ACIT Vs Siyaram Gupta (HUF) (ITAT Allahabad)
Conclusion: Once the substantive assessment in the case of Mr. Siya Ram Gupta was confirmed , the protective assessment had no independent standing but dependent on the final outcome of the substantive assessment. CIT(A) was right for deleting the addition on protective basis on the ground that AO had already taxed the same in the hands of Mr. Siya Ram Gupta on substantive basis.
Held: Assessee for assessment year 2003-04 was assessed on protective basis to the tune of Rs. 70,000/- by AO, vide assessment order dated 29.03.2006 passed u/s 143(3), as against returned income of Rs. 60,000/-. The additions on the substantive basis were made by AO in the hands of Shri Siya Ram Gupta , vide assessment order dated 29.03.2006 passed by AO u/s 143(3). The said Shri Siya Ram Gupta filed first appeal with CIT(A) against the assessment order dated 29.03.2006 passed by AO u/s 143(3) which appeal stood dismissed by CIT(A) on the ground that the income held to be assessed in the hands of assessee by AO on protective basis did not stand any more, as the same was brought to tax in the hands of Sri Siya Ram Gupta on substantive basis , and hence the additions on protective basis made by AO in the hands of assessee did not survive. It was held that assessee never raised the ground of appeal before CIT(A) that the addition be sustained in the hands of Mr. Siya Ram Gupta, as Shri Siya Ram Gupta owned up the amounts of income of other family members as his income and no challenge was made by assesse before CIT(A) for deleting the addition on protective basis on the grounds that the AO had already taxed the same in the hands of Mr. Siya Ram Gupta on substantive basis , and thus there was no occasion before CIT(A) to have allowed the appeal of assessee. Thus, CIT(A) dismissed the appeals of the assessee because the same had become infructuous, because the substantive additions made of the income of the assessee in the hands of Mr. Siya Ram Gupta stood confirmed in the hands of Shri Siya Ram Gupta and in view of that protective addition of the same amount of income in the hands of the assessee would not stand. Once the substantive assessment in the case of Mr. Siya Ram Gupta was confirmed , the protective assessment had no independent standing but dependent on the final outcome of the substantive assessment. Thus, to that extent, order of Tribunal stand modified and MA filed by Revenue was allowed.
FULL TEXT OF THE ITAT JUDGEMENT
These are batch of fifteen Miscellaneous Applications(MA) , out of which twelve MA’s bearing No. 05-16/Alld/2012 are filed by Revenue , while three MA’s bearing Nos. 48-50/Alld/2016 are filed by assessee namely Mr. Siya Ram Gupta. First, we will take up Revenue’s MA No. 09/Alld/2012.This Miscellaneous application (MA) bearing number 09/Alld./2012 arising out of ITA no. 325/Alld/2008 for assessment year (ay) : 2003-04 was filed by Revenue with Income Tax Appellate Tribunal, Allahabad( herein after called “ the tribunal” ) u/s 254(2) of the Income-tax Act,1961 (hereinafter called “the Act”) , on 11.06.2012 , seeking to rectify an mistake apparent from record which as per Revenue has crept in the appellate order dated 17.03.2009 passed by tribunal. This Misc. Application was filed within the time as was then available during relevant time as provided under Section 254(2) of the Act , before its amendment by Finance Act, 2016 w.e.f. 01.06.2016. The main grievance of the Revenue in this MA is that the tribunal erred in holding that learned Commissioner of Income-tax(Appeals) while adjudicating appeal of the assessee has erroneously held that the appeal of the assessee stand dismissed , while as per Revenue the tribunal further erroneously held that the learned CIT(A) ought to have allowed the appeal of the assessee and thus reversing the order of ld. CIT(A), which as per Revenue , the ld. CIT(A) had rightly dismissed the appeal of the assessee. Thus, the appeal of the assessee filed with tribunal stood allowed by tribunal , vide its appellate order dated 17.03.2009. Before proceeding further , it will be relevant at this stage to reproduce the decision of the tribunal in the case of the assessee, vide appellate order dated 17.03.2009 in ITA no. 325/Alld/2008 for ay: 2003-04, wherein tribunal held as under:
“4. ………………… After discussions with learned DR, we notice that learned CIT(A) upheld assessment on substantive basis in the case of Shri Siya Ram Gupta in appeal No. 221/DCIT/CC/Alld dated 21/2/08 and further held that addition made on protective basis in all these cases did not stand any more. However, he has dismissed the appeal of the assessee.
5. After hearing learned D.R. , we hold that once learned CIT(A) has held that assessment can be made on substantive basis in the case of Shri Siya Ram Gupta and not on protective basis in the case of present assesses, then there was no reason for him to dismiss the appeal of the assessee. So, he ought to have allowed the appeal. It was also not pointed out by learned D.R. as to whether any rectification has been carried out by learned CIT(A) in his order. It was also not informed as to whether department has filed any cross appeal or any cross objections in these cases. Accordingly, we reverse the final order of the learned CIT(A) wherein he has dismissed the appeal of the assessee. The appeal of the assessee are allowed. In the result , all the appeals are allowed .”
1.2 It will be relevant at this stage to reproduce the decision of learned CIT(A) in appellate order dated 21.02.2008 passed in the case of the assessee for ay : 2003-04, wherein ld. CIT(A) held as under:
“ 2. The only effective ground of appeal is against the addition of Rs. 10,000/- on protective basis. This addition has already been upheld on substantive basis in the case of Siya Ram Gupta in A.No.221/DCIT/CC/Alld/06-07 dated 21.02.2008 for the Asst. Year 2003-04, the entire income of the assessee is assessed on a substantive basis in the hands of Shri Siya Ram Gupta therefore, the addition on protective basis does not stand any more.
In result, the appeal is dismissed.”
1.3 Briefly stated that income of the assessee for ay: 2003-04 was assessed on protective basis to the tune of Rs. 70,000/- by AO , vide assessment order dated 29.03.2006 passed u/s 143(3) of the 1961 Act , as against returned income of Rs. 60,000/-. The additions on the substantive basis were made by AO in the hands of Shri Siya Ram Gupta , vide assessment order dated 29.03.2006 passed by AO u/s 143(3) of the 1961 Act. The said Shri Siya Ram Gupta filed first appeal with ld. CIT(A) against the assessment order dated 29.03.2006 passed by AO u/s 143(3) of the 1961 Act, which appeal stood dismissed by ld. CIT(A) vide appellate order dated 21.02.2008 in Appeal No. 221/DCIT/CC/Alld/06-07 , by holding as under:
“3. The third and fourth grounds of appeal is against the inclusion of income of the following members in the hands of the appellant:
