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TMI Blog2024 (5) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... tors are Income Tax assessees. As substantive additions have been made by the department in the case of 4 loan creditors, out of which, 3 loan creditors have accepted the additions and have availed Vivad Se Viswas Scheme and paid the due taxes. Therefore, the source of the loan in their hands stood explained as their unaccounted income, upon which they have paid the due taxes. The 4th loan creditor is also an Income Tax assessee, in whose case the addition has been made. There is no allegation that the source of the income/LTCG in the hands of the said creditor namely Deepak Kumar Jain was out of any unexplained income of the assessee. The assessment in the case of other 3 persons already stood barred by limitation, no substantive additions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of them was the director of the assessee company. The Assessing Officer noted that the source of funds of the creditors, out of which loan was given to the assessee company, was from LTCG earned from sale of shares during the financial year 2013-14 relevant to assessment year under consideration. The Assessing Officer further noted that the LTCG earned by the said loan creditors were out of share transactions done in penny stock companies. He reached to the conclusion that the aforesaid LTCG earned by the loan creditors were bogus, which was the source of the loan to the assessee company. He observed that since the source of the funds of the loan creditors ,prior to forwarding of the loans to the assessee company, was out of bogus LTCG, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessed to tax. Their PAN was given. The amount was received by account payee cheques. They have duly disclosed their income as well as long term capital gain in their return of income. The identity, creditworthiness and genuinity of the transactions is not disputed. The Ld. AO has made addition on protective basis only on the ground that the source of the loan was earning of long-term capital gain by the loan providing shareholders and their relatives. It is submitted that the law required that the assessee to prove the identity of the loan creditors, genuinity of the transaction and Creditworthiness of the parties. The same has not been disputed. The Ld AO has doubted the source of source, It is submitted that the assessee is not required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as under: It is settled law that when there is a doubt as to which person amongst the two was liable to be assessed, parallel proceedings may be taken against both and alternative assessments may also be framed. It is also equally true that while a protective is permissible, it is not open to the income tax appellate authorities under the Act to make a protective order. The law does not permit assessment of the same income successively in different hands. The tax can only be levied and collected in the hands of the person who has really earned the income and is liable to pay tax thereon Prakash Wine Agencies Vs ITO (1990) 38 TTJ (AII) 39 Saipem UK Ltd. Vs. Dy. Director of Income-tax (International Taxation) Range 2(1) Mumbai (2007) 108 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 05.06.2017, M.P. Ramchandran vs. DCIT reported in 129 TTJ 190 at page 195], Hon'ble Delh Bench in the case of G.K. Consultants Ltd. vs. ITO in ITA No.l502/ Del/2013 dated 27.06.2014, which was upheld in CIT vs. G.K. Consultants Ltd., 2016 (6) TMI 136 Delhi High Court), it was held/averred, as follows, by the Hon'ble ITAT Delhi: 19. On careful consideration of above contention, we are of the view that there may be a substantive assessment without any protective assessment but there cannot be any protective assessment/addition without substantive assessment/addition, meaning thereby there has to be some substantive assessment/addition first which enables the AO to make a protective assessment/addition. In the present case, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaded that the assessments of the remaining 3 parties have been made u/s 143(1) and no substantive additions have been made in their hands. Reliance has also been placed on various case laws, wherein, it has been held that protective assessment cannot be made in the hands of a party without being a substantive addition made in the hands of other party. 6. The ld. DR, on the other hand, has relied the findings of the lower authorities. 7. We have considered the rival submissions and gone through the record. Admittedly, in this case, the additions have been made in the hands of the assessee on protective basis only. This fact itself shows that the Assessing Officer, himself, was convinced that the substantive additions were warranted in case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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