9911796707
TMI Blog2025 (1) TMI 1474X X X X Extracts X X X X X X X X Extracts X X X X ..... own feet now against the assessee under consideration. The notices issued u/s. 263 of the Act are no more valid as the order against which the same were issued, is no more in existence, as the department has taken a firm stand against Sh. Mahendra Mehra. Now let's consider the position of law with regard to protective assessments. The concept of protective assessment has not been defined in the Income-tax Act and there are no specific provisions governing the same. However, it is well settled by judicial precedents and it is an established departmental practice which has gained judicial recognition by the Courts over the years that in the interest of revenue, protective assessment can be framed in a situation where the revenue during the proceedings finds that a particular amount of income can be taxed in the hands of different persons/assessee but the Assessing Officer is not sure enough about such person in whose hands the income is chargeable to tax. A protective assessment is regarded as being protective because it is an assessment which is made 'ex abundanti cautela' where the department has a "doubt as to the person who is or will be deemed to be in receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s much as for at least four times (dated 06.01.2023, 09.10.2023, 23.01.2024 & 04.03.2024), submissions were uploaded on the official website of ITD and also sent through email but were unfortunately ignored. It is a classic example of the violation of principle of natural justice and of the mandatory requirement of providing opportunity of being heard before an order could be passed. The impugned order suffering from the serious violation deserves to be quashed and set aside without giving any second chance to the erring officer. 4. The Id. Pr. CIT (Central), Jaipur, in the impugned order passed u/s. 263 of the Act, raised an altogether new issue of the alleged non-examination of sundry creditors of Rs. 29,46,000/-, which has never been a part of the SCN issued dated 04.03.2024. Thus, here gain, there is the serious violation of principle of natural justice and an issue which she has gone beyond the SCN, could not have been made a basis of reaching a conclusion that the subjected assessment order is be erroneous and prejudicial to the interest of the revenue. The impugned order thus, to this extent is a nullity being without jurisdiction and therefore deserves to be quashed on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,000/- Out of total sale consideration. Rs 11 Lacs were paid in cash on the date of agreement. Balance amount of Rs. 115.50 Lacs were to be paid, in three installments of Rs. 40 Lacs on 28.2.2012 Rs. 35.50 Lacs on 30.7.2012 and Rs. 40 Lacs on 30.1.2013. As per endorsement on the back side of the agreement, Sh. Mehra also paid cash of Rs. 40 Lacs on 28.2.2012. The remaining payment of Rs. 75.50 Lacs were made in the year under consideration as per terms and condition of the sale agreement. Thus, total payments of Rs 75.50 Lacs (Rs. 35.50 Lacs + Rs. 40.00 Lacs) in cash were made during the year under consideration. A). during, the course of survey proceeding u/s. 133A of the IT Act, a sale agreement dated: 16.6.2011 was also found and impounded. Through this sale agreement, Sh. Mahendra Mehra purchased land on Khasra No. 78 measuring 11 Bighas 1 Biswa situated in village Sewarampura, Tonk on 16.6.2011 from Sh. Gordhan Das, r/o Tonk for Rs. 1,36,50,000/-. Out of total sale consideration Rs. 10 Lacs were paid in cash on the date of agreement. Balance amount of Rs. 126.50 Lacs, were to be paid in three installments, i.e. on 15.11.2011, 15.4.2012 and 15.9 2012. As per endorsement on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hands of assessee which has escaped assessment u/s. 147 of the Act on protective basis. The unexplained investment to the tune of Rs. 164 Lacs on protective basis has escaped assessment in the hands of assessee which is chargeable to tax G) Applicability of the provisions of section 147/151 to the facts of the case; It is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration. No assessment as stipulated u/s. 2(40) of the Act has been made. The return has been simply processed u/s. 143(1) of the Act. In view of the above, provisions of clause (b) of explanation 2 to section 147 of the Act are applicable to the facts of this case and assessment year and hence this is deemed to be a case where income chargeable to tax has escaped assessment." 3. In view of the above, the case of the assessee was reopened and a notice u/s. 148 of the Act was issued vide dated: 21.03.2020. In response to this notice, the assessee filed a return on 08.03.2021 again declaring the same figure of Rs. 3, 70,630/-. Although, the case was assessed at Rs. 1, 67, 70,630/- (Rs. 3, 70,630/- + Rs. 1, 64, 00,000/-) on protective basis and on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent stands on its own feet now against the assessee under consideration. 6. In view of above, the notices mentioned (supra) issued u/s. 263 of the Act are no more valid as the order against which the same were issued, is no more in existence, as the department has taken a firm stand against Sh. Mahendra Mehra. Now let's consider the position of law with regard to protective assessments. The concept of protective assessment has not been defined in the Income-tax Act and there are no specific provisions governing the same. However, it is well settled by judicial precedents and it is an established departmental practice which has gained judicial recognition by the Courts over the years that in the interest of revenue, protective assessment can be framed in a situation where the revenue during the proceedings finds that a particular amount of income can be taxed in the hands of different persons/assessee but the Assessing Officer is not sure enough about such person in whose hands the income is chargeable to tax. A protective assessment is regarded as being protective because it is an assessment which is made 'ex abundanti cautela' where the department has a "doubt as to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e event substantive additions were to be set aside, the assessee was liable to pay this amount. The CIT (A) directed that amounts brought to tax on protective basis ought to be deleted. The CIT (A)'s reasoning was that additions were enhanced in the case of other assessee's and some of the amounts were deleted in view of documentary evidence gathered. The CIT (A) made two tabular charts in Para 2.1.8.5. One reflected the amounts added by the AO and the final amount sustained on the basis of assessment of evidence. After discussing all these aspects, the CIT (A) held that additions made on protective basis were not sustainable, in the following terms: "In this case, on the basis of noting on impugned seized documents and evidences gathered during the remand proceedings, and enhancement notice u/s. 251(2) of the Act vide letter dated 21-3-2017 has been given to the assessee. Subsequent to receipt of written compliance from the assessee, following additions are required to be made in assessee's hand as per the detailed discussion made in para 2.1.8.5 with respect to Issues No. 1,2,3,4 & 5 as under : Sl. No. ITA No. A.Y. Name Addition made by AO Addition sustai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. In view of the above, we are of the firm view that, the revenue has taken a firm view against Sh. Mahendra Mehra; hence there can't be any simultaneous proceedings of the same matter and amount against the assessee under consideration. 9. To further strengthen our view, we draw strength from the following judicial pronouncements of Hon'ble Apex Court and Hon'ble High Courts as under: [2023] 153 taxmann.com 298 (SC) PCIT (Central) v. Panchmukhi Management (P.) Ltd. G.K. Consultants Ltd. v. ITO [IT Appeal No. 1502 (Delhi) of 2013, dated 27-6-2014], [upheld in CIT v. G.K. Consultants Ltd., [IT Appeal No. 86 of 2015, dated 24-5- 2016] High Court] [2024] 167 taxmann.com 358 (Mad.)Ramakrishnan Ramasubramani v. ITO Considering the ratios lay down by the Hon'ble courts and specific chronology of events in the matter, Ground Nos. 1 and 2 raised by the assessee are allowed and order of the Ld. PCIT passed u/s. 263 of the Act is quashed with consequential impact. 10. Ground No. 3 pertains to non-consideration of the assessee's submissions made vide dated: 06.01.2023, 09.10.2023, 23.01.2024 and 04.03.2024. On this issue we have gone through the factual paper book submitted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
