2021 (6) TMI 737 - AT - Income Tax

Addition on account of income from undisclosed sources on protective basis - assessee submits that the substantive addition was made in the hand of M/s Saheli Developers, wherein the assessee is one of the partner - assessee submits that M/s Saheli Developers accepted the addition and filed application for settlement of dispute on tax with the Department under VSVS Scheme, 2020 and have settled the case and paid due tax - HELD THAT - As assessee has also filed the copy of the assessment order in case of Saheli Developer having PAN ABLFS 4624 G. further, we find that Saheli Developer filed application under VSV-20 for settlement of dispute of tax and the Designated Authority concern has issued Form-3 vide Acknowledgment No. 110537100060121 dated 06.01.2021, copy of which is also placed on record. Considering the facts and circumstances of the case that the substantive addition has been accepted by M/s Saheli Developers and they have paid the due tax by availing the benefit of VSV-20. Therefore, we direct the AO to verify the fact and delete the protective addition at the hand of the assessee. In the result, appeal of assessee is allowed for statistical purpose.

Issues:
1. Condonation of delay in filing appeal.
2. Addition of income from undisclosed sources on protective basis.
3. Verification of settlement and acceptance of substantive addition by M/s Saheli Developers.

Condonation of Delay in Filing Appeal:
The appeal by the Assessee was filed after the prescribed period of limitation. The Assessee sought condonation of the delay, stating that initial advice from the old counsel led to the belief that filing an appeal was unnecessary due to the protective nature of the addition. Later, upon realizing the potential impact if the substantive addition in another case was not sustained, the Assessee decided to file the appeal. The delay was attributed to a genuine belief based on incorrect advice. The Tribunal, considering the circumstances and the Assessee's submissions, condoned the delay of 64 days in filing the appeal.

Addition of Income from Undisclosed Sources on Protective Basis:
The Assessing Officer had made a protective addition of ?1.29 crore in the hands of the Assessee. The Assessee contended that the substantive addition was made in the case of M/s Saheli Developers, where the Assessee was a partner, and that M/s Saheli Developers had accepted and settled the case by paying the due tax under the VSVS Scheme, 2020. The Assessee argued that since the substantive addition had been accepted by M/s Saheli Developers, the protective addition should not stand. The Tribunal, after considering the submissions from both parties and verifying the facts presented, directed the Assessing Officer to delete the protective addition at the hand of the Assessee, allowing the appeal for statistical purposes.

Verification of Settlement and Acceptance of Substantive Addition by M/s Saheli Developers:
The Revenue had urged for the matter to be restored to the file of the lower authority to verify if the substantive addition had been accepted and tax paid by M/s Saheli Developers. The Assessee also requested the same, emphasizing the need for verification before deciding on the protective addition. The Tribunal, after examining the orders of the lower authorities and the evidence provided, directed the Assessing Officer to confirm the acceptance and settlement of the substantive addition by M/s Saheli Developers and subsequently delete the protective addition made in the hands of the Assessee.

In conclusion, the Tribunal addressed the issues of delay in filing the appeal, the validity of the protective addition, and the verification of settlement by M/s Saheli Developers. The decision was made in favor of the Assessee, directing the Assessing Officer to delete the protective addition based on the acceptance and settlement of the substantive addition by M/s Saheli Developers.

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