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

ITA 5028/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1912 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 06-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A , NEW DELHI BEFORE SH. N. K. SAINI , VICE PRESIDENT AND SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER IT A NO. 5028 /DEL/201 5 : ASSTT. YEAR : 2008 - 09 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 19, JHANDEWALAN, NEW DELHI VS SMT. MALA KALSI, 44, MALCHA MARG, CHANAKYA PURI, NEW DELHI PAN - AFQPK0596L (APPELLANT) (RESPONDENT) CO NO. 380 /DEL/201 5 : ASSTT. YEAR : 2008 - 09 SMT. MALA KALSI, 44, MALCHA MARG, CHANAKYA PURI, NEW DELHI PAN - AFQPK0596L VS THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 19, JHANDEWALAN, NEW DELHI (APPELLANT) (RESPONDENT) REVENUE BY : SH. SRIDHAR DORA, SR. DR ASSESSEE BY : SH. AMIT GOYAL, CA DATE OF HEARING : 15.11.2018 DATE OF PRONOUNCE MENT : 19 .11.2018 ORDER PER N. K. SAINI, VICE PRESIDENT : THE APPEAL BY THE DEPARTMENT AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 05.05.2015 P ASSED BY THE LEARNED CIT(A) - XXVII, NEW DELHI. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE DEPARTMENT IN ITS 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 ITA NO. 5028 /DEL /201 5 & CO NO . 380 /DEL/201 5 2 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 DOCUM ENTS/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 INCO ME 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 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 SECTIO N 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 O N SUBSTANTIVE BASIS WAS MADE IN THE HANDS OF THE OVERSEAS COMPANIES TREATING THEM AS RESIDENTS IN INDIA U/S 6(3) OF THE I.T. 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. C OMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS. 4,23,07,721/ - MADE BY ASSESSING OFFICER. 7. THE ORDER OF THE LD. CIT(APPEALS) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. 3. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS APPEAL OF THE ASSESSEE IS FULLY COVERED BY THE ORDER DATED 01.12.2017 OF THE ITAT DELHI BENCH A NEW DELHI IN ITA NOS. 5026, 5027, & 5029 TO 5032 (DELHI) OF 2015 AND CO NOS . 378, 379 & 381 TO 384 (DELHI) OF 2015 FOR THE ASSESSMENT YEARS ITA NO. 5028 /DEL /201 5 & CO NO . 380 /DEL/201 5 3 2006 - 07, 2007 - 08 AND 2009 - 10 TO 2012 - 13 IN ASSESSEE S OWN CASE. 4. IT WAS FURTHER STATED THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS INVOLVED IN THE AFORESAID REFERRED TO ASSESSMENT YEARS, COPY OF THE SAID ORDER DATED 1.12.2017 WAS ALSO FURNISHED WHICH IS PLACED ON RECORD. THE LEARNED SR. DR COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE 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 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 P ARTIES 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 FURT HER NOTED THAT THE ASSESSING ITA NO. 5028 /DEL /201 5 & CO NO . 380 /DEL/201 5 4 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 SUBSTANTIVE 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 ASSES SEE ON PROTECTIVE BASIS. THEREFORE, ADDITION OF THE SAME AMOUNT WAS MADE BY 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 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 DID NOT DERIVE ANY BENEFIT FOR WHICH SHE IS LIABLE TO PAY TAXES THEREON AS PER THE INDIAN TAX 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 HOLDER 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 FO R THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER SIMPLY TRANSFERRED THE 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 CO MPANIES 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 AS SESSING 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 COMPA NIES IN HER HANDS WITHOUT ANY BASIS. WE FURTHER NOTE THAT IN THE CASE OF THE 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 DISCUSS ED THE FACTS PERTAINING TO THE PROTECTIVE ADDITION IN DETAIL AND DELETED THE 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. ITA NO. 5028 /DEL /201 5 & CO NO . 380 /DEL/201 5 5 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. C IT (A), WHICH DOES NOT NEED A NY INTERFERENCE ON OUR PART, 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 TH E DEPARTMENT. 7. SINCE WE HAVE DISMISSED THE APPEAL OF THE DEPARTMENT, THEREFORE, THE CROSS OBJECTION WHICH IS IN SUPPORT OF THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) BECOMES INFRUCTUOUS AND ACCORDINGLY DISMISSED. 8 . IN THE RESULT, APPEAL OF THE DEPART MENT IS DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. ( ORDER PRON OUNCED IN THE COURT ON 19 /11 / 201 8 ) SD/ - SD/ - ( SUDHANSHU SRIVASTAVA ) (N. K. S AINI ) JUDICIAL MEMBER VICE PRESIDENT DATED: 19 /11 /201 8 SH