2014 (5) TMI 990 - AT - Income Tax

Validity of Re-opening of assessment protective assessment - Held that - In the block assessment proceedings as well as in re-opening assessment proceedings u/s 147 of the Act, the additions have been made in respect of the same bank account and the same amount which has been added in the block assessment on substantive basis - additions made in the reopening assessment proceedings are on the protective basis - Revenue has not controverted the contention of the assessee that the same addition has been affirmed up to the stage of ITAT in block assessment proceedings - the additions made u/s 158BC of the Act have become final the AO is directed to delete the addition made on protective basis in all the three assessment years Decided in favour of Assessee.

Summary

Issues:
Reopening of proceedings under section 148 of the Income Tax Act, 1961, and subsequent additions made on a protective basis.

Analysis:
The judgment pertains to three appeals by the assessee against the common order of the Commissioner of Income Tax (Appeals) for the Assessment Years 1994-95, 1995-96, and 1996-97. The assessee challenged the reopening of proceedings under section 148 of the Income Tax Act, claiming it to be void and bad in law. Additionally, the assessee disputed the additions made on a protective basis, arguing that the same additions were already made in block assessment proceedings that had reached the stage of the Income Tax Appellate Tribunal (ITAT) and had become final.

In the lead case for the Assessment Year 1994-95, a search was conducted under section 132 of the Income Tax Act, resulting in the determination of concealed income. Subsequently, a fresh assessment was carried out under section 158BC of the Act, and the case was later reopened under section 147. The Assessing Officer made additions on a protective basis, leading to the appeal before the ITAT.

The counsel for the assessee contended that since the additions had already been affirmed by the ITAT in the block assessment proceedings, the additions made on a protective basis in the reopening assessment should be deleted. The Revenue did not dispute this contention, leading the ITAT to direct the Assessing Officer to delete the additions made on a protective basis for all three assessment years.

Ultimately, the ITAT allowed all three appeals of the assessee, emphasizing that the additions made on a protective basis should be deleted due to the finality of the additions affirmed by the ITAT in the block assessment proceedings. The judgment highlights the importance of consistency in assessments and the impact of final decisions on subsequent proceedings.