HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 342/2018 Pr Commissioner Of Income Tax-Central, New Central Revenue Building, Statue Circle, Jaipur (Raj.). Appellant Versus M/s Kalyan Buildmart Pvt. Ltd., D-44, Subhash Marg, C-Scheme, Jaipur. Respondent For Appellant(s) : Mr. Siddharth Bapna, Advocate HON'BLE CHIEF JUSTICE HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA Judgment 16/07/2019 1. Revenue is aggrieved by orders of ITAT on two counts: firstly, appeal is filed with respect to re-assessment under Section 147/148 of Income Tax Act and secondly, upholding Appellate Commissioner s order which directed cancellation of assessment made on protective basis and its correctness. 2. Brief facts are that one Madan Mohan Gupta in course of search and seizure proceedings, under Section 132 made statement on basis of re-opening of present assessee s completed assessment for year 2008-09. In substantive proceedings, several assessees were subjected to taxation on basis of search and substantive additions were made (as against Navratan Kothari, Vimal Chand Surana (HUF), Kushal Chand Surana and Rajendra Kumar Jain, etc.) for different years falling in block assessment period. No substantive addition was made, however, in respect of assessee company. protective assessment was made on assumption that in event (2 of 3) [ITA-342/2018] substantive additions were to be set aside, assessee was liable to pay this amount. CIT(A) directed that amounts brought to tax on protective basis ought to be deleted. CIT (A) s reasoning was that additions were enhanced in case of other assessees and some of amounts were deleted in view of documentary evidence gathered. CIT(A) made two tabular charts in Para 2.1.8.5. One reflected amounts added by AO and final amount sustained on basis of assessment of evidence. After discussing all these aspects, CIT (A) held that additions made on protective basis were not sustainable, in following terms: In this case, on basis of notings on impugned seized documents and evidences gathered during remand proceedings, and enhancement notice u/s 251(2) of Act vide letter dt. 21.03.2017 has been given to assessee. Subsequent to receipt of written compliance from assessee, following additions are required to be made in assessee s hand as per detailed discussed made in para 2.1.8.5 with respect to issues no. 1,2,3,4 & 5 as under : S.No. ITA No. AY Name Addition Addition Relief Balance made by Ao sustaine Sustaine d d (Final Addition) 10 146/15- 08-09 M/s Shri Rs. --- Rs. ---- 16 Kalyan 14,24,12,650 14,24,12, Buildmar /= 650/- t Pvt Ltd. (Protective) As per detail discussion in above para and in particularly in para 2.1.8.6 no additions of Rs.14,24,12,650/= on protective basis in hands of assessee company and also on substantive basis in hands of Sh Madan Mohan Gupta have been proposed. Accordingly, addition made of Rs. 14,24,12,650/= on protective basis in hands of company is hereby deleted. Assessee s appeal in Gr No. 2 stands allowed. 3. assessee s appeal with respect to re-opening of assessment, was allowed. CIT (A) held that re-assessment notice was invalid. ITAT in its elaborate order discussed (3 of 3) [ITA-342/2018] validity of re-assessment notice and upheld order of CIT (A). It is argued that ITAT did not deal with grounds of appeal or reasoning of CIT (A) on issue of deletion of protective assessment made by AO. 4. This court has considered grounds of appeal urged by revenue in support of present appeal under Section 260A. Undoubtedly, court has to consider as to whether substantial question of law arises in context of reasoning of ITAT in holding deletion of protective assessment. However, what is apparent is that AO in this case proceeded, without furnishing any reasoning and added amounts to assessee s account imposing tax on it purely on protective basis after substantive additions in respect of each amount which were made at third parties end. CIT(A) in our opinion, was correct in his analysis noticing that as against documentary evidence available, only some additions could be sustained even in respect of such third parties. Consequently, in absence of any reason to involve present assessee, which had sold lands to third party and against whom there was no allegation of withholding material or suppression of facts, nor was anything incriminating recorded, no protective assessment could have been made. 5. For foregoing discussions, this court is of opinion that no substantial question of law arises. 6. appeal is dismissed. All pending applications are disposed of. (SANJEEV PRAKASH SHARMA),J (S. RAVINDRA BHAT),CJ FATEH RAJ BOHRA /RAMESH VAISHNAV/-2 Pr Commissioner of Income-tax-Central, Statue Circle, Jaipur v. Kalyan Buildmart Pvt. Ltd