The ITO, Ward-2, Kakinada V. Sri KBS Bindu Rekha, Yanam

ITA 137/VIZ/2003

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6895 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 8 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-04-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 07-04-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TH L PETER

Judgement Text

ITA NO137/VIZAG/2003 SMT. KBS BINDUREKA, YANAM. 1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 137 /VIZAG/ 20 03 ASSESSMENT YEAR : 1998 - 99 ITO WARD - 2 KAKINADA VS. SMT. K.B.S. BINDU REKHA YANAM (APPELLANT) (RESPONDENT) GIR NO.S - 781 APPELLANT BY: SHRI TH.L. PETER, CIT(DR) RESPONDENT BY: SHRI G.V.N. HARI, CA ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER: 1. THE ORDER OF THE CIT(A) IS CONTRARY TO LAW AND THE FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN DELETING THE ADDITIONS, WHI CH WERE MADE ON PROTECTIVE BASIS. 3. THE LD. CIT(A) OUGHT TO HAVE OBSERVED THAT THE MATT ER IN THE CASE OF THE ASSESSEE, VIZ. KANCHERLA LAKSHMINARAYANA (HU F) IN WHOSE HANDS THE ORIGINAL ADDITIONS WERE MADE, HAS NOT BEC OME FINAL. 4. THE LD. CIT(A) ALSO ERRED IN ALLOWING RELIEF OF RS. 60,400 OUT OF THE ADDITION OF RS.80,600 TOWARDS INTEREST ON THE PROMO TES. 4.1 THE CIT(A) OUGHT TO HAVE OBSERVED THAT THE ASSE SSEE, HERSELF ADMITTED THE INCOME AT RS.80,600 AND ON ACCOUNT OF THE RELIEF GRANTED. IT RESULTED IN THE INCOME LOWEST THAN THA T ADMITTED. 5. THE APPELLANT/ASSESSING OFFICER CRAVES LEAVE TO ADD , AMEND OR ALTER ANY OF THE GROUND AS OCCASION MAY ARISE. 6. FOR THESE AND OTHER GROUNDS OF APPEAL THAT SHALL BE URGED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT PRAYS THE HONBLE INCOME TAX APPELLATE TRIBUNAL THAT THE ADDITIONS MA DE BY THE APPELLANT/ASSESSING OFFICER MAY KINDLY BE RESTORED AS PRAYED IN THE GROUNDS OF APPEAL. 2. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE FACT THAT PROTECTIVE A SSESSMENT WAS FRAMED IN THE INSTANT CASE CONSEQUENT TO THE ACTION OF THE ASSESS ING OFFICER TAKEN UNDER SECTION 158BD OF THE I.T. ACT. THE SUBSTANTIVE ASS ESSMENT WAS FRAMED IN THE ITA NO137/VIZAG/2003 SMT. KBS BINDUREKA, YANAM. 2 HANDS OF K. LAKSHMINARAYANA (HUF). IN THE CASE OF K. LAKSHMINARAYANA (HUF), THE MATTER HAS TRAVELLED TO THE TRIBUNAL. T HE TRIBUNAL HAS KNOCKED DOWN THE ASSESSMENT ON TWO LEGAL GROUNDS I.E. (1) N ON-RECORDING OF SATISFACTION OF THE ASSESSING OFFICER AND (2) PROPE R TIME WAS NOT GIVEN IN THE NOTICE ISSUED U/S 158BC FOR FILING THE BLOCK RETURN . ONCE THE ASSESSMENT IN THE CASE OF K. LAKSHMINARAYANA, HUF IN WHICH SUBSTA NTIVE ADDITIONS WERE MADE WAS KNOCKED DOWN ON LEGAL GROUNDS, THE ASSESSM ENT IN THE INSTANT CASE FRAMED ON SUBSTANTIVE BASIS DOES NOT SURVIVE. THE PROTECTIVE ASSESSMENT CAN ONLY BE CONVERTED INTO A SUBSTANTIVE ASSESSMENT BY A SPECIFIC FINDING OF THE APPELLATE AUTHORITIES. IN THE LIGHT OF THESE FACTS, THE ADDITION FRAMED ON PROTECTIVE BASIS IN THE INSTANT CASE DESE RVES TO BE DELETED. 3. THE LD. D.R. ON THE OTHER HAND HAS SUBMITTED THA T ONCE THE SUBSTANTIVE ASSESSMENT HAS BEEN KNOCKED DOWN, THE P ROTECTIVE ASSESSMENT AUTOMATICALLY BECOMES SUBSTANTIVE ASSESSMENT FOR WH ICH NO SPECIFIC FINDINGS OF THE APPELLATE AUTHORITIES ARE REQUIRED. 4. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CA REFUL PERUSAL OF THE ORDER OF THE LOWER AUTHORITIES AND THE ORDER OF THE TRIBUNAL IN THE CASE OF K. LAKSHMINARAYANA (HUF), WE FIND THAT SUBSTANTIVE ASS ESSMENT WAS MADE ON IMPUGNED ADDITIONS IN THE HANDS OF K. LAKSHMINARAYA NA, HUF BUT THE ASSESSMENT FRAMED IN THE HANDS OF K. LAKSHMINARAYAN A WAS KNOCKED DOWN BY THE TRIBUNAL VIDE ITS ORDER DATED 11 TH APRIL, 2011 ON LEGAL GROUNDS. COPY OF THE SAME IS PLACED ON RECORD. NOW THE QUESTION ARISES IN SUCH CIRCUMSTANCES WHETHER THE ASSESSMENT FRAMED ON PROT ECTIVE BASIS IN THE HANDS OF ASSESSEE BECOMES A SUBSTANTIVE ASSESSMENT. 5. ON THIS ASPECT, WE WOULD LIKE TO EXAMINE THE CON CEPT OF PROTECTIVE ASSESSMENT AND SUBSTANTIVE ASSESSMENT. THE WORD PR OTECTIVE ASSESSMENT AND SUBSTANTIVE ASSESSMENT HAS NOT BEEN DEFINED ANY WHERE IN THE INCOME TAX ACT. THIS CONCEPT HAS BEEN USED IN VARIOUS JUD ICIAL PRONOUNCEMENTS TO PROTECT THE REVENUE IN CASE WHERE THERE IS A DOUBT IN THE MIND OF THE ASSESSING OFFICER AS TO IN WHOSE HANDS THE INCOME I S RIGHTLY TO BE ASSESSED. WHEREVER THE ASSESSING OFFICER IS NOT CERTAIN ABOUT INCOME OF PARTICULAR ITA NO137/VIZAG/2003 SMT. KBS BINDUREKA, YANAM. 3 ASSESSEE, HE MAY MAKE AN ADDITION OF THAT INCOME IN THE HANDS OF ONE ASSESSEES IN WHOSE HANDS HE HAS SOME BELIEF AND IN ORDER TO PROTECT THE REVENUE THE SAME ADDITION IS TO BE MADE IN THE HAND S OF OTHER PERSON ON PROTECTIVE BASIS. THE VERACITY OF THE ADDITIONS AR E TO BE ADJUDICATED BY THE APPELLATE AUTHORITIES IN BOTH THE CASES SIMULTANEOU SLY AND THE APPELLATE AUTHORITY HAS TO GIVE A SPECIFIC FINDING IN WHOSE H ANDS THE INCOME ON ACCOUNT OF IMPUGNED ADDITION IS TO BE ASSESSED. BUT IN THE INSTANT CASE APPEAL IN THE CASE OF SUBSTANTIVE ASSESSMENT HAS ALREADY BEEN ADJ UDICATED BY THE TRIBUNAL BY KNOCKING DOWN THE ASSESSMENT ON LEGAL GROUNDS. THERE WAS NO SPECIFIC FINDING WITH REGARD TO THE MERIT OF ADDITIONS. UND ER THIS SITUATION, THE ADDITION OF PROTECTIVE ASSESSMENT CANNOT BE CONVERT ED INTO A SUBSTANTIVE ASSESSMENT. WE THEREFORE FIND NO MERIT IN THE ARGU MENT OF THE REVENUE AND WE DISMISS THE APPEAL OF THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCE D IN THE OPEN COURT ON 27-06-2011. SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 27-06-2011 COPY TO 1 ITO WARD - 2, KAKINADA 2 SMT. K.B.S. BINDU REKHA, W/O SRI K.V.V. RAMALINGESW ARA RAO, 3 - 276, PYDIKONDALA STREET, YANAM 3 THE CI T, RAJAHMUNDRY 4 THE CIT (A) , RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM