Rabiul Islam Gain Vs ITO (ITAT Kolkata)
No Protective Addition Once Real Owner Is Identified: Kolkata ITAT Deletes ₹6.93 Cr Cash Deposit Addition Employee’s Bank Account, Employer’s Money- Protective Addition Fails When Substantive Assessment Is Complete
Kolkata ITAT ‘D’ Bench in Rabiul Islam Gain vs ITO (ITA No.1485/Kol/2025) and Tapan Kumar Pal vs DCIT (ITA No.1487/Kol/2025), AY 2013-14, order dated 23-12-2025, allowed both appeals and deleted protective additions of ₹6.93 crore (cash deposits) and related interest, holding that once the real owner of the money is identified and substantively assessed, no protective addition can survive in the hands of a mere name-lender/employee.
The assessees were employees of M/s Biswas Enterprises, proprietary concern of Mr. Barik Biswas. Large cash deposits of ₹4.41 crore and ₹2.52 crore were made in bank accounts standing in the assessees’ names. During reassessment u/s 147, the assessees consistently stated that the accounts were opened and operated at the instructions of the employer, and that they had no knowledge or control over the cash transactions.
Crucially, Mr. Barik Biswas filed an affidavit admitting full ownership of the cash deposits, disclosed the same in his books and balance sheet, and was substantively assessed u/s 143(3) r.w.s. 147, with large additions already made in his hands. Despite this, AO made protective additions in the hands of the assessees, which were confirmed ex-parte by CIT(A).
ITAT held that:
• Protective addition is impermissible when substantive addition has already been made and accepted in the hands of the real owner
• The assessees were only salaried employees, with no independent source or control over funds
• Bank accounts and transactions were fully reflected in the employer’s books, and ownership was never in dispute
• Income cannot be taxed twice, even on a protective basis, once the correct person is identified and assessed
Accordingly, ITAT set aside the CIT(A)’s orders and directed deletion of the entire protective additions and interest, allowing both appeals in full.
Key takeaway
Protective assessment is only a stop-gap device. Once the real owner of income admits and is substantively assessed, no protective addition can be sustained in the hands of employees or name-lenders—double taxation, even indirectly, is impermissible
FULL TEXT OF THE ORDER OF ITAT KOLKATA
