Ketan V. Shah vs. ACIT (ITAT Mumbai)

DATE: June 26, 2015 (Date of pronouncement)
DATE: July 21, 2015 (Date of publication)
AY: 2005-06, 2007-08
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S. 132(4A) presumption does not apply to loose papers found in some other person's possession. While the AO can make a protective assessment, the appellate authority cannot confirm a protective order. It has to either make it substantive or quash it

(i) The basis for making the addition of Rs. 19.98 crores is the loose paper. We failed to persuade ourselves to make any sense out of the notings in this loose paper. Merely by making additions of all the figures mentioned in the loose paper would not justify the addition of Rs. 19.98 crores. Secondly, the entire addition has been made on the presumption mentioned u/s. 132(4A) of the Act. However, we failed to understand how this presumption is applicable on the facts of the case. Firstly, the loose paper was found in the premises of Shri Sanjay Shah i.e. it was not found in the premises of the assessee. Secondly, it was in the possession of Shri Sanjay Shah so obviously it cannot be in possession of the assessee. Therefore, the provisions of Sec. 132(4A) of the Act is not applicable as the paper was not found from the possession of the assessee.

(ii) It is settled 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 be framed. It is also equally true that while a protective assessment is permissible, it is not open to the income-tax appellate authorities constituted under the Act to make a protective order (CIT
Vs Smt. Durgawati Singh 234 ITR 249 (All), Smt. Hemlata Agarwal Vs CIT 64 ITR 428 (All) followed)

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