2021 (11) TMI 51 - AT - Income Tax

Tribunal dismisses Revenue's appeal, emphasizing need for substantive assessments before protective assessments.

ITO, Ward – 1, Nagaon Versus Keshava Nanda Kakati

The Tribunal upheld the CIT(A)'s decision to delete the protective addition in the assessee's case for AY 2016-17. The Revenue's appeal was dismissed as ... Protective addition - assessee runs a Society of Education - case was selected for scrutiny through CASS and reason for scrutiny selection “substantial cash deposit in the bank account” - HELD THAT:- CIT(A) has made a categorical finding of fact that there was no substantial addition of such an amount made prior in the case of M/s. Society of Education and this finding of fact has not been rebutted/controverted or assailed by the revenue before us by filing specific ground to this effect in this appeal. From a perusal of the grounds of appeal raised by the revenue it is clear that the revenue has only assailed the decision of the Ld. CIT(A) in deleting the protective addition made by the AO. And it can be very well seen that the basis for deletion resorted by Ld CIT(A) to delete the protective assessment in the hands of assessee was because there was no substantial addition in the hands of M/s. Society of Education. This crucial fact has not been rebutted/controvered/assailed before us. No infirmity in the action of Ld. CIT(A) to have deleted the protective assessment in the hands of the assessee when the fact was that there was no substantive addition in the hands of M/s. Society of Education or other assessee’s and ergo the same is confirmed. - Decided against revenue. Issues:Revenue's appeal against deletion of protective addition made by AO for AY 2016-17.Analysis:The Revenue appealed against the deletion of a protective addition made by the Assessing Officer (AO) for AY 2016-17. The AO selected the case for scrutiny due to substantial cash deposits in the bank account. The assessee, a Junior College, explained that the bank account was for college purposes and maintained by the Society of Education. The AO noted withdrawals by members and discrepancies between receipts and cash deposits, leading to a total credit of Rs. 1,51,56,830 treated as income from other sources. The AO made a protective assessment in the assessee's hands. The CIT(A) held that without a prior substantive addition in the college's case, the protective assessment on the assessee was unjustified and deleted it.The Tribunal found that the CIT(A) correctly deleted the protective addition as there was no prior substantial addition in the college's case. The Revenue did not challenge this crucial fact. The Tribunal cited relevant decisions emphasizing that protective assessments must follow substantive assessments. Without a substantive addition in the college's case, the protective assessment on the assessee was unwarranted. The Tribunal upheld the CIT(A)'s decision based on the absence of a substantive addition in the college's case.In conclusion, the Tribunal dismissed the Revenue's appeal, confirming the deletion of the protective addition in the assessee's case. The judgment highlighted the necessity for substantive assessments preceding protective assessments, emphasizing the importance of factual findings in such cases.