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2022 (9) TMI 1334
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.... 143(3) r.w.s. 153A 2011-12 39/JP/2020 16.10.2019 28.12.2017 u/s. 143(3) r.w.s. 153A 2012-13 40/JP/2020 16.10.2019 28.12.2017 u/s. 143(3) r.w.s. 153A 2013-14 41/JP/2020 16.10.2019 27.12.2017 u/s. 143(3) r.w.s. 153A 2. As the issues involved in the present appeals are common and inextricably interlinked or in fact interwoven as it is evident from the following chart. A.Y Assessee's Appeal No Issue Amount Rs. AGOA No. 2010-11 38/JPR/2020 Interest Payment From Undisclosed Sources 69,449.00 1 to 1.2 2011-12 39/JPR/2020 Interest Payment From Undisclosed Sources 85,361.00 1 to 1.2 2012-13 40/JPR/2020 Interest Payment From Undisclosed Sources 27,912.00 1 to 1.2 2013-14 41/JPR/2020 Interest Payment From Undisclosed Sources 37,32,344 1 to 1.2 Therefore, the parties argued them together and are disposed off by this common order. 3. As it is seen that for all these appeals grounds are similar, facts are similar and arguments were similar and were heard on the same day. Therefore, we consider the facts and ground taken in ITA No. 41/JP/2020 for A. Y. 2013-14 as lead ....
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....mpliance to the notice u/s. 153A of the Act, return of income e-filed on 28.11.2015 declaring total income at Rs. 98,59,810/-. After filling return u/s. 153A, the notices u/s. 143(2) along with the questionnaire were issued. The assessee filed the details and same was kept on record. The assessee engaged in the business of Share trading and earned income from business or profession and other sources during the year under consideration. 6. In the assessment order the ld. AO observed as under while making the addition which is disputed by the assessee: "During the course of search operation in the Maverick Group, Jaipur a pen drive was found and seized from the possession of Shri Kailash Chand Khandelwal, who is one of the employee of the Maverick Group. The pen drive so seized contained some files in excel software. The excel sheets contents adjustment entries in the last column with remarks of 2.4%. From the details, it is seen that out of the total interest after considering the duplicate / repeated entries noted in adjustment account, total of such entries comes to Rs. 75,27,847/-out of which it has been claimed that an amount of Rs. 35,15,548/- pertained to various i....
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.... persons. Necessary actions have been taken in the case of persons concerns related to the Maverick group where the addition on substantive bass has already been proposed in their respective pending assessments however, you have failed to establish that the amount appearing under adjustment account in the name of other persons was not paid by you or your group concerns/ persons. Since the pen drive was found from the possession of your one of the treated employer. you are show caused as to why not the provisions of section 132(44) are not invoked and by treating the payment of Rs. 40,12,199/- being made by you out of the undisclosed income and therefore it is proposed to make an addition of R 37,32,344/- in your case on protective Your reply on these issues should reach to this office by 08.12.2017 on which date your case is fixed for hearing Please note that no further opportunity will be provided to you and the case will be decided on merits as per the material available on record. Statutory Notice U/s 142(1) of the IT. Act, 1961 is enclosed for necessary compliance. The assessee vide his reply dated 08.12.2017 submitted that the amount represents the additional....
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....ow: "Ground no.2- Protective addition on pen drive Rs. 37,32,344/- 7. I have perused the written submissions submitted by the Ld. A/R and the order of AO. I have also gone through various judgments cited by the Ld. A/R. I have already held that the addition on the basis of entries in the Pen Drive found from the premises of the key employees are sustainable. On the facts and in the circumstances of the case, since the such addition are held to be sustainable the protective addition of Rs. 37,32,344/- is also confirmed. The ground raised is dismissed." 8. The ld. AR of the assessee in this appeal against the grounds raised has relied on the following written submission : The ground wise submission is as under: Ground of Appeal Nos. 1 to 1.2: In these grounds of appeal, assessee has challenged the action of ld.CIT(A) in confirming the addition made on "protective basis" of account of entries stated to have been found in excel sheets available in pen drive found form the possession of Shri Kailash Khandelwal, an employee of assessee company, by grossly ignoring the fact that none of the entry contained the name of assessee company which ....
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.... "19. On careful consideration of above contention, we are of the view that there may be a substantive assessment without any protective assessment but there cannot be any protective assessment/addition without a substantive assessment/addition, meaning thereby there has to be some substantive assessment/addition first which enables the AO to make a protective assessment/addition. In the present case, the AO proceeded to make protective assessment by way of reopening of assessment of the assessee appellant company without being a substantive assessment on the date of assumption of jurisdiction u/s 147 of the Act which is not permissible as per decision of ITAT, Mumbai in the case of M.P. Ramachandaran vs DCIT (supra) and Suresh K Jajo vs ACIT (supra)." Hon'ble Delhi ITAT in the case of Income tax officer, vs. M/s Fussy Financial Services Pvt. Ltd in I.T.A. No. 4227/DEL/2014 (Case law PB II APB 264-268) has decided the issue of Protective Assessment as follows (APB 267 backside and 268): "7.1 We further note that the analysis of the investment account reveal that the company has made investment of Rs. 5,04,01,000/. The statement given by Sh. PN Jha assumes impor....
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....anies. The printout of the said sheets is available at page 1 to 89 of the paper book. Last column in such excel sheets was "Adjustment entries" and sum total of such so called adjustment entries appearing in excel sheets was arrived at Rs.75,27,847/-. Ld. AO himself at page 3 of Assessment order has mentioned that out of Rs.75,27,847/-, an amount of Rs.35,15,548/- pertains to various individuals/ concerns related to Maverick group and balance Rs.40,12,299/- was related to other persons not related to Maverick group. It is stated that amount of Rs. 35,15,548/- is claimed to be pertaining to various individuals / concerns of the Maverick Group as their names were appearing in the excel sheet. However, it is pertinent to note that in those excel sheets, nowhere the name of assessee company was appearing still the remaining amount of Rs.40,12,299/- undisputedly pertaining to persons other than related to Maverick Group has been added in the hands of assessee on protective basis in four assessment year starting from AY 201-11 to AY 2013-13 i.e. the assessment year to which the entry pertained, solely for the reason that such pen drive was found from the possession of employee of Maveri....
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....wever, he proceeded to make the addition in the hands of assessee company "on protective basis" without there being any addition in the hand of any persons on substantive basis to whom such entry are considered by ld. AO to be belonging to. Regarding the nature of entries contained therein it was explained to ld.AO that as per the Pen Drive (copy of which was supplied by the ld.AO during the course of assessment proceedings) is having total five files prepared under Excel format which are as under: File No. Name of the File APB A. Copy of MMM2013.xls 1-42 B. MMM2013 new 29.05.2013.xlx 43-54 C. MMM2013.xls 55-70 D. New Microsoft Excel Worksheet.xls 71-81 E. MMM.pdf 82-89 Each file contained various excel sheets and the one sheet contained the total transactions whereas the remaining sheets contained the person-wise / company-wise break-up of the transactions appearing in the first sheet. The details available in the sheets of one file are also appearing in the sheets containing in other files, therefore, there are duplications / repetitions of the entries not only within a file but also in other sheets available....
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....ction related to assessee. In this scenario, it is submitted that no incriminating document whatsoever was found in the case of assessee for the year under appeal, thus it is requested that addition made in all the four assessment years under appeal by ld.AO on "protective basis" deserves to be deleted. It is further clarified that excel sheet was received from some finance broker who had been working for many persons apart from Maverick Group. Same was received by employee of the group namely Kailash Khandelwal with the understanding that he would refer the details as belonging to various individuals / companies of the group out of total list and do the needful. This explanation of assessee was partly accepted by Ld. AO who has not made any addition of the entries pertaining to individuals / companies of group but made addition out of remaining entries. Now coming to the list in the excel sheet, it is submitted that there are few names / concerns of Maverick Group against whom amount in last column had been mentioned and Ld. AO in his wisdom has added these amounts in those cases. Accordingly excel sheet may be an incriminating document in the case of persons / concerns o....
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....paper book relying on the various judicial pronouncement in respect of the contentions raised by him in the proceeding before us. 10. The ld. AR of the assessee relying on the written submission further submitted that the person from whom the pen drive is found is not at all relied upon at the time of search. It is also confirmed by both the parties at bar that the person Shri Kailash Chand Khandelwal under whose possession the pen drive found has not made any statement. The search party has not considered this PEN drive and that is why his statement is also not recorded during the search proceeding or at the time of assessment proceedings. The ld. AR of the assessee submitted that in this PEN drive details of the loan, TDS deducted and the name of the parties are written. There are duplication entries which were explained and reconciled with the books during the assessment proceedings. The ld. AR of the assessee in his Paper book at page 1 to 89 filed the print out of these excel sheets. The ld. AR of the assessee also filed the reconciliation of these entries with the books in his paper and the same was filed before the lower authorities. The excel sheet may be related to the ....
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....s reads as under: i. No further appeals before Hon'ble ITAT were recommended in all the four assessment years. ii. On perusal of the assessment records, it is noticed that the AO in assessment order has mentioned that a pen drive was found and seized from the possession of Shri Kailash Chand Khandelwal, one of trusted employee of the assessee. The pen drive so seized contained some files in excel software. The excel sheets contains adjustment entries in the last column with remarks of 2.4%. From the details, it was noted that out of the total interest after considering the duplicate/repeated entries noted in adjustment account, total of such entries comes to Rs. 75.27,847/- out of which it was claimed that an amount of Rs. 35,15,548 pertained to various individual /concerns related to Maverick group and balance Rs 40,12,299/- related to other persons. Necessary action has been taken in the case of Persons/concerns related to the Maverick group where the addition on substantive basis has already been proposed in their respective assessment. The total mount pertains to other persons is Rs. 40,12,299, out of which an amount of Rs 69,449/- pertains for A.Y. 2010-1....
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....lants. The proceedings taken against both the appellants should continue and should be dealt with expeditiously having regard to the fact that the matter is fairly old. In the proceedings taken against Lalji the Income-tax Officer should make an exhaustive enquiry and determine the question as to whether Lalji is liable to pay the tax on the income in question. All objections which Lalji may have to raise against his alleged liability would undoubtedly have to be considered in the said proceedings. Proceedings against Chhotalal may also be taken by the Income-tax Officer and continued and concluded, but until the proceedings against Lalji are finally determined no assessment order should be passed in the proceedings taken against Chhotalal. If in the proceedings taken against Lalji it is finally decided that it is Lalji who is responsible to pay tax for the income in question it may not become necessary to make any order against Chhotalal. If, however, in the said proceedings Lalji is not held to be liable to pay tax or it is found that Lalji is liable to pay tax along with Chhotalal it may become necessary to pass appropriate orders against Chhotalal. When we suggested to the lear....
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....he statute and not invent new procedures outside the limits of the Indian Income-tax Act (p. 609) If we read those decisions carefully, it would be clear that before completing the assessments on protective basis, the ITO is supposed to point out the name of the assessee who may be the owner of such income. It is common ground that in the present cases, till this date, the authorities below did not bring on record any material to show that the declared income in question really belongs to some other assessee. The learned departmental representative frankly conceded that till this date no proceedings in respect of the disputed income have been started against any other assessee. 9. The learned counsel for the assessee contended that the income-tax authorities have no right to call the present assessments as protective because till this date they have not started any proceedings against the alleged real owner of such income. In my opinion, the contention of the assessee has substance. No doubt, the income-tax authorities has the right to make the assessments on protective but while doing so they are supposed to point out the name of the real owner of such income. At least so....
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.... protective addition cannot survive. The amount in dispute is nothing but the amount of the additional interest demanded and not paid by the assessee. Based on the decision relied upon by the ld. AR and on careful consideration of the facts in this case we hold that the ld. AO before completing the assessments on protective basis, the AO is supposed to point out the name of the assessee who may be the owner of such income. It is common ground that in the present case, till this date, the authorities below did not bring on record any material to show that the declared income in question really belongs to some other assessee. The ld. DR honestly conceded that till this date no proceedings in respect of the disputed income have been made against any other assessee and the same is also confirmed by the AO in the report presented before us. 16. It is not disputed the findings of the ld. AO that there is no addition on substantive basis. Thus, the protective addition cannot be survived as AR of the assessee explicitly proved that whatever interest that they have paid in the group cases is duly recorded in the books of accounts and wherever applicable TDS is also deducted. As an additi....