Law:

Section:

Section 143 of the Income-tax Act, 1961 - Assessment - General - Assessment years 2001-02 and 2002-03 - Where during block assessment proceedings Assessing Officer noticed that a concern in name of 'R', in whose case protective assessment was made, was, in fact, controlled by assessee and was a dummy concern of assessee, Assessing Officer was justified in assessing assessee on a substantive basis in respect of income which was assessed in hands of 'R' on a protective basis [In favour of revenue] In the course of block assessment proceedings, the Assessing Officer noticed that a concern, namely, 'G', in the name of 'R' was, in fact, controlled by the assessee. To investigate the case further, assessments in the case of 'R' for assessment years 1999-2000 to 2001-02 were reopened on analysis of various evidences listed in detail in the case of 'R'. It was held that 'G' was, in fact, a dummy concern of assessee, but operated in the name of 'R'. The Assessing Officer added the income in the hands of the assessee on a substantive basis which was added in the hands of 'R' on a protective basis. The Commissioner (Appeals) set aside the assessment on ground that any undisclosed income for the period covered by search could be assessed only under section 158BC. The Tribunal upheld the order of the Commissioner (Appeals). Held that it was not a case where any evidence was unearthed during the course of the search. In fact, it was during block assessment proceedings that the Assessing Officer noticed that 'G' was, in fact, controlled by the assessee, though one 'R' was shown as the proprietor of the said firm. Otherwise, entries were recorded in the regular books of account maintained by 'G' and 'R' was even filing the IT return declaring his income earned from 'G' as its proprietor. It was, thus, a case of lifting of the veil by the Assessing Officer and this could be done in the regular assessment proceedings, insofar as the assessee was concerned. Therefore, the order of the Tribunal was set aside. Since the Tribunal had not gone into the merits of the additions made by the Assessing Officer, the matter was remitted back to the Tribunal to decide as to whether 'G' was a…

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