SHRI SUKHPAL SINGH,MUKTSAR vs. INCOME TAX OFFICER WARD-2(2), MUKTSAR

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ITA 167/ASR/2018Status: DisposedITAT Amritsar12 October 2022AY 2009-105 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that a protective assessment cannot exist without a substantive assessment. Since the finality of the substantive assessment in the hands of the father was unknown, the matter was set aside to the CIT(A) to pass a speaking order after determining the facts.

What were the facts?

The assessee had cash deposits of Rs. 85,14,000/- in a joint bank account with his father, which were added to his income as unexplained. The CIT(A) remanded the matter, and the AO initiated assessment proceedings against the father on a substantive basis, while upholding the protective assessment against the assessee.

What were the issues?

Whether a protective addition can be sustained without a finalized substantive addition in the hands of the primary assessee or a related party. The procedural correctness of making a protective assessment when the substantive assessment is still pending.

Which sections of the Income-tax Act were involved?

Section 69,Section 144,Section 148,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.

Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE

For Respondent: Ms. Amanpreet Kaur, Sr.DR
Hearing: 28.09.2022Pronounced: 12.10.2022

ORDER Per:Anikesh Banerjee, JM:

The instant appeal of the assessee is directed against the order of the ld. Commissioner of Income Tax(Appeals), Bathinda, [in brevity the CIT(A)] bearing appeal No.39/15-16, date of order 24.01.2018, the order passed u/s 250(6) of the Income Tax Act 1961, [in brevity the Act] for A.Y. 2009-10.The impugned order was emanated from the order of the ld. Income Tax Officer,Ward 2(2), Muktsar, (in brevity the AO) order passed u/s 144of the Act date of order 26.03.2015.

2.

The brief fact of the case is that the addition was made u/s 69 amount of Rs. 85,14,000/- with the total income of the assessee. The assessment was completed u/s 144 of the Act. The reasons of addition were that the cash deposit Rs.85,14,000/- in the bank account from unexplained source. Aggrieved assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) remanded the matter. The assessee accepted that the cash was deposited in the HDFC bank which was jointly operated by the assessee with his father Mr. Harinder Pal Singh, and also informed that the cash is belongs to his father. Accordingly, the ld. AO issued notice u/s 148 to his father Mr. Harinder Pal Singh and initiated the assessment for substantive basis in the hands of the father. The ld. CIT(A) upheld the order of the ld. AO related to the protective basis of the assessment.

3.

Aggrieved assessee filed an appeal before us.

4.

During the appeal hearing, none was present on behalf of the assessee. The matter is taken up with the consent of the ld. Sr. DR. The ld. Sr. DR first argued and pointed out in ld. CIT(A) order in para 4.3 which is extracted as below:

4.3 I have given careful consideration to the entire gamut of the facts and find that it is not disputed that cash was being deposited in a particular bank account maintained by the appellant (Sh. Sukhpal Singh) jointly with his father namely Sh. Harinder Pal Singh. It would be fallacious to assume that in a joint account the source of cash deposit need to be explained by only one of the joint holders. The responsibility of explaining the cash deposit is joint and several in these cases. The assessment in the case of appellant was finalised exparte, therefore assessing officer could not take a judicious view in respect of attributing the responsibility of cash deposited in the bank account. However, the entire investigations/enquiries have been made by the Assessing Officer in the remand proceedings to come to a conclusion that being the head of the family Sh. Harinder Pal Singh has admitted to his liability of explaining the cash deposit on himself. The statement of Sh. Sukhpal Singh and Sh. Harinder Pal Singh when read together suggest that one has admitted of its liability to the exclusion of the other.

5.

After the thoughtful consideration of the submission of the ld. Sr. DR and observation of the revenue order we direct the revenue to complete the assessment of assessee on basis of the finalization of his father’s assessment on substantive basis.

6.

During hearing, the ld. Sr Dr. was unable to inform whether the substantive assessment in hands of the father was completed or not.

7.

On careful consideration of above discussion, we are of the view that there may be a substantiveassessment without any protective assessment but there cannot be any protective assessment/addition without substantiveassessment/addition, meaning thereby there has to be some substantiveassessment/addition first which enables the AO to make a protective assessment/addition. In the present case, the AO proceeded to make protective assessment by way of AIR data without being a substantiveassessment on the date of assumption of jurisdiction u/s 147 of the Act. The substantive assessment was initiated as per direction of appellate authority in the hands of assessee’s father.

The finality of the assessment / addition of assessee’s father is not known before the bench. The ld. Sr. Dr was unable to through any light about the finality of assessment/ addition. We set aside the matter to ld. CIT(A) and direct to passa speaking order after determination of the fact. The order is passed with termsdictated above.

8.

In the result, the appeal bearing isallowed for statistical purpose.

Order pronounced in the open court on 12.10.2022

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