A two-Judge bench consisting Justice Antony Dominic and Justice Dama Seshadri Naidu ruled that completion of Protective Assessment against Assessee’s wife would not make Assessment against Assessee Invalid.
The Kerala High Court while dealing the case between R. Ramachandran Nair vs. Revenue, both aggrieved by the order passed by the Income Tax Appellate Tribunal, Cochin Bench.
In instant petition, the assessee is the former Chief Secretary to the Government of Kerala. There held a search and seizure operation under Section 132 of the Income Tax Act in the residential premises of assessee wherein found the undisclosed income of the assessee amounted to Rs.1,14,94,610/-
This order was impugned by the assessee before ITAT Cochin was partly allowed and some of the additions made in the assessment order were deleted.
During the course of proceedings, many of the grounds were raised by the revenue regarding the unaccounted cash which may or may not belong to the assessee or his family members.
While considering the fact the counsel for the assessee submitted before the High Court that many of the items of income which were assessed in the hands of the assessee were already assessed in the hands of his wife Smt.Lakshmi R. Nair, in an assessment under Section 158BD of the Income Tax Act.
The assessee also stated that the AO recorded his satisfaction that assets which are unearthed are treated as things of assessee’s wife so the same set of assets cannot again be assessed in the hands of the assessee herein.
The Court rejected the aforesaid contention of the assessee for the reason that the assessment completed against the assessee’s wife is the only protective assessment.
“While the bonafides of the aforesaid transactions entered into by the assessee, during his tenure of the Vice Chancellor of the University are open to doubt, there is no evidence whatsoever to conclude for the Assessing Officer or the Tribunal or this court to arrive at a conclusion that the differential amounts mentioned above have actually reached the hands of the assessee to be treated as his undisclosed income to be taxed at his hands. In this case, although there are communications which are sufficient to suspect the bonafides of the deals that cannot take the place of all principles to saddle the assessee with the tax liability which requires proof of undisclosed income at the hands of the assessee.”
Finally, the court observed the issue as “protective assessment has been completed against the assessee’s wife does not ipso facto mean that assessment of such items of assets at the hands of the assessee is unsustainable.”
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