TaxTMI 
TaxTMI 
2026 (3) TMI 116
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....assessee as well as the HUF before the Hon'ble High Court. The Hon'ble High Court upheld the validity of assumption of jurisdiction holding that the Assessing Officer possessed material forming "reasons to believe" escapement of income. Thus, the jurisdictional issue stands concluded. 4. During assessment proceedings the assessee contended that the investment was not made by her but by Virbhadra Singh (HUF) through one Shri Anand Chauhan, LIC Agent, under an alleged Memorandum of Understanding relating to orchard income. 5. The Assessing Officer examined this explanation and recorded specific factual findings. It was observed that the MOU was stated to have been executed on 15.06.2008. However, as per the ledger produced during proceedings, Shri Anand Chauhan had already received Rs. 5 lakh each on 07.06.2008 and 13.06.2008 from Universal Apple Associated and invested Rs. 10 lakh in LIC on 19.06.2008. The Assessing Officer therefore recorded that money had moved even before the alleged agreement came into existence and concluded that the arrangement was a bogus claim. 6. The Assessing Officer further noted that even the Tribunal in earlier proceedings in the cases of the H....
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....to decide the issue. 13. The Ld. AR argued that since proceedings were also initiated in the case of the HUF, the Revenue itself was uncertain about the correct person chargeable to tax, and therefore the impugned addition cannot survive as substantive. 14. It was accordingly prayed that the addition be either deleted or treated as protective, subject to determination in the hands of HUF. The Ld. AR had also filed the following written submission in support of the case of the assessee contents of which read as under: "The present appeal stands heard by this Hon'ble Bench on 10.02.2025. The third ground in the present appeal was not pressed. As far as the first and second grounds of appeal are concerned, the submissions are as under:- 1. The HUF of Virbhadra Singh had made various investments in LIC in the name of its co-parceners /members during assessment year 2008-2009, 2009-2010, 2010-2011. The HUF owned the investment in the LIC policies. The case of the HUF was that it is owner of 100 bigha orchard situated in Village Damrali and a memorandum of understanding was entered into between the HUF on one side and Sh. Anand Chauhan the other side.....
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....t Rs. 2,21,35,000/- and the same has pending adjudication after the reopening of case and the assessment has not yet been completed in the said case. The revenue / respondent while rejecting the objections has not prima facie disputed the said fact. However, since because the earning of the agriculture income of the HUF has been disputed, the objections were dismissed. 6. On identical facts for Assessment year 2010-2011 where assessment in the case of HUF has been concluded and a copy of the assessment order has been placed on record vide the second paper-book. The Ld. Assessing Officer has taken cognizance of the fact of investment of LIC in the HUF polices and however, the agriculture income beyond Rs. 15,000,00/- has been added as income from undisclosed sources. The said issue is pending adjudication before Ld. CIT(Appeals). Initially the said revised return had been accepted by the revenue, however, under section 263 proceedings were initiated by the Ld. Principle Commissioner of Income Tax and the order of assessment was set aside with the direction of re-assessment of the assessee. An appeal against order under section 263 stands dismissed by this Hon'ble Tribun....
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....led as Lalji Haridas Vs. ITO reported as 43 ITR 387 page (Supreme Court). 11. In that facts and legal circumstances of the case, the assessment of the investment as unexplained in the hands of the assessee (Pratibha Singh) is absolutely illegal and not sustainable in the eyes of the law. 12. Before parting, it is, most respectfully submitted that though the same has been assessed as out of agriculture income in the hands of the HUF in whose case substantive addition has been made for Assessment year 2010-2011 and as per the law, the fiscal loss every years is independent year but the principles of constructive res-judicata as propounded by the Supreme Court in the case of Radhasoami Satsang Vs. CIT reported as 193 ITR 321 Page Supreme Court have to be taken cognizance of the case, if the same is taken cognizance of natural influence of the same is that the assessment so made in the hands of the assessee in her individual capacity is per-se illegal and not sustainable in the eyes of the law. It is, therefore, most respectfully prayed that the addition may kindly be deleted or any other relief be given as this Hon'ble Tribunal deems fit and proper in th....
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....uestionnaire 16.06.2016 Assessee filed objections against reopening 24.11.2016 Objections disposed of by speaking order 14.12.2016 Writ petition listed before Hon'ble Himachal Pradesh High Court 26.12.2016 High Court dismissed writ petitions (assessee & HUF) 19. The entire defence of the assessee rests upon an alleged arrangement whereby funds of the HUF of Shri Virbhadra Singh were purportedly handled by Shri Anand Chauhan under a Memorandum of Understanding dated 15/6/2008 for the management of orchard income. It has been claimed that cash was deposited in the bank account of Shri Anand Chauhan and thereafter routed to the assessee for investment in the LIC policy. However, the Assessing Officer has recorded a categorical factual finding that transactions in the bank account of Shri Anand Chauhan existed even prior to the alleged MOU dated 15/6/2008. This finding has remained unrebutted. Further, neither the original nor a copy of the MOU was produced before the Assessing Officer, the Ld. CIT(A), or even before us. This aspect is crucial when the assessee herself claims to be a coparcener in the HUF and isthe wife of the late. Shri Veer Bhadra Singh. ....
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....Act. However, the mere existence of an HUF does not automatically establish that an asset standing in the name of an individual member belongs to the HUF. The burden squarely lies upon the assessee to establish with cogent evidence that the source of investment emanated from identifiable HUF funds. In the present case, except for making a bald assertion that the HUF owned agricultural land and earned agricultural income, no reliable evidence demonstrating the actual flow of funds from the HUF to the impugned LIC policies has been brought on record. The alleged Memorandum of Understanding has already been held to be not genuine and therefore cannot support the claim of HUF ownership. In the absence of proof of source, the statutory presumption under section 69 operates against the assessee. 27. The assessee has relied upon proceedings in the case of the HUF for other assessment years to contend that the Revenue has accepted the investment to belong to the HUF. We are unable to accept this contention. Each assessment year is a separate unit of assessment, and findings in another year, particularly when the issue itself is disputed and pending adjudication, cannot determine ownersh....
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....y in situations where it is not possible to predicate with certainty whether the income belongs to one person or another and the enquiry is undertaken to determine the correct person liable to tax. Thus, the very foundation of a protective assessment is the existence of doubt in the mind of the Assessing Officer. A protective addition, therefore, is not a right available to the assessee but is merely a device available to the Revenue to prevent escapement of income where ownership is uncertain. The assessee cannot compel the Assessing Officer to adopt a protective assessment when the Assessing Officer has reached a definite conclusion regarding taxability. Further, the coordinate bench in M.P. Ramachandran v. DCIT (32 SOT 592) has further clarified that protective assessment is based on doubt. 33. In the present case, the Assessing Officer has recorded a categorical finding that the investment in the LIC policy stood in the name of the assessee and the assessee failed to satisfactorily explain the source thereof. The addition has thus been made after reaching a clear and conclusive determination of ownership of the unexplained investment. 34. The mere claim of the assessee th....