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TMI Blog2015 (7) TMI 1394X X X X Extracts X X X X X X X X Extracts X X X X ..... its appeals and the ground as raised in ITA NO.332/Kol/2012 for A.Y.2003-04 reads as under :- "1. For that in the facts and circumstances of the case, the Ld.A.O. erred in making protective additions in an order u/s 147/145(3) and as such the entire order is void abinitio since an order passed u/s 147/145(3) cannot be on the basis of suspicion or doubt while a protective addition is made only when there is a doubt. The action of the A.O. was wholly unreasonable, uncalled for and bad in law. The ld. CIT(A) was unjustified in confirming the action of AO." Similarly the assessee has also raised the issue under rule 27 of Income Tax (Appellate Tribunal) Rule 1963 whereby the ld. Counsel for the assessee raised the same issue qua the revenue's appeal also and he wanted to support the order of CIT(A) on this issue. As we have reproduced the ground raised by assessee in ITA No.332/Kol/2012, the issue is crystallized. 3. At the outset, the ld. Counsel for the assessee Sr. Advocate Shri R.P.Agarwal submitted the reasons recorded for issuing notice u/s 148 of the Act and almost similar reasons in the impugned assessment years. The relevant reasons as reproduced by CIT(A) for A.Yr. 2005- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equire further probe. Thus, the addition of the A.O. on protective basis is held to be correct. Thus, the appellant fails to get relief on this issue." 4. On this issue the ld. Counsel for the assessee relied upon the decision of Mumbai 'E' Bench in the case of Suresh K.Jajoo vs ACIT, Circle-4(2), Mumbai [2010] 39 SOT 514 (Mum) and argued that the Co-ordinate Bench of this Tribunal relying on another decision of ITAT in the case of M.P.Ramachandran vs D.CIT [IT Appeal No.587 (Mum) of 2005] has laid down the following principles :- " 23. Before us, both the learned counsel for the assessee and the learned D.R. have relied on the decision of Mumbai Bench of the ITAT in the case of M.P.Ramachandran v. Dy.CIT [IT Appeal No.587(Mum) of 2005]. In the aforesaid case, facts were that in assessment under section 143(3) for assessment year 1997-98 was completed on 25-2- 2000. On 3-22-2000, there was a search and consequent there to, notice under section 148 dated 26-3-2003 was issued to the assessee. Consequent to the search, block assessment order was framed on 30-11-2008 in which, sum of Rs. 5.27 crores was held to be expenditure not related to the business of the assessee and considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the findings of ITAT Mumbai Bench of this Tribunal in the case of M.P.Ramachandran vs DCIT (2009) 32 SOT 592 wherein it has held as under :- "Though from the reasons recorded by the A.O., it comes up that he had taken the steps for including this amount in the reassessment with a view to protect the interest of Revenue, but he had not specifically spelt out his mind that the addition was to be made on protective basis. It is another matter that while passing the order u/s.143(3) r.w.s. 147 addition of Rs. 527.85 lakhs was made on protective basis. Be that as it may, we shall proceed to decide the matter with the presumption that the AO reopened the original assessment made u/s 143(3) on this count for the purpose of making the disallowance of advertisement expenses on protective basis. Protective assessment cannot be independent of substantive assessment. Thus protective assessment is 'always successive to the substantive assessment. There may be a substantive assessment without any protective assessment, but there cannot be any protective assessment without there being a substantive assessment. In simple words there has to be some substantive assessment/addition first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t even according to respondent No.,1 the said proposed assessment would be in the nature of a precautionary or protective assessment, and Mr.Nambiar's case is that this concept of a precautionary or protective assessment is not recognised by the Act and as such any attempt to levy such assessment would be illegal. In support of this argument Mr.Nambiar strongly relied on the finding recorded against the appellant's brother, Lalji, in the ex parte assessment order which had originally been passed against him. It is no doubt true that the said ex parte order had held that Lalji was liable to pay the tax on the amount of income in question; but the said order has been subsequently set aside, and, as we have already seen, fresh proceedings against Lalji have been commenced at Jamnagar. Mr. Nambiar also relied on the admission made by the respondent in his statement of the case before this court, and he contended that the respondent himself seems to concede that the assessment proposed to be made against the appellant is no more than precautionary. It is true that paragraph 3 of the statement avers that "steps are being taken against the appellant for taxation of income in his hands onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g regard to the fact that the matter is fairly old. In the proceedings taken against Lalji the Income-tax Officer should make an exhaustive enquiry and determine the question as to whether Lalji is liable to pay the tax on the income in question. All objections which Lalji may have to raise against his alleged liability would undoubtedly have to be considered in the said proceedings. Proceedings against Chhotalal may also be taken by the Income-tax Officer and continued and concluded, but until the proceedings against Lalji are finally determined no assessment order should be passed in the proceedings taken against Chhotalal. If in the proceedings taken against Lalji it is finally decided that it is Lalji who is responsible to pay tax for the income in question it may not become necessary to make any order against Chhotalal. If , however, in the said proceedings Lalji is not held to pay tax or it is found that Lalji is liable to pay tax along with Chhotalal it may become necessary to pass appropriate orders against Chhotalal. When we suggested to the learned counsel that we propose to make an order on these lines they all agreed that this would be a fair and reasonable order to mak ..... 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