TaxTMI 
TaxTMI 
2024 (5) TMI 1235
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....ainst the confirmation of addition of Rs. 2,67,60,000/- made by the Assessing Officer on protective basis in respect of the loan amount received by the assessee from one of its director and his relatives. 3. The brief facts of the case are that the assessee filed its return of income for the assessment year under consideration declaring a total income of Rs. 24,07,054/-. The return was selected for scrutiny and notices u/s 143(2) & 142(1) of the Act were issued to the assessee. The ld. Counsel for the assessee had submitted documents in compliance of the notices issued by the Assessing Officer. The Assessing Officer noted that during the financial year 2013-14, the assessee company had taken a loan of Rs. 2,67,60,000/- from 7 loan credit....
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....as received by the assessee through account payee cheque. That the creditors had duly disclosed their income from LTCG in their return of income. That the identity, creditworthiness and genuineness of the transaction was not disputed. That the Assessing Officer has made the addition only on protective basis which means that even the Assessing Officer was convinced that the additions in relation to the LTCG were to be made in the hands of the respective creditors and not in the hands of the assessee. That the source of the loan amount in the hands of the assessee was duly proved. The ld. counsel has also made the following written submissions: "It is submitted that the assessee filed loan confirmation letters. All the loan provider ....
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.... manner in the hands of three parties. They also paid tax on the same by opting for Vivad se Vishwas Scheme. Necessary evidences have been filed in the paper book page No.32-62. Therefore when three persons have already paid the tax and substantive assessment has been made by adding back the amount in their hands, the addition in respect of the said three parties is required to be deleted. Hence it is submitted that in case where the substantial addition has been made and the parties have opted for VSV Scheme and paid their taxes, the protective assessment is liable to be deleted since the same would tantamount to making double addition. Reference in this connection is invited to the judgement of * Hon'ble Allahabad Hi....
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....s. Therefore when no substantive assessment is made in the hands of these parties' protective addition cannot survive. The assessment proceedings have already been barred by limitation in respect of the above four parties. When proceedings are barred by limitation, the protective addition cannot stand. Reference is invited to the decision of ITAT in the case of Kanav Metals a copy of which is enclosed herewith. Further in cases where no substantial addition has been made, no protective assessment is permissible. Reference in this connection is invited to the judgement of * Hon'ble Ahmedabad Bench in the case of Kunj Malls in ITA No. 1088/Ahd/2018 dated 17.04.2023. * Hon'ble Gauhati Bench ....
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.... the aforesaid written submissions made by the ld. counsel for the assessee would reveal that apart from pleading that the identity, creditworthiness and genuineness of the transactions relating to the aforesaid loan creditors were duly proved on the file, the ld. counsel has further taken legal plea that protective additions cannot be made in the hands of the assessee without their being substantive additions made in the hands of the loan creditors. It has been further pleaded that out of 7 loan creditors, in effect, the additions were made in substantive manner in the hands of 3 parties, however, all the said 3 parties opted for Vivad Se Viswas Scheme and paid the due taxes. It has been further pleaded that assessment in case of another p....