Specify all those circumstances under which an A.O. resorts to make 'Protective Assessment' and for which reason. Can such assessment order be made a basis for taking action to levy penalty under the Act ?

Protective Assessment: The assessing officer resorts to complete the assessment under the Act for any year on "protective basis" where it appears to the authorities that certain/any income has been received during the relevant assessment year but apparently it is not clear that who has received such income. The Assessing Officer then by initiating proceedings against all such persons complete the assessment as a protective measure for the same income in order to prevent the revenue leakage both in the hands of the person who is considered as liable to tax and simultaneously also by including the same income in the hands of another person. The view of the A.O. behind such an assessment is to ensure that when the issue of income assessable is finally settled, the assessment of such income should not get time barred. Protective assessment cannot be made a basis for levy of penalty under any provisions of Act because Act does not envisage "Protective Assessment" as an assessment for taking penal action against the assessee.