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TMI Blog2020 (6) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... stands nullified as the substantive addition stands deleted in the hands of the company. Protective addition in the hands of the assessee does not have any feet to stand on. Since the protective addition was upheld by the Ld. CIT (A) solely for the purposes of section 179 since the substantive addition has been deleted, the basis for protective addition also goes. Therefore, for the reasons stated above we quash the protective addition in the hands of the assessee. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... First Appellate Authority. The Ld. AR raised numerous grounds before the Ld. CIT (A) but the sum and substance of the assessee's challenge to the assessment order was that protective assessment could not have been made in the assessee's case. However, the Ld. CIT (A) dismissed the assessee's appeal by holding that although the alleged pay outs were by the company and the related tax liability was to fall on the company and not on the personal tax computation of the directors, all the same, as per provisions of section 179 of the Act, the liability can always be fastened on the director of the company and since the assessee was a director of this company, the action of the AO in carrying out the protective addition was in accordance with law. The Ld. CIT (A) also directed the AO not to carry out any coercive action for recovering of tax dues against the assessee till such time the substantive appeal in the case of the company is decided finally. 2.3 Now the assessee is before this Tribunal challenging the order of the Ld. CIT (A) and has raised following grounds of appeal :- "1. That the Ld. CIT(A) grossly erred in having upheld the addition of ₹ 35,85,00,000/- made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was submitted that the Ld. CIT (A) reliance on the provisions of section 179 was legally incorrect in as much as the provisions of section 179 were applicable to companies which were in liquidation whereas in the case of company M/s. G.L. Litmus Events Pvt. Ltd it was not so. 3.1 The Ld. AR also made a reference to the Arbitration Award vide dated 14.5.2018 which was passed in the case of the company G.L. Litmus Events Pvt. Ltd by the Arbitral Tribunal wherein after a detailed examination and cross examination of the various allegations, witnesses and evidences, the Arbitral Tribunal had held that the subject transaction with CWG was bona fide and was not influenced by any extraneous consideration. The Ld. AR also submitted that a perusal of paragraphs 60 to 62 of the said Award of the Arbitral Tribunal would show that the Arbitral Tribunal had negated the accusations of fraud, corrupt practices, collusion and cartelization levelled against the company M/s. G.L. Litmus Events Pvt. Ltd. The Ld. AR further submitted that against this award, a petition was filed before the Hon'ble High Court of Delhi by the Union of India, Department of Sports, Ministry of Youth Affairs & Sports and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rotective assessment in the case of the assessee was made on 12.3.2013 whereas the substantive addition in the hands of the company M/s. G.L. Litmus Events Pvt. Ltd. was much later on 25.2.2015 and, thus, the AO at that point of time was absolutely correct in making the protective addition. 4.1 The Ld. CIT (DR) also referred to the order of the ITAT passed in the case of M/s. G.L. Litmus Events Pvt. Ltd. and the observations contained in Para 42 wherein it had been noted by the ITAT that as per the loose sheets seized which contained an e-mail, the E-mail ID was '[email protected]' which was, thus, in the personal name of the assessee and, therefore, this was a clear pointer that the assessee was involved in the alleged transaction of illegal gratification. 4.2 The Ld. CIT (DR) submitted that, although, the substantive addition in the hands of the company M/s. G.L. Litmus Events Pvt. Ltd has been deleted by the ITAT, this matter should be restored to the file of the AO to examine the issue afresh. 5.0 We have heard the rival submissions and have also perused the material on record. The question before us for our consideration and adjudication is whether the impugned additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any and not on the personal tax computations of the Directors. Thus, a plain reading of the order of the Ld. CIT (A) would show that there is a clear finding by the Ld. CIT (A) that the impugned protective addition was not at all called for in the hands of the assessee and that the addition was being confirmed on protective basis only u/s 179 of the Act laying down that in the event of substantive addition being confirmed in the case of the company, then for the purposes of recovery of the tax liability, the assessee in the capacity of the Director of the company, could be called upon to pay that said tax liability. It is our considered opinion that since the substantive addition has been deleted in the hands of the company, the liability u/s 179 of the Act on the assessee, in the capacity of the Director of the company also stands absolved. A perusal of the order of the Ld. CIT (A) would further show that he has nowhere confirmed the protective addition on the ground that the said amount was paid by the assessee. Rather, the Ld. CIT (A) has clearly mentioned that the impugned amount related to the company and the protective addition was solely u/s 179 of the Act in the sole event ..... X X X X Extracts X X X X X X X X Extracts X X X X
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