Sh. Ajai Kalsi, New Delhi V. DCIT, New Delhi

CO 410/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0095 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 23-12-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: NIPPUN MITTAL; PAWAN BHO LUSARIA
• Keywords: Document seized; Documents seized
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C , NEW DELHI BEFORE SH. N. K. SAINI, HON BLE VICE PRESIDENT AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO. 4655/DEL/2015 : ASSTT. YEAR : 2006 - 07 ITA NO. 4656/DEL/2015 : ASSTT. YEAR : 2007 - 08 ITA NO. 4657/DEL/2015 : ASSTT. YEAR : 2008 - 09 ITA NO. 4658/DEL/2015 : ASSTT. YEAR : 2009 - 10 ITA NO. 4659/DEL/2015 : ASSTT. YEAR : 2010 - 11 ITA NO. 4660/DEL/2015 : ASSTT. YEAR : 2011 - 12 ITA NO. 4661/DEL/2015 : ASSTT. YEAR : 2012 - 13 DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 19, NEW DELHI VS SH. AJAI KALSI, FARM NO. 9, SHIVAJI MARG, WESTEND GREEN, RANGPURI, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A AZPK2263J CO NO. 435/DEL/2015 : ASSTT. YEAR : 2006 - 07 CO NO. 410/DEL/2015 : ASSTT. YEAR : 2007 - 08 CO NO. 411/DEL/2015 : ASSTT. YEAR : 2008 - 09 CO NO. 412/DEL/2015 : ASSTT. YEAR : 2009 - 10 CO NO. 413/DEL/2015 : ASSTT. YEAR : 2010 - 11 CO NO. 414/DEL/2015 : ASSTT. YEAR : 2011 - 12 CO NO. 4 15/DEL/2015 : ASSTT. YEAR : 2012 - 13 SH. AJAI KALSI, FARM NO. 9, SHIVAJI MARG, WESTEND GREEN, RANGPURI, NEW DELHI VS DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 19, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAZPK2263J ASSESSEE BY : SH. PAWAN BHO LUSARIA , CA & SH. NIPPUN MITTAL, CA REVENUE BY : SH . AMIT KATOCH , SR. DR DATE OF HEARING : 05 .12 .201 8 DATE OF PRONOUNCE MENT : 05 .1 2 .201 8 ITA NO S. 4655 TO 4661 /DE L/201 5 CO NOS . 410 TO 415 & 435/DEL/2015 AJAI KALSI 2 ORDER PER BENCH : THE APPEAL S BY THE DEPARTMENT AND THE CROSS OBJECTION S BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER S EACH DATED 27.04.2015 PASSED BY THE LEARNED CIT(A) - XXVII, NEW DELHI. 2. THE APPEALS OF THE DEPARTMENT AND THE CR OSS OBJECTIONS OF THE ASSESSEE HAVING COMMON ISSUES, WERE HEARD TOGETHER, SO, THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. GROUNDS RAISED IN ITA NO. 4655/DEL/2015 FOR THE ASSESSMENT YEAR 2006 - 07 READ AS UNDER: 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 W HEREAS 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 THE TAXABILITY OF THESE COMPANIES LIES IN INDIA AND THESE COMPANIES ARE RESIDENT FOR THE TAX PURPOSES 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 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 ITA NO S. 4655 TO 4661 /DE L/201 5 CO NOS . 410 TO 415 & 435/DEL/2015 AJAI KALSI 3 SUBSTANTIAL EVIDENCE IN FORM OF SEIZED MATERIAL, E - MAILS, SHARE HOLDING PATTERN SHOWING THE ULTIMATE CONTROL AND MANAGEMENT OF INDIAN COMPANIES AND OVER SEAS 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 I.T. 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 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 IT ACT, THERE WAS NO REASON OR OCCASION OR AN ISSUE TO ASSESS THE SAME IN THE HANDS OF THE A PPELLANT ON PROTECTIVE BASIS. THE LD. COMMISS IONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS. 394,07,64,987/ - MADE BY ASSESSING OFFICER. 6(A) THE ORDER OF THE LD. CIT (APPEALS) IS ERRONEOUS AND NOT TENAB LE IN LAW AND ON FACTS. (B) 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. 4. THE IDENTICAL GROUNDS ARE RAISED IN ALL OTHER APPEALS BY THE DEPARTMENT, THE ONL Y DIFFERENCE IS IN THE AMOUNT INVOLVED. ITA NO S. 4655 TO 4661 /DE L/201 5 CO NOS . 410 TO 415 & 435/DEL/2015 AJAI KALSI 4 5. DURING THE COURSE HEARING, THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SATED THAT THE ISSUES UNDER CONSIDERATION ARE DIRECTLY COVERED BY THE DECISION DATED 19.11.2018 OF THIS BENCH OF THE ITAT I N THE CASE OF DCIT, CENTRAL CIRCLE - 19, NEW DELHI VS SMT. MALA KALSI, CHANAKYA PURI, NEW DELHI IN ITA NO. 5028/DEL/2015 AND CO NO. 380/DEL/2015 FOR THE ASSESSMENT YEAR 2008 - 09. IT WAS ALSO STATED THAT THE GROUNDS RAISED IN THE SAID APPEAL AND THE APPEALS UNDER CONSID ERATION ARE IDENTICAL, THE ONLY DIFFERENCE IS IN THE AMOUNT INVOLVED AND THAT THE FACTS ARE IDENTICAL IN BOTH THE CASES WHEREIN THE PROTECTIVE ADDITIONS WERE MADE (COPY OF THE SAID ORDER DATED 19.11.2018 WAS FURNISHED WHICH IS PLACED ON RECORD). 6 . IN HIS RIVAL SUBMISSIONS, THE LD. CIT DR ALTHOUGH STRONGLY SUPPORT THE ORDER OF THE AO BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 7 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAIL ABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS WAS A SUBJECT MATTER OF THE DEPARTMENTAL APPEAL IN ITA NO. 5028/DEL/2015 AND CO NO. 380/DEL/2015 IN THE CASE OF SMT. MALA KALSI, WIFE OF THE ASSESS EE, FOR THE ASSESSMENT YEAR 2008 - 09 WHEREIN THIS BENCH OF THE TRIBUNAL IN PARAS 5 & 6 OF THE ORDER DATED 19.11.2018 HAS HELD AS UNDER: 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESE NT CASE, IT IS AN ADMITTED FACT THAT AN ITA NO S. 4655 TO 4661 /DE L/201 5 CO NOS . 410 TO 415 & 435/DEL/2015 AJAI KALSI 5 IDENTICAL ISSUE HAVING SIMILAR FACTS WAS A SUBJECT MATTER OF THE DEPARTMENTAL APPEALS IN ITA NOS. 5026, 5027, & 5029 TO 5032 (DELHI) OF 2015 AND CO NOS. 378, 379 & 381 TO 384 (DELHI) OF 2015 FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2006 - 07, 2007 - 08 AND 2009 - 10 TO 2012 - 13 WHEREIN THIS BENCH OF THE TRIBUNAL IN PARA 6 OF THE ORDER DATED 1.12.2017 HAS HELD AS UNDER: - WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE IMPUGNED ORDERS. ALL THE GROUNDS IN THE REVENUE'S APPEAL, IN SUBSTANCE, RELATE TO SOLITARY ISSUE OF DELETION OF PROTECTIVE ADDITION BY THE LD. CIT (A). THEREFORE, THE SAME ARE BEING CONSIDERED TOGETHER. WE FIND THAT AO IN THE ASSESSMENT ORDER ADMITTED THAT THE ENTIRE AMOUNT WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE ON 'PROTECTIVE BASIS' WAS ALREADY ASSESSED IN THE HANDS OF THE OVERSEAS COMPANIES ON 'SUBSTANTIVE BASIS'. IT WAS FURTHER NOTED THAT THE ASSESSING OFFICER DID NOT CONSIDER THE DETAILS FILED BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS BUT MADE THE ASSESSMENT OF THE ASSESSEE ON THE BASIS OF THE ASSESSMENT ORDERS OF THE OVERSEAS COMPANIES AND ALSO THAT OF HER HUSBAND SH. AJAY KALSI. WE FURTHER NOTE THAT ADDITION WHICH WAS MADE ON S UBSTANTIVE BASIS IN 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, ADDITION OF THE SAME AMOUNT WAS MADE B Y THE ASSESSING OFFICER IN THE HANDS OF THREE PERSONS I.E. (A) THE OVERSEAS COMPANIES, (B) SH. AJAY KALSI AND (C) SMT. MALA KALSI WHICH WAS UNWARRANTED AND UNJUSTIFIED. THE ADDITIONS MADE IN CASE OF THE OVERSEAS COMPANIES U/S 6(3) IS NOT RELEVANT TO THE CA SE OF THE ASSESSEE AS SHE IS ONLY A SHAREHOLDER, AND WAS NOT ENTITLED TO DERIVE ANY BENEFIT. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DID NOT DERIVE ANY BENEFIT FOR WHICH SHE IS LIABLE TO PAY TAXES THEREON AS PER THE INDIAN TAX ITA NO S. 4655 TO 4661 /DE L/201 5 CO NOS . 410 TO 415 & 435/DEL/2015 AJAI KALSI 6 LAWS. IT IS NOT OUT OF PLACE TO MENTION THAT WHEN ADDITION WAS ALREADY MADE IN THE HANDS OF THE OVERSEAS COMPANIES ON SUBSTANTIVE BASIS TREATING THEM AS RESIDENTS IN INDIA, THERE IS NO JUSTIFICATION FOR THE ASSESSING OFFICER TO MAKE SUCH AN ADDITION IN THE HANDS OF A SHARE HO LDER ON PROTECTIVE BASIS, WHEN NO BENEFIT WAS DERIVED BY HER FROM THESE COMPANIES TO PROTECT THE INTEREST OF REVENUE. IT IS NOTED THAT WITHOUT ASSESSING THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER SIMPLY TRANSFERRED T HE ADDITION MADE IN CASE OF THE OVERSEAS COMPANIES TO THE ASSESSMENT ORDER OF SH. AJAY 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 SUBSTANTIAL EVIDENCE TO PROVE HIS ROLE. BASED ON THE ASSESSMENT OF SH. AJAY KALSI, BY 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 ASSESSEE MEANING THEREBY THAT THE ASSESSING OFFICER DID NOT ASSESS THE INCOME 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 T HE ASSESSEE'S HUSBAND SH. AJAY KALSI, A PROTECTIVE ADDITION WAS ALSO MADE ON IDENTICAL FACTS. 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 ADDITION IN DETAIL AND DELETED T HE ENTIRE PROTECTIVE ADDITION MADE BY THE ASSESSING OFFICER IN HIS CASE. SINCE, THE FACTS OF THE ASSESSEE'S CASE ARE SIMILAR 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 M UTANDIS 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 INTERFERENCE ON OUR PART, ITA NO S. 4655 TO 4661 /DE L/201 5 CO NOS . 410 TO 415 & 435/DEL/2015 AJAI KALSI 7 HENCE, WE UPHOLD THE ACTION OF THE LD. CIT (A) AND REJECT THE GROUNDS RAISED BY THE REVENUE. 6. SO RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER, WE DO NOT SEE MERIT IN THIS APPEAL OF THE DEPARTMENT. SO RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER, WE DO NOT SEE MERIT IN THIS APPEAL OF THE DEPARTMENT. 8 . SINCE WE HAVE DISMISSED THE APPEAL S OF THE DEPARTMENT, THEREFORE, THE CROSS OBJECTION S WHICH ARE IN SUPPORT OF THE IMPUGNED ORDER S PASS ED BY THE LEARNED CIT(A) BECOME INFRUCTUOUS AND ACCORDINGLY DI SMISSED. 9 . IN THE RESULT, APPEAL S OF THE DEPARTMENT ARE DISMISSED AND CROSS O BJECTION S OF THE ASSESSEE ARE DISMISSED AS INFRUCTUOUS. (ORDER PRON OUNCED IN THE COURT ON 05 /1 2 /2018) SD/ - SD/ - ( BEENA A. PILLAI ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 05 /12 /2018 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR