2021 (4) TMI 685 - AT - Income Tax

Tribunal dismisses assessee's Miscellaneous Applications, upholds Commissioner's decision on protective assessments

The tribunal allowed all twelve Miscellaneous Applications (MAs) filed by the Revenue, confirming that the Commissioner of Income-tax (Appeals) rightly ... Rectification of mistake u/s 254 - Assessment on protective basis & enhancing the returned income - Whether income of the family members has to be assessed in the hands of the assessee namely Mr. Siya Ram Gupta? - CIT(A) dismissed the appeal of the assessee on the grounds that the income held to be assessed in the hands of the assessee by the AO on protective basis does not stand any more as the same is brought to tax in the hands of Sri Siya Ram Gupta on substantive basis , and hence the additions on protective basis made by AO in the hands of the assessee does not survive - whether the ld. CIT(A) was right in dismissing the appeal of the assessee or not? - HELD THAT:- The assessee never raised the ground of appeal before ld. CIT(A) that the addition be sustained in the hands of Mr. Siya Ram Gupta , as Shri Siya Ram Gupta owned up the amounts of income of other family members as his income and no challenge was made by assesse before ld. CIT(A) for deleting the addition on protective basis on the grounds that the AO has already taxed the same in the hands of Mr. Siya Ram Gupta on substantive basis, and thus there was no occasion before ld. CIT(A) to have allowed the appeal of the assessee. Thus, in fact ld. CIT(A) dismissed the appeals of the assessee because the same had become infructuous, because the substantive additions made of the income of the assessee in the hands of Mr. Siya Ram Gupta stood confirmed in the hands of Shri Siya Ram Gupta and in view of that protective addition of the same amount of income in the hands of the assessee would not stand. Once the substantive assessment in the case of Mr. Siya Ram Gupta is confirmed , the protective assessment has no independent standing but dependent on the final outcome of the substantive assessment. Thus, to that extent , order of the tribunal stand modified and MA filed by Revenue is allowed Issues Involved:1. Rectification of mistakes apparent from the record under Section 254(2) of the Income-tax Act, 1961.2. Substantive vs. protective basis of income assessment.3. Validity of the Commissioner of Income-tax (Appeals) [CIT(A)]'s decision.4. Clubbing of income of family members.5. Appeals and cross-appeals in income tax assessments.Detailed Analysis:1. Rectification of Mistakes Apparent from the Record:The Revenue filed a batch of fifteen Miscellaneous Applications (MAs) seeking rectification of mistakes under Section 254(2) of the Income-tax Act, 1961. The main grievance was that the tribunal erroneously reversed the CIT(A)'s order, which had dismissed the assessee's appeal. The tribunal's decision was based on the fact that the CIT(A) had upheld the assessment on a substantive basis in the case of Mr. Siya Ram Gupta and dismissed the protective assessments in other cases.2. Substantive vs. Protective Basis of Income Assessment:The Revenue contended that the tribunal erred in holding that the CIT(A) should have allowed the assessee's appeal because the income was already assessed on a substantive basis in the hands of Mr. Siya Ram Gupta. The CIT(A) had dismissed the appeal of the assessee on the grounds that the protective assessment did not stand once the substantive assessment was upheld.3. Validity of the CIT(A)'s Decision:The tribunal reviewed the CIT(A)'s decision, which had dismissed the appeal of the assessee on the grounds that the income assessed on a protective basis did not stand as it was already assessed on a substantive basis in the hands of Mr. Siya Ram Gupta. The tribunal held that the CIT(A) was correct in dismissing the appeal since the substantive assessment was upheld.4. Clubbing of Income of Family Members:The CIT(A) had upheld the clubbing of income of various family members in the hands of Mr. Siya Ram Gupta based on the fact that he had admitted the income belonged to him during the search and seizure operation. The tribunal agreed with the CIT(A) that the income of the family members should be assessed in the hands of Mr. Siya Ram Gupta and dismissed the protective assessments in the hands of other family members.5. Appeals and Cross-Appeals in Income Tax Assessments:The tribunal noted that the assessee did not raise any grounds before the CIT(A) challenging the addition on protective grounds, and thus, the CIT(A) had no occasion to allow the appeal. The tribunal modified its order to reflect that the CIT(A) had rightly dismissed the appeal as the protective assessment had no standing once the substantive assessment was confirmed.Specific Judgments for Each MA:- MA No. 09/Alld/2012: Allowed, modifying the tribunal's order to reflect that the CIT(A) rightly dismissed the appeal as the protective assessment had no standing.- MA No. 05/Alld/2012 to MA No. 16/Alld/2012: Allowed, applying the same reasoning as in MA No. 09/Alld/2012.- MA Nos. 48-50/Alld/2016: Dismissed, rejecting the assessee's contention that the income of family members should not be assessed in his hands, as the tribunal had already held that the income should be assessed in the hands of Mr. Siya Ram Gupta.Conclusion:The tribunal allowed all twelve MAs filed by the Revenue, confirming that the CIT(A) rightly dismissed the appeals as the protective assessments had no standing once the substantive assessments were confirmed. The three MAs filed by the assessee were dismissed, upholding the tribunal's earlier decision that the income of family members should be assessed in the hands of Mr. Siya Ram Gupta.