Mr. Natwarlal Radheshyam Bagadia, Pune V. Asst. CIT CENTRAL Circle-1(1), Pune

ITA 717/PUN/2007

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6828 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 02-03-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 16-05-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR Y A MABRUKAR
• Assessee Lawyers: J P BAINAGRE
• Keywords: Unexplained investment; Income from undisclosed sources; Principle of natural justice; Right to appeal
• Section: 153A; 131; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER I.T.A. NO. 715 TO 719/PN/2007 A.Y. 1999-00 TO 2003-04 NATWARLAL RADHESHYAM BAGADIYA 23-B KASBA PETH, PUNE-411 011 PAN AAVPB 4302 R APPELLANT VS. ASSTT. CIT CENT. CIR. 2(1) PUNE RESPONDENT APPELLANT BY: SHRI J.P. BAINAGRE AND SHRI PRAKASH JHUNJHUNWALA RESPONDENT BY: DR. Y.A. MABRUKAR, ORDER PER SHAIALENDRA KUMAR YADAV, JM ALL THESE APPEALS PERTAIN TO THE SAME ASSESSEE CONSEQUENT TO ORDER PASSED U/S 155A(A) OF THE ACT. SO THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY T HIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. AL L THESE APPEALS ARISE OUT OF CONSOLIDATED ORDER OF THE CIT( A)-I PUNE DATED 23-3-2007 FOR A.Y. 1999-00 TO 2003-04. ITA NO. 715/PN/2007 FOR A.Y. 1999-00 2. THE GROUNDS RAISED IN THIS APPEAL READ AS UNDER: 1. ON THE FACTS OF THE CASE AND IN LAW, THE CIT(A) -I PUNE ERRED IN SUSTAINING THE ADDITION OF RS. ITA NO. 715 TO 719/PN/07 NATWARLAL BAGADIYA A.Y. 1999-00 TO 20032-04 2 2,18,000/- TOWARDS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT IN MY HANDS ON PROTECTIVE BASIS. 2.1 HAVING ACCEPTED THAT (I) THE SEIZED MATERIAL FOUND IN THE POSSESSION OF SHRI SHRIRAM SONI, DID NOT ESTABLISH THAT THE ASSESSEE HAD ADVANCED FUNDS TO HIM; (II) THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH CONDUCTED ON APPELLANTS PREMISES TO SHOW THAT ALLEGED CASH LOANS WERE GIVEN TO OR THROUGH MR. SHRIRAM SONI BY THE ASSESSEE. (III) THE APPELLANT, HIS FAMILY MEMBERS AND GROUP CONCERNS HAD KEPT A RECORD OF THEIR ENTIRE UNACCOUNTED INCOME OF RS. 30 LAKHS WHICH WAS DISCLOSED AND OFFERED TO TAX BY THE APPELLANT, HIS FAMILY MEMBERS AND GROUP CONCERNS IN RETURNS FILED IN PURSUANCE OF NOTICE U/S 153A; (IV) THE VARIOUS JUDICIAL DECISIONS CITED BY APPELLANT WHICH CLEARLY SUPPORTED APPELLANTS CONTENTION THAT THE ADDITION OF RS. 2,18,000/- OUGHT TO BE DELETED TOTALLY; AND (V) THAT THE AFORESAID AMOUNT OF RS. 2,18,000/- HAS TO BE TAXED IN THE HANDS OF MR. SHRIRAM SONI ON SUBSTANTIVE BASIS; THE LEARNED CIT(A)-I PUNE ERRED IN SUSTAINING THE ADDITION OF RS. 2,18,000/- TOWARDS UNEXPLAINED INVESTMENT U/S 69 IN MY HANDS ON PROTECTIVE BASIS. 2.2 THE LEARNED CIT(A)-I PUNE ERRED IN HOLDING THAT ADDITION OF RS. 2,18,000/- BE MADE ON PROTECTIVE BASIS WHICH WAS NOT PERMISSIBLE IN APPELLATE PROCEEDINGS. HE ERRED IN NOT FOLLOWING RATIO OF TH E BELOW MENTIONED DECISIONS (A) SMT HEMLATA AGARWAL VS CIT (1967) 64 ITR 428 (ALL) (B) SMT. DAYABAI VS. CIT (1985) 154 ITR 248 (MP) 3. SEARCH ACTION U/S 132(1) WAS CARRIED OUT AT THE PREMISES FINANCE BROKER/MONEY LENDER MR. SHRIRAM SONI ON 29- 7-2003 AND SIMULTANEOUSLY ANOTHER SEARCH U/S 132(1) WAS CO NDUCTED AT THE ASSESSEES OFFICE PREMISES ON 29-7-2003. ON THE BASIS OF ITA NO. 715 TO 719/PN/07 NATWARLAL BAGADIYA A.Y. 1999-00 TO 20032-04 3 SEARCHED DOCUMENTS THE ASSESSEE GROUP HAD RETURNED UNDISCLOSED INCOME OF RS. 30.00 LAKHS IN HIS CASE, IN THE CASE OF FAMILY MEMBERS AND GROUP CONCERN. 4. THE ASSESSING OFFICER MADE ADDITION U/S 69 OF TH E ACT IN DIFFERENT YEARS AS UNDER: ASSESSMENT YEAR UNEXPLAINED INVESTMENT U/S 69 1999-00 RS. 2,18,000/- 2000-01 RS. 28,88,500/- 2001-02 RS. 1,63,90,700/- 2002-03 RS. 1,46,82,000/- 2003-04 RS. 65,33,250/- TOTAL RS. 4,07,12,450/- 5. IN APPEAL, ON PERUSAL OF THE MATERIAL ON RECORD, THE CIT(A) OBSERVED THAT THE ASSESSEES PREMISES DID NOT RESUL T IN RECOVERY OF ANY MATERIAL SHOWING ADVANCING OF CASH LOAN TO OR THROUGH SHRI SHRIRAM SONI. PRECISELY THE CIT(A) IN PARA 2.15 OF HIS CONSOLIDATED ORDER HELD AS UNDER: 2.15 IN VIEW OF THE FOREGOING SUBMISSION OF THE APPELLANT WHICH, INTER ALIA, INCLUDES THE JUDICIAL DECISIONS CITED BY THE APPELLANT, TAKING INTO ACCOUNT THE FAC T THAT THE SAME INCOME HAS BEEN HELD TO BE TAXABLE AT APPE LLATE STAGE N SUBSTANTIVE BASIS FOR REASONS GIVEN IN CASE OF APPEALS OF SHRI SHRI RAM SONI FOR THE RESPECTIVE ASSESSMENT YEARS REFERRED TO SUPRA, I AM OF THE CONSIDERED VIEW THAT THE DECISION OF THE LEARNED A. O TO TAX INCOME IN CASE OF THE APPELLANT FOR RESPECTIVE ASSESSMENT YEARS UNDER APPEAL ON SUBSTANTIVE BASIS, ON BASIS OF PAPERS FOUND AND SEIZED FROM PREMISES OF S HRI SHRI RAM SONI, CANNOT BE SUSTAINED. IT IS HELD FO R ALL THE ASSESSMENT YEARS UNDER APPEAL, NO ADDITION COULD BE MADE IN CASE OF THE APPELLANT ON SUBSTANTIVE BASIS. THE APPELLANT GETS CONSEQUENTIAL RELIEF. ITA NO. 715 TO 719/PN/07 NATWARLAL BAGADIYA A.Y. 1999-00 TO 20032-04 4 HOWEVER, HAVING REGARD TO MATERIAL ON RECORD, I AM OF THE CONSIDERED VIEW THAT, IT WOULD BE FAIR AND REASONAB LE IF THE INCOME HELD TO BE TAXABLE IN CASE OF SHRI SHRI RAM SONI WHICH ALSO COMPRISES OF INCOME TAXED IN CASE O F APPELLANT ON SUBSTANTIVE BASIS BY THE ASSESSING OFF ICER BUT HELD AS NOT TAXABLE IN CASE OF APPELLANT ON SUBSTANTIVE BASIS HEREINBEFORE, IS TAXED ON PROTECT IVE BASIS TO PROTECT THE INTEREST OF REVENUE. THUS, IT IS HELD THAT INCOME TAXED BY THE A.O ON SUBSTANTIVE BASIS F OR RESPECTIVE ASSESSMENT YEARS ON BASIS OF PAPERS FOUN D IN CASE OF SHRI SHRI RAM SONI, REQUIRES TO BE TAXED ON PROTECTIVE BASIS FOR PROTECTING THE INTEREST OF REV ENUE TILL THIS ISSUE REACHES FINALITY IN APPELLATE PROCEEDING S IN CASE OF SHRI SHRI RAM SONI. ACCORDINGLY, ASSESSING OFFICER IS DIRECTED TO TAX INCOME OF RS. 2,18,000/- FOR A.Y. 1999-00 ON PROTECTIVE BASIS. SIMILARLY, INCOME OF RS. 28,88,500/- COMPRISING OF PRINCIPAL OF RS. 27,46,00 0/- AND INTEREST OF RS. 1,42,500/- SHALL BE TAXED ON PROTECTIVE BASIS FOR A.Y. 2000-01. AS REGARDS ASSE SSMENT YEAR 2001-02, INCOME OF RS. 1,63,90,700/- COMPRISIN G OF PRINCIPAL OF RS. `1,44,21,400/- AND INTEREST OF RS. 18,69,300/- SHALL BE TAXED ON PROTECTIVE BASIS. FO R A.Y. 2002-03, INCOME OF RS. 1,46,82,000/- COMPRISING OF PRINCIPAL OF RS. 1,01,08,000/- AND INTEREST ON OF R S. 46,74,000/- SHALL BE TAXED ON PROTECTIVE BASIS. FO R A.Y. 2003-04 THE INCOME OF RS. 65,33,250/- SHALL BE TAXE D ON PROTECTIVE BASIS. THE A.O IS DIRECTED TO ALLOW CONSEQUENTIAL RELIEF TO THE APPELLANT. 6. IT IS PERTINENT TO MENTION HERE THAT THE ADDITIO N HAS BEEN MADE ON SUBSTANTIVE BASIS IN THE CASE OF ASSESSEE A ND ON PROTECTIVE BASIS IN THE CASE OF SHRIRAM SONI IN RES PECTIVE ASSESSMENT YEARS AT ASSESSMENT STAGE AT THE LEVEL O F ASSESSING OFFICER WHICH WAS CONVERTED TO SUBSTANTIVE BY CIT(A ). THE LEARNED COUNSEL HAS REFERRED TO ORDER OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI SHRI RAM SONI IN ITA N O. 474, 475, 476, 447 AND 518/PN/2000. 21. ON DUE CONSIDERATION OF THE ENTIRETY OF THE CA SE WE FIND NO CONVINCING REASON TO UPHOLD THE VIEW OF THE A.O ITA NO. 715 TO 719/PN/07 NATWARLAL BAGADIYA A.Y. 1999-00 TO 20032-04 5 AS WELL AS THE LD. CIT(A). BEFORE US, A SERIES OF SUCH INSTANCES WERE REFERRED WHEREIN THE REVENUE DEPARTM ENT ITSELF HAS TAKEN STEPS FOR CORRECT ASSESSMENT IN TH E HANDS OF THE CORRECT INVESTORS. FOR EXAMPLE, THE REVENUE DEPARTMENT HAS SUMMONED THREE INVESTORS U/S 131 NAMELY TULSIRAM PALLOD, NANDKIRAN BIRLAND DHANRAJ KAVEDIA. REVENUE DEPARTMENT HAS ALSO ISSUED U/S 14 8 IN RESPECT OF FIVE INVESTORS NAMELY JAGANNATH E LAH OTI IND AND HUF, BABHUTMAL JAIN, VIJAY B JAIN AND BHAVE SH BHAYANI. THE REVENUE DEPARTMENT HAS ALSO ISSUED NOTICES U/S 153A IN RESPECT OF TWO INVESTORS NAMELY NATWARLAL BAGDAIYA AND NANCHAND SHAH. IT HAS BEEN INFORMED THAT THE REVENUE DEPARTMENT HAS ALSO ISSUE D NOTICES TO OTHER PERSONS. HOWEVER, ALL THAT INFORM ATION WAS NOT DIVULGED TO THIS ASSESSEE. ONCE THE REVENU E DEPARTMENT WAS IN THE PROCESS OF IDENTIFYING THE INVESTORS THEN IT WAS DEFINITELY PREMATURE ON THE P ART OF LD. CIT(A) TO TAKE AN ADVERSE VIEW AGAINST THIS ASS ESSEE. NATURAL JUSTICE DEMANDS TO FIRST LET THE INVESTIGAT ION COMPLETED AND THEN ONLY DUE ACTION AS PER LAW COULD HAVE BEEN TAKEN AGAINST THE ASSESSEE. AN ADVERSE A CTION WHICH LACKS NATURAL JUSTICE SHOULD NOT BE AFFIRMED IN THE EYES OF LAW. LD. AR HAS READ FEW OF THE JUDGMENTS A S MENTIONED SUPRA, WHEREIN THE RESPECTIVE AOS HAVE GI VEN A CATEGORICAL FINDING THAT THOSE PERSONS HAVE ADVAN CED LOANS ON INTEREST TO DIFFERENT PARTIES THROUGH S.H SONI IN WHOSE CASE SEARCH WAS CONDUCTED. THE LD. AR HAS BROUGHT ON RECORD THE ASSESSMENT ORDERS OF 6 SUCH INVESTORS NAMELY GOVERDHAN MUNDADA, VIJAY BJAIN, JAGANNATH LAHOTI, MISHRIMAL RAMRATAN PANCHARIYA, NANDKISHORE H BIRLA, VIJAY JASRAJ RAHATEKAR. IN AL L THOSE CASES OF INVESTORS THE RESPECTIVE AOS HAVE RECOGNIZ ED THE FACT THEIR MONEY WAS INVESTED THROUGH MR. S.H. SONI . RATHER THE AMOUNT INVESTED BY THEM HAS BEEN ASSESSE D ON SUBSTANTIVE BASIS RESPECTIVELY IN THEIR HANDS. ALL SUCH FINDINGS OF THE REVENUE DEPARTMENT HAVE A DIRE CT BEARING ON THE FATE OF THIS CASE. THEREFORE IT IS A BSOLUTELY UNLAWFUL AND UNJUSTIFIABLE ON THE PART OF LD. CIT(A ) TO GIVE A DIRECTION TO ASSESS THE ENTIRE INVESTMENT ON SUBS TANTIVE BASIS WHICH HAS ALREADY BEEN ASSESSED IN THE HANDS OF THOSE INVESTORS ON SUBSTANTIVE BASIS. FIRST OF ALL SAME AMOUNT CANNOT BE TAXED TWICE THAT TOO ON SUBSTANTIV E BASIS. BEFORE GIVING SUCH DIRECTIONS LD. CIT(A) OU GHT TO HAVE KEPT IN MIND THIS FUNDAMENTAL PROCEDURE OF LAW . ITA NO. 715 TO 719/PN/07 NATWARLAL BAGADIYA A.Y. 1999-00 TO 20032-04 6 BEFORE THIS, IN PARA 11.12 (AT PAGE 88 OF THE SAID ORDER, ITAT HELD AS UNDER: AS REGARDS OTHER INVESTORS WE ARE OF THE CONSIDERE D OPINION HAT THESE AMOUNTS CANNOT BE ADDED IN THE HA NDS OF THE APPELLANT EITHER ON PROTECTIVE BASIS AS DONE BY THE A.O OR ON SUBSTANTIVE BASIS AS DONE BY THE CIT(A).T HE CASE OF THE APPELLANT IS DIRECTLY COVERED BY THE DE CISION OF MUMBAI ITAT IN THE CASE OF SHRI BIREN SAVLA AND THE PUNE ITAT IN THE CASE OF SHRI RAMANLAL CHORDIA; BOT H THE ORDERS SHALL BE DISCUSSED HEREINBELOW. 7. FROM THE ABOVE FINDING OF I.T.A.T. IN THE CASE O F SHRI SHRI RAM SONI IN RESPECT OF UNEXPLAINED INVESTMENT ON TH E BASIS OF CASH TRANSACTION, THE ADDITION MADE IN THE HANDS OF SHRI SHRI RAM SONI ON PROTECTIVE BASIS BY THE ASSESSING OFFIC ER AND IN FIRST APPEAL MADE ON SUBSTANTIVE BASIS BY THE CIT(A ) WHICH HAS BEEN DELETED BY ITAT AS DISCUSSED ABOVE. 8. IN VIEW OF THE FACTUAL AND LEGAL SUBMISSIONS MAD E ON BEHALF OF THE ASSESSEE, THE CIT(A) OBSERVED THAT TH E DECISION OF THE ASSESSING OFFICER TO TAX INCOME IN CASE OF THE ASSESSEE FOR RESPECTIVE ASSESSMENT YEARS UNDER APPEAL ON SUBSTAN TIVE BASIS, ON THE BASIS OF PAPERS FOUND AND SEIZED FROM PREMISES OF SHRI SHRIRAM SONI, COULD NOT BE SUSTAINED IN THE HANDS OF ASSESSEE. IT WAS FURTHER HELD THAT FOR ALL THE ASSE SSMENT YEARS UNDER APPEAL, NO ADDITION COULD BE MADE IN CASE OF THE ASSESSEE ON SUBSTANTIVE BASIS. CONSEQUENTLY, THE A SSESSEE WAS GRANTED RELIEF ACCORDINGLY IN ALL THE YEARS UND ER CONSIDERATION. ITA NO. 715 TO 719/PN/07 NATWARLAL BAGADIYA A.Y. 1999-00 TO 20032-04 7 9. HAVING SAID SO, THE CIT(A) FELT THAT IT WOULD BE FAIR AND REASONABLE IF THE INCOME WAS TAXED ON PROTECTIVE BA SIS TO PROTECT THE INTEREST OF REVENUE. THUS, IT WAS HELD IN ASSESSEES CASE THAT INCOME TAXED BY THE ASSESSING OFFICER ON SUBSTANTIVE BASIS FOR RESPECTIVE ASSESSMENT YEARS ON THE BASIS OF PAPERS FOUND IN THE CASE OF SHRI SHRIRAM SONI, REQUIRED TO BE TAXED ON PROTECTIVE BASIS FOR PROTECTING THE INTEREST OF REVENUE TILL THIS ISSUE REACHES FINALITY IN APPELLATE PROCEEDING S IN THE CASE OF SHRI SHRIRAM SONI. ACCORDINGLY, ASSESSING OFFIC ER WAS DIRECTED TO TAX INCOME OF RS. 2,18,000/- FOR A.Y. 1 999-00 ON PROTECTIVE BASIS. SIMILARLY, INCOME OF RS. 28,88,5 00/- COMPRISING OF PRINCIPAL OF RS. 27,46,000 /- AND INTEREST OF RS. 1,42,500/- SHOULD BE TAXED ON PROTECTIVE BAS IS FOR A.Y. 2000-01. AS REGARDS A.Y. 2001-02, INCOME OF RS. 1,63,90,700/- COMPRISING OF PRINCIPAL OF RS. 1,44,2 1,400/- AND INTEREST OF RS. 18,69,300/- SHOULD BE TAXED ON PROTECTIVE BASS. FOR A.Y. 2002-03, INCOME OF RS. 1,46,82,000; - COMPRISING OF PRINCIPAL OF RS. 1,01,08,000/- AND IN TEREST THEREON OF RS. 46,74,000/- SHOULD BE TAXED O PROTEC TIVE BASIS. FOR A.Y. 2003-04 THE INCOME OF RS. 65,33,250/- SHOU LD BE TAXED ON PROTECTIVE BASIS. THE ASSESSING OFFICER WA S DIRECTED TO ALLOW CONSEQUENTIAL RELIEF TO THE ASSESSEE. 10. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED FINDING OF CIT(A) INTER ALIA THE PROTECTIVE ASSESSMENT ITA NO. 715 TO 719/PN/07 NATWARLAL BAGADIYA A.Y. 1999-00 TO 20032-04 8 WAS MADE IN CASE OF ASSESSEE ON ACCOUNT OF UNEXPLAI NED INVESTMENT FOR ALL THE FIVE YEARS AS DISCUSSED ABOV E. ON FACTS, IT WAS SUBMITTED THAT THE ASSESSEE HAS RAISED FACTU AL ARGUMENTS AS WELL AS LEGAL ARGUMENTS IN THE GROUNDS OF APPEAL BUT BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE HAS ONLY PRESSED THE GROUNDS WITH REGARD TO PROTECTIVE ASSES SMENT. THE STAND OF THE ASSESSEE IS THAT THE CIT(A) WAS NO T JUSTIFIED IN SUSTAINING THE ADDITION ON PROTECTIVE BASIS WHICH I S NOT PERMISSIBLE IN THE APPELLATE PROCEEDINGS. FOR THIS , HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: (A) CIT VS. SMT. DURGAWATI SINGH (1998) 234 ITR 249; (ALLD) (B) PRAKASH WINE AGENCIES VS ITO (1990) 38 TTJ (ALL) 39 (C) SAIPEM UK LTD. VS. DY. DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION) RANGE 2(1) MUMBAI (2007) 108 ITD 545 (MUM) 11. THE LEARNED COUNSEL FURTHER SUBMITTED THAT PROT ECTIVE ASSESSMENT AT APPELLATE STAGE IS NOT PERMISSIBLE SO THE ORDER OF THE CIT(A) TO THAT EXTENT NEEDS TO BE SET ASIDE. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT INTEREST OF REV ENUE SHOULD BE PROTECTED. HE SUPPORTED THE ORDER OF THE CIT(A) STATING THAT TO PROTECT THE INTEREST OF REVENUE, TH E CIT(A) WAS JUSTIFIED IN SUSTAINING THE ADDITION ON PROTECTIVE BASIS IN THE CASE OF THE ASSESSEE. 12. AFTER HEARING BOTH THE SIDES AND GOING THROUGH THE MATERIAL ON RECORD, AS DISCUSSED ABOVE, WE FIND TH AT SEARCH ITA NO. 715 TO 719/PN/07 NATWARLAL BAGADIYA A.Y. 1999-00 TO 20032-04 9 ACTION U/S 132(1) WAS CARRIED OUT AT THE PREMISES O F FINANCE BROKER AND MONEY LENDER SHRI SHRIRAM SONI ON 29-7-2 003 AND SIMULTANEOUSLY ANOTHER SEARCH U/S 132(1) TOOK PLACE AT THE ASSESSEES BUSINESS PREMISES AS WELL AS RESIDENTIAL PREMISES ON THE SAME DATE. WE FIND THAT ON THE BASIS OF SEI ZED MATERIAL IN THE CASE OF SHRI SHRIRAM SONI THE ASSESSING OFFI CER MADE FOLLOWING ADDITIONS ON SUBSTANTIVE BASIS U/S 69 IN THE CASE OF THE ASSESSEE FOR ALL THE FIVE YEARS AS UNDER: ASSESSMENT YEAR UNEXPLAINED INVESTMENT U/S 69 1999-00 RS. 2,18,000/- 2000-01 RS. 28,88,500/- 2001-02 RS. 1,63,90,700/- 2002-03 RS. 1,46,82,000/- 2003-04 RS. 65,33,250/- TOTAL RS. 4,07,12,450/- 13. IN APPEAL, THE CIT(A) HAS DELETED THE ADDITION IN QUESTION FOR THE REASONS DISCUSSED ABOVE. HOWEVER, THE CIT(A ) SUSTAINED THE ADDITION ON PROTECTIVE BASIS FOR THE REASONS DISCUSSED ABOVE. NOTHING HAS BEEN BROUGHT ON RECOR D TO SHOW THAT ANY APPEAL HAS BEEN FILED BY THE REVENUE AGAIN ST THE DELETION OF ADDITION ON SUBSTANTIVE BASIS IN THE HA NDS OF THE ASSESSEE BY THE CIT(A) IN THE IMPUGNED ORDER. SO TH ERE IS NO OCCASION TO DISCUSS THE MERITS OF THE SUBSTANTIVE D ELETIONS. SO, THE MOOT QUESTION BEFORE US IS WHETHER UNDER THE FA CTS AND CIRCUMSTANCES, THE PROTECTIVE ADDITION CAN BE SUSTA INED IN THE ITA NO. 715 TO 719/PN/07 NATWARLAL BAGADIYA A.Y. 1999-00 TO 20032-04 10 HANDS OF THE ASSESSEE. ONLY THE LEGAL ISSUE REGARD ING THE ADDITION ON PROTECTIVE BASIS SURVIVES BEFORE US. WE FIND THAT HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SMT. DU RGAWATI SINGH (SUPRA) HAS HELD THAT PROTECTIVE ASSESSMENT I S PERMISSIBLE BUT APPELLATE AUTHORITIES CANNOT MAKE A PROTECTIVE ORDER. IT WAS ALSO OBSERVED THAT IT IS SETTLED LAW THAT WHEN THERE IS A DOUBT AS TO WHICH PERSON AMONGST THE TWO WAS LIABLE TO BE ASSESSED, PARALLEL PROCEEDINGS MAY BE TAKEN AGAINST BOTH AND ALTERNATIVE ASSESSMENTS MAY ALSO B E FRAMED. IT IS ALSO EQUALLY TRUE THAT WHILE A PROTECTIVE ASS ESSMENT IS PERMISSIBLE, IT IS NOT OPEN TO THE INCOME TAX APPEL LATE AUTHORITIES CONSTITUTED UNDER THE ACT TO MAKE A PRO TECTIVE ORDER. THE LAW DOES NOT PERMIT ASSESSMENT OF THE S AME INCOME SUCCESSIVELY IN DIFFERENT HANDS. THE TAX CA N ONLY BE LEVIED AND COLLECTED IN THE HANDS OF THE PERSON WHO HAS REALLY EARNED THE INCOME AND IS LIABLE TO PAY TAX THEREON. WE ALSO FIND THAT IN THE CASE OF PRAKASH WINE AGENCIES (SUP RA), THE ALLAHABAD BENCH OF THE TRIBUNAL HAS HELD AS UNDER: IN OUR OPINION, THERE IS MERIT IN THE ASSESSEES SUBMISSION. NO APPELLATE AUTHORITY IS AUTHORIZED T O EVADE THE GROUND OF APPEAL WHICH IS RAISED BEFORE I T FOR ADJUDICATION BY THE APPELLANT. EVEN A PROTECTIVE ASSESSMENT GIVES RISE TO RIGHT OF APPEAL RELATABLE TO THE FINDING OF PROTECTIVE ASSESSMENT ITSELF AND, THEREF ORE, IT WAS THE BOUNDEN DUTY OF THE LEARNED CIT(A) TO HAVE DETERMINED AS TO WHO WAS THE REAL OWNER OF THE INCO ME IN QUESTION, NAMELY, WHETHER THE ASSESSEE FIRM WAS THE BENAMI OF LATE SHRI S.N. SAHU. THIS ISSUE CANNOT B E LEFT UNDECIDED IN APPEAL. THE RIGHT TO MAKE PROTECTIVE ITA NO. 715 TO 719/PN/07 NATWARLAL BAGADIYA A.Y. 1999-00 TO 20032-04 11 ASSESSMENT HAS BEEN GIVEN TO THE ITO BY THE CASE LA W LALJI HARIDAS VS. ITO & ANR (1961) 43 ITR 387 (SC) BUT AN APPELLATE AUTHORITY CANNOT EVADE THE DETERMINATI ON OF THE ISSUE WHEN IT IS BROUGHT BEFORE IT BY WAY OF AN APPEAL EITHER BY THE ASSESSEE WHO IS SUBSTANTIALLY ASSESSE D. THE COURSE OF ACTION ADOPTED BY THE LEARNED CIT(A) WAS PRIMA FACIE AGAINST LAW AND, THEREFORE, HIS ORDER DESERVE S TO BE SET ASIDE AND SO WE SET IT ASIDE. 14. IN THIS BACKGROUND WE FIND THAT IT WAS THE DUTY OF THE CIT(A) TO DETERMINE AS TO WHO WAS THE REAL OWNER OF THE INCOME IN QUESTION. THIS ISSUE COULD NOT BE LEFT U NDECIDED IN APPEAL. THE RIGHT TO MAKE PROTECTIVE ASSESSMENT HA S BEEN GIVEN TO THE ITO BY THE CASE LAW LALJI HARIDAS VS. ITO AND ANR (1961) 43 ITR 387 (SC) BUT AN APPELLATE AUTHORITY C ANNOT EVADE THE DETERMINATION OF THE ISSUE WHEN IT IS BRO UGHT BEFORE IT BY WAY OF AN APPEAL EITHER BY THE ASSESSEE WHO I S SUBSTANTIALLY ASSESSED. FURTHER, WE FIND THAT THE BOMBAY BENCH OF THE TRIBUNAL IN THE CASE OF SIPEM UK LTD. (SUPRA) HAS HELD AS UNDER: ANOTHER IMPORTANT ISSUE WAS AS TO WHETHER THE A.O HAVING ALREADY ASSESSED THE INCOME IN THE HANDS OF THE REAL ASSESSEE, COULD MAKE A PROTECTIVE ASSESSMENT I N THE CASE OF HE ASSESSEE HOLDING IT TO BE AGENT OF V. SUCH DOUBLE TAXATION MILITATES AGAINST THE CARDINAL PRIN CIPLES FOR LEVYING TAX ON INCOME. IT IS TRUE THAT THE DEP ARTMENT MAY NOT BE SURE AS TO IN WHOSE HANDS, THE INCOME SH OULD BE BROUGHT TO THE CHARGE OF TAX OR FOR WHICH ASSESS MENT YEAR SUCH INCOME IS ASSESSABLE. IN SUCH SITUATION , THE DEPARTMENT IS LEGALLY JUSTIFIED IN MAKING TWO ASSES SMENTS OUT OF WHICH ONE IS SUBSTANTIVE ASSESSMENT AND THE OTHER IS PROTECTIVE ASSESSMENT. THIS WAS WHAT HAD HAPPEN ED IN THE INSTANT CASE. THE A.O HAD BROUGHT TO A CHAR GE OF TAX THE RELEVANT INCOME ON SUBSTANTIVE BASIS IN THE HANDS OF V AND ON PROTECTIVE BASIS IN THE HANDS O F THE ASSESSEE COMPANY. ITA NO. 715 TO 719/PN/07 NATWARLAL BAGADIYA A.Y. 1999-00 TO 20032-04 12 THE APPEAL IN THE CASE OF V WAS DISMISSED BY THE CI T(A) ON 28-7-2003 AND, THUS, THE ASSESSMENT IN THE CASE OF V ACHIEVED FINALITY. THE CIT(A) WAS WHOLLY UNJUSTIFI ED IN CONFIRMING THE PROTECTIVE ASSESSMENT MADE IN THE CA SE OF THE ASSESSEE COMPANY EVEN THOUGH SUBSTANTIVE ASSESSMENT WAS CONFIRMED BY HIM. FOR THE SAID REASONS, THE RELEVANT ORDERS PASSED BY THE A.O AND THE CIT(A) WERE TO BE QUASHED. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT TH E CIT(A) AFTER UPHOLDING THE ADDITION ON SUBSTANTIVE BASIS IN THE OTHER CASE, COULD NOT MAKE PROTECTIVE APPELLATE ORDER IN THE CA SE OF THE ASSESSEE. THE ASSESSING OFFICER MAY NOT BE SURE AS TO IN WHOSE HANDS THE INCOME SHOULD BE BROUGHT TO CHARGE OF TAX OR FOR WHICH ASSESSMENT YEAR SUCH INCOME IS ASSESSABLE . IN SUCH A SITUATION, THE ASSESSING OFFICER IS LEGALLY JUSTI FIED IN MAKING TWO ASSESSMENTS OUT OF WHICH ONE IS SUBSTANTIVE ASS ESSMENT AND THE OTHER IS PROTECTIVE ASSESSMENT. BUT IN APP EAL, IT IS NOT OPEN TO THE CIT(A) IN CONFIRMING THE ADDITION ON PR OTECTIVE BASIS IN THE CASE OF AN ASSESSEE, EVEN THOUGH SUBST ANTIVE ADDITION WAS DELETED IN THE HANDS OF THE SAME ASSES SEE. IN VIEW OF THE ABOVE, WE HOLD THAT THE CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO SUSTAIN THE ADDI TION MENTIONED ABOVE ON PROTECTIVE BASIS AND THUS, HIS D IRECTION IS HEREBY VACATED. ITA NO. 715 TO 719/PN/07 NATWARLAL BAGADIYA A.Y. 1999-00 TO 20032-04 13 15. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED, AS ABOVE. DECISION PRONOUNCED IN THE OPEN COURT ON 13 TH APRIL 2011. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER PUNE DATED THE 13 TH APRIL 2011 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT I PUNE 4. CIT(A)-I PUNE 4. THE D.R, B BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE