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Facts
The Revenue filed twin appeals for Assessment Years 2009-10 and 2010-11 against the CIT(A)/NFAC's order which deleted a protective addition of Rs. 16,60,36,538/- relating to unexplained cash credits. The original assessment proceedings were initiated under Section 143(3) read with Section 147 of the Income Tax Act.
Held
The Tribunal held that a protective addition is only attracted when there is a doubt in the Assessing Officer's mind as to whose hands a particular item of income should be assessed. Citing precedent, it further ruled that Section 148/147 proceedings cannot be initiated for the purpose of making a protective addition. Consequently, the Revenue's appeals were dismissed.
Key Issues
Whether a protective addition deleted by the CIT(A)/NFAC can be restored, and whether Section 148/147 proceedings can be initiated for making a protective addition.
Sections Cited
143(3), 147, 148
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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
Before: Sh. Satbeer Singh Godara & Sh. S. Rifaur Rahman
Asstt. Year : 2010-11 Income Tax Officer, Vs Sanjay Thakur, 7th Floor, 703, Satyam Ansal Ward-2(2)(3), Ghaziabad-201002 Building, RDC, Ghaziabad-201001 (APPELLANT) (RESPONDENT) PAN No. AJRPT9741P Assessee by : None Revenue by : Sh. Mahesh Kumar, CIT-DR & Sh. Pradumna Kumar Singh, Sr. DR Date of Hearing: 02.09.2025 Date of Pronouncement: 02.09.2025 ORDER Per Satbeer Singh Godara, Judicial Member: These Revenue’s twin appeals & 1778/Del/2025, for Assessment Years 2009-10 and 2010-11, arise against the CIT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2024-25/1072030371(1) & 1072030519(1) dated 09.01.2025, in proceedings u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short “the Act”), respectively.
Heard both the parties at length. Case files perused.
Learned CIT-DR vehemently argues in light of the Revenue’s pleadings that the CIT(A)/NFAC has erred in law and on facts in deleting protective addition of unexplained cash & 1778/Del/2025 Sanjay Thakur credits amounting to Rs.16,60,36,538/- in assessment order dated 16.12.2016; and, therefore, the same deserves to be revived herein. We note in this factual backdrop that what all the Revenue endeavour herein is to get a protective addition restored wherein there is no indication in the assessment order itself as in whose hands, the Assessing Officer had made the corresponding substantive addition. We deem it appropriate in this factual backdrop to quote Lalji Haridas Vs. ITO (1961) 43 ITR 387 (SC), that a protective addition gets attracted only when there arises a doubt in the Assessing Officer’s minds as to in whose hands, a particular item of income deserves to be assessed and not otherwise. This in indeed coupled with the fact that the hon’ble Bombay high court in DHFL Venture Capital Fund vs. ITO (2013) 34 taxmann.com 300 (Bom.) has further settled the issue that section 148/147 proceedings could not even be initiated for the purpose of making a protective addition. We thus reject the Revenue’s instant sole substantive ground as well as both these appeals since involving identical set of facts and addition(s) in very terms.