ACIT Vs Satguru Foundation (ITAT Chandigarh)
Protective Additions Unsustainable Once Substantive Additions Confirmed – ITAT Chandigarh Deletes Protective Additions in Hands of Trust
The Chandigarh Bench of the ITAT dismissed the Revenue’s appeals and upheld deletion of protective additions made in the hands of M/s Satguru Foundation (a charitable trust), holding that once substantive additions on the same income were sustained in the hands of identified individuals, the same amount cannot again be taxed protectively in the hands of the trust.
During survey proceedings at the premises of the trust, a diary marked “SGF-XIV” was impounded showing cash receipts and payments for AYs 2010-11 to 2013-14. The Assessing Officer made substantive additions in the hands of Shri Gurmail Singh (administrator of the trust) and his son Shri Arshpreet Singh, and protective additions of ₹6.81 crore and other amounts in the hands of the trust. The CIT(A) deleted the protective additions on the ground that the same income had already been taxed substantively in the hands of the individuals.
The Revenue argued that there was no categorical finding that the diary belonged to the individuals and that the issue should be adjudicated afresh. However, the Tribunal relied on the detailed order of the ITAT Amritsar Bench in the cases of Shri Gurmail Singh and Shri Arshpreet Singh, wherein it was held that the diary entries belonged to the individuals, peak credit theory was applied, and the peak income stood fully covered by ₹3 crore already surrendered and taxed in their hands, avoiding double taxation.
The Tribunal held that:
