CIT vs. Mahindra Finlease Pvt Ltd (Delhi High Court)

DATE: (Date of pronouncement)
DATE: February 8, 2011 (Date of publication)

Click here to download the judgement (mahindra_finlease_158BC_protective_assmt.pdf)

Protective assessment can be framed u/s 158BC & 158BD

Search and seizure operation u/s 132 was conducted at the premises of Shri P.K. Sood who was the director of the assessee. As certain documents were found which showed that Shri Sood was indulging in giving accommodation entries to various parties on commission basis, an addition of undisclosed income was made in the hands of P.K. Sood u/s 68 on substantive basis. As the assesse was named by P. K. Sood, the AO also made a protective assessment on the assessee. In appeal, the CIT (A) & Tribunal quashed the protective assessment on the ground that u/s 158BC & 158BD, the AO had no jurisdiction to pass a protective assessment order. On appeal by the department, HELD allowing the appeal:

In the context of regular assessment proceedings, it has been held in Lalji Haridas vs. ITO 43 ITR 387 (SC) that even when there is no specific provision in the Act for protective assessment, the AO has power to make such a protective assessment under certain circumstances. This principle of law will apply to block assessment proceedings u/s 158BC & 158BD as well and the AO has the power to make a block assessment order on a protective basis.

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