Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (8) TMI 913 - AT - Income TaxAddition u/s 68 - Protective additions - substantive addition made in the hands of lender - CIT(A) deleting the addition in the hands of the assessee, which was made on the protective basis - Whether CIT-A erred ignoring the fact that the issue of substantial addition in the case of Shri Global Tradefin Ltd., has not reached the finality and is pending in the Bombay High Court - HELD THAT:- AO as well as CIT(A) recorded a findings that 25 companies who invested in the assessee company are included in the list of said 53 investor companies which have advanced money to 14 companies including the assessee and same amount has been transferred by all 14 companies including the assessee to one company namely M/S Shree Global Tradefin Ltd. Thus, the amounts have been transferred by 14 companies including assessee to M/S Shree Global Tradefin Ltd., and the flow of funds are clearly evident and discernible. As such, there is no doubt as to the source of money. AO added u/s 68 of the Act on protective basis in the hands of the assessee and simultaneously similar addition was made to the income of Shree Global Tradefin Ltd. on substantive basis on the ground that source of money was not proved. Pertinent to note that in the appellate proceeding, the Tribunal deleted the addition in the case of Shree Global Tradefin Ltd.[2018 (10) TMI 1974 - ITAT MUMBAI] and there is no finding by the Coordinate Bench that the said amount of Rs. 43.50 Cr belongs to the present assessee. We note from the perusal of the order of coordinate bench that the addition in the case of M/S Shree Global Tradefin Ltd. has been deleted on merit. Thus, the coordinate bench has not given any finding that the money belongs to the assessee. The protective addition is always made whenever there is a doubt about the correct entity or correct assessment year. Thus , where there is a doubt as to whom the income belongs to, the addition is made in the hands of two persons, i.e. on substantive basis in the hands of one person and on protective basis in the hands of the other person. The protective addition would become substantive, only and only if substantive addition is deleted by the appellate authority on the ground that the income belonged to the person in whose hands protective addition has been made. The protective addition does not survive if the substantive addition has been confirmed or substantive addition has been deleted on merits. Thus protective addition has to go as the substantive addition was deleted on merits. We do not find nay force in the arguments/written submissions of the ld. DR that where substantive addition is deleted the protective has to restored to the AO as in the case of M/S Shree Global TradefinLtd , assessment has not attained finality. We are therefore inclined to dismiss the appeal of the revenue by upholding the order of CIT(A) - Decided against revenue.
|