Trilok Saini Vs ITO (ITAT Delhi)
Introduction
A protective assessment safeguards the Revenue where uncertainty exists about the proper assessment of an income. However, its continuation requires consideration of what has happened in the corresponding substantive assessment. Where the same income has been substantively assessed and the required taxes have already been paid, the justification for maintaining the protective addition becomes a crucial question.
In Trilok Saini v. ITO, the Delhi ITAT allowed the assessee’s appeal after recording that the disputed assessment was protective and that taxes had already been paid in the substantive assessment. The decision provides useful support against the continuation of a parallel protective addition on such facts.
Background of the Dispute
The appeal concerned Assessment Year 2011–12 and arose from the order of the CIT(A), NFAC, Delhi, dated 28 May 2024.
According to the grounds reproduced in the Tribunal’s order, the assessee had declared income of ₹1,66,925, whereas the assessed income stood at ₹14,76,910. The principal dispute related to an addition of ₹13,09,988 towards alleged long-term capital gains.
The assessee challenged both the reassessment proceedings and the capital gains addition. His grounds questioned the assumption of jurisdiction under sections 147 and 148, the adequacy of the recorded reasons, and the approval granted under section 151.
On the merits, the assessee contended that no sale agreement or transfer of property had taken place during the relevant assessment year. He further claimed that the transaction pertained to Assessment Year 2012–13, in which it had already been assessed. These were the assessee’s contentions; the Tribunal did not independently adjudicate the transfer year.
Protective Nature Acknowledged by CIT(A)
The significant feature was that the CIT(A)’s own order acknowledged the protective character of the assessment.
The passage reproduced by the Tribunal recorded that the assessment for Assessment Year 2011–12 had been made protectively to avoid revenue leakage, with an addition of ₹13,09,988.
This acknowledgment supplied the factual foundation for the assessee’s argument. The issue before the Tribunal could therefore be considered in the context of an admitted protective assessment and the tax payment already made under the substantive assessment.
Assessee’s Submissions Before the Tribunal
At the outset, the assessee’s authorised representative submitted that the assessment under appeal had been made on a protective basis and that the assessee had already paid the required taxes in the substantive assessment.
The representative relied upon the CIT(A)’s express acknowledgment and submitted that the same demand had arisen in the substantive assessment, against which payment had already been made. On this basis, he requested that the appeal be allowed.
The Departmental Representative relied upon the orders of the authorities below.
Tribunal’s Findings and Decision
The Bench, comprising Shri Anubhav Sharma, Judicial Member, and Shri Krinwant Sahay, Accountant Member, considered the findings of the lower authorities and the assessee’s submissions.
The Tribunal recorded two decisive facts: the assessment was protective, and the assessee had already paid taxes in the substantive assessment.
On that basis, it allowed the assessee’s appeal. Although the order is brief, its operative reasoning clearly connects the relief to the protective nature of the assessment and the payment of taxes under the substantive assessment.
The decision should therefore be cited for this specific proposition. It does not contain a separate determination invalidating the reopening, disapproving the section 151 sanction, or deciding the year in which the property transfer occurred.
Earlier Judicial Background
In Lalji Haridas v. ITO [1961] 43 ITR 387 (SC), the Supreme Court recognised that, where uncertainty existed about which person had received the income, the authorities could undertake proceedings against the competing persons to determine the correct liability. That decision supplies the broader judicial background for protective proceedings.
However, the Delhi ITAT did not cite Lalji Haridas in the present order. The earlier decision explains the protective mechanism; the present ruling addresses relief on the recorded facts of substantive assessment and tax payment.
Author’s Comments
The practical value of this decision lies in the connection between the protective addition and its corresponding substantive assessment. An assessee seeking similar relief should establish that both assessments concern the same income and furnish the substantive assessment order, computation, demand particulars and proof of payment.
Merely describing an addition as protective may leave essential factual questions unanswered. Equally, payment of an unrelated demand would not establish the factual foundation accepted in this case.
The ruling should also be used with precision. The Tribunal did not expressly examine whether the substantive assessment had attained finality, nor did it formulate an exhaustive rule covering every protective assessment.
Nevertheless, where the Revenue acknowledges the protective character of an addition and the corresponding substantive tax liability has already been discharged, Trilok Saini provides direct factual support for seeking deletion of the protective addition. The decision underlines the need to review protective assessments in light of subsequent developments in the substantive proceedings.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is filed by the Assessee against the order dated 28-05-2024 passed by the Ld. CIT(A), NFAC Delhi for the Assessment Year 2011-12.
2. The Assessee has raised the following grounds of appeal:
“1. On the facts and circumstances of the case, the CIT(A) has erred in confirming the action of the AO in issuing notice u/s 148 and assumption of jurisdiction u/s 147 in absence of condition precedent for assumption of jurisdiction, the order passed by the AO is bad in law, void ab initio and liable to be set aside.
2. That the notice issued u/s 148 of the Act and the consequent reassessment proceedings are illegal, bad in law and without jurisdiction since the reasons to believe purportedly recorded in this case were generic, vague, factually incorrect, ill-founded, and far-fetched and did not meet the requirements for reopening of assessment u/s 147 r.w.s 148 of the Act.
3. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in sustaining the order passed by the Ld. AO u/s 147/143(3) without appreciating that the approval granted by the Ld. PCIT is mechanical and ritualistic manner under Section 151 of the Income Tax Act, 1961.
4. On the facts and circumstances of the case, the he learned CIT(A) failed to appreciate that no sale agreement / transfer of property took place during the relevant assessment year, and hence no income could be said to have accrued or arisen to the appellant and the assessment so made is being a protective assessment.
5. On the facts and circumstances of the case, Ld. CIT (A) has erred both on facts and in law, in upholding the order of the AO, thereby sustaining assessed income of Rs. 14,76,910/- as against income of Rs.1,66,925/- declared by the appellant. the
6. On the facts and circumstances of the case, the Ld. CIT(A) erred in upholding the addition of Rs. 13,09,988/- on account of alleged capital gain without consideration that appellant discharged its onus by substantiating the agreement to sale and bank statement for genuineness of the transaction and the fact is that the above transaction pertain to A.Y 2012-13 only which were assessed during the assessment year 2012-13.
7. On the facts and circumstances of the case, the CIT(A) erred in enhancing the income to the extent of Rs. 14,76,910/- without alleging any failure on the part of appellant in disclosing full and truly all primary relevant facts during the proceedings under Section 251(1)(a) of the Income Tax Act, 1961 through physical mode of hearing.
8. On the facts and circumstances of the case, the CIT(A) erred in upholding the addition made by the AO in conjecture and surmises without there being any direct adverse material against the assessee, based only on suspicion.
9. The appellant craves leave to add, amend or alter any of the grounds of appeal.”
3. During proceedings before us the Ld. Counsel of the assessee at the outset submitted that the assessment in this case has been made on protective basis and that the assessee has already paid taxes in the substantive assessment. The ld. CIT(A) in his order has also mentioned as under :-
“The assessment for A.Y. 2011-12 was made on a protective basis to avoid revenue leakage, adding Rs.13,09,988/- to the taxable income. The assesse did not disclose “Long Term Capital Gain” of Rs.13,09,988/- leading to an addition to the taxable income.”
4. On this finding the Ld. Counsel of the assessee submitted that it is a protective assessment and in the substantive assessment the same demand was raised on which the assessee has already been paid required taxes. Accordingly, the Ld. Counsel of the assessee made a prayer before the Bench that the appeal of the assessee should be allowed.
5. Per contra the ld. DR relied on the orders of the authorities below.
6. We have considered the findings given by the authorities below and we have also considered the submission made by the Ld. Counsel of the assessee. We find that it is a protective assessment and the assessee has already made the payment of taxes in the substantive assessment case. Therefore, there is no reason to continue with this appeal accordingly, assessee’s appeal on this issue is allowed.
7. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 13.11.2026.
