DCIT, New Delhi V. Sh. Anil Aggarwal, New Delhi

ITA 4662/DEL/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3742 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 14-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMAR BHADRA
• Keywords: Transfer pricing; Residential status; Search and seizure; Document seized; Avoidance of tax; Sham transactions; Documents seized; Capital Gains
• Section: 143(3); 153A; 201; 148; 132

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE MS SUCHITRA KAMBLE , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NOS. ASSESSMENT YEAR 4662/DEL/2015 2006 - 07 466 3 /DEL/2015 2007 - 08 466 4 /DEL/2015 2008 - 09 466 5 /DEL/2015 2009 - 10 466 6 /DEL/2015 2010 - 11 466 7 /DEL/2015 2011 - 12 466 8 /DEL/2015 2012 - 13 DCIT, CENTRAL CIRCLE - 19, NEW DELHI VS. ANIL AGGARWAL, S - 71, GREATER KAILASH, NEW DELHI PAN: ACJPA8635N (APPELLANT) (RESPONDENT) CO NOS I N ITA NOS. ASSESSMENT YEAR 416/DEL/2015 4662/DEL/2015 2006 - 07 417/DEL/2015 466 3 /DEL/2015 2007 - 08 418/DEL/2015 466 4 /DEL/2015 2008 - 09 41 9 /DEL/2015 466 5 /DEL/2015 2009 - 10 4 20 /DEL/2015 466 6 /DEL/2015 2010 - 11 4 21 /DEL/2015 466 7 /DEL/2015 2011 - 12 422 /DEL/2015 466 8 /DEL/2015 2012 - 13 ANIL AGGARWAL, S - 71, GREATER KAILASH, NEW DELHI PAN: ACJPA8635N VS. DCIT, CENTRAL CIRCLE - 19, NEW DELHI (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SAMAR BHADRA, CIT DR ASSESSEE BY: SHRI AMIT GOEL, CA SHRI NIPPUN MITTAL, CA DATE OF HEARING 08/08 / 201 9 DATE OF PRONOUNCEMENT 3 0 / 08 / 2019 O R D E R PER BENCH PAGE | 2 1 . THESE ARE THE APPEALS PERTAINING TO ONE AS SESSEE FOR SEVERAL YEARS INVOLVING COMMON ISSUES / GROUNDS OF APPEAL FOR AY 2006 - 07 TO AY 2012 - 13 AND THEREFORE, THEY ARE DISPOSED OFF BY THIS COMMON ORDER. 2 . ITA NO. 4662/DEL/2015 IS FILED BY THE DCIT, CENTRAL CIRCLE - 19, NEW DELHI (LD AO) FOR ASSESSMENT YEAR 2006 - 07 AGAINST THE ORDER OF THE LD CIT(A) - 27, NEW DELHI DATED 28.04.2015 RAISING SIX EFFECTIVE GROUNDS OF APPEAL: - 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 IN DIA 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 THE TAXABILITY OF THESE COMPANIES LIES IN INDIA AND THESE COMPANIES ARE RESIDENT FOR THE TAX PURPOSES U/S 6 OF THE IT 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 SUBSTANTIAL EVIDENCE IN FORM OF SEIZED MATERIAL, E - MAILS, SHARE HOLDING PATTERN SHOWING THE ULTIMATE CONTROL A ND 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 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 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. 22,74,81,323/ - MADE BY ASSESSING OFFICER. 7. (A) THE ORDER OF THE LD. CIT (APPEALS) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. 3 . THE BRIEF FACTS OF THE CASE SHOW THAT THE ASSESSEE IS AN INDIVIDUAL. A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CONDUCTED ON 22.03.2013 IN M/S. FOCUS ENERGY GROUP OF CASES WHEREIN , THE PREMISES OF THE ASSESSEE AT PAGE | 3 GREATER KAILASH - 2, NEW DELHI WAS ALSO COVERED. THEREFORE, NOTICE U/S 153A OF THE ACT WAS ISSUED TO THE ASSESSEE. ON 19.03.2013 THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING INCOME OF RS. 107339/ - . THE ASSESSMENT U/S 153A READ WITH SECTION 143(3) OF THE ACT WAS PASSED ON 31.03.2014 WHEREIN, THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 227588662/ - . THE ABOVE ADDITION CONSIST S OF THE INCOME OF TWO OVERSEAS COMPANIES AMOUNTING TO RS. 227481323/ - . THE SUBSTANTIVE A DDITION WAS MADE IN THE HANDS OF THE RESPECTIVE OVERSEAS COMPANIES; HOWEVER, AS THE ASSESSEE ALONG WITH THREE OTHERS IS THE SHAREHOLDER OF THOSE COMPANIES, THEREFORE HELD TO BE BENEFICIAL OWNER OF THE TWO COMPANIES , ADDITION ON THE PROTECTIVE BASIS WAS MAD E IN THE HANDS OF THE ASSESSEE. 4 . THE ASSESSEE AGGRIEVED WITH THE ORDER OF THE LD AO PREFERRED AN APPEAL BEFORE THE LD CIT(A) WHO DELETED THE ADDITION AS UNDER: - 8. GROUND NOS. 2, 3, 5, 5.1 TO 5.4, 8 AND 9 RELATES TO AN ADDITION OF RS.22,74,81,323/ - MADE B Y THE ASSESSING OFFICER ON PROTECTIVE BASIS. 8.1.0 I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS MADE BY THE ASSESSING OFFICER AND CONCLUSIONS DRAWN IN THE ASSESSMENT ORDER. I HAVE ALSO CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE SUBMISSIONS AND ARGUMENTS OF THE APPELLANT. ON PERUSAL OF THE DETAILS ON RECORD, IT IS SEEN THAT IN THE ASSESSMENT ORDER, IN THE CASE OF THE APPELLANT, THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION ON SUBSTANTIVE BASIS. A CONSOLIDATED AMOUNT AGGREGATING TO RS.22,74, 81,323/ - WAS ADDED TO THE INCOME OF THE APPELLANT ON PROTECTIVE BASIS ON THE GROUND THAT NONE OF THE OVERSEAS COMPANIES HAD ADMITTED TO BE IN THE JURISDICTION OF THE INDIAN TAX LAWS AND THEREFORE, IN ORDER TO PROTECT THE INTEREST OF REVENUE INCOME OF ALL THOSE OVERSEAS COMPANIES FOR THE ASSESSMENT YEAR 2006 - 07 WAS ASSESSED IN THE HANDS OF THE APPELLANT ON PROTECTIVE BASIS, AND AN ADDITION OF THE SAME SEGREGATED AMOUNT WAS MADE IN THE HANDS OF THE RESPECTIVE OVERSEAS COMPANIES ON SUBSTANTIVE BASIS IN T HEIR ASSESSMENTS FOR RESPECTIVE YEAR. IT IS PERTINENT TO MENTION HERE 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 APPELLANT ON PROTECTIVE BASIS WHICH EVIDENCES LACK OF CLARITY AND CONFUSION IN THE MIND OF THE ASSESSING OFFICER. ON PERUSAL OF THE ASSESSMENT ORDER OF THE APPELLANT, I FIND THAT THE CONTENTS OF THE ASS ESSMENT ORDERS IN CASE OF THE OVERSEAS COMPANIES WERE REPRODUCED IN ENTIRETY IN COMPLETE FORM IN TOTO, IN THE CASE OF THE APPELLANT ALSO. THERE IS NO ISSUE RELEVANT TO THE INCOME OF THE APPELLANT WHICH WAS DISCUSSED BY THE ASSESSING OFFICER THAT RESULTED I N ADDITION IN HIS INDIVIDUAL CASE. THE ASSESSING OFFICER HAD DISCUSSED AT LENGTH ABOUT THE APPLICABILITY OF THE PROVISIONS OF SECTION 6(3) OF THE IT ACT. 1961 IN THE CASES OF RESPECTIVE OVERSEAS COMPANIES. IN THE ASSESSMENT ORDER OF PAGE | 4 THE APPELLANT. THE ASSE SSING OFFICER HAD CONSTANTLY AND CONSISTENTLY ALLEGED THAT THE AMOUNTS, WHICH WERE ADDED IN THE CASE OF THE APPELLANT ON PROTECTIVE BASIS, PERTAINED TO VARIOUS OVERSEAS COMPANIES. IT IS ALSO PERTINENT TO MENTION THAT IN THE CONCLUDING PART OF THE ASSESSMEN T ORDER, IN PARA 21.4, THE ASSESSING OFFICER CATEGORICALLY STATED THAT SUBSTANTIVE ADDITION WAS ALREADY MADE IN THE HANDS OF THE RESPECTIVE OVERSEAS COMPANIES AND IN ORDER TO PROTECT THE INTEREST OF REVENUE, PROTECTIVE ADDITION WAS MADE IN RESPECT OF THE A MOUNT PERTAINING TO SOME OF THE OVERSEAS COMPANIES WHERE THE APPELLANT HAD BENEFICIAL INTEREST FOR ASSESSMENT YEAR 2006 - 07 IN THE HANDS OF THE APPELLANT. 8.1.1 IN THE AFORESAID BACK GROUND OF FACTS, THE ISSUE NOW FOR CONSIDERATION IN THE PRESENT APPEAL BE FORE ME IS WHETHER THE ASSESSING OFFICER WAS JUSTIFIED AND CORRECT IN MAKING A PROTECTIVE ADDITION AMOUNTING TO RS.22,74,81,323/ - IN THE HANDS OF THE APPELLANT. 8.1.2 ON PERUSAL OF THE ORDER OF THE APPELLANT, I FIND THAT THE ASSESSING OFFICER MADE THE A DDITION ON PROTECTIVE BASIS BY HOLDING THAT THE PROFITS OF THE OVERSEAS COMPANIES WERE TO BE TAXED IN THE HANDS OF THE APPELLANT BY APPLYING THE CONCEPT OF DOCTRINE OF LIFTING THE CORPORATE VEIL. THE ASSESSING OFFICER ALSO STATED IN PARA 21.2.8, THAT D OCTRINE OF LIFTING THE CORPORATE VEIL WAS READILY APPLIED IN CASES FALLING WITHIN THE PURVIEW OF COMPANY LAW, LAW OF CONTRACT AND LAW OF TAXATION, WHEN ONCE THE TRANSACTION WAS SHOWN TO BE FRAUDULENT, SHAM, CIRCUITOUS OR COLOURABLE DEVICE FOR THE PURPOSE O F TAX EVASION. 8.1.3 ON A CAREFUL CONSIDERATION OF THE FACTS, I FIND THAT THE OBSERVATIONS OR REMARKS MADE BY THE ASSESSING OFFICER ARE NOT ONLY ERRONEOUS BUT ALSO OUT OF CONTEXT AND SELF - CONTRADICTORY. THE ASSESSING OFFICER HIMSELF WHILE ASSESSING THE OV ERSEAS COMPANIES HAD TREATED ALL THE OVERSEAS COMPANIES TO BE SEPARATE LEGAL ENTITIES. THE OFFICERS OF THE INVESTIGATION WING DURING THE POST SEARCH ENQUIRIES AND THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS OF THE OVERSEAS COMPANIES HAD MADE EL ABORATE AND INDEPENDENT INQUIRIES FROM THE VARIOUS OVERSEAS FOREIGN TAX AUTHORITIES THROUGH FT&TR DIVISION OF CBDT REGARDING THE AFFAIRS OF THESE OVERSEAS COMPANIES. FROM THE DETAILS ON RECORD, WHICH WERE PROVIDED BY THE RESPECTIVE FOREIGN TAX AUTHORITY, I T WAS EVIDENT, THAT THE OVERSEAS COMPANIES WERE INCORPORATED ACCORDING TO THE PREVALENT LAWS OF THE RESPECTIVE COUNTRIES AND COMPLIED ALL STATUTORY PROVISIONS. I ALSO PERUSED THE INFORMATION PROVIDED BY THESE FOREIGN TAX AUTHORITIES AND NONE OF THEM REPORT ED ANY DOUBTFUL OR ILLEGAL EXISTENCE OF THESE COMPANIES. IT IS ALSO RELEVANT AND PERTINENT TO MENTION HERE, THAT WHILE ASSESSING THE OVERSEAS COMPANIES, IN THE ASSESSMENT ORDERS OF RESPECTIVE OVERSEAS COMPANIES, THE ASSESSING OFFICER HAD HIMSELF ADMITTED I N PARA 5.9 AS UNDER: '5.9 THE ASSESSEE'S CLAIM THAT IT IS REGISTERED OUTSIDE INDIA ACCORDING TO LAW OF OUR OWN COUNTRY I.E., IS NOT CHALLENGED BY THE DEPARTMENT AND IS ACCEPTED.' 8.1.4 FROM THE AFORESAID ADMISSION BY THE ASSESSING OFFICER, IT IS EVIDENT THAT HE ACCEPTED THE STATUS OF THE OVERSEAS COMPANIES AS NOT RESIDENT IN INDIA. IN PARA 5.10 OF THE ASSESSMENT ORDER IN RESPECT OF PAGE | 5 OVERSEAS COMPANIES, THE ASSESSING OFFICER HAD ADMITTED THA T THE OVERSEAS COMPANIES ARE - INDEPENDENT AND DISTINCT CORPORATE LEGAL ENTITY IS ACCEPTED PARTIALLY. SIMILARLY, IN PARA 5.15 OF THE SAID ORDER, THE ASSESSING OFFICER HAD ADMITTED THAT THE HEAD AND BRAIN I.E. BOARD OF DIRECTORS IS SITUATED OUTSIDE IND IA IS PARTIALLY CORRECT. HAVING ADMITTED THE AFORE STATED POSITION AND STATUS OF THE OVERSEAS COMPANIES AS RESIDENTS IN THEIR RESPECTIVE COUNTRIES AND EXISTING OUTSIDE INDIA, I DO NOT FIND ANY REASON OR GROUND FOR THE ASSESSING OFFICER TO TREAT THESE COMP ANIES AS SHAM ON A SPUR OF A MOMENT WITHOUT ANY BASIS WHILE ASSESSING THE CASE OF THE APPELLANT. 8.1.5 THE ASSESSING OFFICER HAD DRAWN AN ADVERSE INFERENCE FOR TAXING THE INCOME OF THE OVERSEAS COMPANIES IN THE HANDS OF THE APPELLANT BY LIFTING THE CORP ORATE VEIL ON THE GROUND THAT VARIOUS OVERSEAS COMPANIES WERE INCORPORATED FOR THE PURPOSE OF AVOIDING TRANSFER PRICING AUDIT, WHICH IN MY VIEW IS DEVOID OF MERIT AND CONTRARY TO THE FACTS OF THE CASE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF VARIOUS INDIAN COMPANIES, THE ASSESSING OFFICER MADE A REFERENCE TO THE TRANSFER PRICING OFFICER (TPO) INTERNATIONAL TAXATION, NEW DELHI IN RESPECT OF TRANSACTIONS OF VARIOUS OVERSEAS COMPANIES WITH THAT OF THE VARIOUS INDIAN COMPANIES. IT IS CERTAINLY AN ESTABLI SHED FACT, THAT SUCH REFERENCE TO THE TRANSFER PRICING OFFICER COULD ONLY BE MADE IF THE VARIOUS OVERSEAS COMPANIES WERE CONSIDERED AND TREATED TO BE SEPARATE AND INDEPENDENT LEGAL ENTITIES, AS WAS RIGHTLY DONE BY THE ASSESSING OFFICER IN THIS CASE. IF THE OVERSEAS COMPANIES WERE TO BE TREATED AS SHAM, THEN OBVIOUSLY, THERE WOULD BE NO OCCASION OR NEED FOR THE ASSESSING OFFICER TO REFER SUCH TRANSACTIONS TO TRANSFER PRICING OFFICER FOR DETERMINING THE ARMS LENGTH PRICE OF THE TRANSACTIONS BETWEEN THE OV ERSEAS COMPANIES AND THE INDIAN COMPANIES. BY MAKING A REFERENCE TO THE TRANSFER PRICING OFFICER, THE ASSESSING OFFICER HAD HIMSELF ADMITTED AND RECOGNIZED THE VARIOUS OVERSEAS COMPANIES AS GENUINE, SEPARATE AND INDEPENDENT LEGAL ENTITIES. THEREFORE, IN MY CONSIDERED VIEW THERE WAS NO JUSTIFICATION FOR THE ASSESSING OFFICER TO STATE THAT THESE COMPANIES WERE SHAM. IT IS ALSO A MATTER OF RECORD, THAT AFTER THE FINANCIAL AND ECONOMIC ANALYSIS OF THESE RELATED TRANSACTIONS BETWEEN THE INDIAN COMPANIES AND OV ERSEAS COMPANIES, THE TPO, NEW - DELHI DID NOT MAKE ANY ADVERSE INFERENCE AND DID NOT PROPOSE ANY ADJUSTMENTS. 8.1.6 THEREFORE, THE REFERENCE MADE TO THE TRANSFER PRICING OFFICER AND THE ORDERS PASSED BY HIM IN PURSUANCE OF SUCH REFERENCE CLEARLY ESTABLISHES THE FACT THAT: - I) THE OVERSEAS COMPANIES ARE SEPARATE, INDEPENDENT AND GENUINE ENTITIES II) THE TRANSACTIONS BET WEEN THE VARIOUS COMPANIES ARE GENUINE TRANSACTIONS. PAGE | 6 III) THAT THE TRANSACTIONS BETWEEN THE VARIOUS COMPANIES WAS CARRIED OUT AT AN ARMS LENGTH PRICE. IV) THAT NOT A SINGLE CASE OF DIVERSION OF PROFIT OF THE INDIAN ENTITIES TO OVERSEAS ENTITIES WAS FOUND N EITHER BY THE TPO NOR THE ASSESSING OFFICER. 8.1.7 IN VIEW OF THE MATERIAL ON RECORD AND DISCUSSION THERETO, THERE IS NO MERIT OR BASIS FOR THE ASSESSING OFFICER TO LIFT THE CORPORATE VEIL ON ANY GROUND OR TO MAKE AN ALLEGATION WHILE ASSESSING THE APPELLA NTS CASE THAT PROFIT OF THE INDIAN ENTITIES WAS TRANSFERRED TO THE OVERSEAS COMPANIES AND THAT SUCH OVERSEAS COMPANIES WERE INCORPORATED WITH A PURPOSE TO AVOID TRANSFERRING AUDIT. THE ASSESSING OFFICER DID NOT ALLEGE THAT THE APPELLANT TRANSFERRED UNDISC LOSED INCOME OR UNDISCLOSED PROFITS OF THE INDIAN COMPANIES TO THE OVERSEAS COMPANIES. HE FOCUSED MAINLY ON THE PURPOSE OF INCORPORATING THE OVERSEAS COMPANIES IN TAX HAVENS WHICH ACCORDING TO HIM WAS FOR AVOIDING TRANSFER PRICING AUDIT OF THE RELATED TRAN SACTIONS BETWEEN THESE INDIAN COMPANIES AND THE OVERSEAS COMPANIES, WHICH WAS PRESUMED BY HIM WAS TO AVOID PAYMENT OF TAXES ALSO. SINCE THESE OVERSEAS COMPANIES WERE ACCEPTED BY ASSESSING OFFICER TO BE INCORPORATED OUTSIDE INDIA TO FASTEN THE TAX LIABILITY ON THESE OVERSEAS COMPANIES, HE INVOKED THE PROVISIONS OF SECTION 6(3) OF THE IT ACT, 1961 AND THEREAFTER, AS AN ALTERNATE ARGUMENT ALSO SUGGESTED APPLICATION OF THE AMENDED PROVISIONS OF SECTION 9 OF THE IT ACT IN CASE OF THE OVERSEAS COMPANIES AND MADE AN ADDITION ON SUBSTANTIVE BASIS IN THEIR RESPECTIVE HANDS THEREFORE, IN MY OPINION, BASED ON THE ABOVE DISCUSSION, I DO NOT SEE ANY REASON OR JUSTIFICATION FOR THE ASSESSING OFFICER TO MAKE AN ADDITION ON PROTECTIVE BASIS IN THE CASE OF THE APPELLANT WI THOUT BRINGING ON RECORD ANY SUBSTANTIAL MATERIAL OR CONCRETE EVIDENCE WHICH WAS DETECTED BY HIM SUGGESTING SOME FRAUD OR ADOPTION OF A COLOURABLE DEVICE OR METHOD BY THESE COMPANIES TO EVADE PAYMENT OF TAXES IN INDIA. ADDITION ON SUBSTANTIVE BASIS WAS M ADE BY THE ASSESSING OFFICER IN THE CASE OF THESE OVERSEAS COMPANIES TREATING THEM AS RESIDENTS UNDER THE PROVISIONS OF SECTION 6(3) OF THE IT ACT, 1961 BUT NOT ON THE BASIS OF ANY FRAUD OR ILLEGAL TRANSACTIONS, WHICH WAS INVESTIGATED BY THE ASSESSING OF FICER. 8.1.8 IT IS ALSO A MATTER OF RECORD WHICH IS EVIDENT FROM THE ASSESSMENT ORDER THAT AN AMOUNT OF RS.22,74,81,323/ - WAS ADDED TO THE INCOME OF THE APPELLANT ON PROTECTIVE BASIS DID NOT BELONG TO THE APPELLANT NOR PERTAINED TO THE APPELLANT. THE S AID AMOUNT BELONGED TO THOSE OVERSEAS COMPANIES WHERE THE ASSESSING OFFICER CONSIDERED THEM TO BE TAXABLE IN INDIA U/S 6(3) OF THE IT ACT ON SUBSTANTIVE BASIS AND BROUGHT THEM TO TAX NET ACCORDINGLY. WHERE THE FACTS OF THE CASE OF THE APPELLANT ARE CONCE RNED, IT IS IRRELEVANT WHETHER SUCH AMOUNTS WERE FOUND TO BE TAXABLE OR NOT IN THE CASE OF THOSE OVERSEAS COMPANIES AS THE FACTS ARE NOT IDENTICAL OR THERE WERE ANY RELATED TRANSACTIONS BETWEEN THE APPELLANT AND THOSE OVERSEAS COMPANIES WHICH WARRANTED ADD ITION IN THE HANDS OF THE APPELLANT ON PROTECTIVE BASIS. THE OWNERSHIP OF THE INCOME WHICH WAS ADDED IN CASE OF THESE OVERSEAS COMPANIES WAS CATEGORICALLY VOUCHED AND ADMITTED BY THE ASSESSING OFFICER AS BELONGING TO THE OVERSEAS COMPANIES, WHICH WAS EVI DENT IN PARA 19 OF THE ASSESSMENT ORDER AS UNDER: PAGE | 7 '19. THEREFORE IN VIEW OF THE AFORESAID DISCUSSION, FACTS ON RECORD, SEIZED DOCUMENT'S, STATEMENTS RECORDED DURING SEARCH PROCEEDINGS U/S 132, POST SEARCH PROCEEDINGS AND ASSESSMENT PROCEEDINGS, CORRESPONDE NCE REFLECTED IN E - MAILS AND INFORMATION GATHERED DURING ASSESSMENT PROCEEDINGS INCLUDING IS SPECIFIC INPUTS RECEIVED FROM FOREIGN TAX AUTHORITY IN UK, BVI, CYPRUS AND MAURITIUS AS DISCUSSED IN DETAIL IN THE ABOVE PARAS IT IS HELD THAT THE INCOME OF OVERS EAS COMPANIES ARE LIABLE TO BE TAX IN INDIA UNDER THE PROVISIONS OF SECTION 6(3)(II) OF THE I.T.ACT, 1961 SINCE OVERSEAS COMPANIES ARE TREATED AS COMPANY RESIDENT IN INDIA FOR THE REASON THAT CONTROL AND MANAGEMENT OF ITS AFFAIRS IS WHOLLY SITUATED IN INDI A.' 8.1.9 IN VIEW OF THE AFORESAID POSITION CONCLUDED BY THE ASSESSING OFFICER FOR MAKING SUBSTANTIVE ADDITION IN CASE OF THE OVERSEAS COMPANIES, I DO NOT FIND ANY VALID REASON FOR THE ASSESSING OFFICER TO MAKE A SIMILAR ADDITION ON PROTECTIVE BASIS I N THE HANDS OF THE APPELLANT WITHOUT ANY BASIS. 8.1.10 THE PROTECTIVE ADDITION MADE IN THE CASE OF THE APPELLANT COMPRISED OF THE AMOUNTS WHICH WERE TRANSACTED BETWEEN THE COMPANIES AND WHICH WERE TREATED BY THE ASSESSING OFFICER AS A PART OF THE GROUP COM PANIES. IF THESE COMPANIES AND GROUP CORPORATE STRUCTURE WAS TREATED AS SHAM' AS ALLEGED BY THE ASSESSING OFFICER, THEN THE NATURAL COROLLARY TO THE SAME WOULD BE CANCELLATION TO NULLIFY THE INTRA GROUP TRANSACTIONS AND THE PROTECTIVE ADDITION MADE BY HIM WOULD NOT HAVE EXISTED. DUE TO LACK OF APPRECIATION OF FACTS IN RIGHT PERSPECTIVE, THE ASSESSING OFFICER IS ALWAYS SELF - CONTRADICTING HIS ASSESSMENT. ON ONE HAND HE ATTEMPTED TO LIFT THE CORPORATE VEIL BY TREATING VARIOUS COMPANIES AS SHAM AND ON THE O THER HAND AT THE SAME TIME, HE RECOGNIZED THE RELATED TRANSACTIONS ENTERED BETWEEN THESE COMPANIES AS GENUINE, SEPARATE AND INDEPENDENT TRANSACTIONS. FROM THE MATERIAL ON RECORD, IT IS EVIDENT THAT THESE OVERSEAS COMPANIES ARE REAL AND ARE OF SUBSTANCE. TH E ASSESSING OFFICER ACCEPTED THESE TRANSACTIONS WITH VARIOUS INDIAN COMPANIES, WHICH IS EVIDENT FROM THE VERY FACT THAT THESE TRANSACTIONS WERE REFERRED TO TRANSFER PRICING OFFICER, NEW DELHI. THE INCOME FROM VARIOUS OVERSEAS COMPANIES WAS SUBJECTED TO THE PROVISIONS OF INDIAN INCOME TAX ACT, 1961, WHEREVER IT WAS APPLICABLE WITH REGARD TO THESE TRANSACTIONS AND TAXES WERE ALSO PAID THEREON. 8.1.11 THE APPELLANT SH. ANIL AGGARWAL DID NOT UNDERTAKE ANY KIND OF TRANSACTIONS WITH ANY OF THESE OVERSEAS COMPANIE S EXCEPT AN AMOUNT OF RS.48,23,000/ - RECEIVED DURING THE ASSESSMENT YEAR 2009 - 10 AND AN AMOUNT OF RS.48,99,381/ - RECEIVED DURING THE ASSESSMENT YEAR 2010 - 11 FROM SDP SERVICES LTD. WAS BEEN DULY DECLARED BY HIM IN THE RETURN FILED IN INDIA . 8.1.12 FURTHER, IN MY CONSIDERED OPINION, BY VIRTUE OF BEING A MERE SHARE HOLDER AND HAVING A BENEFICIAL INTEREST IN A COMPANY, CANNOT BE A GOOD GROUND TO FASTEN THE SHAREHOLDER WITH A NON - EXISTENT AND HYPOTHETICAL INCOME TAX LIABILITY. THE QUESTION OF TAXABILITY IN THE HANDS OF SHAREHOLDER WOULD ARISE ONLY WHEN SOME INCOME IS RECEIVED OR ACCRUED TO THE SHAREHOLDER FROM THE COMPANY. IN THE APPELLANTS CASE PAGE | 8 HE HAD NEITHER RECEIVED ANY INCOME FROM ANY OVERSEAS COMPANIES NOR ANY INCOME HAS ACCRUED TO HIM FROM ANY OVERSEAS CO MPANY. IT IS NOT A CASE OF THE ASSESSING OFFICER WHERE THE APPELLANT DERIVED SOME KIND OF INCOME FROM THESE OVERSEAS COMPANIES AND NO PAYMENT OF TAXES THEREON WAS AVOIDED OR EVADED BY HIM IN INDIA. 8.1.13 IN PARA 21.2.1 OF THE ASSESSMENT ORDER, THE ASSESSI NG OFFICER MENTIONED THAT REAL BUSINESS ACTIVITY WAS CARRIED OUT ONLY IN TWO MAIN COMPANIES OF THE GROUP, NAMELY M/S FOCUS ENERGY LTD. AND M/S GRANADA SERVICES PVT LTD. ALTHOUGH, THIS CONCLUSION OF THE ASSESSING OFFICER IS TOTALLY OUT OF CONTEXT, SO FAR AS THE CASE OF APPELLANT IS CONCERNED, YET IT IS NOT UNDERSTOOD AS TO HOW, AND ON WHAT BASIS THE ADDITION CAN BE MADE IN THE CASE OF APPELLANT WITHOUT BRINGING ANY EVIDENCE TO SUPPORT IT. IT IS PERTINENT TO MENTION HERE THAT THE ASSESSING OFFICER ALSO WAS TH E ASSESSING OFFICER OF THE INDIAN ENTITIES NAMELY GRANADA SERVICES PVT. LTD. AND FOCUS ENERGY LTD. AND WITHOUT BRINGING AN ADVERSE MATERIAL ON RECORD IN CASE OF THE APPELLANT, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING SUCH SELF CONTRADICTORY AND BA SELESS ALLEGATIONS. FURTHER, THE INCOME FROM THE OIL AND NATURAL GAS BLOCKS AND BPO BUSINESS WAS OFFERED TO TAX BY THE RESPECTIVE COMPANIES IN THEIR INCOME TAX RETURNS AND THEREFORE, THE ALLEGATION OF THE ASSESSING OFFICER THAT PROFIT FROM INDIAN COMPANIES WAS TRANSFERRED TO OVERSEAS COMPANIES APPEARS TO BE MISCONCEIVED AND BASELESS. 8.1.14 IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER REFERRED TO VARIOUS E - MAILS AND CORRESPONDENCE TO ALLEGE THAT THE CONTROL AND MANAGEMENT OF THE AFFAIRS OF VARIOUS OVERSEAS COMPANIES WAS SITUATED IN INDIA AND EXERCISED BY SH. AJAY KALSI. WITHOUT BRINGING ANY C ORROBORATIVE EVIDENCE, RELYING ON INCOMPLETE, FRAGMENTED, PLAIN TEXTS WHICH ARE UNAUTHENTICATED, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING AN ADDITION IN THE CASE OF THE APPELLANT ON THE BASIS OF THESE E - MAILS. THESE E - MAILS DO NOT ESTABLISH EVEN R EMOTELY THAT THE APPELLANT HAS EARNED ANY INCOME. THE E - MAILS, NOWHERE SHOWED ANY INCOME BEING EARNED BY THE APPELLANT. IN FACT, THE ASSESSING OFFICER ALSO DID NOT TREAT THESE E - MAILS TO BE A GROUND OR BASIS FOR MAKING THE PROTECTIVE ADDITION IN THE CASE OF THE APPELLANT. 8.1.15 IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER RELIED ON THE STATEMENTS OF THE APPELLANT AND OTHER PERSONS RECORDED DURING THE COURSE OF SEARCH. THESE STATEMENTS WERE INFERRED BY THE ASSESSING OFFICER AS A GROUND FOR TREATING VAR IOUS OVERSEAS COMPANIES AS RESIDENT IN INDIA U/S. 6(3) OF THE INCOME TAX ACT, 1961 AND CONSEQUENTLY SUBSTANTIVE ADDITIONS WERE MADE IN THE CASE OF RESPECTIVE OVERSEAS COMPANIES. SUBSEQUENT, TO SEARCH, THE APPELLANT HAD CHALLENGED THE VERACITY OF THESE STATEMENTS ON SEVERAL OCCASIONS. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, VIDE LETTER DATED 25.03.2014, THE APPELLANT CHALLENGED THE VERACITY OF THE CONTENTS OF THE SAID STATEMENTS EXTRACTED AS UNDER: 'FIRSTLY THE ALLEGATIONS MADE AND CONCLUSIONS DRAWN IN THE SHOW CAUSE NOTICE ARE VAGUE ERRONEOUS AND SELF - CONTRARY IN AS MUCH AS AT CERTAIN PLACES IN THE NOTICE, THE UNDERSIGNED IS BEING HELD TO BE BENEFICIARY / ULTIMATE BENEFICIARY OF CERTAIN COMPANIES AND AT CERTAIN OTHER PLACES IN THE NOTICE, SOME OTHER PERSON IS HELD TO BE PAGE | 9 THE BENEFICIARY / ULTIMATE BENEFICIARY OF THE SAME COMPANIES. SIMILARLY AT VARIOUS PLACES IN THE NOTICES, THE UNDERSIGNED IS ALLEGED TO BE CONTROLLING OR MANAGING CERTAIN COMPANIES, WHEREAS AT CERTAIN OTHER PLACES SOME OTHER PERSON IS ALLEGED TO BE CONTROLLING OR MANAGING THE SAME. THE UNDERSIGNED HAS NOT EARNED ANY SUCH INCOME AS MENTIONED IN PARAGRAPH 7.5 OF YOUR CAPTIONED LETTER AND THEREFORE, IT IS INCONCEIVABLE THAT ANY ADDITION OF ANY SUCH NON - EXISTING INCOME CAN BE MADE. IT WOUL D NOT BE OUT OF PLACE TO HIGHLIGHT THAT THE UNDERSIGNED HASNT RECEIVED ANY BENEFIT FROM ANY OF THE FOREIGN COMPANIES MENTIONED IN YOUR CAPTIONED NOTICE, EXCEPT WHAT HAS BEEN DISCLOSED IN MY RETURN OF INCOME. THERE IS ABSOLUTELY NO BASIS/MATERIAL EVEN TO S UGGEST THAT UNDERSIGNED HAS RECEIVED ANY BENEFIT OR EARNED INCOME WHICH IS NOT DISCLOSED. AT THE COST OF REITERATION, IT IS STATED THAT THE CONCLUSION DRAWN IS FACTUALLY WRONG AND LEGALLY UNSUSTAINABLE. FURTHER, I WOULD LIKE TO BRING ON RECORD THE SURROUND ING CIRCUMSTANCES AND THE MANNER IN WHICH THE STATEMENTS WERE RECORDED. IT WOULD BE IMPERATIVE TO HIGHLIGHT THAT THE SEARCH OPERATIONS WHICH STARTED ON 22.03.2012 AND CONTINUED FOR CONSECUTIVE PERIOD FOR 3 DAYS & NIGHTS (WHEREIN, IT WAS EVIDENT THAT ENTIRE SEARCH OPERATION WAS CARRIED OUT WITH PREDETERMINED BIAS THAT THE VARIOUS NON - RESIDENT FOREIGN COMPANIES OUGHT TO HAVE PAID TAXES IN INDIA. IT IS A MATTER OF RECORD THAT I WAS KEPT AWAKED WHOLE NIGHT AND DAY, WHICH ITSELF SUGGESTS THE CONSTRICTIVE ENVIRO NMENT IN WHICH THE STATEMENTS WERE RECORDED). IN THIS BACK DROP THE SEARCH TEAM TOOK WRITTEN FROM ME WHAT THEY WANTED. HOWEVER, I AM STILL SANGUINE THAT JUSTICE SHALL PREVAIL. IT MAY BE RELEVANT TO MENTION THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, YOU HAD RECORDED MY STATEMENT. IN THE SAID STATEMENT, YOUR GOOD OFFICE WAS APPRAISED THAT THE UNDERSIGNED WAS NOT AWARE ABOUT THE CONTENTS OF THE STATEMENTS RECORDED AT THE TIME OF SEARCH. MOREOVER, AT THE TIME OF RECORDING OF STATEMENT DURING THE COURSE O F ASSESSMENT PROCEEDINGS, THE UNDERSIGNED DID STATE THAT THE CONTENTS OF STATEMENT COULDN'T BE COMMENTED UPON, UNLESS A COPY OF SAME IS MADE AVAILABLE. HOWEVER, COPY OF THE STATEMENTS HAVE NOT YET BEEN MADE AVAILABLE TO ME OR MY AUTHORIZED REPRESENTATIVE. A SIMILAR SUBMISSION HAD BEEN MADE IN THE LETTER DT. 01.02.2014, WHEREIN, YOUR GOOD OFFICE WAS REQUESTED YOU TO PROVIDE THE COPY OF STATEMENTS. THE REASONS FOR NOT MAKING AVAILABLE THE STATEMENTS BASED UPON WHICH, YOUR GOOD OFFICE PROPOSE TO DRAW ERRONEOUS CONCLUSIONS, ARE BEST KNOWN TO YOU. THE FACT THAT THE STATEMENTS WERE DICTATED WITH PREDETERMINED BIAS AND ALSO THAT, IN ANY CASE, THE SOME CONTENTS OF THE STATEMENTS ARE FACTUALLY ERRONEOUS, IS EVIDENT FROM THE INSTANCES MENTIONED HEREUNDER. THE STATEMEN T OF THE UNDERSIGNED DATED 23.03.2012 IS STATED TO HAVE STARTED AT 4:15 PM. IN THE STATEMENT THERE ARE 60 QUESTIONS PAGE | 10 AND 60 ANSWERS. AFTER Q. NO. 60 AND ANSWER THERETO, IT HAS BEEN MENTIONED THAT THE STATEMENT IS TEMPORARILY CONCLUDED. IT IS NOT KNOWN WHEN THIS STATEMENT WAS FURTHER RESUMED AND WHEN IT WAS FINALLY CONCLUDED. YOU ARE REQUESTED TO INFORM WHETHER THE STATEMENT WAS EVER FINALLY CONCLUDED AND IF AT ALL CONCLUDED, COPY OF SAME MAY BE PROVIDED. THE PURPORTED STATEMENTS OF THE UNDERSIGNED BEARS SIGN ATURE OF TWO WITNESSES. THE EXERCISE UNDERTAKEN IS IN GROSS VIOLATION OF PROVISIONS OF RULE 112(6) AND 112(7) OF INCOME TAX RULES. THE NATURE AND MANNER OF OBTAINING WITNESSES, ITSELF ESTABLISH THAT THE STATEMENTS WERE TAKEN WRITTEN AS PER PREDETERMINED BI AS. YOU ARE REQUESTED TO CALL UPON THE WITNESSES SO THAT YOU CAN YOURSELF BE SATISFIED THAT THE STATEMENTS WERE INDEED TAKEN AS PER PREDETERMINED BIAS. AS IS EVIDENT FROM THE STATEMENT DT. 23.03.2012, THE STATEMENT OF UNDERSIGNED COMMENCED WITH THE THREAT OF PROSECUTION, ON THE ALLEGATION THAT THE STATEMENT DATED 22.03.2012 AS RECORDED BY SOME OTHER AUTHORIZED OFFICER AT THE UNDERSIGNED'S RESIDENCE I.E. AT S - 71 G.K.II, WAS NOT CORRECT. HOWEVER, THE COPY OF THIS STATEMENT DATED 22.03.2012 HAS NOT BEEN PROVID ED BY YOUR GOOD OFFICE. YOU ARE REQUESTED TO PROVIDE THE COPY OF THE SAME. EVEN AFTER THE ABOVE MENTIONED STATEMENT AT S - 71, G.K. - LL, I WAS AGAIN ASKED TO GIVE STATEMENT TIME AND AGAIN; THE PREDETERMINED MOTIVE OF THE SEARCH PARTY BEING TO GET WRITTEN WHAT THEY WANTED. TLS CAN BE SEEN THAT THE SEARCH STARTED ON 22.03.2012. THE STATEMENTS WERE RECORDED ON 22.03.2012 AND ALSO ON 23.03.2012 AND FURTHER ON 24.03.2012. THE SEARCH PARTY LEFT THE PREMISE ONLY ON 24.03.2012 AFTER TAKING WRITTEN SUCH CONTENTS AS THE Y WANTED. THE ANSWERS TAKEN WRITTEN TO QUESTIONS ALLEGEDLY CONTAINING THE SO CALLED CONFESSION /ADMISSION OF TAXABILITY OF INCOME IS ALMOST IDENTICAL TO THE STATEMENT RECORDED OF THE UNDERSIGNED AND MR. AJAY KALSI. YOU WILL APPRECIATE THAT IT IS NOT EVEN R EMOTELY PROBABLE THAT TWO PERSONS WILL GIVE SIMILAR ANSWERS IN SIMILAR LANGUAGE. THIS CLEARLY ESTABLISHES THAT THE SEARCH PARTY WAS PREDETERMINED TO GET THE ANSWERS WHAT THEY WANTED. IN YOUR CAPTIONED NOTICE YOU HAVE REPRODUCED THE FOLLOWING STATEMENT OF T HE UNDERSIGNED STATEMENT DATED 24.03.2012 AT 9. SHIVALL MARG Q2.) PLEASE TELL THE OWNERSHIP, SHARES HOLDING PATTERN AND CONTROLLING PATTERNS OF EICR(CYPRUS) LTD. PLEASE ALSO FINISH THE HOLDING STRUCTURE OF IENERGIZER LTD., GUERNSEY FROM ULTIMATE SHARE HOL DER TO THE BOTTOM - LINE ENTITY? ANS. I OWN 100% SHARES OF WICKWOOD DEVELOPMENT LTD. WHICH HAS 100% OWNED SUBSIDIARIES GEOPHYSICAL SUBSTRATA LTD. WHICH OWNS TWO SUBSIDIARIES, E1CR CYPRUS AND SDP SERVICES LTD. EICR OWNS SHARES IN IENERGIZER LTD. I OWN AND CON TROL ALL THESE PAGE | 11 COMPANIES. ALL THE CONTROLS AND MANAGEMENT OF THESE COMPANIES EFFECTIVELY LIES WITH ME. Q3.) PLEASE STATE WHAT PART OF THE ACTIVITIES OF EICR (CYPRUS) LTD. LIES OUTSIDE INDIA AND WHO IS THE DIRECTOR OF EICR(CYPRUS) LTD. ? ANS. I AM THE MAIN DIRECTOR OF EICR CYPRUS LTD. THERE ARE OTHER TWO DIRECTORS PROVIDED BY SECRETARIAL SERVICE PROVIDES INVESTMENT OF EICR IN IENERGIZER LTD IS HELD OUTSIDE INDIA IN CYPRUS, BANK A/C IS HELD IN CYPRUS SECRETARIAL AND ACCOUNTING RECORDS ARE MAINTAINED AT CYPRUS . BOARD MEETINGS OF THE COMPANY ARE HELD AT CYPRUS. HOWEVER, I CLARIFY THAT ALL THE DECISION TAKEN IN THE BOARD MEETINGS ARE ONLY AFTER MY APPROVAL. Q4.) BASED ON THE ABOVE FACTS, PLEASE STATE YOUR OPINION IN RESPECT OF TAXABILITY OF INCOME OF EICR(CYPRUS) LTD.? ANS. SINCE I AM AN INDIAN CITIZEN WHO ULTIMATELY OWN EICR THROUGH WICKWOOD DEVELOPMENT AND SINCE ALL CONTROL AND MANAGEMENT ULTIMATELY LIES WITH ME, IT IS ONLY NATURAL THAT INCOME OF EICR IS TAXED IN INDIA. AND FAIR THAT TAXES TO BE PAID IN INDIA. / IS INCOME SO FAR HAS BEEN FROM THE PROFIT OF THE SALE OF SHARE OF IENERGIZER LTD ON SEP 14, 2010, WHEN EICR SOLD 31,930,706 SHARES OF IENERGIZER LTD @ GBP 1.16 PER SHARE, RESULTING IN APPROX. GBP 37 MILLION FROM THE SALES PROCEEDS. ANY CAPITAL GAIN ARISING OUT OF THIS TRANSACTION WILL BE MY INCOME AND I SHALL PAY ANY CAPITAL GAIN TAX ON THIS INCOME. Q5. PLEASE STATE THE MODALITY THROUGH WHICH YOU WOULD BRING THE INCOME OF EICR (CYPRUS) LTD IN INDIAN TAX NET? WHO WILL BE THE REPRESENTATIVE ASSESSEE OF THIS C OMPANY AND HOW YOU PROPOSED TO SECURE THE PAYMENT OF TAX ARISING OUT OF THE ABOVE INCOME. ANS. I AM NOT AN EXPERT ON THIS HOWEVER I FULLY AGREE THAT THE ABOVE INCOME SHOULD BE TAXED IN INDIA. SINCE I AM THE ULTIMATE BENEFICIAL OWNER OF EICR THROUGH WICKWOO D, ANY TAX LIABILITY ARISING IN ANY OF MY OWN COMPANY IS MY SOLE LIABILITY FOR THE SAME. I MAY BE TREATED AS THE REPRESENTATIVE ASSESSE OF EICR & WICKWOOD. Q6. IT IS SEEN THAT SOME OF THE COMPANIES LIKE M/S SDP SERVICES LTD., M/S WICKWOOD DEVELOPMENT LTD. AND M/S ROLLAND ENTERPRISES LTD, M/S 3 PHASE ENGINEERING LTD ALL REGISTERED IN BVI BUT WORKING UNDER YOUR CONTROL AND MANAGEMENT. PLEASE FURNISH EXPLANATION? ANS. I AGREE OF FIRST 3 COMPANIES ARE OWNED BY ME, WICKWOOD AND ROLLAND DIRECTLY AND SDP THROUGH WICKWOOD. I ALONG WITH SANDEEP RASTOGI AND RAJIV GUJRAL ARE DIRECTOR FOR THESE 3 COMPANIES. HOWEVER, ALL THE DECISIONS AND ACTIVITIES ARE CONTROLLED AND TAKE EXCLUSIVELY BY ME IN INDIA. THEREFORE, I CONFIRM THAT ANY RESULTING TAX LIABILITY ON THE INCOME OF THESE 3 COMPANIES AND SHOULD BE TAXED IN INDIA. I MAY BE TREATED AS REPRESENTATIVE ASSESSEE OF THESE 3 COMPANIES AND I STAND SURETY FOR THE PAYMENT OF TAXES FOR THE SAME. PAGE | 12 REGARDS OF 3 PHASE ENGINEERING I HAVE TO VERIFY THE FACTS REGARDING OWNERSHIP AND I WILL REVERT BACK ON THE SAME. Q7.) PLEASE FURNISH THE LIST OF ALL OTHER OVERSEAS ENTITIES ALONG WITH THEIR NATURE OF ACTIVITIES, MANAGED AND CONTROLLED WHOLLY BY YOU? ANS. IN ADDITION TO M/S WICKWOOD DEVELOPMENT LTD, ROLLAND ENTERPRISES AND SDP SERVICES LTD. AND OTHER STEP DOWN SUBSIDIARIES BELONGING TO WICKWOOD DEVELOPMENT LTD AND SINCE I HAVE ACCEPTED OWNERSHIP OF WICKWOOD DEVELOPMENT LTD, I HAVE ALSO ACCEPTED WHOLLY AND EXCLUSIVELY CONTROL AND MANA GEMENT OF THESE COMPANIES AND THEREFORE OF ALL ITS SUBSIDIARIES. ENTIRE LIST OF THE HOLDING PATTERN TO BE PROVIDED VERY SHORTLY. I DO NOT HAVE MY OWNERSHIP OF THE COMPANIES OUTSIDE THE STRUCTURE. Q8. IT APPEARS THAT FOREIGN COMPANIES CONTROLLED BY YOU ARE LIABLE TO TAX IN INDIA. PLEASE VERIFY WHETHER YOU PAY THE TAXES? ANS. I HAVE CONSIDERED THE POSITION OF ALL MY COMPANIES AND WANT TO MAKE A FULL STATEMENT THAT ALL THESE COMPANIES ARE OWNED AND CONTROLLED BY ME IN INDIA. THIS CONTROL AND MANAGEMENT OF THE COMPANIES IS WHOLLY AND EXCLUSIVELY FROM INDIA. INDIVIDUAL STATEMENT ABOUT EACH COMPANIES IS AS FOLLOWS: A.] M/S WICKWOOD DEVELOPMENT LTD. BV1, THIS COMPANY WAS INCORPORATED IN 1991 IN BVI BY ME AND AS I AM 100% BENEFICIAL OWNER,CONTROL AND MANAGEMENT IS C ARRIED BY ME WHOLLY AND EXCLUSIVELY IN INDIA. THIS COMPANY HAS NO OFFICE AND NO EMPLOYEE AND NO INFRASTRUCTURE ADDRESS OF THE COMPANY IN BVI IS NOT READILY AVAILABLE BUT CAN BE PROVIDED VERY SHORTLY. THIS COMPANY IS A 100% HOLDING COMPANY OF GEOPHYSICAL SU BSTRATA LTD. BVI WHICH IN TURN OWNS 100% SHARE OF SDP SERVICE LTD. AND EICR CYPRUS LTD. I WILL ALSO BE FILING A RETURN OF THIS COMPANY IN INDIA AS THIS COMPANY IS RESIDENT UNDER SEC. 6 OF INDIAN INCOME TAX ACT 1961. AND IN CORPORATION I WILL PAY TAX ON ANY INCOME ARISING TO THIS COMPANY. B.) GEOPHYSICAL SUBSTRATA LTD. BVI - THIS COMPANY WAS STARTED IN BVI WITH 100% SHARES BEING HELD BY WICKWOOD DEVELOPMENT LTD SINCE ITS INCORPORATION. BENEFICIAL OWNERSHIP OF ALL THE SHARES IS WITH ME SINCE THE INCORPORATION O F THE COMPANY . CONTROL AND MANAGEMENT OF THIS COMPANY IS EXERCISED BY ME WHOLLY AND EXCLUSIVELY FOR INDIA SINCE THE SINCE THE INCORPORATION OF THE COMPANY AND TILL DATE. THIS COMPANY HOLDS SHARES OF SDP SERVICES LTD. AND EICR(CYPRUS) LTD. I WILL BE PROVID ING THE BOOKS OF ACCOUNTS, BANK ACCOUNTS OF THIS COMPANY SINCE THE INCORPORATION OF THE COMPANY AS THE CONTROL AND MANAGEMENT OVER THIS COMPANY IS EXERCISED FROM INDIA WHOLLY AND EXCLUSIVELY. I AGREE THAT THIS COMPANY BECOMES RESIDENT IN INDIA FOR TAX PURP OSE UNDER SECTION 6 OF INDIAN INCOME TAX ACT 1961 SINCE INCORPORATION. C. ) SDP SERVICES LTD. BVI - THIS COMPANY WAS INCORPORATED IN 1998 IN BVU WITH 100% SHARES BEING HELD BY GEOPHYSICAL PAGE | 13 SUBSTRATA LTD. SINCE 2008. CONTROL AND MANAGEMENT OF THIS COMPANY IS EXERCISED BY ME WHOLLY AND EXCLUSIVELY BY ME FROM INDIA SINCE THE INCORPORATION OF THE COMPANY AND TILL DATE. THE COMPANY EARNS INCOME BY WAY OF LEASE OF DRILLING RIGS, SEISMIC EQUIPMENTS AND OTHER OIL EXPLORATION EQUIPMENT TO FOCUS ENERGY LTD. I WILL BE P ROVIDING THE BOOKS OF ACCOUNTS, BANK ACCOUNTS OF THIS COMPANY SINCE THE COMPANY INCORPORATION AS THE CONTROL AND MANAGEMENT OVER THIS COMPANY IS EXERCISED IN INDIA WHOLLY AND EXCLUSIVELY FROM INDIA. I AGREE THAT THIS COMPANY BECOMES RESIDENT IN INDIA FOR T AX PURPOSE UNDER SECTION 6 OF INDIAN INCOME TAX ACT 1961 SINCE INCORPORATION. THE COMPANY WILL BE LIABLE TO TAX ON ITS INCOME AND I AM LIABLE TO PAY TAX IN INDIA, I WILL BE FILING THE RETURN OF THIS COMPANY FOR ALL THE A.Y. IN THE STATUS OF RESIDENT AND PA Y TAX. I WILL BE PAYING TAX AS SOON AS POSSIBLE AND DEFINITELY WITHIN THE PERIOD OF 12 MONTHS. I WILL BE SUBMITTING THE PLANS OF INSTALLMENTS. D. ) EICR(CYPRUS) LTD.,BVI : THE COMPANY WAS INCORPORATED IN BVI, CONTROL AND MANAGEMENT OF THIS COMPANY IS EXERC ISED BY ME WHOLLY AND EXCLUSIVELY FOR INDIA SINCE THE SINCE THE INCORPORATION OF THE COMPANY AND TILL DATE. THIS COMPANY HOLDS SHARE OF IENERGIZER LTD. A COMPANY REGISTERED IN GUERNSEY AND QUOTED IN LONDON STOCK EXCHANGE, I WILL BE PROVIDING THE BOOKS OF A CCOUNTS, BANK ACCOUNTS AS THE CONTROL AND MANAGEMENT OVER THIS COMPANY IS EXERCISED FROM INDIA WHOLLY AND EXCLUSIVELY. I AGREE THAT THIS COMPANY BECOMES RESIDENT IN INDIA FOR TAX PURPOSE UNDER SECTION 6 OF INDIAN INCOME TAX ACT 1961 SINCE INCORPORATION. TH IS COMPANY HAS EARNED CAPITAL GAINS ON SALE OF SHARES OF IENERGIZER LTD. ON SEPTEMBER 14,2010 WHEN EICR SOLD 31,930,706 SHARES OF IENERGIZER LTD @ GBP 1.16 PER SHARE RESULTING IN APPROX 37 MILLION GBP FROM THE SALE PROCEEDS. CAPITAL GAINS ARISING ON THIS S ALE IS LIABLE IN INDIA UNDER THE INCOME TAX ACT. I WILL BE PAYING TAX ON THIS CAPITAL GAIN , OTHER THAN THIS TRANSACTION EICR HAS NOT EARNED ANY INCOME EXCEPT INTEREST ON DEPOSIT IN BANK. I WILL BE FILING THE RETURNS OF THIS COMPANY FOR ALL THE A.Y. IN THE STATUS OF RESIDENT AND PAY TAX. I WILL PAY TAX AS SOON AS POSSIBLE AND DEFINITELY WITHIN A PERIOD OF 12 MONTHS. I WILL SUBMIT THE INSTALLMENT PLAN. E. ) M/S ROIIAND ENTERPRISE LTD., BVI: THIS COMPANY WAS INCORPORATED IN BVI BY ME AS A 100% BENEFICIAL OWNE R CONTROL AND MANAGEMENT IS EXERCISED BY ME WHOLLY AND EXCLUSIVELY FROM INDIA. THIS COMPANY HAS NO OFFICE AND NO EMPLOYEE AND NO INFRASTRUCTURE - INCOME BY WAY OF LEASE OF DRILLING RIGS, SEISMIC EQUIPMENTS AND OTHER OIL EXPLORATION EQUIPMENT TO FOCUS ENERGY LTD ARE THE MAIN SOURCE OF INCOME OF THIS COMPANY. I WILL BE FILING THE RETURNS OF THIS COMPANY IN INDIA AS THIS COMPANY IS RESIDENT UNDER SEC. 6 OF INDIAN INCOME TAX ACT 1961 SINCE INCORPORATION. I WILL HAPPILY PAY TAX ON ANY INCOME ARISING TO THIS COMPA NY. F. ) BARKER SHOES LTD, UK: THE COMPANY SHARES WERE PURCHASED BY ME SOMETIME IN 2010. THE COMPANY IS CONTROLLED AND MANAGED FROM UK AND PAY INCOME TAX UNDER UK REGULATIONS. PAGE | 14 G. J I WILL SUBMIT DETAILS OF ANY OTHER COMPANY OWNED BY ME SHORTLY AS FAR AS I REMEMBER, THERE ARE NO ACTIVITIES OR INCOME IN ANY OF THESE COMPANIES . HOWEVER THE CONTROL AND MANAGEMENT OF ALL THESE COMPANIES ARE WHOLLY AND EXCLUSIVELY EXERCISED BY ME IN INDIA. I ACCORDINGLY AGREE THAT THESE ARE RESIDENT FOR TAX PURPOSE UNDER SEC. 6 OF INDIAN INCOME TAX ACT SINCE INCORPORATION. I WILL BE FILING THE RETURNS OF THESE COMPANIES FOR ALL THE A.YS. IN THE STATUS OF RESIDENT AND PAY TAX DUE ON ANY INCOME OF THESE COMPANIES. FROM THE AFORE - STATED EXTRACTS, IT IS ABUNDANTLY CLEAR THAT THE STAT EMENT HAD BEEN TAKEN BY THE SEARCH PARTY IN A PREEMPTIVE MANNER AND COLOURED BY THEIR OWN PREDETERMINED BIAS, IN TOTAL IGNORANCE OF CORRECT FACTUAL POSITIONS AND LAW. AFTER Q.2 & Q.3, ALL OF A SUDDEN, IN IMMEDIATELY NEXT Q.4, IT HAS BEEN TAKEN WRITTEN THAT BASED ON ANSWERS TO Q.2 & Q.3, CERTAIN AMOUNT WILL BE MY INCOME. AS IS EVIDENT FROM THE Q.2 & Q.3, THERE IS NO BASIS TO ALLEGE OR INFER THAT THERE IS SOME TAXABLE INCOME. THE SUBSEQUENT QUESTIONS AND ANSWERS NO.4 TO 8 ARE ALL STATED TO BE BASED ON THE CON TENTS OF Q.2 & Q.3. THERE IS NOTHING IN ANSWERS TO Q.2 & Q.3 WHICH CAN BE MADE BASIS OF DRAWING ADVERSE INFERENCE. FURTHER AS PER ANSWERS TO Q.2 & Q.3 (WHICH IS MADE THE BASIS OF SUBSEQUENT QUESTIONS AND ANSWERS) IT IS ESTABLISHED THAT NONE OF THE FOREIGN COMPANIES MENTIONED IN THOSE QUESTIONS CAN BE HELD TO BE CONTROLLED OR MANAGED FROM INDIA. IN Q.4 AND ANSWER THERETO, 1 HAVE BEEN DEPICTED AS IF I AM A TAX EXPERT AND UNDER THE GUISE, SOME FACTUALLY AND LEGALLY ERRONEOUS CONTENTS HAVE BEEN TAKEN WRITTEN. I T IS NOT UNDERSTANDABLE AS TO HOW THE ANSWER TO Q.4, AS TAKEN WRITTEN, CAN BE THE BASIS FOR DRAWING ADVERSE INFERENCE AS IS SOUGHT TO BE DRAWN. FURTHER FROM Q.5 AND ANSWER THERETO, AS IS SELF EVIDENT, THERE BEING NO FACTUAL OR LEGAL BASIS FOR TAXABILITY UN DER THE INDIAN INCOME TAX ACT (IN FACT THE SEARCH PARTY ITSELF REALIZED/THOUGHT THAT AMOUNT CANNOT BE BROUGHT TO TAX IN INDIA UNLESS BROUGHT IN INDIA), SOMETHING WITH REGARD TO LIABILITY AND SURETY ETC. WAS TAKEN WRITTEN, WHICH ARE UNSUSTAINABLE BOTH ON FA CTS AND IN LAW. IN SUBSEQUENT Q.6TO Q.8, AS IS APPARENT SOME GENERAL AND SWEEPING CONTENTS HAVE BEEN TAKEN WRITTEN AS PER PREDETERMINED BIAS WHICH AS ALREADY STATED ARE FACTUALLY AND LEGALLY ERRONEOUS. Y4S ALREADY STATED, I AM A NON - RESIDENT INDIAN. IT IS A MATTER OF RECORD THAT I LIVE OUTSIDE INDIA AND COMES TO INDIA ONLY ON FEW OCCASIONS IN INDIA AND THEREFORE ANY ALLEGATION / PRESUMPTION THAT I AM CONTROLLING OR MANAGING THE AFFAIRS OF ANY COMPANY WHOLLY FROM INDIA IS FACTUALLY ERRONEOUS. IT WOULD BE IMP ERATIVE TO MENTION AT THIS JUNCTURE THAT THE PROVISIONS OF SECTION 132(4) OF THE ACT DOES NOT EMPOWER THE AUTHORIZED OFFICER TO GET WRITTEN, THOSE CONTENTS WHICH ARE FACTUALLY AND LEGALLY UNSUSTAINABLE, SUCH AS OBTAINING UNDERTAKING / SURETY ETC. SUCH CONT ENTS TAKEN RECORDED IN THE STATEMENT ARE AT BEST, VOID AB INITIO. YOUR HOUR WILL APPRECIATE THAT INCIDENCE OF TAX DOES NOT ARISE ON AN AMOUNT, SOLELY ALL BY ITSELF OR ON THE BASIS OF SOME STATEMENTS. THE TAXABILITY OF ITEMS OF INCOME AND ASSESSMENTS HAVE T O BE MADE STRICTLY IN PAGE | 15 ACCORDANCE WITH THE PROVISIONS OF LAW. THE FACT OF THE MATTER THAT EACH <5 EVERY FOREIGN COMPANY WHERE I AM A DIRECTOR OR SHAREHOLDER IS BEING CONTROLLED AND MANAGED FROM OUTSIDE INDIA. THEY HAVE BEEN INCORPORATED ACCORDING TO THE LAW S OF THE RESPECTIVE COUNTRY. THE HEAD AND BRAIN I.E. THE BOARD OF DIRECTORS ARE SITUATED OUTSIDE INDIA. THE BOARD MEETINGS ARE HELD OUTSIDE INDIA. THE BOOKS OF ACCOUNTS ARE MAINTAINED OUTSIDE INDIA. THE BANK ACCOUNTS ARE MAINTAINED AND OPERATED OUTSIDE IND IA. IN THIS REGARD YOUR HONOUR CAN VERIFY THESE FACTS FROM THE RESPECTIVE COMPANIES ALSO. IT IS SETTLED CANNON OF LAW THAT A PUBLIC OFFICER IS REQUIRED TO EXERCISE HIS POWERS AND AUTHORITY WHICH HAVE BEEN BESTOWED UPON HIM, IN A MOST FAIR AND APPROPRIATE M ANNER. RULES OF FAIR HEARING AND REASONABLENESS WOULD ONLY SUGGEST THAT THE FACTUAL POSITION REGARDING THE CONTROL AND MANAGEMENT OF FOREIGN COMPANIES SHOULD BE VERIFIED AND CORROBORATED WITH THE RESPECTIVE FOREIGN COMPANIES. IN ADDITION TO THE ABOVE, IT I S INDEED APPALLING THAT THE ADVERSE CONCLUSIONS HAVE BEEN DRAWN BY YOUR GOOD OFFICE, ON A WRONG AND BASELESS CONSTRUAL OF THE UNDERSIGNED'S FRIENDSHIP WITH MR. KALSI. NONETHELESS, ANY ADVERSE INFERENCE DRAWN IN THIS REGARD MAY, IN THE INTEREST OF JUSTICE, BEST BE CORROBORATED WITH MR. AJAY KALSI. AT THIS JUNCTURE, IT IS IMPORTANT TO MENTION THAT THE CONNOTATIONS USED BY YOUR GOOD OFFICE IN THE SUBJECT NOTICE, SUCH AS 'CONTROL AND MANAGEMENT', 'BENEFICIAL OWNERSHIP', 'REPRESENTATIVE ASSESSEE' AND OTHER LEGAL PROVISIONS OF THE ACT SUCH AS SECTION 277 AND 278, CAN BEST UNDERSTOOD BY LEGAL EXPERTS HAVING EXTENSIVE AND VAST KNOWLEDGE. NEEDLESS TO MENTION, THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH PROCEEDINGS DO REQUIRE CAREFUL CONSIDERATION BEFORE RELIA NCE PLACED THEREUPON. ANY SUCH RELIANCE UPON STATEMENTS ITSELF SHALL ACTS AS PREJUDICE IF THE SAME IS NOT APPROPRIATELY CORROBORATED AND NO CREDENCE OR COGNIZANCE TO THE OTHER EVIDENCE/SUBMISSIONS BEING MADE FROM TIME TO TIME DURING THE COURSE OF SEARCH PR OCEEDINGS AND IN THE POST INVESTIGATION PROCEEDINGS IS GIVEN. SUCH BALD RELIANCE WOULD RESULT IN MISCARRIAGE OF JUSTICE AND THE RESULTANT PROCEEDINGS ARE LIABLE TO BE QUASHED. ' 8.1.16 IN CASE OF THE APPELLANT, IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DID NOT CONTRADICT THE CONTENTS OF THE LETTER DATED 25.03.2014 NOR HE HAD RE - RECORDED THE STATEMENT OF THE APPELLANT ON OATH AGAIN. THEREFORE THERE IS NO CORROBORATION NOR CONFIRMATION OF THE CONTENTS OF THE STATEMENTS THAT WERE RECOR DED AT THE TIME OF SEARCH. IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SUBSTANTIATE THE STATEMENTS IN THE CASE OF THE APPELLANT. THERE IS NO RELEVANCE REGARDING THE DETAILS DECLARED IN THE RETURN OF THE APPELL ANT TO THE CONTENTS OF THE STATEMENTS RECORDED IN THE CASE OF THE OVERSEAS COMPANIES. THE ASSESSING OFFICER PAGE | 16 RELIED ON THE STATEMENTS OF THE APPELLANT WHILE DETERMINING THE RESIDENTIAL STATUS OF THE OVERSEAS COMPANIES IN ACCORDANCE OF THE PROVISIONS OF SE CTION 6(3) OF THE IT ACT AND FOR TAXABILITY AS PER INDIAN INCOME TAX ACT BUT NOT IN THE CASE OF THE APPELLANT ON ANY OTHER MATTER. 8.1.17 THE ASSESSING OFFICER DID NOT MAKE ANY PROTECTIVE ADDITION IN THE CASE OF THE APPELLANT BASED ON THE CONTENTS OF STAT EMENTS RECORDED IN THE COURSE OF SEARCH PERTAINING TO VARIOUS OTHER PERSONS. BUT HE REPRODUCED THE EXCERPTS OF SUCH STATEMENTS IN THE ORDERS PASSED IN CASE OF THE OVERSEAS COMPANIES TO DETERMINE THE RESIDENTIAL STATUS OF THESE OVERSEAS COMPANIES BY INVOK ING THE PROVISIONS OF SECTION 6(3) OF THE IT ACT, 1961. THEREFORE, REFERRING TO SUCH STATEMENTS IN THE CASE OF THE APPELLANT SEEMS OUT OF CONTEXT AND IRRELEVANT. 9. IN PARA 21.2.1, THE ASSESSING OFFICER CONCLUDED THAT THE APPELLANTS CASE IS PECULIAR, WHER E AN ELABORATE SCHEME WAS PLANNED AND EXECUTED METICULOUSLY TO SHIFT THE HUGE PROFITS AND CAPITAL GAINS EARNED FROM INDIA COMPANIES AND THEIR SHARE HOLDERS TO THE OVERSEAS COMPANIES. WHILE DOING SO, THE ASSESSING OFFICER RELIED ON THE RATIO OF THE VARIOUS JUDICIAL PRONOUNCEMENTS, PREDOMINANTLY, LIKE MC DOWELL & CO. LTD. [154 ITR 148 SC (1985)]. I HAVE GONE THROUGH THE CITATIONS OF CASE LAWS RELIED UPON BY THE ASSESSING OFFICER AND FIND THAT THE FACTS OF THOSE CASES ARE DISTINGUISHABLE TO THAT OF THE APPELLA NT. ON PERUSAL, I FIND THAT THE ASSESSING OFFICER MISAPPLIED THE RATIO OF THE JUDGEMENT OF MC DOWELL & CO. LTD. TO THE APPELLANTS CASE, AS THE ASSESSING OFFICER DID NOT ESTABLISH ANY CASE WHERE THE APPELLANT ADOPTED A COLOURABLE DEVICE AND MOST IMPORTANTL Y NO CASE OF ANY TAX EVASION WAS ESTABLISHED BY THE ASSESSING OFFICER IN CASE OF THE APPELLANT OR OVERSEAS COMPANIES. 9.1.0 THE ASSESSING OFFICERS RELIANCE ON THE JUDGMENT IN THE CASE OF CIT VS. SRI MEENAKSHI MILLS LTD. 63 ITR 609 (SC) IS NOT APPLICABLE TO THE FACTS OF THE APPELLANTS CASE. IN AFORESAID CASE WHICH WAS RELIED BY THE ASSESSING OFFICER UPON BY ASSESSING OFFICER , THE COMPANY BORROWED AN EXORBITANT AMOUNT OF MONEY FROM THE INDIAN BRANCHES OF BANK A BASED ON THE FIXED SECURITY DEPOSITS MADE IN OTHER BRANCHES OF BANK A IN A NON - TAXABLE TERRITORY. FURTHER THE DIRECTOR OF THE ASSESSEE - COMPANY WAS ALSO THE MAIN SHARE HOLDER OF THE BANK A. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER TREATED THE ENTIRE PROFITS OF THE ASSESSEE COMPANY, IN CLUDING INTEREST FROM THE NON - TAXABLE TERRITORY IN THE HANDS OF THE ASSESSEE COMPANY. 9.1.1 THE FACTS OF THE APPELLANTS CASE ARE DIFFERENT FROM THE FACTS OF THE AFORESAID CASE AND SUCH FACTS CANNOT BE PARALLEL AND SIMILAR. 9.1.2 THEREFORE IN MY CONSIDERED OPINION, THE ASSESSING OFFICER FAILED TO APPRECIATE AS WELL AS DISTINGUISH THE FACTS MENTIONED IN THE AFORESAID PARAS WITH THAT OF THE APPELLANT. IN THIS CASE RELIED UPON BY THE ASSESSING OFFICER, THE ASSESSMENT WAS COMPLETED IN THE HANDS OF THE ASSESSEE COMPANY, BUT NOT IN THE HANDS OF THE DIRECTOR - FOUNDER, EVEN AFTER HOLDING HIM TO BE SHARE HOLDER OF THE ASSESSEE COMPANY AS WELL AS BANK A. 9.1.3 THE ASSESSING OFFICER FURTHER PLACED RELIANCE IN THE RATIO OF THE DECISION OF LIFE INSURANCE CORPORATION OF INDIA VS ESCORTS LTD. [(1986) 1 PAGE | 17 SCC 264] WHICH I FIND IS IN COMPLETE IGNORANCE OF THE FACTS OF THE SAID CASE TO THAT OF THE APPELLANT. THE DECISION IN LIFE INSURANCE (SUPRA) WAS RENDERED IN RESPECT TO FOREIGN EXCHANGE REGULATION A CT, 1973, COMPANIES ACT, 1956, CONSTITUTION OF INDIA AND DID NOT CONSIDER THE PROVISIONS WITH RESPECT TO THE INCOME TAX ACT. THE APEX COURT, IN THE AFORESAID CASE, MERELY MADE A REFERENCE, IN CONTEXT OF LIFTING OF THE CORPORATE VEIL, WHILE CONCLUDING SOMET HING WHICH WAS RELEVANT TO THE FACTS AND THE STATUTE CONCERNED IN THAT CASE, WHICH WAS MISINTERPRETED BY THE ASSESSING OFFICER AND MISAPPLIED THE JUDGMENT TO THE FACTS OF THE APPELLANT, WITHOUT APPLICATION OF RELEVANT LAW. 9.1.4 THE SUBJECT MATTER IN THE CASE OF JUGGILALKAMLAPAT V. CIT [AIR SC 932] WAS A HOAX TRANSACTION THAT WAS UNDERTAKEN BETWEEN A FIRM AND THE COMPANY; WHEREIN PARTNERS OF THE FIRM WERE ALSO THE MAJORITY SHAREHOLDERS OF THE COMPANY.THE HONBLE SUPREME COURT HELD THE TRANSACTION TO BE A H OAX TRANSACTION BY APPLYING THE DOCTRINE OF LIFTING THE CORPORATE VEIL. HOWEVER, IN THE CASE OF THE APPELLANT NO SUCH TRANSACTION WAS UNDERTAKEN TO ALLEGE THAT THE INCOME OF OVERSEAS COMPANIES IS TAXABLE IN THE HANDS OF THE APPELLANT FIRSTLY BY LIFTING OF THE CORPORATE VEIL AND SECONDLY BY WAY OF A PROTECTIVE ASSESSMENT. IN FACT, IT IS PERTINENT TO MENTION HERE THAT THERE ARE NO TRANSACTIONS BETWEEN THE APPELLANT AND THE OVERSEAS COMPANIES FOR WHICH ADDITIONS HAVE BEEN MADE BY ASSESSING OFFICER. 9.1.5 IN V IEW OF THE AFORESAID DETAILED DISCUSSION, THE VARIOUS CASE LAWS RELIED UPON BY THE ASSESSING OFFICER ARE NOT APPLICABLE TO THE FACTS OF THE APPELLANTS CASE. THE ASSESSING OFFICER MADE VAGUE REFERENCES TO THESE CASE LAWS WITHOUT POINTING OUT AND ESTABLISHI NG AS TO HOW THE SAME WERE APPLICABLE TO THE FACTS OF THE APPELLANTS CASE. HENCE THE FACTS OF THE CASE LAWS REFERRED BY THE ASSESSING OFFICER ARE ENTIRELY DIFFERENT FROM THAT OF THE APPELLANTS CASE. IN THE CASES RELIED UPON BY THE ASSESSING OFFICER, IT W AS ESTABLISHED THAT THE TRANSACTIONS WERE SHAM, AND WERE UNDERTAKEN WITH A PURPOSE TO EVADE TAXES AND ON APPLYING THE DOCTRINE OF LIFTING THE CORPORATE VEIL, THESE TRANSACTIONS WERE FOUND TO BE FRAUDULENT, SHAM, CIRCUITOUS AND S DEVICE TO DEFEAT THE INTER EST OF VARIOUS STAKE HOLDERS. 10. IN THE INSTANT CASE, THE ASSESSING OFFICER DID NOT BRING ON RECORD SUCH ADVERSE FACTS THAT ESTABLISHED FRAUD, CIRCUITOUS OR SHAM TRANSACTIONS AS IN THE CASES MENTIONED BY ASSESSING OFFICER IN THE ORDER. THE ONLY ALLEGATIO N OF THE ASSESSING OFFICER FOR DRAWING AN ADVERSE INFERENCE IN CASE OF THE APPELLANT IS THAT THE PURPOSE FOR WHICH THE COMPANIES WERE INCORPORATED OVERSEAS IN TAX HAVENS WAS TO AVOID TRANSFER PRICING AUDIT AND CONSEQUENT AVOIDANCE OF TAX. HOWEVER, THIS WAS MERELY A DOUBT AND ALLEGATION OF ASSESSING OFFICER. TO ASCERTAIN THE FACTUAL POSITION, THE ASSESSING OFFICER HIMSELF REFERRED THE MATTER TO TRANSFER PRICING OFFICER AND AS DISCUSSED EARLIER, NO CASE OF ANY TAX - EVASION WAS DETECTED. CONTRARY TO THE ALLEGAT ION AND DOUBT OF THE ASSESSING OFFICER, ALL THE TRANSACTIONS WITH THE OVERSEAS COMPANIES WHICH WERE DOUBTED BY THE ASSESSING OFFICER WAS FOUND TO BE GENUINE AND CARRIED OUT AT AN ARMS LENGTH PRICE. MOREOVER, IN ONE OF THE OVERSEAS COMPANIES WHILE REFERRIN G TO THE EMAILS THE ASSESSING OFFICER HIMSELF ACCEPTED THAT IT WAS A PART OF THE TAX - PLANNING. THEREFORE, THE PAGE | 18 FACTS OF THE VARIOUS CASE LAWS REFERRED BY THE ASSESSING OFFICER ARE DISTINGUISHABLE AND ARE NOT APPLICABLE TO THE FACTS OF THE APPELLANTS CASE. 11. IN THE VIEW OF THE ABOVE DISCUSSION, THE ADDITION OF RS.22,74,81,323/ - MADE BY THE ASSESSING OFFICER FOR THE YEAR UNDER CONSIDERATION IS HEREBY DELETED. THESE GROUNDS OF APPEAL ARE ALLOWED . 5 . THEREFORE, THE REVENUE IS AGGRIEVED WITH THE ABOVE ORDER AND HAS PREFERRED THIS APPEAL. 6 . THE LD DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD AO AND SUBMITTED THAT THE ASSESSEE IS THE BENEFICIAL OWNER AND THEREFORE, THE ABOVE ADDITION HAS RIGHTLY BEEN MADE. 7 . THE LD AR VEHEMENTLY SUBMITTED THAT THE ADDITION HAS BEEN MADE IN THE HANDS OF THE COMPANY AND HE EXTENSIVELY REFERRED TO THE ORDER OF THE LD CIT(A) AND STATED THAT THE TOTAL ADDITION MADE BY THE LD AO IS ON THE BASIS OF CONJECTURES AND SURMISES. IT WAS FURTHER SUBMITTED THAT THE IDENTICAL ADDITIONS MADE IN THE HANDS OF THE OTHER PERSONS HAS ALREADY BEEN DELETED BY THE COORDINATE BENCH AND THEREFORE, IN THE CASE OF THE ASSESSEE THE ABOVE ADDITION CANNOT BE SUSTAINED. 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE BRIEF FACTS OF THE CASE SHOWS THAT IN THE HANDS OF THE ASSESSEE THE ADDITION IS MADE ON THE PROTECTIVE BASIS OF RS. 227481323/ - WITH RESPECT TO THE INCOME OF THE TWO OVERSEAS COMPANIES NAMELY WICKWOOD DEVELOPMENT LTD AND ROLLAND ENTERPR ISES LTD. BOTH THE COMPANIES HAVE ALLEGED TO HAVE EARNED THE LEASE RENTAL INCOME FOR ASSESSMENT YEAR 2006 - 07 . IN ONE OF THE OTHER SHARE HOLDERS MR. AJAY KALSI IN WHOSE CASE IN EARLIER YEAR IDENTICAL ADDITIONS WERE MADE ON PROTECTIVE BASIS. FURTHERMORE, ANOTHER BENEFICIARY SMT MALA KALSI, SUCH ADDITIONS WERE ALSO MADE BEING THE SHARE HOLDER OF THOSE COMPANIES. ALL THESE ADDITIONS WERE MADE ON PROTECTIVE BASIS IN THEIR HANDS . IN CASE OF SMT MALA KALSHI THE COORDINATE BENCH HAS ALREADY DECIDED THE ISSUE D ELETING THE ABOVE ADDITION ON PROTECTIVE BASIS AS PER ORDER DATED 1 ST DECEMBER 2017 REPORTED IN 90 TAXMANN.COM 175 (DELHI). FURTHER, IN CASE OF SHRI AJAY KALSI THE COORDINATE BENCH H AS DELETED THE ABOVE ADDITION AS PER ORDER DATED 05.12.2018 FOR ASSESSME NT YEAR 2006 - 07 TO 2012 - 13. THEREFORE, THE ISSUE IS NOW SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ABOVE ADDITION. THE LD PAGE | 19 DR COULD NOT COTROVERT THE ABOVE FACT THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH IN CASE OF OTH ER SHARE HOLDERS. IN VIEW OF THIS FACT RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH WHERE IDENTICAL ADDITIONS WERE DELETED , WE ALSO DIRECT THE LD AO TO DELETE THE ABOVE PROTECTIVE ADDITIONS OF RS. 227481323 / - IN THE HANDS OF THE ASSESSEE FOR ASSESSMENT YEAR 2006 - 07. THEREFORE, THE APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2006 - 07 IS ALLOWED. 9 . THE ASSESSEE IS ALSO RAISED CROSS OBJECTION IN THE ABOVE APPEAL. IN THE CROSS OBJECTION THE ASSESSEE HAS CHALLENGED CERTAIN JURISDICTIONAL ISSUES AND FURTHER ADDITIONS MADE U/S 153A OF THE ACT BY THE LD AO ARE BEYOND THE SCOPE OF THE LAW. AS WE HAVE ALREADY DELETED THE APPEALS OF THE REVENUE THE CROSS OBJECTION SUPPORTING THE IMPUGNED ORDER PASSED BY THE LD CIT(A) BECOMES INFRACTUOUS AND HENCE CROS S OBJECTIONS IS ALSO DISMISSED. 10 . THE APPEAL FOR ASSESSMENT YEAR 2007 - 08 FILED BY THE REVENUE ALSO INVOLVES THE IDENTICAL ADDITIONS OF RS. 495316627 / - AND THE ASSESSEE HAS FILED THE CROSS OBJECTIONS SUPPORTING THE ORDER OF THE LD CIT( A). THE APPEAL FOR ASSESSMENT YEAR 2008 - 09 FILED BY THE REVENUE ALSO INVOLVES THE IDENTICAL ADDITIONS OF RS. 529475798/ - THE ASSESSEE HAS FILED THE CROSS OBJECTIONS SUPPORTING THE ORDER OF THE LD CIT(A). THE APPEAL FOR ASSESSMENT YEAR 2009 - 10 FILED BY THE REVENUE ALSO INVOLVES THE IDENTICAL ADDITIONS OF RS. 2447420629/ - THE ASSESSEE HAS FILED THE CROSS OBJECTIONS SUPPORTING THE ORDER OF THE LD CIT(A). THE APPEAL FOR ASSESSMENT YEAR 2010 - 11 FILED BY THE REVENUE ALSO INVOLVES THE IDENTICAL ADDITIONS OF RS. 88 8,10,18,345/ - THE ASSESSEE HAS FILED THE CROSS OBJECTIONS SUPPORTING THE ORDER OF THE LD CIT(A). THE APPEAL FOR ASSESSMENT YEAR 2011 - 12 FILED BY THE REVENUE ALSO INVOLVES THE IDENTICAL ADDITIONS OF RS. 5082087156 / - THE ASSESSEE HAS FILED THE CROSS OBJECTIO NS SUPPORTING THE ORDER OF THE LD CIT(A). 11 . IN VIEW OF OUR FINDING FOR ASSESSMENT YEAR 2006 - 07, WHEREIN, WE HAVE RESPECTFULLY FOLLOWED THE DECISION OF THE COORDINATE BENCHES IN CASE OF MS. MALA KALSI AND SHRI AJAY KALSI (SUPRA) , FOR THE SIMILAR REASONS , W E ALSO DISMISS APPEAL S OF THE REVENUE AND THE CROSS OBJECTIONS OF THE ASSESSEE. 12 . NOW WE COME TO THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2012 - 13 AND THE CROSS OBJECTION OF THE ASSESSEE SUPPORTING THE ORDER OF THE LD CIT(A). AS GROUND NOS. 1 TO 6 OF THE APPEAL THE LD AO CHALLENGED THE DELETION OF THE PAGE | 20 ADDITION OF RS. 2273802044/ - IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS. BOTH THE PARTIES HAVE CONFIRMED THAT THIS GROUND OF APPEAL IS SQUARELY COVERED BY THE ISSUES IN THE APPEAL OF THE REVENUE FOR AS SESSMENT YEAR 2006 - 07 TO 2011 - 12. 13 . AS WE HAVE ALREADY DELETED THE ABOVE ADDITION RESPECTFULLY FOLLOWING THE DECISION OF THE ORDER OF THE COORDINATE BENCHES IN CASE OF MS MALA KALSI AND MR. AJAY KALSI (SUPRA), WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE R EVENUE FOR THE REASONS GIVEN BY US WHILE DELETING THE ADDITION FOR ASSESSMENT YEAR 2006 - 07. ACCORDINGLY, GROUND NOS 1 TO 6 OF THE APPEAL OF THE LD AO ARE DISMISSED. 14 . GROUND NO. 7 OF THE APPEAL IS WITH RESPECT TO THE DELETION OF THE ADDITION OF RS. 69500 0 0/ - ON ACCOUNT OF UNEXPLAINED CASH. THE LD AO HAS MADE THE ABOVE ADDITION AS DURING THE COURSE OF SEARCH U/S 132 AT THE PREMISES OF SHRI ANIL AGARWAL , CASH OF RS. 69.50 LAKHS AND JEWELLERY OF RS. 2546789/ - WERE FOUND. AT THE TIME OF SEARCH , SHRI ANIL AGA RWAL ADMITTEDLY OWNED THE CASH AND JEWELLERY BOTH. HOWEVER, REGARDING THE SOURCE OF CASH AND JEWELLERY NOTHING WAS EXPLAINED BY SHRI ANIL AGGARWAL ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE BY APPLYING THE PROVISIONS OF SECTION 292C OF THE ACT. THUS, T HE LD AO MADE THE ADDITION OF RS. 6950000/ - AND JEWELLERY OF RS. 2546789/ - . THE ASSESSEE CHALLENGED THE SAME BEFORE THE LD CIT(A). THE LD CIT(A) DELETED THE ADDITION ON ACCOUNT OF CASH FOUND OF RS. 6950000/ - AS SHRI ATUL A G GARWAL BROTHER OF THE APPELLANT S URRENDERED THE ABOVE CASH IN HIS HANDS AND DECLARED THE SAME IN THE RETURN OF INCOME FILED BY HIM FOR ASSESSMENT YEAR 2012 - 13 WHICH WAS ASSES SED U/S 143(3) DATED 18.04.2014. A S THE ABOVE AMOUNT WAS ALREADY TAXED, IT AMOUNTED TO DOUBLE ADDITION IN THE HANDS OF THE ASSESSEE AS WELL AS MR. ATUL AGGARWAL. FURTHER, ADDITION ON ACCOUNT OF JEWELLERY ALSO , MR. ATUL AGGARWAL EXPLAINED THE SOURCE IN HIS OWN CASE AND NO ADDITION WAS MADE BY THE LD AO IN THE HANDS OF SHRI ATUL AGGARWAL AS THE JEWELLERY WORTH THE OF RS . 1682400/ - WAS WITHIN THE LIMITED AS PRESCRIBED BY CBDT IN INSTRUCTION DATED 11.05.1994 AND THE BALANCE JEWELLERY OF RS. 1088351/ - WAS ALREADY OFFERED BY HIM IN HIS HANDS AS OTHER INCOME . T HE LD CIT(A) ALSO NOTED THAT THE ABOVE ADDITION HAS ALREADY BEE N TAKEN CARE OF IN ASSESSMENT OF SHRI ATUL AGGARWAL. PAGE | 21 THEREFORE, THE ADDITION OF SAME SUM CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. 15 . THE LD AO AGGRIEVED BY THE ORDER OF THE LD CIT(A) HAS PREFERRED THIS APPEAL ON GROUND NO. 7 AND 8 . 16 . THE LD DR RELIED UPON THE ORDER OF THE LD AO. 17 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. AS THE SUM OF RS. 6950000/ - HAS ALREADY BEEN OFFERED BY SHRI ATUL AGGARWAL IN HIS HANDS OUT OF CASH SEIZED AND FURTHER THE JEWELLERY WORTH OF RS. 1088351/ - WAS ALSO DISCLOSED AS INCOME IN HIS RETURN OF INCOME, FURTHER, JEWELLERY WORTH RS. 1682400/ - WAS TREATED AS EXPLAINED IN VIEW OF THE CBDT INSTRUCTION DATED 11.05.1994 , WE DO NOT FIND ANY MERIT IN THE GROUND NO. 7 AND 8 OF THE APPEAL OF THE LD AO. ACCORDINGLY, THEY ARE DISMISSED. THE CROSS OBJECTION OF THE ASSESSEE ALSO DISMISSED. 18 . ACCORDINGLY, ALL THE APPEALS FOR ASSESSMENT YEAR 2006 - 07 TO 2012 - 13 OF THE LD AO AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 0 / 08 / 2019 . - SD/ - - SD/ - ( SUCHITRA KAMBLE ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 0 / 08 / 2019 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI