INCOME TAX ACT, 1961

Section 143(3)

Assessment - Remand - Addition of cash seized in case of another person on protective basis - Addition sustained without verifying status of finality of substantive addition

Revenue found and seized some cash at the premises of a person named 'R'. Out of the said amount, the amount of Rs. 1,30,00,000 was admitted by assessee as belonging to him during survey proceedings, which were conducted at his premises. But later on, the assessee did not offer such amount in his return of income. Accordingly, the AO assessed the income at Rs. 1.3 crores in the case of the assessee on protective basis and substantive addition was made in the case of R. Further, CIT (A) upheld the protective addition on the ground that the assessee did not file any evidence to support that R finally accepted such addition in his hands. Held: CBDT in Order, dt. 20-12-1971 has authorized Departmental Authorities to cancel the protective assessment where the substantive assessment had attained finality. Accordingly, the Revenue should have taken action in the hands of the assessee after verifying the facts in respect of the status of the addition in the hands of R. Further, CIT (A) was not justified in sustaining the protective addition merely on the reason that the assessee had not provided the status of finality of addition in the hands of R as the CIT (A) had access to the records of the department and could have ascertained the status of finality of addition. Hence, the order of the CIT (A) was set aside and the matter was remanded back to him for deciding afresh in accordance with law after verifying the records as to whether R had finally accepted addition of Rs. 1.3 crores in his hands or not.

REFERRED :

FAVOUR : In assessee's favour by way of remand

A.Y. : 2010-11

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