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TMI Blog2019 (10) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... stantive addition should be made in the case of the donees, i.e., the person who has received the gift. Until and unless there is such finding by the appellate authority in the case of Sri Harish Kumar, then protective addition has no legs to stand. We direct the Assessing Officer as under - to ascertain whether in the case of Shri Harish Kumar any finding has been given by the appellate authority that additions made in his hand should be taxed on protective basis and substantive addition should have been made in the hands of the donee, i.e. the assessee who has received the gift if addition has been deleted on merits in the case of Shri Harish Kumar then again no addition can be confirmed against the assessee. Until and unless the appellate authority has held that addition made in the hands of Shri Harish Kumar is to be examined or made in the case of the assessee no addition can be made or confirmed and if the substantive addition made in the hands of Shri Harish Kumar had attained finality then also no addition or any proceedings can be initiated against the assessee. AO is directed to comply with this direction within a period of six months from the date of receiving of the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the gifts) who had duly admitted in his statement on oath recorded on 28.03.2007 u/s.131, that he had received cash from various parties and deposited the same in his account no. 3756 with Punjab and Sind Bank, Fatehpuri, New Delhi, then transferred the amounts to another account no.3755 with the same bank and issued drafts to the said parties in the form of gifts. Out of these drafts, four drafts have been issued to Mrs. Kanika Chawla, the details of which are as under: Date Amount Bank 02.08.2003 25 lakhs Punjab and Sind Bank, Fatehpuri Branch, Delhi 01.09.2003 25 lakhs -do- 03.09.2003 25 lakhs -do- 05.09.2003 25 lakhs -do- 4. Based on this information, the Assessing Officer initiated reopening proceedings and has recorded the following reasons for reopening the assessment u/s.147/148: "In this case return of income for the Assessment year 2004-05 in Form No.2D, was filed on 29.10.2004, declaring total income of ₹ 90,100/- the same was processed u/s. 143(1), on 03.05.2005 and the return income was accepted. An information has been received from ITO, Ward 28(3,), Delhi, that Ms. Kanika Chawla, D/o Shri. Ramesh Chawla, resident of B-32, Visha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder: "11. Considering the above submission we find substance in the contention of the ld. AR as it is very much evident from the statements of Mr. Harish Kumar recorded by the Assessing Officer u/s.131 of the Act that he in his statements has nowhere alleged specifically that the gifts in question given by him to the assessees were bogus and the money involved therein was the money of the assessees which came to him and in lieu thereof he had issued having accepted the amount as the income of the partners themselves, it could not be added to the income of the firm. The assessment of the partners had resulted in the sum being charged to tax in their hands and it did not make any difference whether the sum was taxed in the hands of the partners or in the hands of the firm, held the Hon'ble High Court. Applying the ratio laid a own in these decisions of the Hon'ble Jurisdictional High Court, we hold that if the donor has already paid tax on the amount gifted, the same is required consideration while deciding the assessability of the same in the hands of the donee i.e. the present assessees. We thus in the interest of the justice set aside the matter to the file of the AO to afford ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te authorities to uphold the addition on substantive basis in the hands of that assessee who deserves that addition on appreciation of the facts and circumstances of the case and thereafter the issue of addition on protective or substantive basis in the cases of these assessees will be settled." 7. If the Assessing Officer has made the addition on protective basis, but Ld. CIT (A) being an appellate authority should not have perpetuated by confirming the addition on protective basis. As an appellate authority, he should have firstly, ascertain the fate of substantive addition made in the hands of Harish Kumar; and then only he should have either deleted or confirmed the addition on substantive basis. There is no provision for confirming the addition on protective basis. The relevant conclusion in paragraph 10.1 of the Ld. CIT(A) in this regard read as under: "10.1 In view of above, I hold that the addition of ₹ 1,00,00,000/- made by Assessing Officer u/s.68 of the Act on protective basis is justified and the grounds taken by appellant are liable to be dismissed." 8. Before the ld. counsel for the assessee, Shri Salil Agarwal and ld. Sr. D.R. had vehemently argued the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has been added on substantive basis, then whether tax is recoverable from him or not is relevant at all. What is relevant is that same addition cannot be taxed twice and there has to specific finding in whose hand the amount is taxable. Before us both the parties could not provide the detail of fate of substantive addition, whether any appellate authority has held that the addition made in the case of Mr. Harish Kumar should be made on protective basis and substantive addition should be made in the case of the donees, i.e., the person who has received the gift. Until and unless there is such finding by the appellate authority in the case of Sri Harish Kumar, then protective addition has no legs to stand. 11. Under these circumstances, we direct the Assessing Officer as under: * firstly, to ascertain whether in the case of Shri Harish Kumar any finding has been given by the appellate authority that additions made in his hand should be taxed on protective basis and substantive addition should have been made in the hands of the donee, i.e. the assessee who has received the gift; * secondly, if addition has been deleted on merits in the case of Shri Harish Kumar then again no a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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