| The Tax Publishers2021 TaxPub(DT) 0915 (Del-Trib) INCOME TAX ACT, 1961
Section 143(3)
When no step has been initiated for substantive assessment by issuing notice under section 142(1), there remains no room for protective assessment in the hands of any other else.
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Assessment - Scrutiny under section 143(3) - No notice under section 142(1) issued for substantive assessment - Protective assessment void
The assessee, besides being an individual tax-payer, is a coparcener in an HUF. On the basis of AIR information that the assessee had deposited a sum of Rs. 23,34,400, in aggregate, in his bank accounts, the case was taken up for scrutiny and the assessee was asked to explain the source of this amount. To this, the assessee submitted that this amount of Rs. 23,34,400 was part of Rs. 25 lakhs, being sale proceeds of Timber and Foliage which he received on behalf of an HUF whose affairs, he was looking after as sole male coparcener. However, on scrutiny of available records, the AO was of the opinion that the sale proceeds of Rs. 25 lacs should belong to the HUF and hence, issued notice under section 142(1) to the HUF and added this sum as the income of the assessee on protective basis pending substantive assessment of the HUF. On appeal, CIT(A) confirmed the addition, made by the AO, refusing to admit additional evidence by the assessee at the resistance of the AO. Held: On perusal of records, it transpired that although the AO made protective assessment in the hands of the assessee while intending to make substantive assessment in the hands of the HUF, in fact, no such notice under section 142(1) was issued to the assessee, as confirmed by him to CIT(A) vide his remand report. Under such circumstances, CIT(A) should have admitted the additional evidence, sought to be produced by the assessee in order to know the exact nature of the receipt of Rs. 25 lacs and at whose hands it should have been taxed. In view of this, the issue was remanded to the file of the AO with the direction to admit additional evidences to be produced by the assessee and to take a view after appreciating the material on record and affording an opportunity to the assessee to put forth his case on this aspect.
REFERRED :
FAVOUR : Partly in assessee's favour
A.Y. : 2009-10
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