessee has purchased an immoveable property admeasuring 195.193 square feet situated at village Nishatpura Tehsil Huzur, District Bhopal from one Shiv Kumar Kushwaha and Sunita Kushwaha vide sale deed dated 7th January, 2011. He further noted that the market value of the said property was Rs.1,85,000/- whereas the assessee has shown the purchase consideration of Rs.1,50,000/-. The assessee has stated that the purchase consideration has been made from the current income and savings. He also claimed that there has been sufficient cash surplus with him to meet the expenses incurred by him. The A.O did not accept this explanation of the assessee and made an addition on account of investment in the property of Rs.1,50,000/- plus registration charges of Rs.19,235/- from undisclosed sources of income for the Assessment Year 2011-12. Further the A.O. noted that during the course of search and seizure action it is seen that on page 5 of DS/SLS-5 seized from the residential premises of the assessee containing the details reproduced in para 12 of the assessment order as under:

07/01/11 Shop sale) 200000/- Shiv Kumar Kushwaha 177700/- stamp duty 377700/- Total expense 310000/- received 4

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma 67700/- balance (11/01/11) +1005000/- Shiv Kumar

6. Before the Tribunal the learned authorised representative of assessee submitted that the loose paper seized from the residence do not give any clear picture about the actual transaction took place and therefore, no meaningful information pertaining to escape income of assessee can be inferred there from. The learned authorised representative pointed out that the seized document show sale of shop as per the jotting whereas the assessee has not sold any shop instead he purchased a shop from Shiv Kumar kushwaha on 7th January, 2011 through registered title deed for a consideration of Rs.1,50,000/- along with stamp duty and registration charges. He has further submitted that one of the entries in the seized documents showing stamp duty of Rs.1,77,700/- which is absolutely absurd and illogical because it is not matching with the sale consideration of the shop purchased by the assessee. Further one of the rough jottings also shows a sum of Rs.10,05,000/- in the name of Shiv Kumar on 11th January, 2011 whereas the sale deed was registered on 7th January 2011. Thus it is unrealistic that any person will pay any on money after execution of sale deed. The Ld. authorised representative has contended that a non-speaking document without any corroborating material/ evidence to show that the alleged transactions have actually materialized cannot be a basis for the purpose of assessment u/s 153A of the Act. Non speaking documents are referred as dumb 6

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma documents. In support of his contention he has relied upon following judgements:

(i) Common cause vs. Union of India (2017) 77 taxmann.com 245 (SC)

(ii) Principal Commissioner of Income Tax Vs. Shri Pukhraj Soni (2019) 7 ITJ On line 54 MP (MP High Court)

(iii) CIT Vs Vivek Agarwal (2015) 56 taxman.com (High Court of Delhi)

(iv) ACIT Vs Shri Mohanlal Chugh and others in IT(SS)A No. 267 and 268/Ind/2016.

(v) ACIT, Bhopal Vs. M/s KL Sharma & Sunita Maheshwari, Bhopal and Anr. In IT(SS)A No.149 to 151/Ind/2019 (ITAT Indore)

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma merely take the benefit of provisions of section 132(4A) of the act without conducting an independent and corroborate inquiry and bringing on the record corroborative evidence to substantiate that the seized material represents real transactions of income in nature. Thus the Ld. authorised representative has submitted that it is settled law that loose sheets alone have no evidencing value and no addition can be made merely on the basis of loose sheets in the absence of any corroborative evidence/tangible evidence brought on record.

07/01/11 Shop sale) 200000/- Shiv Kumar Kushwaha 177700/- stamp duty 377700/- Total expense 310000/- received 67700/- balance (11/01/11) +1005000/- Shiv Kumar

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma transaction whether it is a payment or receipt. The addition made by the A.O in respect of other notings in the seized document has been deleted by the CIT(A) in para No. 3.6.2 as under:

3.6.2 1 have considered the facts of the case, plea of the appellant, case laws relied upon by the appellant and findings of the Id AO. The appellant during appellate proceedings has contend that he purchased a shop from Shri Shiv Kumar Kushwaha on 07.01.2011 for a sale consideration of Rs. 1,50,000/- and paid stamp duty of Rs. 17,575/-. The market value of the shop was at Rs. 1,85,000/-, However, the impunged loose paper mentions sale of shop for Rs. 2,00,000/- and stamp charges of Rs. 1,77,700/- which appx. Comes at 96.05% of the sale consideration which is not possible. Further, the shop was purchased on 07.01.2011, however, the loose paper mentions amount of Rs. 10,05,000/- on 11.01.2011 which in general terms in unrealistic for the reason that no prudent person will receive on- money after the execution of transactions. Therefore, the impunged loose paper contain mere rough jotting and nothing but a loose dumb document. Per contra, the Id AO by placing reliance on provisions of section 132(4A) stated that no satisfactory explanation was offered by appellant with regard to transactions mentioned in the said loose paper. After considering entire factual position of the case, I find that the appellant purchased a shop from Shri Shiv Kumar Kushwaha on 07.01.2011 for a sale consideration of Rs. 1,50,000/- (market value of Rs. 1,85,000/-), however, the impunged loose paper mentions sale consideration of Rs. 2,00,000/- and stamp duty charges of Rs. 1,77,700/-. The jotting of stamp charges is totally unrealistic. Further, the transaction of purchase of shop is fully recorded in receipt and payment account. It is worth mentioning that the addition on account of purchase of shop has already been made by the Id AO vide para 11 of the assessment order which has been discussed and decided in para 3.5.2 herein above. Therefore, the addition made on this account by the Id AO amounting to Rs. 3,77,700/- is hereby deleted

10. Thus CIT(A) has analysed the facts relating to the transaction of purchase of shop by the assessee vide sale deed dated 07.01.2011 as well as the details given in the loose paper showing the sale of shop for Rs.2,00,000/- and stamp duty charges of Rs.1,77,700/- was found to be totally impossible and illogical. The IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma CIT(A) has observed that the loose paper mentioned Rs.10,05,000/- on 11.01.2011 which in normal course is not possible and unrealistic for the reason that no prudent person will receive on money after execution of sale deed. The CIT(A) has further observed that seized loose paper contains merely rough joittings and nothing but a loose dumb document. However the CIT(A) has confirmed the addition of Rs.10,05,000 in para 3.6.3 as under:

3.6.3 Further, for jotting made under the date 11.01.2011 of Rs. 10,05,000/- 1 find that the same does not belong to the transaction of purchase of shop by the appellant and represents some other transaction for which no explanation has been offered. As per provisions of section 132(4A) onus is casted upon appellant to explain all the transactions mentioned in a documents found and seized as a result of search. It is also not the case where appellant did not know the person whose name has been mentioned. Here, he is the same person from whom the appellant purchased a shop. Thus, the appellant has failed to explain the nature and source of transaction and therefore, I do not find any infirmity in the finding of the Id AO. Hence, addition made by the Id AO amounting to Rs. 10,05,000/- is confirmed

11. The above finding of the CIT(A) in para number 3.6.3 is contrary and opposite to the finding given in para 3.6.2 so far as the document in question is a loose paper contains mere rough jotting and found to be a dumb document without having any specific nature of transaction. Therefore, in the absence of any corroborative evidence brought on record by conducting an independent inquiry by the Assessing Officer no addition can be made on the basis of the jottings in a document already held as dumb document. It is manifested from the assessment order that the A.O has not even attempt to conduct any inquiry to find out the 11

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma actual nature of transaction as recorded in the seized loose paper either by examining the assessee or by examining the person against whose name this amount is treated as a payment made by the assessee. The Hon’ble jurisdictional High Court in case of Principal CIT Vs. Shri Pukhraj Soni (supra) while considering an identical issue has held in para 6 to 9 as under:

“6. The Tribunal has considered the aforesaid judgment while dismissing the appeal of the Revenue. The Apex Court in the case of Common Cause (A Registered Society) v. Union of India reported in (2017) 30 ITJ 197 (SC) (2017) 16 STD 132: (2017) 394 ITR 220 (2017) 245 Тахтап 214: (2017) 77 taxmann.com 245, 22, 24 and 27 has held as under :- 22. In case of Sahara, in addition we have the adjudication by the Income Tax Settlement Commission. The order has been placed on record along with L.A. No.

24. Since it is not disputed that for entries relied on in these loose papers and electronic data were not regularly kept during course of business, such entries were discussed in the order dated 11.11.2016 passed in Sahara's case by the Settlement Commission and the documents have not been relied upon by the Commission against assessee, and thus such documents have no evidentiary value against third parties. O we are of the considered opinion 131 12

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma of the materials which have been placed on is made out to direct investigation against any of the persons named in the Birla's documents or in the documents A-8, A-9 and A-10 etc. of Sahara 27. Considering the aforesaid principles which have been laid down, we are of the opinion that the materials in question are not good enough to constitute offences to direct the registration of F.I.R. and investigation therein. The materials should qualify the test as per the aforesaid decision. The complaint should not be improbable and must show sufficient ground and commission of offence on the basis of which registration of a case can be ordered. The materials in question are not only irrelevant but are also legally inadmissible under Section 34 of the Evidence Act, more so with respect to third parties and considering the explanation which have been made by the Birla Group and Sahara Group, we are of the opinion that it would not be legally justified, safe, just and proper to direct investigation, keeping in view principles laid down in the cases of Bhajan Lal and V.C. Shukla (supra)

7. The Apex Court has taken into account in similar circumstances the incriminating materials in form of random sheets, loose papers, computer prints, hard disk and pen drive etc. and has held that they are admissible in evidence, as they are in the form of loose papers.

8. In the present case also entries found during search and seizure which are on loose papers are being made the basis to add income of this respondent.

9. Resultantly, in light of the Supreme Court judgments, referred above, no case for interference is made with the order passed by the Tribunal”.

12. Thus following the judgment of Hon’ble Supreme Court in case of Common Cause Vs. Union of India (2017) 77 taxmann.com 245, the Hon’ble High Court has held that the incriminating material in the form of random sheets, loose papers, computer prints, hard disk and pen drive etc. are inadmissible in evidence.

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma Similar view has been taken by the Hon’ble Delhi High Court in case of CIT Vs. Vivek Agarwal supra in para 12 and 13 as under:

“12. In Kulwant Rai (supra) interestingly the ruling of the Supreme Court in Dhakeswari Cotton Mills Ltd. (supra) was relied upon. The Supreme Court held that even though Income Tax Authorities including the Assessing Officer has unfettered discretion and not strictly bound by the rules and pleadings as well as materials on record and is legitimately entitled to act on the material which may not be accepted as evidence, nevertheless such discretion does not entitle them to make a pure guess and base an assessment entirely upon it without reference to any material or evidence at all.

13. Given the above state of law and this Court has no hesitation in so concluding, since the document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of the AO, the ITAT's view which endorsed the findings of the CIT(Appeals) were well-founded and do not call for interference. The reliance placed upon Smt. Urmila Gambhir (supra) in this Court's opinion is inapt because in that case there was other corroborative material for the income tax authorities to link the description of the transactions found in the said innocuous document seized with respect to other material. However, such inference cannot be drawn in this case because there is no other material. On the contrary the AO's acceptance and finalization of the assessment for 2007-08 on the basis of salary income of the assessee, undermines the entire findings with respect to the inferences drawn and the additions made, indicated above. The question of law urged, therefore, is not substantial and is answered against the revenue”.

13. The Hon’ble High Court has held that there is no hesitation in concluding that since the document seized was both undated and unsigned and even taken at face value did not lead to further inquiry on behalf of the assessing officer and accordingly the addition deleted by the CIT(A) as well as this tribunal was found to be justified and did not call for interference. Further this Tribunal in case of CIT Vs. Sri Mohan Lal Chugh and others in IT(SS)A No.267 & 268/Ind/2016 and and others vide order dated 23.08.2021 held in para 39 and 40 as under: 14

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma

“39. We have heard the rival contentions and carefully perused the records placed before us. We have also carefully perused the various loose papers seized from the residential premises of the partners of the assessee firm which have been relied upon by the Assessing Officer for making the impugned addition. We find that such loose papers are in respect of one project site titled as 'Sun City', Rau. However, at the same time, we appreciate that these loose papers do not anywhere contain name of the assessee firm or any of its partners. It has been claimed by the assessee firm that such loose papers have not been prepared by, or on the instructions of, the assessee firm. We also find that on these loose papers, no date or period has been mentioned. We further find that some of the loose papers merely contain some measurement notings without any reference of any amount. We find that the loose paper page no. 21 contains the caption 'estimate' for some work to be done for an estimated cost of Rs.1,05,72,430/-. We also find that at computerized sheets inventorized as page No.22 to 23, some cost of work at Rs.1,94,12,306.50p has been stated. Further, at page No.16 and 17 cost of work has been mentioned at Rs.81,26,739.57p. At page No. 16, the sum total of these two costs have been mentioned at Rs.2,75,39,046.07p. On a careful and conjoint reading of all the subject loose papers, we find that the subject loose papers do not convey any meaning and these loose papers, having no signature, no date and no periodicity, can at the best be regarded as dumb documents and the same cannot be used as an evidence against the assessee. We find that the Assessing Officer, except relying upon the subject loose papers, have not brought any single corroborative material or evidence on record to establish that the assessee firm has actually incurred any such development expenditure in respect of Sun City project at Rau. It is an undisputed fact that the 'Sun City' project at Rau does not belong to the assessee firm. We find that such project is situated at land owned by one different company namely, M/s. Medicaps IT Park Pvt. Ltd. having its registered office at 20/1, Pushparatan Paradise, 9/5, Palasia, Indore. Thus, the ownership of the entire project is that of the above named company only and the assessee is not having any ownership rights in such project. Before us, the assessee firm claimed that the above named company had approached the assessee firm for marketing its proposed 'Sun City' project and for such purpose, the company had appointed the assessee as one of the agents. It has been further claimed that in such project the assessee had made bulk booking by giving an advance of Rs.4,00,00,000/- through account payee cheque during the financial year 2011-12 which has duly been entered into the regular books of account of the assessee firm. The assessee firm further stated that a copy of the resolution to this effect passed in the Meeting of the Board of Directors of M/s. Medicaps IT Park Pvt. Ltd., on 01-09-2011, which was 15

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma also furnished before the Id. CIT(A). The assessee firm further claimed that the entire expenditure relating to the development of the said 'Sun City' project had been incurred by the above named company only and the assessee has not incurred any single penny in connection with such project. As regard the abstracts of the websites reproduced by the Assessing Officer in the assessment order, the assessee firm submitted that it was making its efforts to market the project along with Medicaps I.T. Park Pvt. Ltd. only. The assessee firm further claimed that it was not having any vested interest in the said project either as owner or developer and during the course of entire sear4ch proceedings, not a single agreement or title deed or any other evidence to this effect was found by the search party.

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma

14. Again in case of ACIT, Bhopal Vs. M/s. KL Sharma & Sunita Maaheshwari (supra) in IT(SS) A No.149 to 151/Ind/2019 and others vide order dated 11.2.2022 this Tribunal has taken a similar view by holding that loose papers are only dumb documents and no addition could have been made based on such dumb documents. Accordingly having considered the facts and circumstances of the case as discussed above, we are of the considered view that this issue of addition sustained by CIT(A) is covered by the above mentioned judgments and decisions. Hence, in view of the above discussion and following the binding precedents the additions sustained by CIT(A) of Rs.10,05,000/- is deleted.

Assessment Year 2013-14 The assessee has raised following grounds of appeal:

“1.On facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Ld. AO who has proceeded to make addition by ignoring the law that no addition can be made in the absence of incriminating material in the case of unabated assessment. Therefore, the addition made is in gross violation of settled legal view and therefore the impugned addition made may kindly be deleted in toto. 2.Without Prejudice to the above ground, on facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Ld. AO in making addition of Rs. 16,00,000/- by treating the genuine unsecured loan as unexplained credits without appreciating the facts of the case and submission made before him and mistaken understanding of law.

3. The appellant craves leave to add any new ground of appeal or alter, amend or delete any of the above grounds of appeal.” 17

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma Abhisar Buildwell Private Limited reported in 149 taxman.com 399 and submitted that the Hon’ble Apex court has settled the controversy with regard to the addition in unabated assessment year without any incriminating material found during the course of search operation. Ld. authorised representative has submitted that in the absence of any incriminating material found during research the A.O cannot assess taking into consideration the other material in respect of completed assessment/unabated assessments. He has pleaded that the addition made by the AO and confirmed by CIT (A) is not sustainable in law and liable to be deleted.

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma

Sl.No. A.Y Name of lender Amount (Rs.) 1 201314 Pragya Thapak 10,00,000 2 2013-14 Sanjay Tiwari 6,00,000 3 20313-14 Shyam 5,00,000 Rathore Total 21,00,000

10.4 It is, therefore concluded that the assessee has no explanation to offer and no evidence to furnish in support of his claim. The amount of Rs.8,00,000- received by the assessee from his wife, Sent. Jaya Sharma, after verification of her bank statements, is treated as genuine. However, the balance amount of Rs.21,00,000/-, is added to the total income of as explained credits and taxed in the assessment year 2013-14. Penalty proceedings u/s 271(1) (c) of the IT Act are initiated separately for the AY 2013-14.

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma 19. Thus, it is clear from the order of the A.O that he has made addition on the basis of details furnished by the assessee during the course of assessment proceedings and no reference has been made by the A.O to any material much less incriminating material found or seized during the course of search and seizure operation. In appeal CIT(A) has confirmed the addition made by the A.O by citing the reasons that nothing was found during the course of search and seizure operation including no books of accounts, no receipt and payment account etc, therefore, the entry in the bank account are in the nature of incrementing material. It is pertinent to note that in case no incrementing material found during the course of search the Assessing Officer cannot assess or reassess the income of the assessee by taking into consideration other material in respect of completed assessments or unabated assessments. The bank account statement of the assessee cannot be treated as incriminating material when the amount has disclosed by the assessee and nothing abnormal or incriminating detected during the course of search and seizure action. This issue is now settled by the Hon’ble Supreme Court in case of Principal CIT Vs. Abhishar Buildwell Pvt. Ltd in para No. 10 to 14 as under:

10. On a plain reading of Section 153A of the Act, 1961, it is evident that once search or requisition is made, a mandate is cast upon the AO to issue notice under section 153 of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Section 153A of the Act reads as under:

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma "153A. Assessment in case of search or requisition (1) Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132-A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. Provided further that assessment or reassessment, if any, relating to any assessment year falling wit the period of six assessment years referred to in this sub section pending on the date of initiation of the search under section 132 or making requisition under section 132-A, as the case may be, shall abate. Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132-A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) ha been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sul section (1) or Section 153, the assessment or reassessment relating to any assessment year which h abated under the second proviso to sub-section (1), shall stand revived with effect from the date receipt of the order of such annulment by the Commissioner: Provided that such revival shall cease to have effect if such order of annulment is set aside

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma Explanation For the removal of doubts, declared that,- (i) save as otherwise provided in this section, section 153-B and section 153- C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year."

On the facts and in the circumstances of the case, the Ld CIT (A)-3 has erred in:- 1.Whether on the merits and on the circumstances of the case and in law the Ld. CIT(A) was justified in deleting the addition of Rs. 2,98,46,941/- on account of unexplained payments, on the basis of diary seized from the assessee's premises, Ignoring the presumption laid down u/s 132(4A of the Act regarding ownership and accuracy of seized documents, which Was not adequately countered by the assesee? 2. Whether on the CIT(A)) was justified in treating the seized incriminating diary a dumb document without taking cognizance of the facts that the assesse has accepted the ownership of the diary and that it was maintained in his own handwriting for accounting of election related expenditure, and even failed to substantiate the source of such payments in his statement recorded on oath u/s 131 of the Act? 3. Whether on the facts and on the circumstances of the case and in law the Ed. CHYA) was justified in in treating the seized incriminating diary as dumb document without taking cognizance of significant facts that the entries (eg Dkata Parishad 1 lac) in the seized diary are corroborate with the other pages of the same diary, and balance amount has been computed in certain

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma pages indicating actual payments of the amount mentioned in the seized diary? 4. Whether on the facts and on the circumstances of the case and in la the Ld. CITYA) was justified in deleting the addition by solely relying upon the assessee's argument that such expenditure recorded in the seized diary was made by the assessee on behalf of a political party for election management work ignoring that: (1) the quantum of expenditure as p the income and expenditure account of the concerned political party the relevant period was more than recorded expenditure in the seized diary; and more importantly that (II) no correlation whatsoever of the recorded entries in the seized diary with the income and expenditure account of the political party was established by the assessee to substantiate his claim? 5. Whether on the facts and on the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the protective addition of Rs 7,89,13,065/ made on the issue of unsecured loans / liabilities in the hands of the societies in which assessee was a founder member viz. M/s Truba Education Society and M/s Truba Advance Science Kombine, on the basis of documents seized from the assessee's premises, despite the presumption laid down u/s 132(4A) of the Act regarding ownership and accuracy of seized documents which was not countered by the assessee? 6. Whether on the facts and on the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the protective addition of Rs 7,89,13,065/- made on the issue of unsecured loans/liabilities in the hands of M/s Truba Education Society and M/s Truba Advance Science Kombine, when the assessee was not able to establish even the identity of lenders (as per the seized document) of M/s Truba Education Society and M/s Truba Advance Science Kombine, despite being the founder member of both of these societies? 7. Whether on the facts and on the circumstances of the case and in law, the Ld. CIT(A) was justified in accepting the assessee's submission that incriminating documents with entries of unsecured loans/liabilities in the hands of M/s Truba Education Society (TES) and M/s Truba Advance Science Kombine (TASK) is a dumb document without taking cognizance of the fact that the seized incriminating document is a dated document with names of lenders of M/s Truba Education Society and M/s Truba Advance Science Kombine as on date specified therein, wherein, several names in the seized document correspond/corroborate with the names of lenders of unsecured loan recorded in the books of M/s Truba Advance Science Kombine (TASK), with a higher amount mentioned against their names in the seized document vis vis the books of M/s TASK?

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma 8. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the protective addition of Rs 7,89,13,065/- made on the issue of unsecured loans / liabilities in the hands of M/s Truba Education Society and M/s Truba Advance Science Kombine, on the grounds that no corresponding substantive addition has been made by the AO in the cases of M/s Truba Education Society and M/s Truba Advance Science Kombine, when the statutory time limit, for making substantive addition of Rs 7,89,13,065/ in the hands of M/s Truba Education Society and M/s Truba Advance Science Kombine, on the basis of seized material, has not elapsed? 9.Whether on the facts and on the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 2,63,000/- on account of cash deposits in bank accounts, when the assessee failed to: (i) support the source of each cash deposit with necessary evidence which was specifically asked for; (ii) furnish detailed date-wise cash flow statement to justify the cash deposits; and (iii) justify the opening cash in hand shown in the receipt and payment account for the FY 2009-10 despite giving reasonable time during assessment proceedings? 22. Ground No. 1 to 4 are regarding addition made on account of unexplained expenses/payments made out of undisclosed sources of income which was deleted by CIT(A).

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma 16.17 In response, the assessee has made submissions vide letter dated 16/11/2017. The submissions of the assessee have been carefully considered However, the same are not acceptable for the following reasons: a. The notings in the seized diary clearly show the financial implication which is in the nature of payments to some media; b. the DDIT had deciphered the abbreviations "DJ" & "AU" as Dainik Jagran and Amar Ujala Information obtained u/s 133(6) of the Act from the entities revealed that no such receipts mentioned in the seized diary have been received by them. c but the probability of the abbreviation ‘DJ’ having a different meaning cannot be negated. Similar logic is applicable to 'AU' also: d. aforesaid pocket diary cannot be considered as dumb document as treated by the assessee in view of the fact that he has confirmed that he was maintaining the diary for election but miserably failed to substantiate, e. In view of the above, the diary has evidentiary value for which assessee chooses not to explain; f. The copy of letter dated 12/08/2017, issued on the letter head of Bhartiya Janata Party filed vide submissions dated 31/08/2017 does not serve the purpose of the assessee as it does not contain the specific details called for from the assessee during the course of search and post search proceedings. The same is therefore not acceptable. 16.18 in view of the above discussion, it concluded that the amounts reflected in the pages of diary are related with the payments nude to media. This diary is handwritten by Shri Shailendra Sharma only, however, despite being provided enough opportunities, he failed to furnish any explanation regarding source such payments, instead he gave only evasive replies. As the diary was belonging to Shri Shailendra Sharma only, the entries in this we hand written by him only and this was seized from his premises. Thus, as per the provision of the section 132(4A) of the Act, it can be logically concluded that the above mentioned payments reflected in the above pages of the diary were actually made. Since assessee h failed to offer any explanation and only gave evasive replies, it can be concluded that the were paid by Shri Shailendra Sharma only out of his undisclosed income.

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma Thus, miscellaneous payments mentioned on pages 42, 42 back & 44 amounting Rs.48,81,941/- and payments/expenses related to media, given at pages 42, 43, 43 back. 45 back and 46 amounting to Rs.1,29,45JMMM during the year relevant to the A.Y 2015 are treated as payments made by the assessee out of his undisclosed sources of income taxed in the A.Y 2015-16. Further, transactions mentioned on Page no. 56 to 68 Rs.1,20,00,000/-are treated as payments made by the assessee out of his undisclosed sources of income and taxed in the A.Y. 2015-16. Penalty proceedings u/s 271(1) (c) of the IT are initiated separately for A.Ys 2015-16.”

��न . उपरो�त डायर� के पृ ठ सं"या पर कुछ और Abbrevia�ons जैसे 3 21 16,17,18 : DJ,AU, JSM, AD आ)द *लखे ह- । कृपया इनका full form बताइए । उ1र उपरो�त का full form मुझे याद नह�ं है । ��न . आपको पुनः बताया जा रहा है 5क आपका यह बयान आयकर अ�ध6नयम , 4 क8 धारा के अंतग:त शपथपूव:क दज: 5कया जा रहा है और शपथपूव:क बयान 1961 131 या जानबूझकर त?य एवं जानकार� 6छपाने हेतु आपके के दौरान गलत बयानी करने @वABध Penalty एवं Prosecu�on क8 काय:वाह� भी �ारंभ क8 जा सकती है । अतः आपसे अनुरोध है 5क पूछे गए ��नD का सह� एवं सट�क उ1र दे एवं सह� त?य एवं जानकार� �Fतुत करG ।

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma उ1र – मेरे Bवारा मेरे बयान मG जो भी जानकार� द� गई है वह सJय है एवं आगे भी सह� एवं सट�क जानकार� द� जाएगी । मुझे �ावधानD के @वषय मG जानकार� है । ��न 5. पृ ठ सं . मG 6नLन जानकार� है :- 16 DJ-25 20 AU & Others 5 JSM (1.5) .5 Others small & media press 2.5 इसी �कार पृ ठ Nमांक पर 17 Media Balance payment DJ 30 AV 10 AD (29th 30th ) उपरो�त पृ ठD से यह Fप ट है 5क उपरो�त )हसाब 5कताब मीOडया से संबं�धत है और यह से संबं�धत है । ता5क: क Aप से ( ) वीं लोकसभा के चुनाव 2014 16 उपरो�त Abbrevations @व*भ�न मीOडया हाउसेस के short form है जैसे: DJ है Dainik Jagran, AU: Amar Ujala आ)द तथा इनके सामने *लखी गई रा*शयां कम से कम लाख मG *लखी गई रा*शयां है . िजनका )दनांक वार भुगतान क8 जानकार� है । पेज नं , पर Balance payment भी *लखा गया है िजससे यह Fप ट है 5क इसमG बचे हुए , 17 भुगतान media Houses को देने क8 जानकार� है । इसी �कार पेज नंबर पर भी 18 जैसे , इसी से संबं�धत कुछ जानकार� *लखी गई है Point No.3- DJ के Hanging Ads ka matter एवं Point No.4- Media के पैसे संजय से । पेज नंबर - पर भी 21 AU(Final) Heading के अंतग:त भी कुछ details *लखी गई ह- एवं Amounts का िजN है । इन सभी पृ ठD से यह पूर� तरह Fप ट है 5क इन पृ ठD मG दज: जानकाTरयां @व*भ�न media Houses को हुए भुगतान से संबं�धत है अतः आपसे 6नवेदन है 5क सोच समझकर पुनः

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma संपूण: जानकार� दG एवं बताएँ 5क भुगतान 5कसके Bवारा 5कया गया है और इसका FVोत �या है ॽ उ1र – म- @पछले कई वषX से भारतीय जनता पाटY के चुनाव �बंधन से संबं�धत कामकाज देखता हूँ जैसा म-ने पहले ह� बताया 5क उपरो�त पृ ठD मG दज: �@वि टयां चुनाव के दौरान काय:काल से संबं�धत है समय पर - जो @व*भ�न लोगD Bवारा मुझे समय , र याददा�त के *लए इ�हG म- नोट कर *लया करता था । जानकाTरयां द� जाती थी औ ले5कन इस संदभ: मG मुझे अभी कुछ याद नह�ं है और ऐसे कोई भुगतान मेरे Bवारा [यि�तगत Aप से नह�ं 5कए गए ह- । ��न ) आपको आयकर अ�ध6नयम क8 धारा A) से अवगत कराया जा रहा है , 4 132 6 , 6नयंVण से �ा]त होता है / वेज 5कसी [यि�त के पास िजसके अनुसार य)द कोई भी दFता तो यह माना जाएगा 5क यह उसी से संबंध रखता है और उसमG दज: �@वि टयां पूर� तरह से सJय है । इस संदभ: मG य)द आपके Bवारा उपरो�त पृ ठD मG दज: जानकार� का Fप ट�करण नह�ं )दया जा रहा है न यह माना जाए 5क यह भुगतान आपके तो �यD , Bवारा Fवयं क8 अघो@षत आय से 5कया गया है ॽ उ1र – उपरो�त संदभ: मG मेरे Bवारा जो पहले बयान )दया गया है वह� सJय है । और इसमG मेरे Bवारा [यि�तगत Aप से कोई भुगतान नह�ं 5कया गया है । ��न . पृ ठ सं . से भी तक expenses part मG @व*भ�न �@वि टयां एवं इनके 7 42 46 Amount *लखे गए है इसमG भी @व*भ�न अ�य खचX के अलावा मीOडया के खच_ भी शा*मल है । इसमG भी अ�धकतर �@वि टयां लाख मG *लखी गई ह- । कृपया इन पृ ठD का अवलोकन करG एवं इसमG दज: �@वि टयD क8 संपूण: जानकार� दे एवं भुगतानD क8 21 �वृ@1 एवं FVोत के बारे मG जानकार� दG एवं �माण �Fतुत करG । उ1र उपरो�त �@वि टयां भी चुनाव खच_ से - संबं�धत है ले5कन इनमG मेरे Bवारा भुगतान नह�ं 5कया गया है । यह हमार� पाटY के चुनाव �बंधन काया:लय मG समय समय पर द� - गई जानकाTरयां ह- िजसे मG याददा�त के *लए *लख लेता था पर�तु अभी इसके बारे मG मुझे कुछ याद नह�ं है ।

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma ��न कृपया बताएँ 5क इन पृ ठD मG दज: कुछ [यि�त जैसे �द�प जी संजय , )हमांशु , 8 पूर� जानकार� द�िजए । इनके , एकता पTरषद कौन ह- , जी उ1र चुनाव के दौरान @व*भ�न लोगD से संपक: होता है और उ�ह�ं के नाम *लखे हो - सकते ह- ले5कन अभी मुझे इन [यि�तयD के बारे मG कुछ याद नह�ं । ��न . कृपया बताये 5क आप भारतीय जनता पाटY मG �या �या काय: देखते ह- एवं - 9 बताई गई जानकाTरयां 5कन [यि�तयD के Bवारा आपको द� जाती थी । कृपया आपको यह भी बताए 5क यह सब खच` पाटY क8 लेखापुFतकD मG 5कस �कार से दज: हैॽ यह 5कस 6नवा:चन aेV से संबं�धत हैॽ अपने कथन के समथ:न मG कृपया �माण �Fतुत करG । उ1र म- @पछले कई वषX मG पाटY के रा b�य एवं �ादे*शक Fतर पर @व*भ�न पदD पर रहा हूँ और @व*भ�न िजLमेदाTरयां भी 6नभाता रहा हूँ । इसी �कार चुनावD के दौरान भी , चुनाव �बंधन से जुड़े हुए @व*भ�न काय: भी मेरे Bवारा देखे जाते ह- । उपरो�त जानकाTरयD पाटY के @व*भ�न काय:कता:ओं के Bवारा समय समय पर द� जाती रह� है । - 5कसी [यि�त @वशेष के Bवारा जानकार� न )दए जाने के कारण म- इनक8 जानकार� देने मG असमथ: हूँ । उपरो�त डायर� मG दज: �@वि टयां एवं जानकाTरयां 5कसे एक 6नवा:चन aेV से संबं�धत नह�ं है िजसमG @व*भ�न 6नवा:चन aेV के संदभ: मG जानकार� हो सकता है । चूं5क म- पाटY क8 @व1ीय �बंधन एवं Accounts नह�ं देखता हूँ अतः पाटY क8 लेखा पुFतकD के बारे मG जानकार� मुझे नह�ं है । ��न आपके 6नवास पर तलाशी एवं जeती क8 काय: वाह� के दौरान जeत LPS-1 के 10 पृ ठ सं . से आपको )दखाये जा हे ह- । कृपया इस LPS के सभी पृ ठD का 1 43 अवलोकन करG एवं इनका Fप ट�करण द�िजए । उ1र आपसे अनुरोध - है 5क मेरा बयान आज Fथ�गत 5कया जाए कुछ जAर� कारणD से मे अभी बयान देने मG असमथ: हूँ । म- कल पुनः मेरा बयान दज: कराने के *लए काया:लय मG उपिFथत हो जाउंगा

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma fी शैले�g शमा: का बयान आज )दनांक को पुनः शपथ पूव:क 20.01.2016 गया । बयान �ारंभ 5कया उपरो�त ��न सं . के उ1र मG मेरा 6नLन कथन है से पेज नंबर : - 10 4 1 तक हमारे Bवारा भ@व य मG यूनीव*स:ट� खोलने क8 योजना से संबं�धत Draft projections और working है । परंतु यह योजना फल�भूत नह�ं हो पाई ।

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma 26. Therefore, from the nature of the entries in the seized diary and the explanation of the assessee in the statement recorded u/s 134(4) as well as statement recorded u/s 131 on 19.01.2016 leaves no doubt about the fact that the said expenditure was incurred by the state unit of BJP in the election related activities and media campaign. The CIT(A) has dealt with this issue and decided the same in para 3.8.7 as under:

3.8.7 Most importantly. the appellant during assessment proceedings in support of his claim, that the impunged jottings have been made on the behalf of state unit of BJP for election management work and any expenditure recorded therein had not been done in individual capacity, has filed copy of letter dated 12.08.2017 from the office of Bhartiya Janta Party, MP. wherein, it has been mentioned that the appellant during 2003, 2008 & 2013 assembly elections and 2004, 2009 & 2014 parliamentary election has worked as a member. Further, the appellant has managed various activities such as office management, meetings, publicity, air travel and rallies. Further, it has been clearly mentioned that no expenditure has been incurred by him and all the expenses related to elections have been done by state unit of BJP and are recorded in books of account. In support copies of income and expenditure account for FY 2013-14 & 2014-15 have also been filed submitted. On perusal of the said income and expenditure account for FY 2013-14 & 2014-15 the following has been observed:- Income and expenditure account as on 31.03.2014

S.No. Particulars Amount 1 Advertisement (printing) expenses 36550719 2 Advertisement expenses 266359563 3 Election expenses 5297495 4 Media expenses 2474152 5 Travelling expenses 181326804 6 Welcome expenses 941884

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma

Income and Particulars Amount expenditure account as on 31.03.2015S.No . 1 Advertisement (printing) 30184986 expenses 2 Election expenses 10660429 4 Media expenses 5073396 5 Travelling expenses 9997572 6 Welcome expenses 1797089 From above, it has been observed that the expenses towards advertisement and travelling are incurred many times in FY 2014 when compared to FY 2015. The only reason which could have been is that during FY 2014, 16 Lok Sabha Elections were held. Therefore, the expenses are on higher side. Further, the expenses recorded in the seized diary are very less when compared to expenses recorded in books of account of state unit of BJP. Therefore, the claim of appellant that the seized diary contained both recorded and projected/proposed expenditure is found to be acceptable and has merit. Considering the nature of entries made in the seized material, it is clear that the receipt/payment appearing in the seized material do not pertain to the appellant and hence, the addition made by the Id AO on this basis can not be sustained”.

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma 29. We have heard the Ld. DR as well as Ld. AR and considered the relevant material on record. Ld. AR has relied upon various decisions which we will deal hereinafter. The A.O has made protective addition in the hands of the assessee in para 17.10 of the assessment order as under:

17.10 In view of the above discussion, the documents as referred to above, have been seized from the premises of Shri Shailendra Sharma and he has failed to furnish any satisfactory reply/explanation regarding the entries of loans/liabilities of TES & TASK, reflected in these papers, the cash loans reflected in the documents as discussed above amounting to Rs. 7,89,13,065/- is added on protective basis in the hands of Shri Shailendra Sharma. Information will be passed on to the AO of the societies, M/s Truba Education Society and M/s Truba Advance Science Kombine for making addition on substantive basis in thoses cases for the A.Y. 2015-16.

3.9.4 It is also important to mention that the Ld. AO in the body of assessment order has given a finding that the impunged transaction pertain to TES and TASK and therefore, a protective addition is made in the hands of appellant. The appellant during appellate proceedings has strongly contended that when no substantive addition was made, the qua protective addition does not survives and placed reliance on various judicial pronouncements (supra). In order to verify the veracity of the claim of the appellant, the Ld. AO vide letter dated 11.06.2021 was required to explain whether any substantive addition was made in the hands of the said firm/institute. The Id AO in reply vide letter in F.No

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma ACIT(Central)/Gwalior/RR/2021-22/235 dated 16.09.2021 has stated as under:- 2 Protective addition On the issue of protective addition of Rs. 7.89.13.065/-, the record has been verified However, no letter has been found on record, which could ascertain that the information was passed by the AO in the cases of Mix Trubo Education Society & M/s Truba Advance Science Kombine After making efforts, the PANS of the above two entities have been found. The details of PANs are as under Name PAN AO M/s Truba Education Society AABAT0008P Exemption Circle, Bhopal M/s Truba Advance Science Kombine AAAAT7101J ITO (12), Bhopal AAAAT4603R Exemption Circle, Bhopal The status of assessment may kindly be ascertained from the jurisdictional Assessing Officers. Therefore, the jurisdictional Assessing officers DC IT (Exemption), Bhopal and ITO 1(2), Bhopal vide letter dated 21.09.2021 were required to verify whether any substantive addition on ibid account was made in the hands of said concerns. In compliance, the ACIT (Exemption), Bhopal vide letter F.Ne ACTI(EX/BPL/Remand report/2021-22/29 dated 28.09.2021 has stated as under:

In this connection, it is submitted that no addition has been made by the A.O in the case osf M/s Trubu Eshucation Society (PAN AABATO008P and M/s. Truba Advance Science Kombine (PAN AAAA701J & ΑΛΛAT4603R for the assessment year 2013-14 (copy of order enclosed).

Further, it is informed that no assessment have been done in the above cover for the AY 2013-10 us per this office record.

Also, in compliance, the ITO 1(2), Bhopal vide letter F.No FTO 1(2/BPL/RR/2021-22 dated 12.10.2021 has stated as under:-

In this regard it is to submitted that the P'ΑΝ ΑΛΛAT71011 (M/s Truba Advance Science Kombine pertains to this office while the PAN AAAAT46038 pertains to the exemption ward. On verification of records and ITBA and e-filing profile of the assessee it is to be submitted that the said assessee hors not filed its Income Tax return for any of the assessment year mentioned above No assessment as made in this office or 41

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma the above mentioned assessee and hence, no vid addition has been made as per record of this office.

From the above report, it transpires that no information was passed by the Ld. AO before or after making protective addition in the hands of appellant, per se, no substantive addition has been made in the hands of the said institute. In these circumstances, Hon'ble ITAT Ahmadabad Benet in the case of Pravinkumar Valjibhai Pujara HUF vs ITO in Ahd 2016 dated 28.06.2021 has held that protective addition framed by the AO without making substantive addition is not sustainable. The relevant extract of decision is reproduced as under: 6.4 The facts of the present case are like this. The assessee has deposited cash of R 7207.000. in his bank account which was subsequently transferred to the parties as discussed above through the mode of banking channel. Such amount of cash deposit was treated as unexplained investment in the hands of the assessee under the provisions of section of the Act and therefore the same was added to the total income of the assessee on protective basis. 6.5 However, the AD was conscious while framing the assessment of the assessee about the fact that the substantive assessment has to be framed in the name of the persons as discussed above. The relevant observations of the AO as recorded in his order with respect to the substantive assessment reads as under: Sustantive addition is to be made on the same issue in the cases of l Shri Sureshbhui Nathalal Thukkur, 2)Shri Rakesh Sares Thakkar, 3) Shri Sunil Sureshbhal Thakkar and 4) Sma Jueunaben Sureshbhai Thakkar as the transaction are done by the them, in the bank account of the assessee and they have also failed to give their explanation in this matter, despite of opportunities being given to them to attend by issuing summons and also by the assessee.

6.6 Undoubtedly, there was no assessment framed in the hands of the persons as discussed above. Thus in our considered view in the absence of such substantive assessment, the protective assessment cannot survive de holding so we draw support and guidance from the order of Mumbai Tribunal in the case of Suresh K. Jajoo Vs. ACIT reported in 39 SOT 514 wherein it was held as under: Thus, protective assessment has to be done only after sustain assessment is done. An assessment can be considered as protective only when there is substantive assessment. Thus, assessment has to precede protective assessment 6.7 We also note that the ITAT Jodhpur in the case of Ramesh Chand Premraj Soni (HUF) VS. ACIT reported in 13 SOT 15 has held that if the 42

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma substantive assessment in the case of the assessee is struck down being barred by time, the additions made in the protective assessment cannot survive. The relevant extract is reproduced as under "In the instant case, there was no dispute with regard to the facts that all the additions, which were the subject-matter of appeal or for that matter that of assessment order passed under section 15880 in the case of the HUF were made on protective basis All parallel additions were made in the case of R individually. The assessment made under section 158BC in the case of 'R' did not survive at all since it had been struck down being time barred. The additions made on substantive basis had not been decided by deleting the same from assessee's individual hands rather they were thrown along with the block assessment order, meaning thereby, there was no substantive addition in existence at all, and the protective addition presupposed the existence of substantive additions. In another words whenever additions were made, they were only substantive additions. The term protective addition is a misnomer, actually it is a substantive addition. The protective addition name has been given to it since it protects the interest of the revenue. In such a case, there happens to be some doubt as to whom a particular income belongs to when it is not clearly established as to in whose hands a particular income should be added when there are evidences that it may belong to either of the two, or when scintillating evidences are available from which it is not possible to come to clear-cut conclusion, readily. In the instant case, the substantive additions had not been declared to not belong to 'R' Had that been the case, the protective addition could have been considered and added substantially if it was found to belong to protective assessee. From the above observations, it follows that when the substantial additions go, protective additions cannot survive. When the very base of income goes', the addition in the assessee's hands, who was treated as protective would also not survive. Consequently, on this legal ground, the assessment order was quashed 6.8 In view of the above and after considering the facts in totality, we hold that the protective assessment framed by the AO without making the substantive assessment is not sustainable. Hence, the assessee succeeds on this technical ground. As the assessee has succeeded on the technical ground, we do not find any reason to adjudicate the issue raised by the assessee on merit. Hence the grounds raised by the assessee on merit are 3.9.5 In view of the above discussion, the Ld. AO was not justified in making impugned addition on protective basis in the hands of appellant. Further, in view of the various judicial pronouncements, the appellate authority cannot sustain protective addition. Such decisions are as under: (i). Hon'ble Allahabad High Court in the case of Durgawati Singh (1988) 234 ITR 249. The operative part of the decision is as under:- 43

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma

It is settled that when there is a doubt as to which person amongst the two was liable to be assessed, parallel proceedings may be taken against both and alternative assessments may also be framed. It is also equally true that while a protective assessment is permissible, it is not open to the income-tax appellate authorities constituted under the Act to make a protective order The law does not permit assessment of the same income successively in different hands. The tax can only be levied and collected in the hands of the person who has really earned the income and is liable to pay tax thereon (ii). Hon'ble Allahabad ITAT in the case of Prakash Wine Agencies (1990) 38 TTJ 39 (Allahabad) has held that an appellate authority should decide and determine the substantive addition and cannot confirm protective addition. The relevant para of the said judgment is reproduced hereunder:-

6. In our opinion, there is merit in the assessee’s submission. So appellate authority is authorised to evade the ground of appeal

which is raised before it for adjudication by the appellate. Even a protective assessment gives rights of appeal relatable in the finding of protective access itself and therefore, it was the bounden duty of the learned Commoner Appeal) as have determined us who was the real owner of the income in question namely, whether the aassessee firm was the benami of Late Stri SK Sabe. This issue cannot be let and decided in appeal. The right so make protective assessment has been given to the ITO by the one live Lali Baridas NO (1961) 43 ITR 387 (SC) hat appellate authority cannot evade the determination of the lone when it is brought before by way of an appeal either by the assessee who is substantially assessed. The course of action adopted by the learned Commissioner (Appeals) was prima facile against low and therefore his order deserves to be set aside and so we set it aside. (iii). Hon'ble MP High Court in the case of Dayabai is CIT 23 namam 377 has held that the appellate authority cannot uphold a protective order, meaning thereby appellate authority cannot pass protective appellate order against the assessee. The relevant para of the said judgment is reproduced hereunder-

8. It is therefore clear that the protective assessment made against Smt. Dayabai only to meet a situation thus in case the assessment of Vinit Talkies is not made, this assessment could become operative, cannot now be maintained as the same income as already assessed as the income in the hands of firm Vinit Talkies, Jabalpur. 9.In this view of the matter answer to the questions referred to by the Tribunal is in the negative that the Tribunal wanted in confirming the 44

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma protective assessment. In the circumstances of the case parties are directed to bear their own costs. (iv). Hon'ble ITAT Pune in the case of Natwarlal Radheshyam Bagaria to 719/PN/2007 has held that it is not open to the CIT, appeal in confirming the addition on protective basis in the case of an assessee, even though substantive addition was deleted in the hands of same assessee. The operative part of decision is as under: 14. In this background we find that it was the duty of the CIT(A) to determine as to who was the real owner of the income in question. This issue could not be left undecided in appeal. The right to make protective assessment has been given to the ITO by the case law Lalji Haridas Vs. ITO and Anr (1961) 43 ITR 387 (SC) but an appellate authority cannot evade the determination of the issue when it is brought before it by way of an appeal either by the assessee who is substantially assessed Further, we find that the Bombay Bench of the Tribunal in the case of Sipem UK Ltd (supra) has held as under: "Another important issue was as to whether the A.O having already assessed the income in the hands of the real assessee, could make a protective assessment in the case of the assessee holding it to be agent of V. Such double taxation militates against the cardinal principles for levying tax on income. It is true that the department may not be sure as to in whose hands, the income should he brought to the charge of tax or for which assessment year such income is assessable. In such situation, the department is legally justified in making two assessments out of which one is substantive assessment and the other is protective assessment. This was what had happened in the instant case. The A.O had brought to a charge of tax the relevant income on substantive basis in the hands of 'V' and on protective basis in the hands of the assessee company. The appeal in the case of V was dismissed by the CIT(A) on 28-7-2003 and, thus, the assessment in the case of 'V' achieved finality. The CIT(A) was wholly unjustified in confirming the protective assessment made in the case of the assessee company even though substantive assessment was confirmed by him. For the said reasons, the relevant orders passed by the A.O and the CIT(A) were to be quashed. In view of the above, we are of the opinion that the CIT(A) after upholding the addition on substantive basis in the other case, could not make protective appellate order in the case of the assessee. The Assessing Officer may not be sure as to in whose hands the income should be brought to charge of tax or for which assessment year such income is assessable. In such a situation, the Assessing Officer is legally justified in making two assessments out of which one is substantive assessment and the other is protective assessment. But in appeal, it is not open to the CIT(A) in confirming the addition on protective basis in the case of an assessee, even though substantive addition was deleted in the hands of 45

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma the same assessee. In view of the above, we hold that the CIT(A) was not justified in directing the Assessing Officer to sustain the addition mentioned above on protective basis and thus, his direction is hereby vacated. Accordingly, entire protective addition made by the Ld. AO amounting to Rs. 7,89,13,065/- is deleted. Therefore, appeal on this ground is allowed.

“8. We have heard both the parties and perused the records. We note that the Ld. CIT(A) has made a categorical finding of fact that there was no substantial addition of such an amount (Rs. 1,51,56,830/-) made prior in the case of M/s. Society of Education and this finding of fact has not been rebutted/controverted of assailed by the revenue before us by filing specific ground to this effect in this appeal. From a perusal of the grounds of appeal raised by the revenue (supra), it is clear that the revenue has only assailed the decision of the Ld. CIT(A) in deleting the protective addition made by the AO to the tune of Rs. 1,51,56,830%. And it can be very well seen that the basis for deletion resorted by Ld CIT(A) to delete the protective assessment in the hands of assessee was because there was no substantial addition in the hands of M/s, fiociety of Education. This crucial fact has not been rebutted/controvered/assailed before us. Therefore, this finding of fact of 14. CIT(A) crystallizes (Le no substantive addition in the hands of M/s. Society of Education) and, therefore, we do 46

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma not find any infirmity in the order passed by the Ld. CIT(A) on this issue on deletion of protective addition without substantial addition. We also take note that the Ld. CIT(A) to come to such a decision has taken note of relevant decisions of this Tribunal which reads as under:

"In the case of ITO v. Fussy Financial Services Private Limited (LTA. No. 44/DEL/2014 dated 5-6- 2017, it was held/averred, as follows, by the Hon'ble ITAT-Delhi:

We further note that the analysis of the investment account reveal that the company has made investment of Rs.5,04,01,000/-. The statement given by Sh. PN Jha assumes importance wherein he categorically admitted that the company was doing the business of investment and finance and during the year the bank accounts of the company have been used to provide the accommodation entries. The addition of Rs. 31767952/- made by the Assessing Officer on protective basis, which is not sustainable in the eyes of law, because in this case the A0 himself stated in the assessment order that the Department is looking after the case of beneficiaries and the amounts channelized through this group would be taxed in hands of the beneficiaries, the amount of total credits of Rs. 3,17,67,951/- made in its bank account with Kotak Mahindra Bank, KG Marg, New Delhi, during the year is added to the income of the assessee on protective basis. In this case we find that AO has not made any substantive assessment. There may be substantive assessment without any protective assessment, but there cannot be any protective assessment without there being a substantive assessment.

In the case of MP Romchandran v. DCIT [129 TTJ 190 at page 195), it was held/averred, as follows, by the Hon'ble ITAT:

"In order to give a different colour, the Id. DR contended that this disallowance was made on protective basis only and hence cannot be equated with the substantive disallowance. We have noted above about the validity and presumption of the protective assessment in general. Protective assessment cannot be pendent of substantive assessment. This protective assessment is always successive to the substantive assessment. There may be a substantive assessment without any protective assessment but there must be any protective assessment without there being a substantive assessment. In simple words where has to be some substantive assessment addition first which enables the AO to make a protective assessment/addition. Substantive addition/assessment is made in the hands of the person in whose hands the AO prima facie holds the opinion that the income is rightly taxable. Having done so and with a view to protect the interest of the Revenue, if the AO is not sure that 47

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma the person in whose hands he had made the substantive addition rightly, he embarks upon the protective assessment. Thus the protective assessment is basically based on the doubt of the AO as distinct from his belief which is there is the substantive assessment."

In the case of Gregory & Nicholas v. Asst. CIT [IT Appeal No. 5102 (Mum.) of 2006, dated 1-3-2007], it was held averred, as follows, by the Hon'ble ITAT (Mumbai):

"21. In the case of Suresh K. Jaju (2010) 39 SOT 414(Mum), E-Bench of the Tribunal at pages 532 to 533 held as follows:

"The AO made the following observations:

As the assessee has already offered this income in assessment year 2001-02, the same is assessed in this year to protect the interest of the revenue Whether the above observations are enough to conclude that the assessment of the capital gains as long- term capital gain in assessment year 2001-02 by the Assessing Officer was only a protective assessment? We have already seen the ratio laid down by the Hon'ble Supreme Court in the case of Lalji Haridas (supra) wherein the Hon'ble Supreme Court while recognizing the concept of protective assessment has very clearly laid down that there must be an exhaustive enquiry and the question as to who is liable to pay (in this case which year the capital gain is to be assessed and whether as long-term capital gain in assessment year 2001-02 or short term capital gain in assessment year 2000-01) should be determined after hearing objections. He should determine the question in the case of one person (in this case of the other person (in this case in other year) in whose case assessment has to be made protectively. Thus, protective assessment has to be done only after substantive assessment is done. An assessment can be considered as protective only when there is substantive assessment. Thus, substantive assessment has to be precede protective assessment” In case of G.K. Consults Ltd V. ITO [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], it was held/averred, as follows, by the Hon’ble ITAT Delhi: “19. On careful consideration of above contention, we are of the view that there may be a substantive assessment without any protective assessment but there cannot be any protective assessment/addition, meaning thereby there has to be some substantive assessment/addition first which enables the AO to make a protective assessment/addition. In 48 IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma the present case, the AO proceeded to make protective assessment by way of reopening of assessment of the assessee appellant company without being a substantive assessment on the date of assumption of jurisdiction u/s 147 of the Act which is not permissible as per decision of ITAT, Mumbai in the case of MP. Ramachandaran v. DCIT (supra) and Suresh K Jaju Vs. CIT (supra)." (Emphasis given by us] In the light of the aforesaid decision of the Tribunal and based on the discussion, we do not find any infirmity in the action of Ld. CIT(A) to have deleted the protective assessment in the hands of the assessee when the fact was that there was no substantive addition in the hands of M/s. Society of Education or other assessee's and ergo the same is confirmed.

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma 34. The Ld. departmental representative has submitted that for the year under consideration the assessee has made cash deposit in the bank account of Rs. 2,63,000/- and failed to furnished details of date wise cash flow statement to justify the cash deposits. The assessee also failed to justify the opening cash in hand shown in the receipt and payment account for the financial year 2009-10 despite giving reasonable and sufficient opportunities. Therefore, the A.O held that he failed to explain the source of deposit made in the bank account and consequently A.O made the addition of 2,63,000/- as unexplained cash deposit. Ld. DR has relied upon the order of Assessing Officer.

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma financial year 2009-10 and consequently he made addition of Rs.2,63,000/- as unexplained cash deposit. On appeal the CIT(A) deleted this addition in para 3.2.2 as under:

3.2.2 1 have considered the facts of the case, material evidences on record, written submission filed by appellant and to the facts and findings of the Id AO inter alia material brought on record. I find that appellant during appellate proceedings in support of his claim has filed copies of relevant receipts and payments accounts which shows that the cash inflow is generated out of disclosed sources of income. On perusal of receipt and payment account it transpires that the appellant as on 01.04.2010 has shown opening cash balance of Rs. 3,93,160/- which have been generated out of net resultant of receipts and payments account for FY 2009-10 (AY 2010-11). The AY 2010-11 was also covered under search assessment proceedings and a similar addition on account of unexplained cash deposit was made amounting to Rs. 1,75,000/-. My Ld predecessor vide order in appeal no CIT(A)-3/BPL/IT-11521, 11527, 11531 & 11537/2017-18 dated 11.06.2021 has deleted entire addition stating that all the sources of income and qua expenditure have been shown in receipt and payment account and the sources of income have been taken into consideration while filing return of income for the relevant year. Agreeing with view taken by my Ld. predecessor, the opening cash balance as on 01.04.2010 cannot be doubted. Further, on perusal of receipt and payment account, I find also find that appellant had shown sources of income which have duly been taken into consideration while filing return of income for relevant year. Since, the cash deposit in bank account is duly reflected in receipt and payment account. therefore, the source thereof is found to be explained

IT(SS) No.30 & 31/Ind/2023 ITA (SS) No.305/Ind/2023 Shailendra Sharma any discrepancy in cash flow statement as well as the opening cash balance in the hands of the assessee as reflected in cash flow statement. Accordingly we do not find any error or illegality in the impugned order of CIT(A) qua this issue and the same is up held.

Order pronounced in the open court on 24 .06.2024.