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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
Commissioner of Income Tax, Jaipur
Vs.
Shri Sobhrajmal
 
Facts of the case: Para 3 of order
3. The brief facts, which can be noticed on perusal of the order passed u/s 256(1) and the order passed by the ITAT while deciding the matter, are that a search and seizure operation was carried out in the case of partnership firm M/s Ghindmal Kauromal on 05/09/1985 and the respondentassessee happened to be the partner of firm M/s Ghindmal Kauromal and was also subjected to search, the other partners were also subjected to search. During the course of search, certain books of accounts, documents and other incriminating HCdocuments/material were found and seized. During the course of assessment proceedings, the Assessing Officer (for short, 'AO') scrutinized the said documents and had made additions on account of some of the documents and it was claimed that these documents pertained to the assessee. The AO also made additions on account of some papers/documents in the case of firm M/s Ghindmal Kauromal on substantive basis but since the assessee being a partner and the documents having been found in the possession and custody and at the residence of the assessee, therefore, on protective basis, the addition was also made in the hands of the assessee as well.


Arguments by Assessee: Para 8 of order
8. Ld. counsel for the respondent-assessee, on the other hand, contended that when these very additions have been made in other cases and even the AO in the assessment order himself held that the additions are being made on protective basis, then when additions have already been made in other hands, the addition cannot be made in the case of the assessee again. He further contended that the order of ITAT is based essentially on finding of fact and does not lead to any question of law.


Held by High Court: Para 10 and 13 of order
10. Under the Income Tax Act though there is no such word as substantive addition/assessment or protective addition/ assessment, however, the courts have held that in case where it appears to the income tax authorities that certain income has been received during the relevant year or for that matter documents/loose papers have been found and it is not clear to whom it pertains or it is not clear who has received that income and prima-facie it appears that the income or/and documents/loose papers pertains to either A or B or by both together and thus it will be open to the relevant income tax authority to determine the said question by taking appropriate proceedings both against A and B.

 

13. When we peruse the facts in the present reference application, then it is an admitted fact and the revenue also does not deny that protective addition was made in the case of assessee whereas substantive addition was either made in the case of M/s Ghindmal Kauromal or/and in the case of Roop Chand or/and in the case of Nanak Ram (Dropadi Devi) and when the above additions have finally been sustained, as observed by the ITAT in the case of M/s Ghindmal Kauromal or/and in the case of Roop Chand or/and Nanak Ram (Dropadi Devi), then it is a finding of fact and no question of law can be said to arise with the facts found by the ITAT. When ultimately, the addition of these very documents had been sustained in some other case relating to the search or other partners or in the case of M/s Ghindmal Kauromal or/and in the case of Roop Chand or/and Nanak Ram (Dropadi Devi), then the ITAT had rightly deleted the addition as the same cannot be or could not have been made in two hands. The revenue should not have been aggrieved as the additions on the basis of loose papers/documents has ultimately been made/sustained in other cases of the group.

To read full judgment click here


 
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Author:

TaxReply


Dec 29, 2014


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