AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 515
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....on u/s 153C of the Income Tax Act in absence of any incriminating material found during the search on Mr. K. S. Dhingra and Mr. G. S. Dhingra on 16.09.2011. 4) That the Ld. CIT(A) erred in law and on facts in holding that books of accounts prepared in raw form on outsourcing basis on commercial terms are of incriminating nature for assuming jurisdiction u/s 153C of the Income Tax Act. 5) That the Ld. CIT(A) erred in law and on facts in holding that AO has interpreted and applied the directions of Hon'ble High Court vide its order dated 02.05.2018 in the writ proceedings in correct legal manner in deciding the issue of assumption of jurisdiction u/s 153C of the Income Tax Act. 6) That the Ld. CIT(A) erred and on facts in law in holding the action of the Ld. AO in relying on:- i) Inadmissible statements recorded during survey mainly of Mr. Rajneesh Gupta, Accountant u/s 133A of the Income Tax Act for assuming jurisdiction u/s 153C of the Income Tax Act. ii) Illegally holding that although the documents found per se don't reveal any undisclosed income yet such documents indicate that appellant is resident in India for assuming jurisdiction u/s 153C of the Income....
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....The Ld. CIT(A) failed to appreciate that all necessary disclosures to RBI, Tax Authorities in the assessments of parent holding company, Statutory Declarations in Statutory Forms 3ECB etc. had been made and no addition could be made as there was no undisclosed income in the documents impounded/seized. 16. That the ld. CIT(A) erred in law and on facts in holding that assessee company is resident in India within the meaning of section 6(3)(ii) of the Income Tax Act ignoring the vital evidences such as Board Meeting held overseas and all business activities carried out in overseas. 17. That the Ld. CIT(A) erred in law and on facts in concluding that the documents indentified in the satisfaction note dated 08.10.2013 convey that management and control of the affairs of assessee foreign company was wholly situated in India during all the year under consideration. 18. That the Ld. CIT(A) erred in law and on facts in not accepting the contention that residential status of an assessee is required to be determined on a year-to-year basis and there is no presumption in law that once a resident always a resident'. 19. That the Ld. CIT(A) erred in law and on facts of the assess....
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....aning of section 2(35) of the Income Tax Act. 26. That the Ld. CIT(A) erred in law in not calling for the records from A.O. in respect of direct enquiries made by Tax Department from the corresponding authorities in Jersey to check the residential status of the assessee. 27. That the Ld. CIT(A) failed to appreciate that assessee could not be a party to such enquiries and could not provide any evidence as alleged by the CIT(A). 28. Without prejudice, if assessee is treated as resident in India, the Ld. CIT(A) erred in law and on facts of the assessee's case in not directing the AO to exclude the dividend income received from Indian companies u/s 10(34) / 10(35) of the Income Tax Act on wholly irrelevant considerations." 3. A search & seizure action u/s 132 of the Income Tax Act, 1961 was conducted on Dhingra Group of cases on 16.09.2011. During the course of search operation, the Revenue alleged that certain documents, papers belonging to M/s U. K. Paints (Overseas) Ltd. were found and seized. Accordingly, in the case of the assessee proceedings u/s 153C of the Act have been initiated and Assessment Order u/s 153C of the Act have been passed on 24.10.2018 for A.Y. 2008....
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.... dated 23.08.2023 vide F. No. 279/Misc./M- 54/2023-ITJ. Para 7.2.1 of the instruction is reproduced as under:- "In the lead and all the tagged cases, necessary action u/s 148/147 need to be taken in the situation stated by the Court in the para 14(iv) of the said order in view of section 150 of the Act. The AO will be required to reopen the cases following the currently applicable procedure for reopening i.e. following the procedure prescribed u/s 148A of the Act as inserted by Finance Act, 2021 in accordance with the law laid down by the Hon'ble Supreme Court by its order dated 04.05.2022 in Union of India vs. Ashish Agarwal case (2022 SSC Online SC 543). In view of the specific provisions of section 153(6) of the Act, all the cases reopened u/s 147/148 of the Act will be required to be completed by 30.04.2024." 5. During the course of assessment proceedings u/s 153C of the Act in your case, it was noticed that during the search and seizure action carried out at various premises related to Dhingra Group on 16.09.2011, certain documents/paper belonging to M/s U.K. Paint (Overseas) Ltd. (UKPO, in short) were found and seized/impounded therefrom. These documents and post-search....
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.... you prepare the accounts pertaining to UK Paints Overseas Ltd. Ans: I Prepare the accounts including general entries based on bank statements of the bank accounts maintained in the name of UK Paints (Overseas Ltd.) The above fact was further confirmed by Mr. Naveen Choudhary, CFO, in his statement recorded on oath under section 132(4) on 16.09.2011. The relevant excerpts are reproduced below for ready reference: Q. No. 24: Please explain who prepare the accounts of all the overseas company? Ans: The bank accounts of all the overseas company are received by us and on the basis of that accounts we prepare the accounts of the overseas company in India. Further the Director of the company in India, Sh. G.S. Dhingra, in his statement recorded on 17.09.2011 during the course of survey action at 38 DDA Commercial Complex, Zamrudpur, Kailash Colony, New Delhi, accepted that the books of accounts of these foreign companies are being maintained in India. The relevant excerpts of his statement are reproduced below for ready reference: "Q:9 There are papers, seized in annexure A-6 page no. 54 seen that the balance sheet, P & L account, vouchers, ledger are being sent to Mich....
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....mitted two things: * that the "owners and ultimate beneficiaries" of UKPO are located in India, and * that is why the CFO & accountant in India "must oversee, advise, supervise if necessary, if required the operating people of overseas entities whose task it is mainly to maintain accounts of these companies." This shows that complete control over UKPO is exercised from India. 5.2.2. All Strategic/investment decisions of UKPO are taken by Sh. K. S. Dhingra in India: Strategic investment decisions of the company are taken by the Chairperson of UKPO, Sh. K.S. Dhingra. In this context, it will not be out of place to mention that BJN Holdings Ltd. is a 100% subsidiary of M/S UKPO. However the final decision to dissolve the same and create two more subsidiaries, was taken by Sh. K.S Dhingra in India. This fact has been categorically admitted by the CFO of the company Sh. Naveen Choudhary in his statement recorded on oath on 10.04.2012, under section 131(IA) of the Act. The relevant excerpt of the statement is reproduced below for ready reference: "Q.36.: How and where the decision regarding creating the companies that, is BJN Holdings (D) Limited and BJN Holdings (I) Limit....
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.... and hiring such service provider is an important and strategic decision which appears to be taken by Sh. K. S. Dhinpra singlehandedly, showing the extent of control over UKPO. 5.2.3. Board meeting and Resolutions of M/s UKPO: The seized/impounded documents clearly suggest that meetings of Board of Directors are held in India. This is evidenced from document extracted from the hard disc i.e. Annexure A35/British Paints/Vasanta Mail. This document is an email sent by Mr. Vinod Kaushik to Rajnish Gupta, Deputy Manager of Accounts of UK Paints India Pvt. Ltd. and is reproduced below: "Subject : FW: Ukpo (draft) Bd. Reso. (grouped)- Apr- 07 to Mar 08, Ukpo (draft) Bd. "Dear Mr. Rqjnish, Please find attached Board Resolution for UKPO as discussed. Regards Vinod Kaushik Attachments----------- Ukpo (draft) Bd. Reso (grouped) -Apr-07 to Mar-08 31.5KB Uk20 (draft) Bd. Reso (grouped) -Apr-08 to Mar-09 32.5KB Part 1.4 72 bytes" Attachments to the email show that the draft Board resolutions have been prepared on the letter head of UKPO with its registered address of Jersey. However, the subject on the draft shows the place of meeting in India, and reads as "EXTRACT F....