2012 (11) TMI 945 - AT - Income Tax

Protective assessment Held that - No demand shall arise in consequence to the protective assessment, i.e., until the substantive assessment survives. In fact, if the amount was withdrawn by the assessee on 28/11/1996, while the amount recovered from VR is on 27/11/1996 , the question of ownership of Rs. 39 lacs and odd apart, the same possibly explain the cash found in search with VR - assessee shall co-operate with the A.O. in the matter, who shall finalise the assessment in a time bound manner. That is to say, save or except where the appeal in the case of VR is pending before the Hon ble High Court, within six months from the end of the month of the receipt of this order by the Revenue. Determination and Adjudication - Held that - Matter becoming infructuous in view of the finding of absence of jurisdiction- no merit in the Revenue s challenge to the same inasmuch as there has been no decision of the said authority on merits - no infirmity in principle stands found in the impugned order, and which therefore stands endorsed to that extent - only order to which our attention was drawn, and which found on record, is dated 17/1/2005, so that the date mentioned has been considered to be on account of a mistake, and read as Rs.17/1/2005 in framing the present order - In the result, the Revenue s appeal is dismissed.

Summary

Issues:
- Appeal by the Revenue against the appellate order under section 251 of the Income Tax Act, 1961
- Assessment u/s 143(3) dated 22/03/2006 regarding unexplained peak credit in the assessee's bank account
- Ownership of the amount withdrawn from the bank account and its connection to another entity
- Compliance with tribunal directions in the assessment process
- Jurisdiction of the assessment in relation to pending proceedings of another entity
- Challenge to the appellate order on merits

Analysis:

1. The appeal by the Revenue challenges the appellate order under section 251 of the Income Tax Act, 1961, related to the assessment conducted under section 143(3) on 22/03/2006 concerning an unexplained peak credit in the assessee's bank account.

2. The assessment involved the ownership of a significant amount withdrawn from the bank account, which was linked to another entity under investigation. The Tribunal had previously set aside the assessment in the other entity's case due to procedural irregularities and lack of examination of key individuals involved.

3. The compliance with tribunal directions in the assessment process was a crucial issue, with the Tribunal emphasizing the need for the Revenue to follow the directives issued in previous orders related to the other entity's assessment.

4. The jurisdiction of the assessment was questioned concerning the pending proceedings of the other entity, which had implications on the validity of the assessment conducted on the assessee. The Tribunal highlighted the importance of aligning the assessment process with the final findings in the other entity's case.

5. The challenge to the appellate order on merits was raised by the Revenue, but the Tribunal found it to be infructuous due to the absence of a decision on merits by the learned CIT(A). The Tribunal dismissed the Revenue's appeal based on these considerations.

6. Overall, the Tribunal emphasized the need for cooperation between the assessee and the Assessing Officer to finalize the assessment within a specified timeframe, especially in light of pending proceedings related to the other entity. The Tribunal upheld the dismissal of the Revenue's appeal based on the outlined terms and considerations.