TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 515
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.... on record. 2. The learned Commissioner of Income Tax (A) erred in law and on facts of the case, in dismissing the appeal ignoring the fact that the order u/s 254/143(3) of the Income Tax Act has been passed by the Assessing officer without complying with the directions of Hon'ble Income Tax Appellate Tribunal in appeal no 1724/DEL/2010 dated 28/09/2012. 3. The learned Commissioner of Income Tax (A) while dismissing the appeal failed to consider that the impugned addition and impugned assessment order passed by the Assessing officer are beyond jurisdiction, bad in law, unjustified, barred by limitation, contrary to facts and law and is based upon recording of incorrect facts and findings and is without giving adequate opportunity of being heard." 2. As a lead case, we are taking up the appeal in the case of Smt. Kanika Chawla and findings therein will apply mutatis mutandis in the appeal of M/s. Ramesh Chawla (HUF). 3. The facts in brief are that an information was received by the Assessing Officer from ITO, Ward-28(4), New Delhi vide letter No.164 dated 21.01.2008, stating that assessee has received gift of Rs. 1,00,00,000/- from one Sri Harish Kumar, (donor of the gifts) wh....
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.... amounts were given to various persons as gifts by Shri Harish Kumar. Such gifts were prima facie bogus because cash was received from the donees and cheques were issued in lieu of such cash receipts. The ITO, Ward- 28(3), Delhi, proved beyond doubt after carrying out detailed investigation that Shri Harish Kumar was not carrying out any business and was a Hawala operator giving accommodation entries relating to bogus gifts. In view of the above, I have reason to believe that an income of Rs. 1 crore chargeable to tax for the Assessment Year 2004-05, relevant to Financial Year 2003-04, has escaped assessment within the meaning of Section 147 of the Act, 1961. Notice u/s. 148, dated 08.04.2008, is issued." 5. Thereafter, assessment was made u/s. 143(3)/147 vide order dated 29.12.2008 at an income of Rs. 1,00,90,100/- as against the income of Rs. 90,100/-. Thus, the addition of Rs. 1,00,00,000/- on account of gift was added u/s 68 as income from undisclosed sources. The said addition was confirmed by the Ld. CIT (A) also. However, the Tribunal has set aside the matter to the file of the Assessing Officer after observing and holding as under: "11. Considering the above submission....
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.... error kept in the said assessment order, because the addition should have been made on substantive basis in the case of the assessee. However, despite such observations, he has finally made the addition on protective basis after observing and holding as under: "27. Here, it is being made clear that addition made on substantive basis hands of Harish Kumar for A.Y. 2004-05 in respect of same amount which is being taxed in the present case on substantive basis does not vitiate the assessment proceedings in the present case. The assessee cannot take plea that the AO in the present case is bound by findings in the assessment order passed by the AO in the case of Harish Kumar and following the order of the AO in the case of Harish Kumar, addition in the present case must be made on protective basis only. Chronology of the events cannot decide as to what will be right step to tax any particular income, Simply because assessment order in the case of Harish Kumar was passed much earlier and addition made on substantive basis in that case cannot compel another AO to tax the same income on protective basis in another case. It is upon the appellate authorities to uphold the addition on subs....
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....ctive basis. Further, he was correct in observing that it is the appellate authority to take the decision, whether addition should have been made on substantive basis or protective basis. The Ld. CIT (A) being an appellate authority should have first ascertained the fate of substantive addition and if he would have found that substantive addition has attained finality or the finding given therein is still persisting, then he should have deleted the addition made on protective basis. 10. Before us, the ld. DR had pointed out that since taxes have not been paid by Shri Harish Kumar, therefore, such an addition should be confirmed in the hands of the assessee and Revenue's interest should be protected. However, we are unable to subscribe to this view because protective addition as such cannot be sustained at second appellate stage and consequently no proceedings either for recovery of tax or for initiating any penalty proceedings could be initiated. If the addition has been made on substantive basis in case of another person, here in this case alleged entry provider Mr. Harish Kumar wherein the amount of gift given by him to the assessee has been added on substantive basis, then whet....