Protective assessment cannot survive once the same income is finally taxed in the substantive assessee's hands.

Once income has been finally assessed and taxed in the hands of the person found substantively liable, a protective assessment on the same income in another person's hands cannot survive. The Court treated the protective addition as merely consequential and held that, after final assessment of the income in the hands of Chula Ram, the basis for continuing the protective assessment against the assessee-firm disappeared. The same income could not be taxed twice in different hands once the substantive assessment had attained finality.

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Issues: Whether income assessed on a protective basis in the hands of the assessee-firm could still be subjected to taxation when the same income had already been finally assessed in the hands of another person on a substantive basis.

Analysis: The Court held that once the income shown in the name of the firm was finally assessed and taxed in the hands of Chula Ram, the basis for continuing a protective assessment against the firm disappeared. A protective addition is only consequential until the substantive assessment attains finality, and the same income cannot be taxed twice in different hands once the real assessment stands concluded.

Conclusion: The question was answered against the assessee and in favour of the Revenue. The same income was held not taxable in the hands of the assessee-firm after final assessment in the hands of Chula Ram.

Ratio Decidendi: When income has been finally brought to tax in the hands of the person found substantively liable, a parallel protective assessment on the same income in another person's hands cannot survive.

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