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2019 (10) TMI 515 - AT - Income TaxAddition u/s 68 - Protective addition - addition of gift as income from undisclosed sources - HELD THAT:- Protective addition cannot be sustained at second appellate stage and consequently no proceedings either for recovery of tax or for initiating any penalty proceedings could be initiated. If the addition has been made on substantive basis in case of another person, here in this case alleged entry provider Mr. Harish Kumar wherein the amount of gift given by him to the assessee has been added on substantive basis, then whether tax is recoverable from him or not is relevant at all. What is relevant is that same addition cannot be taxed twice and there has to specific finding in whose hand the amount is taxable. Before us both the parties could not provide the detail of fate of substantive addition, whether any appellate authority has held that the addition made in the case of Mr. Harish Kumar should be made on protective basis and substantive addition should be made in the case of the donees, i.e., the person who has received the gift. Until and unless there is such finding by the appellate authority in the case of Sri Harish Kumar, then protective addition has no legs to stand. We direct the Assessing Officer as under - to ascertain whether in the case of Shri Harish Kumar any finding has been given by the appellate authority that additions made in his hand should be taxed on protective basis and substantive addition should have been made in the hands of the donee, i.e. the assessee who has received the gift if addition has been deleted on merits in the case of Shri Harish Kumar then again no addition can be confirmed against the assessee. Until and unless the appellate authority has held that addition made in the hands of Shri Harish Kumar is to be examined or made in the case of the assessee no addition can be made or confirmed and if the substantive addition made in the hands of Shri Harish Kumar had attained finality then also no addition or any proceedings can be initiated against the assessee. AO is directed to comply with this direction within a period of six months from the date of receiving of the order, because already huge time have elapsed and by this time either the fate of the appeal of Shri Harish Kumar must have been decided or the assessment order in his case must have attained finality. Appeal treated as partly allowed for statistical purposes.
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