POOJA KANSAL,CHANDIGARH V. INCOME TAX OFFICER, WARD-1, G.GARH, GOBINDGARH

ITA 224/CHANDI/2025

AI Insights

The case involves appeals by Pooja Kansal against the orders passed by the CIT(A) National Faceless Appeal Centre, Delhi, for the assessment years 2016-17 and 2017-18. The appeals were consolidated due to the similarity in the grounds and issues involved, differing only in the quantum of amounts. The primary contention was regarding the protective additions made in the hands of the assessee as an individual, despite substantive additions being already made in the hands of Kansal Sons Steels Pvt. Ltd., a company where the assessee is a director. The Tribunal examined whether such dual assessments for the same income were legally tenable, considering the principles of separate legal entity and non-double taxation under the Income Tax Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 782001 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 12-02-2025
• Other Referred Cases: JCIT Vs. Naryana Reddy Bakati, Atchaiah Vs. CH, Soleman Vs. Saloman and Co. Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM KASHYAP
• Assessee Lawyers: T.N. SINGLA
• Keywords: Income from undisclosed sources; Bogus purchase; Reopening of assessment; Initiation of penalty proceedings; Borrowed satisfaction; Bogus
• Section: 147; 148

Judgement Text

"आयकर अपीलȣय अͬधकरण, चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘B’, CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT & SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA Nos. 224 & 225/CHD/2025 Ǔनधा[रण वष[ / Assessment Years : 2016-17 & 2017-18 Pooja Kansal, Kansla Singla and Associates, SCO 80-81, Sector 17-C, Chandigarh बनाम Vs. The ITO, Ward -1, Gobindgarh èथायी लेखा सं./PAN NO. ABYPK5904G अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent ( Hybrid Hearing ) Ǔनधा[ǐरती कȧ ओर से/Assessee by : Sh. T.N. Singla, CA राजèव कȧ ओर से/ Revenue by : Smt. Kusum Kashyap, CIT DR (Virtual Mode) सुनवाई कȧ तारȣख/Date of Hearing : 12.08.2025 उदघोषणा कȧ तारȣख/Date of Pronouncement : 27.10.2025 आदेश/Order Per Krinwant Sahay, AM: Both the appeals pertaining to A.Ys. 2016-17 and 2017- 18 have been filed by the assessee against the separate Printed from counselvise.com 2 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh orders, each dated 18.12.2024, passed by Ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi. 2. Since the grounds of appeal and the issue involved in both the appeals are similar except the quantum of amount involved, therefore, they are being taken up for adjudication together. ITA No.224/Chd/2025 is taken as a lead case for abduction. 3. The grounds raised in ITA No. 224/Chd/2025 are reproduced as under: - 1. That the Ld. CIT(A) has wrongly upheld impugned order passed u/s 147 r.w.s. 144, which is bad and against the provisions of law and facts. 2. That the Ld. CIT(A) has wrongly passed impugned order u/s 250 without properly serving the notices to the assessee. 3. That the Ld. CIT (A) has wrongly decided the case of the appellant ex-parte, as the Ld. CIT(A) has failed to provide sufficient opportunity of hearing, thus depriving the appellant of the right to present its case Printed from counselvise.com 3 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh effectively and rebut the additions wrongly made. 4. That the Ld. CIT(A) has wrongly passed ex- parte order without deciding appeal on merit. 5. That the Ld. CIT(A) has wrongly upheld addition in the hands of appellant being director of the company, on account of payment received of Rs. 3,84,19,516/-by Kansal Sons steels Pvt. Ltd on account of alleged bogus sales by the said company. 6. That the Ld. CIT(A) has wrongly upheld the protective addition of bogus sales made by the company to M/s Universal industries. 7. That the Ld. CIT (A) has wrongly upheld the impugned order of Assessing officer wherein amount of Rs. 3,84,19,516/- was taxed in the hands of Smt. Pooja Kansal as well as M/s Kansal Sons Steels Limited which is against the provisions of Income Tax and amounts to double taxation of same income. 8. That the Ld. Assessing Officer and Ld. CIT(A) has failed to consider the fact that the Smt. Pooja Kansal and M/s Kansal Sons Steels Pvt. Limited are separate entities and are to be treated separately. 9. That the Ld. CIT (A) has wrongly upheld additions of Rs. 3,84,19,515/- u/s 65A made by the Assessing Officer. Printed from counselvise.com 4 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh 10. That the Ld. CIT (A) has wrongly upheld additions wrongly made on account of alleged bogus sale to M/s Universal Industries even though the assessee in her Individual capacity has not entered into any transactions with the M/s Universal Industries. 11. That the Ld. CIT (A) has wrongly upheld addition made by the Assessing Officer without verifying the fact that no transactions of whatsoever nature have been entered into between Smt. Pooja Kansal and M/s Universal Industries. 12. That the Ld. CIT (A) has wrongly upheld initiation of penalty proceedings under section 271(1)(c). 13. That the Ld. CIT(A) has wrongly upheld interest of Rs. 1,12,01,325/- levied u/s 234A, 2348 and 234C. 14. That the assessee craves to add, amend or to leave any ground of appeal before it is finally heard. 4. Brief facts of the case, as given in the order of the Ld. CIT(A), are as under: - Assessee is an Individual deriving its income as partner from M/s Kansal Profiles, Mandi Gobindgarh during the financial year 2015-16, Printed from counselvise.com 5 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh relevant to the assessment year 2016-17. Besides, being partner in M/s Kansal Profiles, assessee is also a directors in M/s Kansal Sons Steels Limited during the year under consideration. During the year under consideration assessee has fled its income tax return derived from M/s Kansal Profiles as partner i.e interest on capital, share of profit from partnership firm and also remuneration from firm. Complete details of the income has duly been fled and uploaded with the Income tax department. A notice under section 148 was received from the AO stating that the assessee has derived income from the sales to M/s Universal Industries. It is also stated by the AO that although the sales to the firm M/s Universal Industries has been made by the company M/s Kansal Sons Steels Limited, in which Smt. Pooja Kansal is also a director. But protective assessment in hands of Smt. Pooja Kansal is being made. Further stated that Income Tax assessment in the case of M/s Kansal Sons Steels Limited was also completed by the National Faceless Assessment Centre, Delhi for the same assessment year by making similar additions as to the income of the Assessee i.e. Smt. Pooja Kansal. It is well settled law that same income cannot be Printed from counselvise.com 6 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh assessed in two different hands, otherwise it will amount to double taxation. 5. At the very outset, the ld. Counsel for the Assessee brought it to the notice of the Bench that the additions confirmed by the Ld. CIT(A) are protective additions made in the hands of the Assessee whereas, the substantive addition had already been made in the hands of the company. In fact, the Assessee is a director of that company. The Assessing Officer made the substantive addition in the hands of the company but at the same time made protective addition in the hands of the appellant. The Ld. Counsel for the Assessee argued that protective addition has been made in the hands of the Assessee as an individual whereas, the substantive addition has been made in the hands of the company. The Ld. counsel also argued that addition made in the hands of the company cannot be again done on protective basis in the hands of an individual whether or not he / she is a director in the company. The Ld. Counsel has filed a short note Printed from counselvise.com 7 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh bringing out facts of the case along with different case laws on this issue which is reproduced as under: - Short Note: The transactions of alleged bogus transactions were made in the accounts of the company and the expenses of said bogus purchases are also booked in the accounts of the companies. Thus, the benefit of any alleged bogus purchases was availed by the company, which is separate legal entity and the department did not establish any link of benefit/diversion to the appellant. Further, no statement of the appellant was recorded and only statement of her husband Vipin Kansal was recorded by the DGGI and on the basis of statement of her husband recorded by third party addition on protective basis in the hands of appellant as unexplained money u/s 69A is made without any enquiry by the assessing officer and the said addition in the hands of appellant is made on the borrowed satisfaction. Further, the alleged bogus purchases are recorded in the regular books maintained by Printed from counselvise.com 8 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh the company and the expenditure of the same is also claimed by the company and the Learned Assessing Officer had not proved that any money or funds relating to the alleged bogus purchases flowed to the appellant during the year. We rely on the judgement of Hon'ble ITAT Hyderabad Bench in the case of JCIT Vs. Naryana Reddy Bakati 88 ITR (TRIB) 190 ITD 466 (Hyderabad). In this case during the search the statement of all the directors was recorded for unexplained funds on the basis of seized incriminating material during the search pertaining to the company found. The Hon'ble ITAT has held as :- \"5 We make it clear that there is not even an indication in the Revenue's grounds that the impugned additions pertain to the asses see himself than his company M/S. VNR Infrastructure Ltd. Hon'ble apex court's landmark decision in 170 vs. CH 170 vs. CH Atchaiah 218 YTR 239 (SC) held long back that the AO can and he must, tax the right person and the right person alone. By 'right person' it is meant the person who is liable to be taxed according to law with respect to a particular income. By the connotation of Printed from counselvise.com 9 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh 'right person', it is meant the person who is liable to be taxed, according to law, with respect to a particular income. And that the expression 'wrong person' is obviously used as an antithesis of the expression 'right person' only. We observe that this dssessee is the 'Managing Director of M/s. VNR Infrastructure Ltd. And that it is this latter entity which the fact is engaged in all the business activity(ies) and has been assessed separately throughout There is yet another landmark decision Soleman vs. Saloman and Co. Ltd. (1897 AC 22) hold long back in corporate parlance that a company is very a body corporate and a distinct entity apart from its Director. 6. We conclude in these circumstances that the CFT(A) has rightly deleted these twin additions in the assessee/individual's hands since corresponding undisclosed and unaccounted Income pertains to its company M/s. VNR Infrastructure Ltd. carrying out the business in its own name. We make it clear while holding so that the Revenue has not even indicated the fact above the company's assessment qua the very income(s). We thus see no reason to reverse the CLT(A) detailed findings for these precise reasons.\" Thus any addition as protective basis in the hands of one director for the alleged bogus purchases made by the company and claimed expenses or other benefit on the same by the Printed from counselvise.com 10 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh company is unwarranted and unjustified in this case. Further, any alleged irregularities or disputed transactions are attributable, if at all, to the company as a corporate body and not to any one individual director, unless specific evidence is brought on record to show personal involvement or benefit. In the present case, no such evidence has been produced by the department to suggest that Smt. Pooja Kansal, in her individual capacity, was the beneficiary of the alleged bogus transactions or that she had acted beyond her role as a director. Given the above facts, legal position, and supporting documents already on record, it is submitted that the proposed additions in the hands of the assessee are not only factually incorrect but also legally untenable. The entire basis of the additions is rooted in transactions undertaken by a distinct and legally separate corporate entity, which is already under assessment for the same. Therefore, we humbly request the Hon'ble Printed from counselvise.com 11 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh Tribunal to kindly drop the proceedings against Smt. Pooja Kansal and refrain from making any adverse inference or addition in her personal assessment for the aforesaid years. 6. Per contra, the ld. DR relied on the order of the authorities below. 7. We have considered the findings given by the Assessing Officer in the assessment order and the Ld. CIT(A) in the appellate order. We have also considered the written submissions filed by the Counsel of the Assessee and his arguments during the proceedings before us. We have taken into consideration the arguments made by the ld. DR. We find that the substantive addition has been made in the hands of the company and the protective addition has been made in the hands of the Assessee of the same amount. If fact, the AO failed to appreciate that a body corporate and an individual are two separate and different entities. Additions made in the hands of one cannot be done on Printed from counselvise.com 12 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh protective basis in the hands of other. Here, in this case the Assessing Officer has made substantive addition in the hands of the company on the basis of certain documents found against the company but at the same time the protective addition of the same amount has been made in the hands of the appellant as an individual which is not permissible in the law. 8. Keeping in view, the facts as discussed above and taking note of different case laws brought on record by the Counsel of the Assessee, we are of this considered view that the protective assessment made by the Assessing Officer in the hands of an individual appellant, cannot be sustained. Accordingly, Assessee’s appeal on this issue is allowed. 9 The Assessee has also raised the issue of reopening of the assessment u/s 147 / 148. Since we have already decided the issue on merit, therefore, this issue of reopening of assessment is just academic in nature, we are not inclined to decide this issue. Printed from counselvise.com 13 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh 10. In the result, the Assessee’s appeal is allowed. ITA No.225/Chd/2025 (AY 2017-18) 11. We find that the facts and issue involved in this appeal of the Assessee are similar to that for A.Y. 2016-17. Even the submissions of the Ld. Representatives are similar as were made in Assessee’s appeal in ITA No. 224/Chd/2025. Therefore, keeping in view the facts and circumstances and issue involved, the decision arrived at by us for A.Y. 2016- 17, will apply mutatis-mutandis for this assessment year too. 18. In the result, both the appeals of the Assessee stand allowed. Order pronounced on 27.10.2025 Sd/- Sd/- ( RAJPAL YADAV ) ( KRINWANT SAHAY) Vice President Accountant Member “आर.क े.” Printed from counselvise.com 14 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकर आयुÈत/ CIT 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "