TMI Blog2019 (4) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 143(3) of the Income Tax Act, 1961 (in short Act ). 2. Heard both parties and perused material available on record. We find that ITAT, Kolkata Benches decided similar and identical issue raised by the Revenue in ITA No.524 525/Kol/2014 and ITA No.1866/Kol/2013 in the case of DCIT vs Topgrain Management Pvt.Ltd. For better understanding, the relevant portion is extracted herein below for ready-reference:- 2. The assessee in the present case is a Company. The investigation carried out by the Department of Income Tax (Investigation), Kolkata revealed that some entities were involved in providing accommodation entries to various companies based in Mumbai, which in turn had used the said funds for payments to Madhipura Mercantile Cooperative Bank at Mumbai, which was controlled by Shri Ketan Parekh. Since the assessee-company was one of such entities, the statement of its Director Shri Pramod Sharma was recorded under section 131 by the DDIT(Investigation), Kolkata on 15.12.2006. In the said statement given on oath, Shri Pramod Sharma accepted that he had got cash of equivalent amount from the Mumbai based Companies belonging to Shri Ketan Parekh Group and after depositing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said companies for the cash given to the assessee-company. The Assessing Officer made further additions of ₹ 3,06,62,000/- and ₹ 32,85,000/- to the total income of the assessee for A.Y. 2005-06 and 2006-07 respectively on account of unexplained cash deposits found to be made in the Bank accounts of the assessee. 3. Against the orders passed by the Assessing Officer under section 143(3)/147 for A.Y. 2005-06 and 2006-07 and under section 143(3) for A.Y. 2007-08, appeals were preferred by the assesee-company before the ld. CIT(Appeals) and after considering the submissions made by the assessee as well as the material available on record, the ld. CIT(Appeals) deleted the addition made by the Assessing Officer to the total income of the assessee for A.Y. 2005-06 on account of the alleged accommodation entries given to the Mumbai based Companies in the form of commission income at the rate of 2% as well as further addition on account of protective basis for the following reasons given in paragraph no. 6 of his impugned order:- 6. I have perused the relevant orders and considered the material placed on record. I find from the appeal folder that in course of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious companies; and that, such cash was assessable as unexplained income in the hands of those companies. The AO has then added the same cash on protective basis as unexplained income of the assessee company without assigning any concrete reasons. I find no basis or justification for the AO to consider on protective basis such cash as unexplained income of the assessee company which he himself held was assessable as unexplained income in the hands of the various companies who had allegedly purchased accommodation entries. The addition on protective basis on account of unexplained cash by the AO contradicts his own findings that such cash was assessable as unexplained income in the 'hands of the various companies who had allegedly purchased accommodation entries. Above all, identical additions made by the AO in similar cases were deleted by my learned predecessor as well as by the Hon'ble Benches of the jurisdictional ITAT. In other words, similar additions based on the admission of the director of the company which was later retracted was deleted by the jurisdictional ITAT in the assessment of such company. In these cases, the director of the company made admission regardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO has found no defect in the cash book of the assessee company. The AO has not pointed out any receipts recorded in the cash book whose source was hot explained. .The remand reports of the AO contain no adverse finding or remark about the cash book. In this factual background, the only conclusion that can possibly be drawn is that the cash deposits in the bank account are explained with reference to the cash book of the assessee company. The AO has noted in his remand reports that apart from the bank statement, cash 'book and the sales invoices, the assessee could produce no other evidence for verification. But then, it has not been clarified by the AO as to what more evidence he required the assessee to produce for verification. The AO has observed that the transactions in shares were made in cash. But then, the sales invoices alongwith the PAN of the buyers was produced before the AO in course of the remand proceedings and the remand reports contain no adverse findings in this regard. I therefore agree with the Ld AR that there is no adverse finding in the remand reports of the AO. The AO has categorically admitted that the bank statement, cash book and sales invoices were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case a doubt or ambiguity about real entity in whose hands a particular income is to be assessed, the assessing authority is entitled to have recourse to make a protective assessment. As held by the Hon ble Supreme Court in the case of Lalji Haridas vs.- ITO (43 ITR 387), the Officer may, when in doubt, to safeguard the interest of the revenue can assess it in more than one hand but this procedure can be permitted only at the stage of assessment. Protective assessment becomes redundant when the substantive assessment becomes final and if the substantive assessment fails, it is protective assessment which is to be treated as substantive. Keeping in view this corollary between the substantive assessment and protective assessment, an appeal against the protective assessment should ordinarily await the outcome of the substantive assessment so that the protective assessment can be inconformity with the substantive assessment. In the case of CIT vs.- Surendra Gulab Chand Modi (140 ITR 517), the appeal arising out of the protective assessment was disposed of by the appellate authority i.e. Tribunal vacating the protective assessment without waiting for the final outcome of the procee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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