TMI Blog2022 (8) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... person in whose hands protective assessment is made or ultimately if substantive addition made is confirmed then in that eventuality protective addition cannot survive. Therefore, keeping in view the above proposition and also keeping in view the judgement discussed by us herein above , we are of the view that in the present facts and circumstances of the case, no loss is going to suffer by the assessee, in case, we uphold the order of the ld. CIT(A) in upholding the protective addition made by the AO in the hands of the assessee. In this view of the matter, the appeal of the assessee is dismissed. - ITA No. 296/JP/2019 - - - Dated:- 16-8-2022 - Shri Sandeep Gosain, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assessee : Shri P.C. Parwal, CA For the Revenue : Shri A.S. Nehra, Addl. CIT ORDER PER: SANDEEP GOSAIN, JM This appeal has been filed by the assessee against order of the ld. CIT(A)-4, Jaipur dated 3-12-2018 for the assessment year 2011-12 raising therein solitary ground as under:- The ld. CIT(A) has erred on facts and in law in confirming the addition of Rs.44,93,520/- (Rs.3,84,000+Rs.9.09,520+ Rs.32,00,000) on protective basis ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under:- 7. Considering the submissions of the partner of the assessee firm M/s. Shree Ram Borewell Construction Company, the Hon ble ITAT Jaipur has set aside the order passed by the AO and has directed the AO to frame de novo assessment after giving reasonable opportunity. 8. I have considered the facts of the case and information furnished by the assesee. In the light of all the facts, I am of the view that whatever submission have been given by the assesee and other partners of the firm are not verified by the AO concerned. All the information introduced before the Hon ble ITAT, Jaipur is yet to be verified by the AO while framing de novo assessment. So, new information cannot be relied upon at this stage. Therefore, I treat the facts of the old audit report as correct till fresh assessment is made in the case of the firm for the A.Y. 2011-12 and make addition to the income of assessee on protective basis till the case of the firm is decided afresh. In the light of the above facts and discussion the income of the assessee for the A.Y. 2011-12 is recomputed as under on the protective basis. 1. Income declared by the assessee us/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es on land at Paradeep, Cuttack. As the turnover of the firm exceeded the limits specified, audit u/s 44AB was conducted. However, due to the some miscommunication between the accountant and the partners, there remained certain discrepancies based on which incorrect financial statements and audit report was prepared and filed. 2. While framing the assessment order in case of the firm, AD made addition of the capital introduced in the firm and disallowed the interest and remuneration paid to the partners. The order of the AO was confirmed by Ld. CIT(A) against which appeal was filed to Hon'ble ITAT. Before the Hon'ble ITAT, additional evidences by way of affidavit of the partners and the correct financial statements/ audit report were submitted. Considering the same, Hon'ble ITAT set aside the assessment order and directed the AO to frame denovo assessment. In set aside assessment of the firm, the AO vide order dated 28.12.2017 (copy enclosed) again made addition of the capital introduced and disallowed the interest and remuneration paid to the partners ignoring that in the revised financial statements no such capital introduction/ payment of interest and remuneration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh of Rs.32.00 lacs and received interest on partner s capital of Rs.3,84,000/- and remuneration of Rs.9,09,520/-. Since according to the AO, the assessee could not establish the source of capital nor declared the interest and remuneration received, therefore, the AO initiated the proceedings for reopening the assessment. The assessee submitted the affidavits of the partner and her reply dated 19-12-2016 explaining that during the year under consideration, neither any capital was introduced by her in the firm nor any remuneration and interest was received from the firm. It was also pointed out by the assessee that in the appeal filed before the ITAT, Jaipur Bench, by the firm, the partners stated in their affidavit that they have not introduced any capital in the firm nor any interest or remuneration but due to miscommunication/ misunderstanding between the tax auditor or Accountant, the incorrect financial statement and audit report was prepared. Therefore, the ITAT Jaipur Bench in the light of submissions made by the assessee , set aside the assessment order and directed the AO to frame de novo assessment after verifying the information / evidences so put forth by the assessee. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Gauhati High Court in the case of Jagannath Bawri and Others vs CIT and Others, 234 ITR 464 has explained the concept of protective assessment in following manner. As regards the contention of Ms. Hazarika, ld. Counsel for the petitioners about the income tax returns, on perusal of annexure-A series it can only be said that those documents are only intimation which is sent to the assessee specifying the sum so payable u/s 143(1)(a). At any rate, the assessments made are only protective assessments. Under the law, it is open to the Department to make assessments on two persons in respect of the same income where there is some ambiguity as to the liability to charge. Such assessments are made to protect the interest of the Revenue so much so, unless such protective or alternate assessment is made, assessment proceedings against the party finally found to be liable may become barred by time. It has now become an established practice that in the case of a doubt as to the person who will be and deemed to be in receipt of the income, it is open to the Department to make protective or alternative assessment. After having meticulously gone through the facts and circumstances o ..... 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