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TMI Blog2011 (4) TMI 1521X X X X Extracts X X X X X X X X Extracts X X X X ..... was no incriminating material found during the search conducted on appellant's premises to show that alleged cash loans were given to or through Mr. Shriram Soni by the assessee. (iii) The Appellant, his family members and group concerns had kept a record of their entire unaccounted income of ₹ 30 lakhs which was disclosed and offered to tax by the appellant, his family members and group concerns in returns filed in pursuance of notice u/s 153A; (iv) The various judicial decisions cited by appellant which clearly supported appellant's contention that the addition of ₹ 2,18,000/- ought to be deleted totally; and (v) That the aforesaid amount of ₹ 2,18,000/- has to be taxed in the hands of Mr. Shriram Soni on substantive basis; The learned CIT(A)-I Pune erred in sustaining the addition of ₹ 2,18,000/- towards unexplained investment u/s 69 in my hands on protective basis. 2.2 The learned CIT(A)-I Pune erred in holding that addition of ₹ 2,18,000/- be made on protective basis which was not permissible in appellate proceedings. He erred in not following ratio of the below mentioned decisions (a) Smt Hemlata Agarwal Vs CIT (1967) 64 ITR 428 (All) (b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Shri Shri Ram Soni, requires to be taxed on protective basis for protecting the interest of revenue till this issue reaches finality in appellate proceedings in case of Shri Shri Ram soni. Accordingly, Assessing Officer is directed to tax income of ₹ 2,18,000/- for A.Y. 1999-00 on protective basis. Similarly, income of ₹ 28,88,500/- comprising of principal of ₹ 27,46,000/- and interest of ₹ 1,42,500/- shall be taxed on protective basis for A.Y. 2000-01. As regards assessment year 2001-02, income of ₹ 1,63,90,700/- comprising of principal of Rs. ₹ 1,44,21,400/- and interest of ₹ 18,69,300/- shall be taxed on protective basis. For A.Y. 2002-03, income of ₹ 1,46,82,000/- comprising of principal of ₹ 1,01,08,000/- and interest on of ₹ 46,74,000/- shall be taxed on protective basis. For A.Y. 2003-04 the income of ₹ 65,33,250/- shall be taxed on protective basis. The A.O is directed to allow consequential relief to the appellant." 6. It is pertinent to mention here that the addition has been made on substantive basis in the case of assessee and on protective basis in the case of Shriram Soni in respective assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of ld. CIT(A) to give a direction to assess the entire investment on substantive basis which has already been assessed in the hands of those investors on substantive basis. First of all same amount cannot be taxed twice that too on substantive basis. Before giving such directions ld. CIT(A) ought to have kept in mind this fundamental procedure of law." Before this, in para 11.12 (at page 88 of the said order, ITAT held as under: "As regards other investors we are of the considered opinion hat these amounts cannot be added in the hands of the appellant either on protective basis as done by the A.O or on substantive basis as done by the CIT(A).The case of the appellant is directly covered by the decision of Mumbai ITAT in the case of Shri Biren Savla and the Pune ITAT in the case of Shri Ramanlal Chordia; both the orders shall be discussed hereinbelow." 7. From the above finding of I.T.A.T. in the case of Shri Shri Ram Soni in respect of unexplained investment on the basis of cash transaction, the addition made in the hands of Shri Shri Ram Soni on protective basis by the Assessing Officer and in first appeal made on substantive basis by the CIT(A) which has been deleted by IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he grounds with regard to protective assessment. The stand of the assessee is that the CIT(A) was not justified in sustaining the addition on protective basis which is not permissible in the appellate proceedings. For this, he placed reliance on the following decisions: (a) CIT Vs. Smt. Durgawati Singh (1998) 234 ITR 249; (Alld) (b) Prakash Wine Agencies Vs ITO (1990) 38 TTJ (All) 39 (c) Saipem UK Ltd. Vs. Dy. Director of Income-tax (International Taxation) Range 2(1) Mumbai (2007) 108 ITD 545 (MUM) 11. The learned counsel further submitted that protective assessment at appellate stage is not permissible so the order of the CIT(A) to that extent needs to be set aside. On the other hand, the learned DR submitted that interest of revenue should be protected. He supported the order of the CIT(A) stating that to protect the interest of revenue, the CIT(A) was justified in sustaining the addition on protective basis in the case of the assessee. 12. After hearing both the sides and going through the material on record, as discussed above, we find that search action u/s 132(1) was carried out at the premises of finance broker and money lender Shri Shriram Soni on 29-7-2003 and sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudication by the appellant. Even a protective assessment gives rise to right of appeal relatable to the finding of protective assessment itself and, therefore, it was the bounden duty of the learned CIT(A) to have determined as to who was the real owner of the income in question, namely, whether the assessee firm was the benami of late Shri S.N. Sahu. This issue cannot be left undecided in appeal. The right to make protective assessment has been given to the ITO by the case law Lalji Haridas Vs. ITO & Anr (1961) 43 ITR 387 (SC) but an appellate authority cannot evade the determination of the issue when it is brought before it by way of an appeal either by the assessee who is substantially assessed. The course of action adopted by the learned CIT(A) was prima facie against law and, therefore, his order deserves to be set aside and so we set it aside." 14. In this background we find that it was the duty of the CIT(A) to determine as to who was the real owner of the income in question. This issue could not be left undecided in appeal. The right to make protective assessment has been given to the ITO by the case law Lalji Haridas Vs. ITO and Anr (1961) 43 ITR 387 (SC) but an appel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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