Smt. Mala Kalsi, New Delhi V. DCIT, New Delhi

CO 383/DEL/2015

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3351 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 01-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 22-12-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SATPAL GULATI
• Assessee Lawyers: AMIT GOEL; NIPPUN MITTAL CAS
• Keywords: Document seized; Documents seized
• Section: 153A; 6; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NOS. 5026, 5027, 5029, 5030, 5031 & 5032/DEL /2015 AYRS.: 2006-07, 2007-08, 2009-10, 2010-11, 2011-1 2 & 2012-13 DCIT, CC-19, NEW DELHI ROOM NO. 362, ARA CENTRE, E-2, JHANDEWALAN EXTN., NEW DELHI VS. SMT. MALA KALSI, 44, MALCHA MARG, CHANAKYA PURI, NEW DELHI (PAN: AFQPK0596L) (APPELLANT) (RESPONDENT) AND CO NOS. 378, 379, 381, 382, 383 & 384/DEL/2015 IN (ITA NOS. 5026, 5027, 5029, 5030, 5031 & 5032/DEL /2015 ) AYRS.: 2006-07, 2007-08, 2009-10, 2010-11, 2011- 12 & 2012-13 SMT. MALA KALSI, 44, MALCHA MARG, CHANAKYA PURI, NEW DELHI (PAN: AFQPK0596L) VS. DCIT, CC-19, NEW DELHI ROOM NO. 362, ARA CENTRE, E-2, JHANDEWALAN EXTN., NEW DELHI (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. SATPAL GULATI, CIT(DR) ASSESSEE BY : SH. AMIT GOEL, & NIPPUN MITTAL, CAS ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED 06 APPEALS AND ASSESSEE HAS FILED 06 CROSS OBJECTIONS, AGAINST THE RESPECTIVE IMPUGNED ORDERS PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXVII, NEW DEL HI RELEVANT TO ASSESSMENT YEARS 2006-07, 2007-08, 2009-10, 2010-11 , 2011-12 & 2012-13 RESPECTIVELY. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE 2 COMMON AND IDENTICAL, HENCE, THE APPEALS AND CROSS OBJECTIONS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER FOR THE SAKE OF CONVENIENCE, BY DEALING WITH REVENUES APPE AL BEING ITA NO. 5026/DEL/2015 (AY 2006-07). 2. THE FOLLOWING ARE THE GROUNDS RAISED IN ASSESS MENT YEAR 2006-07 BY THE REVENUE IN ITS APPEAL. HOWEVER, IN OTHER APP EALS THE GROUNDS ARE SAME, EXCEPT THE DIFFERENCE IN THE FIGURES. 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THAT THE OVERSEAS COMPANIES IN WHICH THE ASSESSEE IS SHAREHOLDER/BENEFICIAL OWNER IS NOT A RESIDENT IN INDIA. UNDER SECTION 6(3)(II) OF THE I.T. ACT WHEREAS ON THE BASIS OF SEIZED DOCUMENTS/E-MAILS AND IN VARIOUS STATEMENTS OF SH. AJAY KALSI/SH. ANIL AGGARWAL U/S 134(4) HAVE ADMITTED THAT TAXABILITY OF THESE COMPANIES LIES IN INDIA AND THESE COMPANIES ARE RESIDENT FOR THE TAX PURPOSE U/S 6 OF THE I.T. ACT. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN IGNORING THAT UNDERLYING ASSETS AND 3 SOURCES OF REVENUE OF ALL THE OVERSEAS COMPANIES IN WHICH ASSESSEE IS SHAREHOLDER/BENEFICIAL OWNER ARE THE INDIAN COMPANIES. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN IGNORING THE SUBSTANTIAL EVIDENCE IN FORM OF SEIZED MATERIAL, E-MAILS, SHARE HOLDING PATTERN SHOWING THE ULTIMATE CONTROL AND MANAGEMENT OF INDIAN COMPANIES AND OVERSEAS COMPANIES LIES WITH SH. AJAY KALSI, SH. ANIL AGGARWAL AND SMT. MALA KALSI, WHO HAVE CREATED DIFFERENT VERTICALS OF CORPORATE VEIL UNDER THEM TO AVOID TAXABILITY IN INDIA. 4. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN IGNORING THE PROVISIONS OF SECTION 9(1) OF THE LT. ACT AS THE REVENUE HAS BEEN EARNED BECAUSE OF UNDERLYING ASSETS OF THE ASSESSEE WHOLLY AND TOTALLY SITUATED IN INDIA. 5. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON 4 FACTS IN HOLDING THAT ONCE AN ADDITION ON SUBSTANTIVE BASIS WAS MADE IN THE HANDS OF THE OVERSEAS COMPANIES TREATING THEM AS RESIDENTS IN INDIA U/S 6(3) OF THE LT. ACT, THERE WAS NO REASON OF OCCASION OR AN ISSUE TO ASSESS THE SAME IN THE HANDS OF THE APPELLANT ON PROTECTIVE BASIS. 6. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS. ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.371,32,83,664/ MADE BY ASSESSING OFFICER. 7. THE ORDER OF THE LD. CIT (APPEALS) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. 8. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF' THE HEARING OF THE APPEAL. 3. THE FOLLOWING ARE THE GROUNDS RAISED IN THE ASSE SSMENT YEAR 2007- 08 BY THE ASSESSEE IN THE CROSS OBJECTION. HOWEVER , IN OTHER CROSS OBJECTIONS THE GROUNDS ARE SAME, EXCEPT THE DIFFERE NCE IN THE FIGURES. 5 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSMENT ORDER PASSED BY THE AO IS WITHOUT JURISDICTION. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE INITIATION OF ASSESSMENT PROCEEDINGS AND ISSUE/ SERVICES OF NOTICES ARE NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW AND ACCORDINGLY THE ASSESSMENT ORDER PASSED ON THE FOUNDATION OF SUCH NOTICE(S) IS LIABLE TO BE QUASHED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ADDITION OF RS. 497,94,74,501/- MADE BY THE AO IS BEYOND THE SCOPE / JURISDICTION OF PROVISIONS OF SECTION 153A OF THE ACT AND, THEREFORE, THE ADDITION MADE IS LIABLE TO BE DELETED. THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT CRAVES LEAVE TO ADD, VARY AND / OR AMEND ANY OR ALL THE OF THE ABOVE GROUNDS WHETHER BEFORE OR DURING THE APPELLATE PROCEEDINGS. REVENUES APPEAL (AY 2006-07) 6 4. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AN D SEIZURE OPERATION U/S 132 OF THE INCOME TAX ACT, 1961 WAS CONDUCTED B Y THE INVESTIGATION WING OF THE DEPARTMENT ON 22.03.2012 IN M/S. FOCUS ENERGY GROUP OF CASES. THE ASSESSEE WAS ALSO COVERED U/S 132(1) OF THE INCOME TAX ACT, 1961. IN RESPONSE TO NOTICE U/S 153A ISSUED BY THE ASSESSING OFFICER THE ASSESSEE FILED HER RETURN OF INCOME. WHILE COMPLETI NG THE ASSESSMENT IN THE CASE OF THE ASSESSEE, THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION ON SUBSTANTIVE BASIS. HOWEVER, ADDITIONS WERE MADE ON PROTECTIVE BASIS HOLDING THAT PROFITS OF ALL THE OVERSEAS COMPANIES AS MENTIONED IN THE ASSESSMENT ORDER ARE TO BE TAXED IN INDIA ON THE GR OUND THAT THESE OVERSEAS COMPANY WERE TREATING AS RESIDENT IN IND IA IN ACCORDANCE WITH THE PROVISIONS LAID IN SECTION 6(3) OF THE INCOME T AX ACT 1961 AND ALSO HELD THAT SINCE SO FAR NONE OF THE OVERSEAS COMPANI ES HAVE ADMITTED TO BE IN THE JURISDICTION OF INDIA AND THEY HAVE NOT F ILED VALID RETURN AND PAID TAXES THEREON, THEREFORE, IN ORDER TO PROTECT THE I NTEREST OF REVENUE PROTECTIVE ADDITION IN RESPECT TO THE INCOME OF THE OVERSEAS COMPANIES FOR AY 2006-07 OF RS.371,34,13,346/- WAS MADE IN THE HA NDS OF THE ASSESSEE AND INCOME OF THE ASSESSEE WAS ACCORDINGLY ASSESSED VIDE ORDER DATED 31.3.2014 PASSED U/S. 153A/143(3) OF THE I.T. ACT, 1961. AGGRIEVED WITH THE AFORESAID ASSESSMENT ORDER DATED 31.3.2014, ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) WHO VID E HIS IMPUGNED ORDER DATED 05.05.2015 DELETED THE PROTECTIVE ADDITIONS M ADE BY THE ASSESSING OFFICER AND ALLOWED THE APPEAL OF THE ASSESSE. AGGR IEVED WITH THE 7 IMPUGNED ORDER, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AND ASSESSEE HAS ALSO FILED THE CROSS OBJECTIONS. 5. DURING THE HEARING, THE LD. CIT (DR) RELIED UPON THE ORDER OF ASSESSING OFFICER WHILE THE LD. COUNSEL OF THE ASSE SSEE RELIED UPON THE ORDER OF LD. CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE IMPUGNED ORDERS. ALL THE GROUNDS IN THE REVENUES APPEAL, IN SUBSTANCE, RELATE TO SOLITARY ISSUE OF DELETION OF PROTECTIVE ADDITION BY THE LD. CIT(A). THEREFORE, T HE SAME ARE BEING CONSIDERED TOGETHER. WE FIND THAT AO IN THE ASSESS MENT ORDER ADMITTED THAT THE ENTIRE AMOUNT WHICH WAS ADDED TO THE INCOM E OF THE ASSESSEE ON PROTECTIVE BASIS WAS ALREADY ASSESSED IN THE HAND S OF THE OVERSEAS COMPANIES ON SUBSTANTIVE BASIS. IT WAS FURTHER N OTED THAT THE ASSESSING OFFICER DID NOT CONSIDER THE DETAILS FILE D BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS BUT MADE THE A SSESSMENT OF THE ASSESSEE ON THE BASIS OF THE ASSESSMENT ORDERS OF T HE OVERSEAS COMPANIES AND ALSO THAT OF HER HUSBAND SH. AJAY KAL SI. WE FURTHER NOTE THAT ADDITION WHICH WAS MADE ON SUBSTANTIVE BASIS I N THE HANDS OF THE OVERSEAS COMPANIES WAS ALSO MADE IN THE HANDS OF SH . AJAY KALSI ON PROTECTIVE BASIS AND ALSO THE SAME AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE ON PROTECTIVE BASIS. THEREFORE, ADDITI ON OF THE SAME AMOUNT WAS MADE BY THE ASSESSING OFFICER IN THE HANDS OF T HREE PERSONS I.E. (A) THE OVERSEAS COMPANIES, (B) SH. AJAY KALSI AND (C) SMT. MALA KALSI WHICH 8 WAS UNWARRANTED AND UNJUSTIFIED. THE ADDITIONS MAD E IN CASE OF THE OVERSEAS COMPANIES U/S 6(3) IS NOT RELEVANT TO THE CASE OF THE ASSESSEE AS SHE IS ONLY A SHAREHOLDER, AND WAS NOT ENTITLED TO DERIVE ANY BENEFIT. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DI D NOT DERIVE ANY BENEFIT FOR WHICH SHE IS LIABLE TO PAY TAXES THEREO N AS PER THE INDIAN TAX LAWS. IT IS NOT OUT OF PLACE TO MENTION THAT WHEN A DDITION WAS ALREADY MADE IN THE HANDS OF THE OVERSEAS COMPANIES ON SUBS TANTIVE BASIS TREATING THEM AS RESIDENTS IN INDIA, THERE IS NO JU STIFICATION FOR THE ASSESSING OFFICER TO MAKE SUCH AN ADDITION IN THE H ANDS OF A SHARE HOLDER ON PROTECTIVE BASIS, WHEN NO BENEFIT WAS DERIVED BY HER FROM THESE COMPANIES TO PROTECT THE INTEREST OF REVENUE. IT I S NOTED THAT WITHOUT ASSESSING THE INCOME OF THE ASSESSEE FOR THE YEAR U NDER CONSIDERATION, THE ASSESSING OFFICER SIMPLY TRANSFERRED THE ADDITI ON MADE IN CASE OF THE OVERSEAS COMPANIES TO THE ASSESSMENT ORDER OF SH. A JAY KALSI ON THE GROUND THAT HE EXERCISED CONTROL AND MANAGEMENT OF THE AFFAIRS OF THE OVERSEAS COMPANIES AS LAID DOWN IN SECTION 6(3) OF THE I.T. ACT 1961 WITHOUT BRINING ON RECORD A CONCRETE AND SUBSTANTIA L EVIDENCE TO PROVE HIS ROLE. BASED ON THE ASSESSMENT OF SH. AJAY KALSI, B Y VIRTUE OF BEING A 50% SHARE HOLDER IN MULTI ASSET HOLDINGS LTD., THE ASSESSING OFFICER MADE AN ADDITION OF SIMILAR AMOUNT IN CASE OF THE ASSESS EE MEANING THEREBY THAT THE ASSESSING OFFICER DID NOT ASSESS THE INCOM E OF THE ASSESSEE BASED ON THE DETAILS FILED IN HER RETURN U/S 153A, BUT ASSESSED THE INCOME OF THE OVERSEAS COMPANIES IN HER HANDS WITHOUT ANY BASIS. WE FURTHER NOTE THAT IN THE CASE OF THE ASSESSEES HUSBAND SH. AJAY KALSI, A 9 PROTECTIVE ADDITION WAS ALSO MADE ON IDENTICAL FACT S. IN THAT CASE LD. CIT(A) VIDE HIS ORDER DATED 27.04.2015 IN APPEAL NO . 346/14-15 DISCUSSED THE FACTS PERTAINING TO THE PROTECTIVE AD DITION IN DETAIL AND DELETED THE ENTIRE PROTECTIVE ADDITION MADE BY THE ASSESSING OFFICER IN HIS CASE. SINCE, THE FACTS OF THE ASSESSEES CASE ARE S IMILAR TO THOSE OF HER HUSBAND, THE REASONS GIVEN BY THE LD. CIT(A) IN HIS ABOVE ORDER IN THE CASE OF SH. AJAY KALSI WILL APPLY MUTATIS MUTANDIS IN THE CASE OF THE ASSESSEE ALSO. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER ON PROTECTIVE BASIS AMOUNTING TO RS. 3,71,32,83,664/- WAS RIGHTLY DELETED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENC E ON OUR PART, HENCE, WE UPHOLD THE ACTION OF THE LD. CIT(A) AND REJECT T HE GROUNDS RAISED BY THE REVENUE. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. 8. FOLLOWING THE CONSISTENT VIEW TAKEN IN ITA NO. 5026/DEL/2015 AY 2006-07 IN UPHOLDING THE ACTION OF THE LD. CIT(A), AS AFORESAID, THE GROUNDS RAISED BY THE REVENUE IN OTHER APPEALS ALSO REJECTED AND ACCORDINGLY, THE OTHER REVENUE APPEALS BEING ITA NO S. 5027, 5029, 5030, 5031 & 5032/DEL/2015 RELATING TO ASSESSMENT YEARS 2007-08, 2009-10, 2010-11, 2011-12 & 2012-13 ALSO STAND DISMISSED. ASSESSEES CROSS OBJETIONS 9. SINCE WE HAVE DISMISSED ALL THE REVENUE APPEALS AS AFORESAID BY UPHOLDING THE ACTION OF THE LD. CIT(A), HENCE, ALL THE CROSS OBJECTIONS FILED BY THE ASSESSEE HAVE BECOME INFRUCTOUS AND D ISMISSED AS SUCH. 10 10. IN THE RESULT, ALL THE 06 APPEALS OF THE REVEN UE AS WELL AS 06 CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED IN THE AFO RESAID MANNER. ORDER PRONOUNCED IN THE OPEN COURT ON 01/12/2017. SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 01/12/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES