TMI Blog2019 (10) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... ss 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 K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard-28(4), New Delhi vide letter No.164 dated 21.01.2008, stating that assessee has received gift of ₹ 1,00,00,000/- from one Sri Harish Kumar, (donor of the gifts) who had duly admitted in his statement on oath recorded on 28.03.2007 u/s.131, that he had received cash from various parties and deposited the same in his account no. 3756 with Punjab and Sind Bank, Fatehpuri, New Delhi, then transferred the amounts to another account no.3755 with the same bank and issued drafts to the said parties in the form of gifts. Out of these drafts, four drafts have been issued to Mrs. Kanika Chawla, the details of which are as under: Date Amount Bank 02.08.2003 25 lakhs Punjab and Sind Bank, Fatehpuri Branch, Delhi 01.09.2003 25 lakhs -do- 03.09.2003 25 lakhs -do- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name of M/s. Shreshtha Overseas. Subsequently, these amounts were given to various persons as gifts by Shri Harish Kumar. Such gifts were prima facie bogus because cash was received from the donees and cheques were issued in lieu of such cash receipts. The ITO, Ward- 28(3), Delhi, proved beyond doubt after carrying out detailed investigation that Shri Harish Kumar was not carrying out any business and was a Hawala operator giving accommodation entries relating to bogus gifts. In view of the above, I have reason to believe that an income of ₹ 1 crore chargeable to tax for the Assessment Year 2004-05, relevant to Financial Year 2003-04, has escaped assessment within the meaning of Section 147 of the Act, 1961. Notice u/s. 148, dated 08.04.2008, is issued. 5. Thereafter, assessment was made u/s. 143(3)/147 vide order dated 29.12.2008 at an income of ₹ 1,00,90,100/- as against the income of ₹ 90,100/-. Thus, the addition of ₹ 1,00,00,000/- on account of gift was added u/s 68 as income from undisclosed sources. The said addition was confirmed by the Ld. CIT (A) also. However, the Tribunal has set aside the matter to the file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he observed that the Assessing Officer in the case of Shri Harish Kumar should not have made the addition on substantive basis and there is inadvertent error kept in the said assessment order, because the addition should have been made on substantive basis in the case of the assessee. However, despite such observations, he has finally made the addition on protective basis after observing and holding as under: 27. Here, it is being made clear that addition made on substantive basis hands of Harish Kumar for A.Y. 2004-05 in respect of same amount which is being taxed in the present case on substantive basis does not vitiate the assessment proceedings in the present case. The assessee cannot take plea that the AO in the present case is bound by findings in the assessment order passed by the AO in the case of Harish Kumar and following the order of the AO in the case of Harish Kumar, addition in the present case must be made on protective basis only. Chronology of the events cannot decide as to what will be right step to tax any particular income, Simply because assessment order in the case of Harish Kumar was passed much earlier and addition made on substantive bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive basis and cannot be subject to double taxation. Here Assessing Officer has rightly accepted the fact that, since addition in the case of Shri Harish Kumar has been made on substantive basis; therefore, he is proceeding to tax the alleged gift on protective basis. Further, he was correct in observing that it is the appellate authority to take the decision, whether addition should have been made on substantive basis or protective basis. The Ld. CIT (A) being an appellate authority should have first ascertained the fate of substantive addition and if he would have found that substantive addition has attained finality or the finding given therein is still persisting, then he should have deleted the addition made on protective basis. 10. Before us, the ld. DR had pointed out that since taxes have not been paid by Shri Harish Kumar, therefore, such an addition should be confirmed in the hands of the assessee and Revenue s interest should be protected. However, we are unable to subscribe to this view because protective addition as such cannot be sustained at second appellate stage and consequently no proceedings either for recovery of tax or for initiating any penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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