9911796707
Advanced Search 
TMI Blog2022 (9) TMI 1334X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 28.12.2017 u/s. 143(3) r.w.s. 153A 2012-13 40/JP/2020 16.10.2019 28.12.2017 u/s. 143(3) r.w.s. 153A 2013-14 41/JP/2020 16.10.2019 27.12.2017 u/s. 143(3) r.w.s. 153A 2. As the issues involved in the present appeals are common and inextricably interlinked or in fact interwoven as it is evident from the following chart. A.Y Assessee's Appeal No Issue Amount Rs. AGOA No. 2010-11 38/JPR/2020 Interest Payment From Undisclosed Sources 69,449.00 1 to 1.2 2011-12 39/JPR/2020 Interest Payment From Undisclosed Sources 85,361.00 1 to 1.2 2012-13 40/JPR/2020 Interest Payment From Undisclosed Sources 27,912.00 1 to 1.2 2013-14 41/JPR/2020 Interest Payment From Undisclosed Sources 37,32,344 1 to 1.2 Therefore, the parties argued them together and are disposed off by this common order. 3. As it is seen that for all these appeals grounds are similar, facts are similar and arguments were similar and were heard on the same day. Therefore, we consider the facts and ground taken in ITA No. 41/JP/2020 for A. Y. 2013-14 as lead case. 4. The assessee has assailed the appeal in ITA No. 41/JP/2020, before us on the following grounds; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g return u/s. 153A, the notices u/s. 143(2) along with the questionnaire were issued. The assessee filed the details and same was kept on record. The assessee engaged in the business of Share trading and earned income from business or profession and other sources during the year under consideration. 6. In the assessment order the ld. AO observed as under while making the addition which is disputed by the assessee: "During the course of search operation in the Maverick Group, Jaipur a pen drive was found and seized from the possession of Shri Kailash Chand Khandelwal, who is one of the employee of the Maverick Group. The pen drive so seized contained some files in excel software. The excel sheets contents adjustment entries in the last column with remarks of 2.4%. From the details, it is seen that out of the total interest after considering the duplicate / repeated entries noted in adjustment account, total of such entries comes to Rs. 75,27,847/-out of which it has been claimed that an amount of Rs. 35,15,548/- pertained to various individual / concerns related to Maverick group and balance Rs. 40,12,299/- related to other persons. Necessary actions have been taken in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed in their respective pending assessments however, you have failed to establish that the amount appearing under adjustment account in the name of other persons was not paid by you or your group concerns/ persons. Since the pen drive was found from the possession of your one of the treated employer. you are show caused as to why not the provisions of section 132(44) are not invoked and by treating the payment of Rs. 40,12,199/- being made by you out of the undisclosed income and therefore it is proposed to make an addition of R 37,32,344/- in your case on protective Your reply on these issues should reach to this office by 08.12.2017 on which date your case is fixed for hearing Please note that no further opportunity will be provided to you and the case will be decided on merits as per the material available on record. Statutory Notice U/s 142(1) of the IT. Act, 1961 is enclosed for necessary compliance. The assessee vide his reply dated 08.12.2017 submitted that the amount represents the additional interest asked by the finance broker which was not paid by the assessee the relevant portion of the same is reproduced as under: "With regard to your proposal for making pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgments cited by the Ld. A/R. I have already held that the addition on the basis of entries in the Pen Drive found from the premises of the key employees are sustainable. On the facts and in the circumstances of the case, since the such addition are held to be sustainable the protective addition of Rs. 37,32,344/- is also confirmed. The ground raised is dismissed." 8. The ld. AR of the assessee in this appeal against the grounds raised has relied on the following written submission : The ground wise submission is as under: Ground of Appeal Nos. 1 to 1.2: In these grounds of appeal, assessee has challenged the action of ld.CIT(A) in confirming the addition made on "protective basis" of account of entries stated to have been found in excel sheets available in pen drive found form the possession of Shri Kailash Khandelwal, an employee of assessee company, by grossly ignoring the fact that none of the entry contained the name of assessee company which is an undisputed fact. The addition made in various assessment years is tabulated as under: Asstt. Year Amount 2010-11 69,449.00 2011-12 85,361.00 2012-13 27,912.00 2013-14 37,32,344.00 At the outset kind attenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO to make a protective assessment/addition. In the present case, the AO proceeded to make protective assessment by way of reopening of assessment of the assessee appellant company without being a substantive assessment on the date of assumption of jurisdiction u/s 147 of the Act which is not permissible as per decision of ITAT, Mumbai in the case of M.P. Ramachandaran vs DCIT (supra) and Suresh K Jajo vs ACIT (supra)." Hon'ble Delhi ITAT in the case of Income tax officer, vs. M/s Fussy Financial Services Pvt. Ltd in I.T.A. No. 4227/DEL/2014 (Case law PB II APB 264-268) has decided the issue of Protective Assessment as follows (APB 267 backside and 268): "7.1 We further note that the analysis of the investment account reveal that the company has made investment of Rs. 5,04,01,000/. The statement given by Sh. PN Jha assumes importance wherein he categorically admitted that the company was doing the business of investment and finance and during the year the bank accounts of the company have been used to provide the accommodation entries. The addition of Rs. 3,17,67,951/- made by the Assessing Officer on protective basis, which is not sustainable in the eyes of law, because in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous individuals/ concerns related to Maverick group and balance Rs.40,12,299/- was related to other persons not related to Maverick group. It is stated that amount of Rs. 35,15,548/- is claimed to be pertaining to various individuals / concerns of the Maverick Group as their names were appearing in the excel sheet. However, it is pertinent to note that in those excel sheets, nowhere the name of assessee company was appearing still the remaining amount of Rs.40,12,299/- undisputedly pertaining to persons other than related to Maverick Group has been added in the hands of assessee on protective basis in four assessment year starting from AY 201-11 to AY 2013-13 i.e. the assessment year to which the entry pertained, solely for the reason that such pen drive was found from the possession of employee of Maverick Group though none of the entries belonged to assessee nor its name was appearing in any of such sheet and the pen drive was also not found and seized from the business premises of assessee company nor found from the residences of any of the Directors / partners of the company / firms of the group but was seized from the residence of Shri Kailash Khandelwal. It is also matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs) is having total five files prepared under Excel format which are as under: File No. Name of the File APB A. Copy of MMM2013.xls 1-42 B. MMM2013 new 29.05.2013.xlx 43-54 C. MMM2013.xls 55-70 D. New Microsoft Excel Worksheet.xls 71-81 E. MMM.pdf 82-89 Each file contained various excel sheets and the one sheet contained the total transactions whereas the remaining sheets contained the person-wise / company-wise break-up of the transactions appearing in the first sheet. The details available in the sheets of one file are also appearing in the sheets containing in other files, therefore, there are duplications / repetitions of the entries not only within a file but also in other sheets available in other files. Accordingly the reconciliation was filed for such duplicate/ repeated entries and after reducing the same the total of all the entries was reduced from Rs. 2,51,22,735/- to Rs. 75,27,847/-. Regarding the entries appearing under the title "as per books", it was explained that they appear to be the loans taken by the respective individuals / company / firm whose name is appearing under the title "your com name" from the respective company whos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he group namely Kailash Khandelwal with the understanding that he would refer the details as belonging to various individuals / companies of the group out of total list and do the needful. This explanation of assessee was partly accepted by Ld. AO who has not made any addition of the entries pertaining to individuals / companies of group but made addition out of remaining entries. Now coming to the list in the excel sheet, it is submitted that there are few names / concerns of Maverick Group against whom amount in last column had been mentioned and Ld. AO in his wisdom has added these amounts in those cases. Accordingly excel sheet may be an incriminating document in the case of persons / concerns of the Maverick group whose names are appearing therein. However as the name of assessee company is not at all appearing in this excel sheet, this sheet cannot be considered as incriminating document in the hands of assessee company. Ld. AO has categorically observed that name of assessee company is not appearing in the excel sheet and therefore has not rightly added directly any amount. Since there is no incriminating document relating to assessee company, additions so made u/s 153A are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered this PEN drive and that is why his statement is also not recorded during the search proceeding or at the time of assessment proceedings. The ld. AR of the assessee submitted that in this PEN drive details of the loan, TDS deducted and the name of the parties are written. There are duplication entries which were explained and reconciled with the books during the assessment proceedings. The ld. AR of the assessee in his Paper book at page 1 to 89 filed the print out of these excel sheets. The ld. AR of the assessee also filed the reconciliation of these entries with the books in his paper and the same was filed before the lower authorities. The excel sheet may be related to the finance broker and the same is not disputed. The only issue is for an amount claimed as additional interest demanded which has neither been paid nor in the seized material found to have been paid. Thus, the addition cannot be made without checking the veracity / reliability of the data recorded in the pen drive. Based on that confirmation the ld. AR of the assessee demonstrated that the assessee and its group concerned have recorded and accounted the interest which is recorded in the Excel Sheet of the PE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the total interest after considering the duplicate/repeated entries noted in adjustment account, total of such entries comes to Rs. 75.27,847/- out of which it was claimed that an amount of Rs. 35,15,548 pertained to various individual /concerns related to Maverick group and balance Rs 40,12,299/- related to other persons. Necessary action has been taken in the case of Persons/concerns related to the Maverick group where the addition on substantive basis has already been proposed in their respective assessment. The total mount pertains to other persons is Rs. 40,12,299, out of which an amount of Rs 69,449/- pertains for A.Y. 2010-11, Rs. 85,361/- pertains to A.Y. 2011-12, Rs. 27,912/ pertains to A.Y. 2012-13 and Rs. 37,32,344/- pertains to A.Y. 2013-14. Since the pen drive was found and seized from the possession of Shri Kailash Chand Khandelwal one of trusted employee of the assessee. It was mandatory for the assessee to explain the contents of the details/account found from the pen drive which was in the possession of the assessee. During the post search enquiries and assessment proceedings, the assessee could not produce any corroborative evidences in sport of their suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 be liable 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 make in the present proceedings. 12. He has further submitted that the coordinate bench of Indore ITAT has also taken a view following that judgement of the apex court in the case of Dilipkumar Jain Vs. ITO. The relied upon finding in that decision is reiterated here in below: "8. I have considered the rival submissions and perused the entire evidence on record. There could be no dispute to the proposition that the ITO had jurisdiction to compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the disputed income have been started against any other assessee. 9. The learned counsel for the assessee contended that the income-tax authorities have no right to call the present assessments as protective because till this date they have not started any proceedings against the alleged real owner of such income. In my opinion, the contention of the assessee has substance. No doubt, the income-tax authorities has the right to make the assessments on protective but while doing so they are supposed to point out the name of the real owner of such income. At least some proceedings should be [commenced] against such assessee. Under the circumstances, in my opinion, the present assessment orders cannot be called the protective assessments. The learned AAC, without bringing on record any evidence, was of the view that the assessments were rightly made on protective basis. Even the learned AAC did not point out that who was the real owner of such income. When the matter came before the learned AAC, at least he should have come to a conclusion that really such income belonged to somebody else. Even if the ITO can blow hot and cold, it is certainly not open to the learned AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r assessee. The ld. DR honestly conceded that till this date no proceedings in respect of the disputed income have been made against any other assessee and the same is also confirmed by the AO in the report presented before us. 16. It is not disputed the findings of the ld. AO that there is no addition on substantive basis. Thus, the protective addition cannot be survived as AR of the assessee explicitly proved that whatever interest that they have paid in the group cases is duly recorded in the books of accounts and wherever applicable TDS is also deducted. As an additional interest as allegedly demanded by the parties is not paid by the assessee, even those parties are not questioned on that 2.4% found recorded in the Excel-Sheet and same were also not taxed on substantive basis. There cannot be any protective addition without making the substantive addition and Revenue did not controvert the argument of the AR of the assessee and has also not supported by any judicial decision so as to confirm the order of the lower authorities. Thus, the interest which is actually paid is duly recorded in the books of accounts and there is no other material which is found even the person under ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
