No protective addition when substantive addition already been made

Sanjaybhai Ranchhodbhai Patel Vs ACIT (ITAT Ahmedabad)

The case of Sanjaybhai Ranchhodbhai Patel Vs ACIT (ITAT Ahmedabad) revolves around an appeal filed by the assessee against an order passed by the CIT(A)-12, Ahmedabad for the Assessment Year 2011-12.

Initially, the assessee filed a return of income on 28.03.2012, showing a total income of Rs.41,81,710/-. Subsequently, a revised return was filed on 11.01.2013, reflecting a total income of Rs.16,37,210/-, primarily due to a capital gain related to the sale of agricultural land, which was exempt. Following a search action in the group case of Shayona Group, including documents related to a land transaction involving all partners of M/s. Shayona Land Corporation, the Assessing Officer issued a notice under Section 148 of the Income Tax Act, 1961 to the assessee on 28.03.2016. The notice was responded to with a return filed on 02.06.2016, declaring an income of Rs.16,37,270/-.

During the assessment proceedings, the Assessing Officer made substantive additions in the case of the firm, M/s. Shayona Land Corporation, based on unsecured loans from Shreeji Finance. However, protective additions were made in the individual partners’ cases, including the assessee’s, totaling Rs.43,12,673/-. Additionally, a disallowance of Rs.4,91,871/- was made under Section 36(1)(iii) of the Act, along with a disallowance of Rs.1,71,576/- under Section 14A of the Act.

On appeal before the CIT(A), the assessee challenged the validity of the notice issued under Section 148 of the Act, arguing that it referred to the assessment year 2009-10 instead of 2011-12. Furthermore, the assessee contended that protective additions were not permissible when substantive additions had already been made in the case of the firm.

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