ITO, Ward - 3(2), Kolkata, Kolkata V. M/s. Vikash Iron & Steel Pvt. Ltd., Kolkata

ITA 473/KOL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92037 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 21-03-2011
• Court: TRIBUNAL
• Department Lawyers: PRABAL CHOWDHURY
• Assessee Lawyers: K K CHHAPARIA; R P AGARWAL
• Keywords: Accommodation entries; Block assessment; Reassessment proceedings
• Section: 143(3); 133A; 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B , KOLKATA [BEFORE SHRI P.K.BANSAL, AM & SHRI MAHAVIR SINGH, JM ] ITA NO S.332 - 334/KOL/2012 ASSESSMENT YEAR S : 2003 - 04, 2004 - 05 & 2008 - 09 ( A PPELLANT ) (RESPONDE NT) VIKASH IRON & STEEL PRIVATE LIMITED - VERSUS - I.T.O., WARD - 3(2) KOLKATA KOLKATA (PAN: AABCV 5950 G) ITA NOS.473 - 475/KOL/2011 ASSESSMENT YEARS : 2005 - 06, 2006 - 07 & 2007 - 08 I.T.O., WARD - 3(2) - VERSUS - VIKASH IRON & STEEL PRIVAT E LIMITED KOLKATA KOLKATA (PAN:AABCV 5950 G) FOR THE ASSESSEE : SHRI R.P.AGARWAL, SR.ADVOCATE & SHRI K.K.CHHAPARIA, FCA FOR THE DEPARTMENT : SHRI PRABAL CHOWDHURY, JCIT, SR.DR. DATE OF HEARING : 01.07.2015. DATE OF PRONOUNCEMENT : 01.07.2015. ORDER PER SHRI MAHAVIR SINGH, JM THESE APPEAL S OF THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST SEPARATE ORDER S OF THE CIT(A) - I, KOLKATA IN APPEAL NO . 173 - 175 /CIT(A) - I/ WARD - 3(2) / 10 - 11 DATED 20.12 .2011 AND APPEAL NOS.509 - 511/CIT (A) - I/3(2)/09 - 10 DATED 15.12.2010 RESPECTIVELY . ASSESSMENT S WERE FRAMED BY I.T.O., WARD - 3(2) , KOLKATA U/S 147/145(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT ) FOR A.Y . 2003 - 04,2004 - 05 AND 2008 - 09 VIDE ITS ORDER DATED 30.11.2010. 2 . THE FIRST COMMON ISSUE IN THESE APPEALS OF ASSESSEE IS AGAINST ASSUMPTION OF JURISDICTION BY AO U/S 147/145(3) OR 143(3) OF THE ACT FOR MAKING PROTECTIVE ADDITION DESPITE THE FACT THAT THERE IS NO SUBSTANTIVE ADDITION. FOR THIS THE ASSESSEE HAS RAISED ITA NO S.332 - 334/KOL/2012 ITA NOS.473 - 475/KOL/2011 M/S.VIKASH IRON & STEEL PVT.LTD. . A.YRS.2003 - 04,2004 - 05 & 2008 - 09 2 C OMMON GROUNDS IN ITS APPEALS AND THE GROUND AS RAISED IN ITA NO.332/KOL/2012 FOR A.Y .2003 - 04 READS AS UNDER : - 1. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.A.O. ERRED IN MAKING PROTECTIVE ADDITIONS IN AN ORDER U/S 147/145(3) AND AS SUCH THE ENTIRE ORDER IS VOID AB - INITIO SINCE AN ORDER PASSED U/S 147/145(3) CANNOT BE ON THE BASIS OF SUSPICION OR DOUBT WHILE A PROTECTIVE ADDITION IS MADE ONLY WHEN THERE IS A DOUBT. THE ACTION OF THE A.O. WAS WHOLLY UNREASONABLE, UNCALLED FOR AND BAD IN LAW . THE LD. CIT(A) WAS UNJUSTIFIED IN CONFIRMING THE ACTION OF AO. SIMILARLY THE ASSESSEE HAS ALSO RAISED THE ISSUE UNDER RULE 27 OF INCOME TAX (APPELLATE TRIBUNAL) RULE 1963 WHEREBY THE LD. COUNSEL FOR THE ASSESSEE RAISED THE SAME ISSUE QUA THE REVENUE S APPEAL ALSO AND HE WANTED TO SUPPORT T HE ORDER OF CIT(A) ON THIS ISSUE . AS WE HAVE REPRODUCED THE GROUND RAISED BY ASSESSEE IN ITA NO.332/KOL/2012, THE ISSUE IS CRYSTALLIZED. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SR. ADVOCATE SHRI R.P.AGARW AL SUBMITTED THE REASONS RECORDED FOR ISSUING NOTICE U/S 148 OF THE ACT AND ALMOST SIMILAR REASONS IN THE IMPUGNED ASSESSMENT YEARS. THE RELEVANT REASONS AS REPRODUCED BY CIT(A) FOR A.YR. 2005 - 06 READS AS UNDER : - RETURN OF INCOME WAS FILED ON 31.10.2005 SHOWING RETURNED INCOME NIL. A SURVEY OPERATION U/S 133A WAS CARRIED OUT IN THE BUSINESS PREMISES OF THE ASSESSEE COMPANY ON 26.02.2008. LATER SHRI VIKASH AGARWAL, THE DIRECTOR WAS EXAMINED ON OATH U/S 131 OF THE INCOME TAX ACT, 1961 AND HIS STATEMENTS WE RE RECORDED. HE HAS CONFESSED THAT THE COMPANY DID NOT CARRY OUT ANY TRADING ACTIVITY BUT ONLY GAVE ACCOMMODATION ENTRIES TO INTERESTED PARTIES ON WHICH IT GOT COMMISSION. LATER HE HAS ALSO CONFESSED THAT THE COMPANY HAS OFFERED AN ADDITIONAL INCOME OF RS. 2,25,000/ - FOR ASST.YEAR 2005 - 06 FOR TAXATION. HE HAS ALSO ADMITTED THAT THE ASSESSEE COMPANY HAS SOME UNDISCLOSED BANK ACCOUNTS. THEREFORE, THIS IS A CLEAR CASE OF INCOME ESCAPING ASSESSMENT. ISSUE NOTICE U/S 148 OF THE INCOME TAX ACT, 1961. THE LD. COU NSEL FOR THE ASSESSEE MADE A CATEGORICAL STATEMENT THAT NO SUBSTANTIVE ADDITION IS MADE ONLY PROTECTIVE ASSESSMENTS ARE MADE IN THE HANDS OF THE ASSESSEE COMPANY. ON QUERY F ROM THE BENCH THE LD. JCIT, SR. DR SHRI PRABAL CHOWDHURY FAIRLY CONCEDED THAT NO SU BSTANTIVE ADDITION IS MADE IN THE HANDS OF ANY PERSON BUT ONLY PROTECTIVE ADDITION IS MADE. BUT HE RELIED ON THE ORDERS OF THE AUTHORITIE S QUA THE ASSESSEE S APPEAL. QUA REVENUE S APPEAL, H E RELIED ON THE ASSESSMENT ORDER. WE FIND ITA NO S.332 - 334/KOL/2012 ITA NOS.473 - 475/KOL/2011 M/S.VIKASH IRON & STEEL PVT.LTD. . A.YRS.2003 - 04,2004 - 05 & 2008 - 09 3 THAT THIS ISSUE DEALT WIT H BY CIT(A) VIDE PARA 5.1. OF HIS APPELLATE ORDER WHICH READS AS UNDER : - 5.1. THE ARGUMENT OF THE APPELLANT IS MISPLACED IN VIEW OF THE FACT THAT ADDITION HAS BEEN MADE ON THE BASIS OF INFORMATION COLLECTED DURING THE COURSE OF SURVEY, ENQUIRY AND INV ESTIGATION MADE BY THE A.O. THE PROTECTIVE ADDITION WAS MADE IN ORDER TO PROTECT THE INTEREST OF THE REVENUE ON THE BASIS OF THE INFORMATION RECEIVED FROM THE A.O. OF THE PERSONS WITH WHOM THE APPELLANT HAS MADE TRANSACTIONS. SINCE THE ADDITION IS PROTECT IVE AND SUBJECT TO OUTCOME OF ASSESSMENT IN THE CASE OF PERSONS WITH WHOM APPELLANT HAS MADE TRANSACTIONS, THE APPELLANT HAS NO BASIS TO BE AGGRIEVED. IT AMOUNTS TO THE APPELLANT S INSISTENCE TO MAKE THE ASSESSMENT ON THE BASIS OF ITS OWN STATEMENT GIVEN W ITHOUT ALLOWING FOR CROSS VERIFICATION WITH THE OTHER PERSONS TRANSACTION. IN FACT, THE A.O. HAS RESORTED TO PROTECTIVE ADDITION ONLY WHEN THE RELATED PERSONS DID NOT CORROBORATE TO THE STATEMENT GIVEN BY THE APPELLANT ON OATH. IN THAT CASE, THE STATEMENT OF THE APPELLANT ON OATH MAY REQUIRE FURTHER PROBE. THUS, THE ADDITION OF THE A.O. ON PROTECTIVE BASIS IS HELD TO BE CORRECT. THUS, THE APPELLANT FAILS TO GET RELIEF ON THIS ISSUE. 4. ON THIS ISSUE THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF MUMBAI E BENCH IN THE CASE OF SURESH K.JAJOO VS ACIT, CIRCLE - 4(2), MUMBAI [2010] 39 SOT 514 (MUM) AND ARGUED THAT THE CO - ORDINATE BENCH OF THIS TRIBUNAL RELYING ON ANOTHER DECISION OF ITAT IN THE CASE OF M.P.RAMACHANDRAN VS D.CIT [IT APPEAL NO.587 (MUM) OF 2005] HAS LAID DOWN THE FOLLOWING PRINCIPLES : - 23. BEFORE US, BOTH THE LEARNED COUNSEL FOR THE ASSESSEE AND THE LEARNED D.R. HAVE RELIED ON THE DECISION OF MUMBAI BENCH OF THE ITAT IN THE CASE OF M.P.RAMACHANDRAN V. DY.CIT [IT APPEAL NO. 587(MUM) OF 2005]. IN THE AFORESAID CASE, FACTS WERE THAT IN ASSESSMENT UNDER SECTION 143(3) FOR ASSESSMENT YEAR 1997 - 98 WAS COMPLETED ON 25 - 2 - 2000. ON 3 - 22 - 2000, THERE WAS A SEARCH AND CONSEQUENT THERE TO, NOTICE UNDER SECTION 148 DATED 26 - 3 - 2003 WAS ISSU ED TO THE ASSESSEE. CONSEQUENT TO THE SEARCH, BLOCK ASSESSMENT ORDER WAS FRAMED ON 30 - 11 - 2008 IN WHICH, SUM OF RS.5.27 CRORES WAS HELD TO BE EXPENDITURE NOT RELATED TO THE BUSINESS OF THE ASSESSEE AND CONSIDERED AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD. IN THE REASSESSMENT PROCEEDINGS UNDER SECTION 148, VERY SAME AMOUNT WAS ADDED ON A PROTECTIVE BASIS. WHEN THE ASSESSING OFFICER MADE AFORESAID ADDITION IN THE REASSESSMENT PROCEEDINGS UNDER SECTION 148, HE NOTICED THAT THE ORDER OF THE ASSESSING OFFICER IN THE BLOCK ASSESSMENT MAKING THE ADDITION HAS ALREADY DELETED BY LEARNED CIT(A). THE APPEAL OF THE REVENUE BEFORE THE TRIBUNAL WAS PENDING. THE ASSESSING OFFICER WHILE MAKING ADDITION IN THE REASSESSMENT PROCEEDINGS UNDER SECTION 148 HAD OBSERVED THAT THE ADDITION WAS BEING MADE ON PROTECTIVE MEASURE. IT IS IN THE AFORESAID BACKGROUND OF FACT, QUESTION OF VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS HAD COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL. 24. THE TRIBUNAL FIRSTLY EXPLAINED THE CONCEPT OF PROTECTIVE ASSESSMENT, WHICH WAS JUDICIALLY RECOGNIZED IN THE CASE OF LALJI HARIDAS V. ITO [1961] 43 ITR 387. THE HON BLE SUPREME COURT HELD THAT WHERE IT APPEARS TO THE INCOME - TAX AUTHORITIES THAT CERTAIN INCOME HAS BEEN RECEIVED DOING THE RELEVANT ASSESS MENT YEAR; BUT IT IS NOT CLEAR WHO HAS RECEIVED THAT INCOME AND PRIMA FACIE, IT APPEARS THAT INCOME MAY HAVE BEEN ITA NO S.332 - 334/KOL/2012 ITA NOS.473 - 475/KOL/2011 M/S.VIKASH IRON & STEEL PVT.LTD. . A.YRS.2003 - 04,2004 - 05 & 2008 - 09 4 RECEIVED EITHER BY THE A OR B OR BY BOTH TOGETHER, IT WOULD BE OPEN TO THE RELEVANT INCOME - TAX AUTHORITY TO DETERMINE THE SAID QUESTION BY TAK ING APPROPRIATE PROCEEDINGS BOTH AGAINST A AND B. THE SUPREME COURT, HOWEVER, OBSERVED THAT IN THE PROCEEDINGS TAKEN AGAINST THE ONE OR THE OTHER, AN EXHAUSTIVE ENQUIRY SHOULD BE MADE AND THE QUESTION AS TO WHO IS LIABLE TO PAY THE TAX IN QUESTION SHOULD B E DETERMINED AFTER HEARING OBJECTIONS AND THAT THE PROCEEDINGS AGAINST THE OTHER PERSON MAY ALSO CONTINUE AND BE CONCLUDED BUT UNTIL PROCEEDINGS AGAINST THE ONE HAS BEEN FINALLY DETERMINED, NO ASSESSMENT ORDER SHOULD BE PASSED. A FINAL DETERMINATION HAD, T HEREFORE, TO BE MADE IN ONE OF THE PROCEEDINGS. 25. THE TRIBUNAL THEREAFTER OPINED THAT A PROTECTIVE ASSESSMENT IS NOT CONFINED TO MAKING ASSESSMENT OF SAME INCOME IN THE HANDS OF TWO DIFFERENT PERSONS; BUT CAN ALSO BE MADE IN THE CASE OF INCOME OF ONE P ERSON WHERE THE ASSESSING OFFICER IS UNCERTAIN AS TO THE YEAR IN WHICH THE INCOME HAD BEEN EARNED. THE TRIBUNAL THEREAFTER HELD THAT PROTECTIVE ASSESSMENT CANNOT BE INDEPENDENT OF SUBSTANTIVE ASSESSMENT BUT ALWAYS HAS TO BE LATER IN PINT OF TIME TO THE S UBSTANTIVE ASSESSMENT. FURTHER HE DREW OUR ATTENTION TO THE FINDINGS OF ITAT MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF M.P.RAMACHANDRAN VS DCIT (2009) 32 SOT 592 WHEREIN IT HAS HELD AS UNDER : - THOUGH FROM THE REASONS RECORDED BY THE A.O., IT COMES UP THAT HE HAD TAKEN THE STEPS FOR INCLUDING THIS AMOUNT IN THE REASSESSMENT WITH A VIEW TO PROTECT THE INTEREST OF REVENUE, BUT HE HAD NOT SPECIFICALLY SPELT OUT HIS MIND THAT THE ADDITION WAS TO BE MADE ON PROTECTIVE BASIS. IT IS ANOTHER MATTER THAT WHI LE PASSING THE ORDER U/S.143(3) R.W.S. 147 ADDITION OF RS.527.85 LAKHS WAS MADE ON PROTECTIVE BASIS. BE THAT AS IT MAY , WE SHALL PROCEED TO DECIDE THE MATTER WITH THE PRESUMPTION THAT THE AO REOPENED THE ORIGINAL ASSESSMENT MADE U/S 143(3) ON THIS COUNT FO R THE PURPOSE OF MAKING THE DISALLOWANCE OF ADVERTISEMENT EXPENSES ON PROTECTIVE BASI S. PROTECTIVE ASSESSMENT CANNOT BE INDEPENDENT OF SUBSTANTIVE ASSESSMENT. THUS PROTECTIVE ASSESSMENT IS ' AL WAY S SUCCESSIVE TO THE SUBSTANTIVE ASSESSMENT. THERE MAY BE A S U BSTANTIVE ASSESSMENT WITHOUT ANY PROTECTIVE ASSESSMENT , B U T THERE CANNOT BE ANY PROTECTIVE ASSESSMENT WITHOU T T HERE BEING A SUBSTANTIVE ASSESSMENT . IN SIMPLE WORDS THERE HAS TO BE SOME SUBSTANTIVE ASSESSMENT/ADDITION FIRST WHI CH ENABLES THE AO TO MAKE A P ROTECTIVE ASSESSMENT/ADDITION. SUBSTANTIVE ADDITION/ASSESSMENT IS MADE IN THE HANDS OF THE PERSON IN WHOSE HANDS THE AO PRIMA FACIE HOLDS THE OPINION THAT THE INCOME IS RIGHTLY TAXABLE. HAVING DONE SO AND WITH A VIEW TO PROTECT THE INTEREST OF THE REVENUE , IF THE AO IS NOT SURE THAT THE PERSON IN WHOSE HANDS HE HAD MADE THE SUBSTANTIVE ADDITION RIGHTLY, HE EMBARKS UPON THE PROTECTIVE ASSESSMENT. THUS THE PROTECTIVE ASSESSMENT IS BASICALLY BASED ON THE DOUBT OF THE AO AS DISTINCT FROM HIS BELIEF WHICH IS TH ERE IS THE SUBSTANTIVE ASSESSMENT. OBVIOUSLY THERE IS NO PLACE FOR 'DOUBT ' IN THE SCHEME OF REASSESSMENT, AS IT HAS TO BE BELIEF OF THE AO ABOUT THE ESCAPEMENT OF INCOME , WHICH IS THE FOUNDATION FOR ASSESSMENT OR REASSESSMENT U/S 147. EVEN IF FOR A MOMENT WE AGREE WITH THE ID. DR THAT THE PROTECTIVE ADDITION IS DIFFERENT FROM SUBSTANTIVE ADDITION AND HENCE THE REASSESSMENT PROCEEDINGS BE UPHELD, WE FIND THAT ULTIMATELY THE SAME CONCLUSION WILL FOLLOW IF THE SUBSTANTIVE ADDITION IS STRUCK DOWN AT A PLACE WHE RE IT WAS MADE. IN SUCH A SCENARIO THE PROTECTIVE ADDITION WILL GET CONVERTED INTO SUBSTANTIVE ADDITION IN THE REASSESSMENT. THAT WILL ALSO RUN CONTRARY TO THE FORMAT OF REASSESSMENT, BEING TO TAX AN INCOME WHICH HAS ESCAPED ASSESSMENT. IN THAT CASE AGAIN IT WILL TANTAMOUNT TO REOPENING ASSESSMENT ON ITA NO S.332 - 334/KOL/2012 ITA NOS.473 - 475/KOL/2011 M/S.VIKASH IRON & STEEL PVT.LTD. . A.YRS.2003 - 04,2004 - 05 & 2008 - 09 5 THE BASIS OF AN ITEM OF INCOME OR DISALLOWANCE, WHICH HAS ALREADY BEEN MADE IN BLOCK ASSESSMENT OF THE ASSESSEE, THEREBY LEAVING NO INCOME ESCAPING ASSESSMENT . UNDER THESE CIRCUMSTANCES WE ARE SATISFIED THAT HA VING MADE ADDITION OF RS . 527 . 85 LAKHS IN THE BLOCK ASSESSMENT, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN FORMING THE BELIEF , EITHER ON SUBSTANTIVE OR PROTECTIVE BASIS , THAT THE SAME INCOME HAS ESCAPED A SSESSMENT IN THE INSTANT YEAR. C IT VS. WIPRO FINANCE LTD . (2008) 10DTR (KAR) 281 RELIED ON ; ' 5 . WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ISSUE RAISED BY THE LD. SR.ADVOCATE HAS BEEN ANSWERED BY THE HON BLE SUPREME COURT IN THE CASE OF LA LJI HARIDAS VS ITO [1961] 43 ITR 387 WHICH READS AS UNDER : - THE MAIN ARGUMENT WHICH IS URGED BY MR.NAMBIAR IN SUPPORT OF THIS APPEAL IS THAT RESPONDENT NO.1, THE INCOME - TAX OFFICER, WHO HAS ISSUED THE IMPUGNED NOTICE, HAS NO JURISDICTION TO ASSESS THE A PPELLANT FOR THE INCOME IN QUESTION, BECAUSE HE CONTENDS THAT EVEN ACCORDING TO RESPONDENT NO.,1 THE SAID PROPOSED ASSESSMENT WOULD BE IN THE NATURE OF A PRECAUTIONARY OR PROTECTIVE ASSESSMENT, AND MR.NAMBIAR S CASE IS THAT THIS CONCEPT OF A PRECAUTIONARY OR PROTECTIVE ASSESSMENT IS NOT RECOGNISED BY THE ACT AND AS SUCH ANY ATTEMPT TO LEVY SUCH ASSESSMENT WOULD BE ILLEGAL. IN SUPPORT OF THIS ARGUMENT MR.NAMBIAR STRONGLY RELIED ON THE FINDING RECORDED AGAINST THE APPELLANT S BROTHER, LALJI, IN THE EX PARTE A SSESSMENT ORDER WHICH HAD ORIGINALLY BEEN PASSED AGAINST HIM. IT IS NO DOUBT TRUE THAT THE SAID EX PARTE ORDER HAD HELD THAT LALJI WAS LIABLE TO PAY THE TAX ON THE AMOUNT OF INCOME IN QUESTION; BUT THE SAID ORDER HAS BEEN SUBSEQUENTLY SET ASIDE, AND, AS WE HAVE ALREADY SEEN, FRESH PROCEEDINGS AGAINST LALJI HAVE BEEN COMMENCED AT JAMNAGAR. MR. NAMBIAR ALSO RELIED ON THE ADMISSION MADE BY THE RESPONDENT IN HIS STATEMENT OF THE CASE BEFORE THIS COURT, AND HE CONTENDED THAT THE RESPONDENT HIMSELF SEEMS TO CONCE DE THAT THE ASSESSMENT PROPOSED TO BE MADE AGAINST THE APPELLANT IS NO MORE THAN PRECAUTIONARY. IT IS TRUE THAT PARAGRAPH 3 OF THE STATEMENT AVERS THAT STEPS ARE BEING TAKEN AGAINST THE APPELLANT FOR TAXATION OF INCOME IN HIS HANDS ONLY AS A PRECAUTIONAR Y MEASURE AGAINST THE EVENTUALITY OF ITS BEING FINALLY HELD THAT THE INCOME IS NOT LIABLE TO BE TAXED IN HIS BROTHER S HANDS , AND IT WAS ADDED THAT THE APPELLANT S CONTENTION THAT SUCH A PROCEDURE IS NOT WARRANTED UNDER THE ACT IS ENTIRELY UNTENABLE ; B UT IN APPRECIATING THE EFFECT OF THIS STATEMENT IT WOULD BE NECESSARY TO CONSIDER THE OTHER RELEVANT STATEMENTS MADE BY THE RESPONDENT IN HIS STATEMENT OF THE CASE. IN PARAGRAPH 4, FOR INSTANCE, IT IS ADDED THAT UNTIL THE QUESTION OF LIABILITY TO PAY TAX I N RESPECT OF THE INCOME IN QUESTION IS FINALLY DETERMINED IT MAY NOT BE POSSIBLE TO SAFELY PREDICATE THAT IT IS THE INCOME OF ONE AND NOT OF THE OTHER, AND THE RESPONDENT S CASE APPEARS TO BE THAT IN SUCH CIRCUMSTANCES PROTECTIVE ASSESSMENTS HAVE TO BE MAD E SO THAT THE INCOME MAY NOT ESCAPE TAXATION ALTOG ET HER. IN OTHER WORDS, THE RESPONDENT S CASE CLEARLY IS THAT THE NOTICES ISSUED AGAINST THE TWO BROTHERS BY THEIR RESPECTIVE INCOME - TAX OFFICERS ARE INTENDED TO DETERMINE WHO IS RESPONSIBLE TO PAY TAX FOR T HE INCOME IN QUESTION; NOW THOUGH MR.NAMBIAR WANTED TO ARGUE THAT PROTECTIVE OR PRECAUTIONARY ASSESSMENT OF TAX IS NOT JUSTIFIED BY ANY OF THE PROVISIONS OF THE ACT HE DID NOT SERIOUSLY CONTEST THE POSITION THAT AT THE INITIAL STAGE IT WOULD BE OPEN TO TH E INCOME - TAX AUTHORITIES TO DETERMINE BY PROPER PROCEEDINGS WHO IS IN FACT RESPONSIBLE FOR THE PAYMENT OF TAX, AND THAT IS ALL THAT IS BEING DONE AT THE PRESENT STAGE. IN CASES WHERE IT APPEARS TO THE INCOME - TAX AUTHORITIES THAT CERTAIN INCOME HAS BEEN REC EIVED DURING THE RELEVANT ASSESSMENT YEAR BUT IT IS NOT CLEAR WHO HAS RECEIVED THAT INCOME AND PRIMA FACIE IT APPEARS THAT THE INCOME MAY HAVE BEEN RECEIVED EITHER BY A OR B OR BY BOTH ITA NO S.332 - 334/KOL/2012 ITA NOS.473 - 475/KOL/2011 M/S.VIKASH IRON & STEEL PVT.LTD. . A.YRS.2003 - 04,2004 - 05 & 2008 - 09 6 TOGETHER, IT WOULD BE OPEN TO THE RELEVANT INCOME - TAX AUTHORITIES TO DE TERMINE THE SAID QUESTION BY TAKING APPROPRIATE PROCEEDINGS BOTH AGAINST A AND B. THAT BEING SO, WE DO NOT THINK THAT MR.NAMBIAR WOULD BE JUSTIFIED IN RESISTING THE ENQUIRY WHICH IS PROPOSED TO BE HELD BY RESPONDENT NO.1 IN PURSUANCE OF THE IMPUGNED NOTICE ISSUED BY HIM AGAINST THE APPELLANT. UNDER THESE CIRCUMSTANCES WE DO NOT PROPOSE TO DEAL WITH THE POINT OF LAW SOUGHT TO BE RAISED BY MR.NAMBIAR. WE WOULD, HOWEVER, LIKE TO ADD ONE DIRECTION IN FAIRNESS TO THE APPELLANTS. THE PROCEEDINGS TAKEN AGAINST BO TH THE APPELLANTS SHOULD CONTINUE AND SHOULD BE DEALT WITH EXPEDITIOUSLY HAVING REGARD TO THE FACT THAT THE MATTER IS FAIRLY OLD. IN THE PROCEEDINGS TAKEN AGAINST LALJI THE INCOME - TAX OFFICER SHOULD MAKE AN EXHAUSTIVE ENQUIRY AND DETERMINE THE QUESTION AS TO WHETHER LALJI IS LIABLE TO PAY THE TAX ON THE INCOME IN QUESTION. ALL OBJECTIONS WHICH LALJI MAY HAVE TO RAISE AGAINST HIS ALLEGED LIABILITY WOULD UNDOUBTEDLY HAVE TO BE CONSIDERED IN THE SAID PROCEEDINGS. PROCEEDINGS AGAINST CHHOTALAL MAY ALSO BE TAKEN BY THE INCOME - TAX OFFICER AND CONTINUED AND CONCLUDED, BUT UNTIL THE PROCEEDINGS AGAINST LALJI ARE FINALLY DETERMINED NO ASSESSMENT ORDER SHOULD BE PASSED IN THE PROCEEDINGS TAKEN AGAINST CHHOTALAL. IF IN THE PROCEEDINGS TAKEN AGAINST LALJI IT IS FINALLY DECIDED THAT IT IS LALJI WHO IS RESPONSIBLE TO PAY TAX FOR THE INCOME IN QUESTION IT MAY NOT BECOME NECESSARY TO MAKE ANY ORDER AGAINST CHHOTALAL. IF , HOWEVER, IN THE SAID PROCEEDINGS LALJI IS NOT HELD TO PAY TAX OR IT IS FOUND THAT LALJI IS LIABLE TO PAY TAX ALONG WITH CHHOTALAL IT MAY BECOME NECESSARY TO PASS APPROPRIATE ORDERS AGAINST CHHOTALAL. WHEN WE SUGGESTED TO THE LEARNED COUNSEL THAT WE PROPOSE TO MAKE AN ORDER ON THESE LINES THEY ALL AGREED THAT THIS WOULD BE A FAIR AND REASONABLE ORDER TO MAKE IN THE PRESENT PROCEEDINGS. 6. IN VIEW OF THE FACTUAL POSITION THAT THE REVENUE HAS NOT INITIATED ANY SUBSTANTIVE ASSESSMENT OR NO ADDITION HAS BEEN MADE ON SUBSTANTIVE BASIS IN ANY OTHER HAND, THERE IS NO QUESTION OF ANY PROTECTIVE ASSESSMENT IN THE PRESENT CASE FROM THE REASONS RECORDED BY THE AO AS REPRODUCED HEREIN ABOVE. WE ARE OF THE VIEW THAT THE AO HAS INITIATED RE - ASSESSMENT PROCEEDINGS U/S 147/148 OF THE ACT ON THE BASIS OF THE STATEMENT OF ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY THAT THE TRANSACTIONS IN THE HANDS OF THE OTHER PARTIES ARE NOT ACCOUNTED FOR AND THIS MAY BE THE INCOME OF THE ASSESSEE. THE REVENUE COULD NOT BRING ON RECORD ANYTHING AGAINST THE OTHER PARTIES OR WHO ARE THE OTHER PARTIES AGAINST WHOM SUBSTANTIVE ADDITI ON IS TO BE MADE. THERE IS NO SUBSTANTIVE ADDITION MADE IN ANY OF THE HAND TILL DATE AS CONCEDED BY THE LD. SR.DR BEFORE US NOW. IN VIEW OF THE ABOVE WE ARE VERY CLEAR THAT THE RE - ASSESSMENT PROCEEDINGS INITIATED U/S 147/148 OF THE ACT IS INVALID AND HEN CE QUASHED. THE PROTECTIVE ADDITIONS MADE BY THE A.O. ARE ALSO QUASHED ACCORDINGLY. 7. NO OTHER GROUND ON MERITS WAS ARGUED BY EITHER OF THE SIDES AND HENCE WE NEED ITA NO S.332 - 334/KOL/2012 ITA NOS.473 - 475/KOL/2011 M/S.VIKASH IRON & STEEL PVT.LTD. . A.YRS.2003 - 04,2004 - 05 & 2008 - 09 7 NOT ADJUDICATE THOSE ISSUES ON MERITS. ACCORDINGLY THESE APPEALS OF THE ASSESSEE AR E ALLOWED AND THAT OF THE REVENUE S APPEALS ARE DISMISSED. 8 . IN THE RESULT THE APPEALS OF THE ASSESSEE ARE ALLOWED AND THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNC ED IN TH E COURT. SD/ - SD/ - [ P.K .BANSAL ] [ MAHAVIR SINGH ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 1 ST JULY, 2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO : 1 . M/S.VIKASH IRON & STEEL PRIVATE LIMITED, CHHAPARIA & ASSOCIATES, SHANTINIKETAN BUILDING 8, CAMAC STREET, 5 TH FLOOR, SUITE - 2, KOLKATA - 700017. 2 THE I.T.O., WARD - 3(2) , KOLKATA 3 . THE CIT, 4. THE CIT(A) - I , KOLKATA 5 . C.I.T.( DR ) , KOLKATA BENCHES, KOLKATA TRUE COPY , BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES