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“protective assessment”

MiscellaneousAssessmentAssessment441 judgments

The decision most relied on for protective assessment is Lalji Haridas v. ITO (43 ITR 387), cited in 238 judgments on BharatTax.

Leading authorities on protective assessment

Lalji Haridas v. ITO
43 ITR 387 · 1961 · Supreme Court
238
citing judgments

When an assessing authority is uncertain about the true ownership of funds or in whose hands income should be assessed, it can frame a protective assessment to safeguard the Revenue's interest. Such protective assessments remain valid until the substantive assessment is finalized.

CIT, Gujarat II v. Surendra Gulab Chand Modi
140 ITR 517 · 1983 · High Court
88
citing judgments

Protective assessments should not be deleted or disposed of by lower authorities, but rather allowed to remain in effect until the related substantive assessment proceedings attain finality before the High Court or Supreme Court.

DHFL Venture Capital Fund v. ITO
358 ITR 471 · 2013 · High Court
66
citing judgments

Reassessment proceedings cannot be initiated solely for the purpose of making a protective addition. Such proceedings are not valid in the eyes of law.

Bhailal Manilal Patel v. CIT
49 Taxmann.com 539 · 2014 · High Court
47
citing judgments

Penalty under section 271(1)(c) cannot be imposed based on a protective assessment order. Initiation of penalty proceedings is impermissible without a substantive assessment order that finally adds income to the assessee's hands.

Peter Vaz v. Commissioner of Income Tax, Central Circle, Bangalore
128 Taxmann.com 180 · 2021 · High Court
34
citing judgments

An assessee can raise an objection regarding the validity of the Assessing Officer's jurisdiction for reopening a concluded assessment even if the issue was not raised before the CIT(Appeals), by invoking Rule 27 of the Income Tax Appellate Tribunal Rules, 1963. This is permissible if the issue is ancillary to the main issue and does not require additional evidence.

(CIT v. Cochin Co. Pvt. Ltd.
104 ITR 655 · 1976 · High Court
32
citing judgments

A protective assessment is permissible when the assessing officer has doubt regarding who is in receipt of income, but a recovery based on a protective assessment is not allowed. If an assessment is intended to be protective, it must be clearly stated as such.

CIT v. Super Steel (Sales) Co.
178 ITR 451 · 1989 · High Court
28
citing judgments

A penalty under Section 271(1)(c) for concealment of income cannot be levied when the assessment was made on a protective basis, especially if the income was actually assessed in the hands of another person and it was uncertain who had concealed the income.

Suresh K. Jajoo v. ACIT
39 SOT 514 · 2010 · ITAT
27
citing judgments

A protective assessment cannot be made without a prior substantive assessment.

Judgments citing protective assessment

Assistant Commissioner of Income Tax Central Circle-2(3), Bangalore vs. M/S Conc Shade Construction Pvt Ltd, Chikkamangalur

In the result, all the appeals by the assessee are partly allowed for statistical purposes

ITA 300/BANG/2018[2011-12]Status: DisposedITAT Bangalore20 Apr 2022AY 2011-12

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri V. Chandrashekar, AdvocateFor Respondent: Shri Sankar Ganesh K., Jt.CIT(DR)(ITAT), Bengaluru
Section 132Section 153CSection 2Section 292C

deleting the protective additions on account of undisclosed investment of Rs.1,10,93,254/- whereas Gujarat High Court in 140 ITR 517 settled that protective assessment should not be decided till substantive assessment reaches finality. 4. Whether on the facts and the circumstances of the case ... funds and add the same as undisclosed income of the Assessee Company. 46. The fact that the AO has also protectively assessed this impugned undisclosed investment also in the hands of Shri. H.B.Sudarshan, makes it is evident that the AO himself is not convinced of the fact that the impugned

Assistant Commissioner of Income Tax Central Circle-2(3), Bangalore vs. M/S Conc Shade Construction Pvt Ltd, Chikkamangalur

In the result, all the appeals by the assessee are partly allowed for statistical purposes

ITA 299/BANG/2018[2010-11]Status: DisposedITAT Bangalore20 Apr 2022AY 2010-11

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri V. Chandrashekar, AdvocateFor Respondent: Shri Sankar Ganesh K., Jt.CIT(DR)(ITAT), Bengaluru
Section 132Section 153CSection 2Section 292C

deleting the protective additions on account of undisclosed investment of Rs.1,10,93,254/- whereas Gujarat High Court in 140 ITR 517 settled that protective assessment should not be decided till substantive assessment reaches finality. 4. Whether on the facts and the circumstances of the case ... funds and add the same as undisclosed income of the Assessee Company. 46. The fact that the AO has also protectively assessed this impugned undisclosed investment also in the hands of Shri. H.B.Sudarshan, makes it is evident that the AO himself is not convinced of the fact that the impugned

M/S. United Spirits Limited, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-7(1)(1), Bengaluru

In the result, the appeal filed by the assessee is partly allowed

ITA 2701/BANG/2017[2013-14]Status: DisposedITAT Bangalore04 Apr 2022AY 2013-14

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am It(Tp)A No.2701/Bang/2017 : Asst.Year 2013-2014 M/S.United Spirits Limited The Deputy Commissioner Of Ub Towers, Income-Tax, Circle 7(1)(1) V. No.24 Vittal Mallya Road Bangalore. Bangalore – 560 001. Pan : Aaccm8043J. (Appellant) (Respondent) Appellant By : Sri.Percy Pardiwala, Senior Advocate Respondent By : Sri.Pradeep Kumar, Cit-Dr Date Of Pronouncement : 05.04.2022 Date Of Hearing : 24.03.2022 O R D E R Per George George K, Jm : This Appeal At The Instance Of The Assessee Is Directed Against Final Assessment Order Dated 12.10.2017 Passed U/S 143(3) R.W.S. 144C(13) Of The I.T.Act. The Relevant Assessment Year Is 2013-2014. 2. The Brief Facts Of The Case Are As Follows: The Assessee Is A Company Engaged In The Manufacture & Sale Of Alcoholic Beverage. The Assessee Filed Its Return Of Income For The Assessment Year 2013-2014 On 28.11.2013 Which Was Selected For Scrutiny Assessment. During The Course Of Assessment, The Assessee’S Case Was Also Referred To The Transfer Pricing Officer (Tpo). The Tpo Vide Order Dated 26.10.2016, Recommended Transfer Pricing Adjustments. The A.O., Thereafter, Passed A Draft Assessment Order Dated 30.12.2016. 2 It(Tp)A No.2701/Bang/2017 M/S.United Spirits Limited.

For Appellant: Sri.Percy Pardiwala, Senior AdvocateFor Respondent: Sri.Pradeep Kumar, CIT-DR
Section 143(3)Section 14ASection 234BSection 234CSection 36(1)(iii)

accordingly incorrect 5.14. Notwithstanding and without prejudice to the above grounds, the learned AO has erred in law and on facts in making a protective assessment and computing disallowance on loans granted to certain related parties, as the learned TPO has already imputed notional interest income on these loans granted

Assistant Commissioner of Income Tax, Central Circle- 1(2), Bangalore vs. Shri. B K Kanakaraju, Bengaluru

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 2023/BANG/2019[2013-14]Status: DisposedITAT Bangalore10 Mar 2022AY 2013-14

Bench: Shri George George K & Ms. Padmavathy Sassessment Year : 2013-14

For Appellant: Shri S Parthasarathi, AdvocateFor Respondent: Smt. Priyadarshini Besaganni, Addl.CIT(DR)
Section 132Section 148Section 153ASection 45

order of CIT(A) is opposed to law and facts of the case. 2. The CIT(A) erred in holding the assessment to be protective assessment when the AO had passed a speaking and reasoned order holding the same to be assessable in the hands of individual ... decision of the Hon'ble High Court of Gujarat in 140 ITR 517 in disposing the appeal of an assessment held to be protective assessment. 4. The CIT(A) erred in not taking into account the ground on which the HUF had filed appeal before CIT(A)-4, Bengaluru

Olympus Medical Systems India Pvt. Ltd., Gurugram vs. ACIT, Circle- 3(1), Gurugram

In the result, appeal of the assessee in ITA No

ITA 873/DEL/2021[2016-17]Status: HeardITAT Delhi13 Jan 2022AY 2016-17

Bench: Shri Saktijit Dey & Shri N.K. Billaiya

For Appellant: Shri Nageshwar Rao, AdvFor Respondent: Shri Mahesh Shah, CIT-DR
Section 143(3)Section 144B

grounds, that Ld. TPO/AO/DRP erred in making inappropriate selection of comparables for the mark-up on alleged brand building/AMP expenditure while computing adjustment in protective assessment. Further, since the above-mentioned approach has been followed at present only on protective basis, the Appellant reserves all rights in law to raise

Sri Anjaneyalu Prathipathi, Bengaluru vs. Assistant Commissioner of Income Tax, Central Circle-1(2), Bengaluru

In the result, all the appeals of the assessee are allowed

ITA 2838/BANG/2017[2012-13]Status: DisposedITAT Bangalore27 Dec 2021AY 2012-13

Bench: Shri N.V. Vasudevan & Shri Chandra Poojariassessment Years: 2012-13

For Appellant: Shri V. Srinivasan, AdvocateFor Respondent: Shri Arun Kumar, CIT(TP-2-DR) (ITAT), Bengaluru
Section 132Section 153CSection 2Section 234

order to protect the interest of revenue and to keep the issue alive till the assessment of substantive addition reaches a finality, the protective assessments made & the penalties levied by the Assessing Officer ought to have been upheld? 32. These are protective assessment in all two asst. years. In earlier

Assistant Commissioner of Income Tax, Circle- 4(2)(1), Bangalore vs. M/S. N G Balu Reddy HUF, Bangalore

In the result, the appeal of the Revenue is allowed

ITA 651/BANG/2020[2009-10]Status: DisposedITAT Bangalore21 Dec 2021AY 2009-10

Bench: Shri Chandra Poojari & Shri George George Kassessment Year : 2009-10

For Appellant: Smt. Sheethal, AdvocateFor Respondent: Shri Chetan R, Addl. CIT (DR)
Section 139(1)Section 139(4)Section 147Section 2(47)(v)

Another 283 ITR 448 (Bom) 16. In the above cases the issue is that reopening of the assessment on the basis of the protective assessment made after 4 years was bad in law. In this case also the assessment was conclusively made on Anitha individual when notice u/s.148 was issued

Perfetti Van Melle India Pvt. Ltd., Gurgaon vs. ACIT, Circle-3(1), Gurgaon

In the result, the additional ground raised by the assessee is allowed

ITA 463/DEL/2021[2016-17]Status: DisposedITAT Delhi22 Sept 2021AY 2016-17

Bench: The Income Tax Appellate Tribunal, Delhi Bench “I-2”, New Delhi

For Appellant: Mr. Deepak Chopra, AdvFor Respondent: Ms. Meera Shrivastava, CIT (DR)
Section 142(1)Section 143(2)Section 143(3)Section 271(1)(c)Section 80Section 80ISection 92C

underline genesis is application of BLT and determination of excessive AMP expenses and consequently making transfer pricing adjustment. Though the TPO has made protective assessment using BLT, but at the same time has proceeded to make substantive adjustment in his own version of profit split method (PSM). While applying

ACIT, New Delhi vs. Sh. Ashok Kapur, New Delhi

In the result, both the appeal of the Revenue and Cross Objections of the assessee are dismissed

ITA 5753/DEL/2016[2012-13]Status: DisposedITAT Delhi02 Aug 2021AY 2012-13

Bench: Shri O.P. Kant & Shri Kuldip Singh[Through Video Conferencing] Assessment Year: 2012-13

For Respondent: 1. The
Section 132

grossly erred in law as well as on facts in not deciding the issue that the protective assessment made in the hands of appellant is ex-facie illegal, arbitrary and without jurisdiction because substantive assessment has not been made before the impugned protective assessment. 3. In the appeal, Revenue ... crore has been offered in the hands of any entity of the group companies, nor in the hands of appellant. The AO made a protective assessment of Rs. 12 crores in the hands of appellant taking into account such disclosure during the course of search and also looking

ACIT, Central Circle- 30, New Delhi vs. Rajnil Sales Pvt. Ltd., New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 4049/DEL/2017[2008-09]Status: DisposedITAT Delhi09 Jul 2021AY 2008-09

Bench: Shri Amit Shukla & Dr. B.R.R. Kumar

For Appellant: Shri Ajay Wadhwa, AdvFor Respondent: Shri Sushma Singh, CIT-D.R
Section 131Section 143(1)Section 147Section 148Section 68

quashed the assessment on the ground that the Assessing Officer has entertained reason to believe only for making 5 I.T.As. No. 4049/DEL/2017 protective assessment which cannot be held. The relevant observation and finding is as under:- “From the above, following facts emerged:  The Assessing Officer has recorded the ‘reason ... investigation wing and therefore, there is non application of mind by the A.O. Further, it is also clear, that the A.O. has resorted to Protective assessment only, which is against the spirit of section 147 of the Act since, having “reason to believe” that certain income has escaped assessment

ITO, Rewari vs. Mool Chand HUF, Rewari

In the result, the appeal of the revenue is dismissed

ITA 4214/DEL/2016[2006-07]Status: DisposedITAT Delhi09 Jul 2021AY 2006-07

Bench: Shri O.P. Kant & Shri Kuldip Singh[Through Video Conferencing] Assessment Year: 2006-07

Section 148

Rs.8,89,12,500/- made by the AO on account of Long Temr Capital Gain, accepting the plea of the assessee that the protective assessment in the name of all co-owners in their individual capacity 2 have been made and confirmed ... there is a reference to the substantive assessment that was in the hands of Mool Chand, HUF and it is only consequent thereto the protective assessment was said to be made in the hands of the 4 assessee. It is, therefore, clear that when the fact does not admit

Luxottica India Eyewear Pvt. Ltd., Gurgaon vs. ACIT, Circle- 15(2), New Delhi

The appeal of the assessee is allowed

ITA 126/DEL/2018[2013-14]Status: DisposedITAT Delhi26 Apr 2021AY 2013-14

Bench: Sh. Amit Shukladr. B. R. R. Kumarita No. 126/Del/2018: Asstt. Year: 2013-14 M/S Luxottica India Eyewear Pvt. Ltd. Vs Acit, 7Th Floor, Dlf Building No. 9, Tower- Circle-15(2), B, Phase-Iii, Dlf Cyber City, New Delhi Gurgaon (Appellantt (Respondent) Pan No. Aabcl3871C

For Appellant: Sh. Nageshwar Rao, AdvFor Respondent: Sh. Surendrapal, CIT DR
Section 143(3)Section 92BSection 92F

That on the fact and circumstances of the case and in law, Hon'ble DRP/ Ld. AO/ Ld. TPO have grossly erred in using protective assessment for application of BLT approach as the very concept of protective assessment is only relevant where there is an ambiguity regarding the assesse

Anand Pershad Jaiswal, New Delhi vs. DCIT (International Taxation), New Delhi

In the result, all appeals filed by the respective assesses are

ITA 3731/DEL/2016[2007-08]Status: DisposedITAT Delhi23 Apr 2021AY 2007-08

Bench: Shri R.K. Panda & Ms. Suchitra Kamble

For Appellant: Ms. R.S. Singhavi, CAFor Respondent: Dr. Prabha Kant CIT-DR
Section 147Section 148Section 149(1)(c)Section 151(2)

That whole basis of addition is illegal, arbitrary and merely based on presumption and surmises. (iii) That there is no legal basis for protective assessment and consequential tax demand and same is highly arbitrary and in disregard to provisions of sec.159 of the I.T. Act, 1961. 6(i). That addition ... Tribunal in the case of Nartwarlal Radheshyam Bagadiya vs ACIT (ITA No.715 to 719/Pune/2007), order dated 13.04.2011, he submitted that right to make protective assessment has been given to ITO but appellate authority cannot evade determination of issue as to who is the owner of real income when

Anand Pershad Jaiswal, New Delhi vs. DCIT (International Taxation), New Delhi

In the result, all appeals filed by the respective assesses are

ITA 3730/DEL/2016[2006-07]Status: DisposedITAT Delhi23 Apr 2021AY 2006-07

Bench: Shri R.K. Panda & Ms. Suchitra Kamble

For Appellant: Ms. R.S. Singhavi, CAFor Respondent: Dr. Prabha Kant CIT-DR
Section 147Section 148Section 149(1)(c)Section 151(2)

That whole basis of addition is illegal, arbitrary and merely based on presumption and surmises. (iii) That there is no legal basis for protective assessment and consequential tax demand and same is highly arbitrary and in disregard to provisions of sec.159 of the I.T. Act, 1961. 6(i). That addition ... Tribunal in the case of Nartwarlal Radheshyam Bagadiya vs ACIT (ITA No.715 to 719/Pune/2007), order dated 13.04.2011, he submitted that right to make protective assessment has been given to ITO but appellate authority cannot evade determination of issue as to who is the owner of real income when

Sh. Karamjit S. Jaiwswal, New Delhi vs. DCIT, New Delhi

In the result, all appeals filed by the respective assesses are

ITA 3248/DEL/2016[2007-08]Status: DisposedITAT Delhi23 Apr 2021AY 2007-08

Bench: Shri R.K. Panda & Ms. Suchitra Kamble

For Appellant: Ms. R.S. Singhavi, CAFor Respondent: Dr. Prabha Kant CIT-DR
Section 147Section 148Section 149(1)(c)Section 151(2)

That whole basis of addition is illegal, arbitrary and merely based on presumption and surmises. (iii) That there is no legal basis for protective assessment and consequential tax demand and same is highly arbitrary and in disregard to provisions of sec.159 of the I.T. Act, 1961. 6(i). That addition ... Tribunal in the case of Nartwarlal Radheshyam Bagadiya vs ACIT (ITA No.715 to 719/Pune/2007), order dated 13.04.2011, he submitted that right to make protective assessment has been given to ITO but appellate authority cannot evade determination of issue as to who is the owner of real income when

Sh. Karamjit S. Jaiwswal, New Delhi vs. DCIT, New Delhi

In the result, all appeals filed by the respective assesses are

ITA 3247/DEL/2016[2006-07]Status: DisposedITAT Delhi23 Apr 2021AY 2006-07

Bench: Shri R.K. Panda & Ms. Suchitra Kamble

For Appellant: Ms. R.S. Singhavi, CAFor Respondent: Dr. Prabha Kant CIT-DR
Section 147Section 148Section 149(1)(c)Section 151(2)

That whole basis of addition is illegal, arbitrary and merely based on presumption and surmises. (iii) That there is no legal basis for protective assessment and consequential tax demand and same is highly arbitrary and in disregard to provisions of sec.159 of the I.T. Act, 1961. 6(i). That addition ... Tribunal in the case of Nartwarlal Radheshyam Bagadiya vs ACIT (ITA No.715 to 719/Pune/2007), order dated 13.04.2011, he submitted that right to make protective assessment has been given to ITO but appellate authority cannot evade determination of issue as to who is the owner of real income when

ACIT, New Delhi vs. M/S Gtm Builders & Promoters Pvt. Ltd., New Delhi

ITA 3783/DEL/2010[2007-08]Status: DisposedITAT Delhi10 Feb 2021AY 2007-08

Bench: Sh. Amit Shukladr. B. R. R. Kumar(Through Video Conferencing) Ita No. 3578/Del/2010 : Asstt. Year : 2007-08 & Sa No. 187/Del/2020 : Asstt. Year : 2007-08

For Appellant: Sh. K. Sampath, AdvFor Respondent: Ms. Sunita Singh, CIT DR
Section 132Section 69

argued that the AO has wrongly made addition of this amount of Rs.6,84,50,134/- substantially in the hands of the assessee and protective assessment has been made in the hands of M/s Sargam Estate Pvt. Ltd. on the premise that the cheque payment has been made ... held that this amount has been paid in cash out of the disclosed income of the assessee group. The AO made protective assessment in the hands of Sargam Estate Pvt. Ltd. and substantive assessment in the case of the assessee. 24. The ld. CIT (A) deleted the addition

M/S. Gtm Builders & Promoters Pvt. Ltd., New Delhi vs. ACIT, New Delhi

ITA 3578/DEL/2010[2007-08]Status: DisposedITAT Delhi10 Feb 2021AY 2007-08

Bench: Sh. Amit Shukladr. B. R. R. Kumar(Through Video Conferencing) Ita No. 3578/Del/2010 : Asstt. Year : 2007-08 & Sa No. 187/Del/2020 : Asstt. Year : 2007-08

For Appellant: Sh. K. Sampath, AdvFor Respondent: Ms. Sunita Singh, CIT DR
Section 132Section 69

argued that the AO has wrongly made addition of this amount of Rs.6,84,50,134/- substantially in the hands of the assessee and protective assessment has been made in the hands of M/s Sargam Estate Pvt. Ltd. on the premise that the cheque payment has been made ... held that this amount has been paid in cash out of the disclosed income of the assessee group. The AO made protective assessment in the hands of Sargam Estate Pvt. Ltd. and substantive assessment in the case of the assessee. 24. The ld. CIT (A) deleted the addition

Addl. CIT, New Delhi vs. M/S. Ircon International Ltd., New Delhi

In the result, the appeal of the Revenue is accordingly dismissed

ITA 3768/DEL/2017[2009-10]Status: DisposedITAT Delhi22 Jan 2021AY 2009-10

Bench: Shri Amit Shukla & Shri O.P. Kant[Through Video Conferencing]

Section 143(3)Section 148

requisite belief whose formation is not a judicial decision but an administrative decision, yet in that case the AO while making an order of protective assessment in respect of AY 1993-94 found that there was a transfer in favour of the partnership firm by the assessee of his trade ... partnership deed, there was no question of any change of opinion when on the relevant facts being found the AO, while protectively assessing the petitioner-assessee for the year 1993-94, noted that this was a case for issuance of a notice under s. 148, which came to be issued

Commissioner of Income Tax vs. Shri Mukesh Luthra

The appeal is disposed of accordingly

ITA - 1115 / 2009HC Delhi03 Jun 2011
Section 158B

were reopened under Section 148 of the Act, which resulted in passing of the reassessment orders on 27.02.2004 making protective assessment in his hands. According the learned Senior Counsel, since the entries were recorded in the regular 2011:DHC:3151-DB ITA No.1115 of 2009 and ITA No.1122 ... Assessing Officer and this could be done in the regular assessment proceedings, insofar as the assessee is concerned. At the same time, protective assessment is made at the hands of Mr. Rajesh Khurana in whose case the assessment is reopened under Section 148 of the Act as that