AI Drafter 
TaxTMI 
TaxTMI 
2024 (1) TMI 259
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.... at the time of hearing." Also, the assessee has raised an additional ground of appeal which reads as under: "In the facts and circumstances of the case and in law, initiation of reassessment and invocation of Sec.147 is illegal, ab initio void inasmuch as there was no "reason to believe" that there was escapement of income. The initiation of reassessment and consequent reassessment order passed is illegal, unsustainable, ab initio void." 2. Succinctly stated, the assessee, a salaried employee had filed his return of income for A.Y.2014-15 on 11.03.2015, declaring an income of Rs. 2,09,790/-. 3. During the course of scrutiny assessment proceeding in the case of one M/s. Shakti Construction (PAN: ABDFS3741A), it was observed by the A.O that there were additions of substantial amounts in the capital account of the respective partners which were claimed to have been sourced out of unsecured loans taken by them during the year under consideration. On a perusal of the records, it was observed by the A.O that the assessee, viz. Shri Keshnath Sahu had advanced an unsecured loan of Rs. 1,50,000/- through his bank account to Shri. Inder Lal Ramrakhyani, a partner of M/s. S....
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....l as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 8. At the very outset of hearing of appeal, the Ld. Authorized Representative (for short 'AR') for the assessee had assailed the validity of the jurisdiction that was assumed by the A.O for initiating proceedings u/s. 147 of the Act. Elaborating on his aforesaid contention, it was submitted by the Ld. AR that proceedings u/s. 147 of the Act were initiated in the case of the assessee de-hors holding of any bonafide belief by the A.O that any income of the assessee chargeable to tax had escaped assessment. Carrying his contention further, it was submitted by the Ld. AR that a bare perusal of the "reasons to believe" recorded in the case of the assessee, which formed the very basis for initiation of proceedings u/s. 147 of the Act, revealed, that the same had been done on a protective basis qua the cash deposit of Rs. 1.50 lac in his bank account on 08.06.2013, while for, the assessment proceedings on a substantive basis were initiated in the hands of Shri Inder Lal Ramrakhyani (supra) as a ultimate beneficiary of the funds. The Ld. AR in order to butt....
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....ed out as under: "4. Findings of the AO:- On perusal of the bank statement of the assessee, it is noticed that said amount was deposited in cash. in his bank account and thereafter transferred to Shri Inder Lal Ramrakhyani. Except this transaction in the bank account, there is no other transaction during the: F.Y. 2013-14. Income claimed by the assessee is nothing but a mean to form own capital without any basis. Therefore, assessee is found to be the owner of unexplained money of Rs. 1,50,000/- which he deposited in his bank account in cash on 8/6/2013 and said amount was transferred to Inder Lal Ramrakhyani, partner of M/s. Shri Shakti Construction on 10/06/2013. The said amount is proposed to be added as income on protective basis in the hands of the assessee and on substantive basis in the hands of Inder Lal Ramrakhyani, who is the ultimate beneficiary of the fund." (emphasis supplied by us) On a perusal of the aforesaid factual position, as stated by the Ld. AR, and, rightly so, the impugned proceedings u/s. 147 of the Act had been initiated for bringing the amount of Rs. 1,50,000/- to tax in the hands of the assessee on a protective basis. Backed by the aforesa....
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....rka Vs. Assistant Commissioner of Income Tax (supra) had quashed the notice u/s. 148 of the Act that was issued by the department. Also, I find that the ITAT, Bangalore in the case of DCIT Vs. Bullion Investments & Financial Services (P) Ltd. (supra), had observed, that as in the case before them the notice u/s. 148 of the Act was issued for making a protective assessment, the same being bad in law was liable to be quashed. 14. I have given a thoughtful consideration to the issue in hand, and find substance in the claim of the Ld. AR that recourse to proceedings u/s. 147 of the Act would not be permissible for framing of a protective assessment. I, say so, for the reason that reopening is permissible only when the A.O gives a clear finding that ascertainable income has escaped in the hands of a definite assessee. As taking recourse to framing of a protective assessment in itself pre-supposes and has as its foundation, a probability, that on arising of a contingency in the future, say, order of an appellate authority/court would result into escapement of income in the hands of the assessee, the fundamental requirement for assuming of jurisdiction u/s 147 of the Act, i.e formation....