TMI Blog2011 (1) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer (AO) - Coming to the powers of the AO to make addition on protective basis, the learned counsel referred to the judgment of the Supreme Court in the case of Lalji Haridas Vs. Income Tax Officer & Another [1961 -TMI - 49482 - SUPREME Court] and Chhotalal Haridas Vs. M.D. Karnik and Another [1961 -TMI - 49482 - SUPREME Court] wherein the Court delineated the following principle justifying the reason for making protective addition Held that, even when there is no specific provision in the Income Tax Act for protective assessment, power lies with the AO to make such an assessment on protective basis under certain circumstances. When there is such a power to make the protective assessment while carrying out the normal assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted under the head introduction of share capital by Shri P.K. Sood in the assessee companies. During the block assessment period in the case of Shri P.K. Sood, he could not explain the source of aforesaid income and the amount of ₹ 66 lacs was added back to his income as undisclosed income by the Assessing Officer (AO). 4. We may also record at this stage that the basis for making the aforesaid addition in the block assessment of Shri P.K. Sood was that along with the documents seized, statement of Shri P.K. Sood was also recorded wherein he had inter alia stated as under: The factual position is that my known people used to come to me for financial matter advice. Since I know that Sh. S.K. Jain deals in such type of activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The cash available with me for these unaccounted transactions was advanced to Sh. S.K. Jain in their obtaining cheques of equal amount in the form of share capital introduction in the companies as under: M/s Mahindra Finlease Pvt. Ltd Receipt amount of ₹ 31,00,000- share allotted for ₹ 21,00,000/- balance ₹ 10,00,000/- refunded. M/s Mahindra Finance Pvt. Ltd. Receipt of ₹ 23,00,000/- shares allotment of ₹ 22,50,000/- Refunded ₹ 50,000/-. M/s Mahindra Traders Receipt of ₹ 10,00,000/- shares allotment of ₹ 10,00,000/-. 5. Since search had taken place at the premises of Sh. P.K. Sood and documents were found in his possession, in the case of Sh. P.K. Sood the addition was made under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007, which reads as under: 4. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that similar issue relating to protective assessment made u/s 158BD had arisen for consideration before the Madras Bench of ITAT in the case of L. Saroja Vs. ACIT 76 ITD 344 wherein it was held by the Tribunal that protective assessment qua the person sought to be covered u/s 158BD cannot be sustained. To the similar effect is the decision of Ahmedabad Bench of ITAT in the case of Smt. Farzana Farooq Desai Vs. DCIT 74 TTJ 507 wherein it was held that there cannot be a protective assessment u/s 158BD. Since no contrary decision of Tribunal or any High Court on this issue has been brought to ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computing undisclosed income, as per that record the commission receipt could be computed by applying 0.75% and no addition on account of unexplained investment under Section 69 of the Act could be made. 11. We may clarify at this stage itself that the basis of the deletion made by the CIT (A) as well as the Tribunal in the case of Shri P.K. Sood is noted above as a fact and we have not commented upon the correctness or otherwise of the said decision of the Tribunal as that was not the issue before us. The reason for taking note of this fact was that the learned counsel for the Revenue justified the protective assessment in the case of these assessees as his plea was that when it was not clearly ascertainable as to whether the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ka, learned counsel for the petitioners about 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 under section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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