TaxTMI 
TaxTMI 
2023 (7) TMI 806
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....n the year 1983, a receiver was got appointed by the High Court of Delhi to take over the property and management of the firm in a litigation initiated by its partners. It was submitted that subsequently, the partners of the firm entered into an agreement in pursuance of which they sold their respective shares in the property during the assessment year (A.Y.) 1994-95 by executing different sale deeds. The share of the petitioner in the sale proceeds of the property of the firm had worked out to be Rs.14,11,000/- and after claiming cost of acquisition @25% of the sale proceeds and index cost @2.44%, the total cost for acquisition of the property had been worked out @Rs.8,60,710/-. The petitioner in the income tax return for the relevant year as filed by him, declared long term capital gains of Rs.5,50,290/- in respect of his share in the property. The respondent No.2 assessing officer passed an order on 25.09.1998 observing that since the building belonged to the firm who was claiming depreciation, therefore, the excess amount received by the assessee was to be deemed as capital gain. Addition of amount of Rs.5,50,290/- was made as capital gain against the petitioner on protective b....
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....titioner by issuing a letter dated 22.03.2016 to its banker on 31.03.2016. The petitioner made prayer for issuing a writ of certiorari for quashing notice of demand and certificate of recovery both dated 06.09.2005 and letter dated 22.03.2016 and order dated 31.03.2016 on the ground that since the additional amount of Rs.7,01,800/- had been assessed against him on protective basis, therefore, no tax, interest or penalty could be recovered from him. He also prayed for issuing a writ of mandamus for directing the respondent No.1 to refund the amount of Rs.15,27,302/- along with interest. 5. The respondents appeared and filed separate replies taking common pleas that the petitioner had shown capital gain in his own hands like other partners of the firm in the return for the relevant A.Y. The firm had neither filed any return nor any assessment had been made in case of the firm. The petitioner had also not been able to show the existence of the firm and to confirm the fact of filing return by the firm. His entire case was built on the basis of existence of the firm but he failed to prove the same and, therefore, there was no question of capital gain being assessed in the hands of the ....
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....arging interest thereon and subsequently recovering the same without framing any substantive assessment is illegal and not sustainable in the eyes of law? 9. On going through the record, it emerges that it is not in dispute between the parties that initially the respondent No.2 assessing officer had made the addition of an amount of Rs.5,50,290/- and had assessed the same on protective basis as against the petitioner qua the A.Y. 1994-95. It is also revealed that the revisional authority had set aside this assessment order and had given directions to the respondent No.2 to frame the assessment afresh who vide order dated 15.02.2022 (Annexure P-4) had re-assessed the income of the assessee for the A.Y. 1994-95 as Rs.13,58,520/- while maintaining its earlier order that the assessment was made on protective basis. It is further revealed that the Tribunal while dismissing the appeals of the petitioner vide order dated 24.03.2006 and 08.09.2006 respectively had reiterated that the assessment was made on protective basis. It is clear from the above that the assessment of the amount of short term capital gain had been made by the assessing authority on protective basis and the same had n....
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....ng a particular income but it should be assessed in the hands of a firm or a family and not in the hands of the person who returned it, then to safeguard the interest of the revenue, the assessing officer may assess it in more than one hand. It was further observed that however, this procedure could be permitted only at the stage of assessment as, it was possible for the appellate or revisional authority to give a clear finding as to the assessee who is liable to be assessed leaving the one who is aggrieved to get redress by appropriate proceedings. In any event, if, at the stage of Tribunal or High Court, it is found that the same income is assessed in both places, the department should provide relief suo motu to one of them. Similarly in ITO v. Bachu Lal Kapoor, (1966) 60 ITR 74 (SC), Hon'ble Apex Court had observed that when there was a doubt as to which person amongst two was liable to be assessed, parallel proceedings might be started against both. In view of the above discussed position of law, it is clear that an assessing officer can certainly make a protective assessment of income at the hands of one person if it appears to him that such income can be assessed in the hands....
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....lying the legal proposition to the effect that without substantive assessment, no recovery can be effected to the instant case, it is observed that since at the time of passing of assessment order by respondent No.2 where the protective addition was made in the case of the petitioner, no substantive addition had been made in the hands of the firm, therefore, no substantive additions were infact in existence. Subsequent demand in the absence of substantive addition being specifically made in the hands of the petitioner, recovery could certainly not be effected from him. At this juncture, one argument raised by learned counsel for the revenue is required to be taken into consideration. He brought the attention of this Court to para 12 of the order dated 08.09.2006 passed by the Tribunal (Annexure P-5) wherein it was observed as follows:- "In certain cases, where no substantive assessment is made, even the protective assessment made becomes substantive. In the present case, in the return of the income filed, the assessee had himself shown the capital gains in his own hands like other partners of the firm. It appears that firm had neither filed the return within the meaning of Sectio....