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TMI Blog2024 (5) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... 67,60,000/- made by the Assessing Officer on protective basis in respect of the loan amount received by the assessee from one of its director and his relatives. 3. The brief facts of the case are that the assessee filed its return of income for the assessment year under consideration declaring a total income of Rs. 24,07,054/-. The return was selected for scrutiny and notices u/s 143(2) & 142(1) of the Act were issued to the assessee. The ld. Counsel for the assessee had submitted documents in compliance of the notices issued by the Assessing Officer. The Assessing Officer noted that during the financial year 2013-14, the assessee company had taken a loan of Rs. 2,67,60,000/- from 7 loan creditors, who were family members and one of them w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheque. That the creditors had duly disclosed their income from LTCG in their return of income. That the identity, creditworthiness and genuineness of the transaction was not disputed. That the Assessing Officer has made the addition only on protective basis which means that even the Assessing Officer was convinced that the additions in relation to the LTCG were to be made in the hands of the respective creditors and not in the hands of the assessee. That the source of the loan amount in the hands of the assessee was duly proved. The ld. counsel has also made the following written submissions: "It is submitted that the assessee filed loan confirmation letters. All the loan provider parties being shareholders and their relatives are assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same by opting for Vivad se Vishwas Scheme. Necessary evidences have been filed in the paper book page No.32-62. Therefore when three persons have already paid the tax and substantive assessment has been made by adding back the amount in their hands, the addition in respect of the said three parties is required to be deleted. Hence it is submitted that in case where the substantial addition has been made and the parties have opted for VSV Scheme and paid their taxes, the protective assessment is liable to be deleted since the same would tantamount to making double addition. Reference in this connection is invited to the judgement of * Hon'ble Allahabad High Court in the case of CIT v Smt Durgawanti Singh reported in 234 ITR 249 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive. The assessment proceedings have already been barred by limitation in respect of the above four parties. When proceedings are barred by limitation, the protective addition cannot stand. Reference is invited to the decision of ITAT in the case of Kanav Metals a copy of which is enclosed herewith. Further in cases where no substantial addition has been made, no protective assessment is permissible. Reference in this connection is invited to the judgement of * Hon'ble Ahmedabad Bench in the case of Kunj Malls in ITA No. 1088/Ahd/2018 dated 17.04.2023. * Hon'ble Gauhati Bench in the case of Keshava Nanda Kakati in I.T.A. No. 460/ GAU/2019 dated 28.10.2021, * Hon'ble Delhi Bench in the case of ITO vs. Fussy Financial Services P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the aforesaid loan creditors were duly proved on the file, the ld. counsel has further taken legal plea that protective additions cannot be made in the hands of the assessee without their being substantive additions made in the hands of the loan creditors. It has been further pleaded that out of 7 loan creditors, in effect, the additions were made in substantive manner in the hands of 3 parties, however, all the said 3 parties opted for Vivad Se Viswas Scheme and paid the due taxes. It has been further pleaded that assessment in case of another party was reopened u/s 148 of the Act. The said creditor challenged the reopening of the assessment before the Hon'ble High Court pleading that the reopening was barred by limitation, wherein, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntive additions have been made by the department in the case of 4 loan creditors, out of which, 3 loan creditors have accepted the additions and have availed Vivad Se Viswas Scheme and paid the due taxes. Therefore, the source of the loan in their hands stood explained as their unaccounted income, upon which they have paid the due taxes. The 4th loan creditor is also an Income Tax assessee, in whose case the addition has been made. There is no allegation that the source of the income/LTCG in the hands of the said creditor namely Deepak Kumar Jain was out of any unexplained income of the assessee. The assessment in the case of other 3 persons already stood barred by limitation, no substantive additions have been made in their hands, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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