Protective reassessment and share application money: reopening cannot stand when income is already attributed to another identified person.

Reassessment under section 148 was considered unsustainable where the revenue had already treated the undisclosed share capital investment as belonging to an identified third person in substantive proceedings. On that footing, a protective reopening of the company's assessment could not be justified merely on suspicion, and the proper course was to use the special machinery for assessing income in the hands of a person other than the searched person. The text also states that share application money cannot be assessed in the company's hands only because the shareholders are alleged to be bogus, where the department has remedies against the shareholders themselves.

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Issues: Whether reassessment under section 148 of the Income-tax Act, 1961 could be sustained for making a protective addition in respect of share capital investments, and whether the amount credited as share application money could be assessed in the hands of the company.

Analysis: The undisclosed investment in the assessee-company's share capital had already been treated as belonging to Shri G.P. Goyal in the substantive block assessment. Once the revenue had taken a definitive stand that the income belonged to another person, the reopening of the assessee's assessment on a protective basis could not be justified merely on suspicion. The proper course, if the revenue wanted to assess the same income in another hand, was to proceed under the special statutory machinery for assessment in the case of a person other than the searched person. The decision also followed the principle that where share application money is under scrutiny, the company cannot be assessed merely because the shareholders are alleged to be bogus, if the department has remedies against the shareholders themselves.

Conclusion: Reassessment for a protective addition was invalid, and the cancellation of the assessment in the assessee-company's hands was upheld.

Final Conclusion: The Tribunal upheld the deletion of the addition and rejected the revenue's challenge to the reopening and assessment in the company's hands.

Ratio Decidendi: Reassessment cannot be sustained on a protective basis where the revenue has already concluded that the income belongs to another identified person, and share application money cannot be taxed in the company's hands merely because the department disputes the shareholders' identity or genuineness.

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