AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1496
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....has erred in law as well as on facts in holding that assessee company is not resident in terms of provisions under section 6(3)(ii) of the 1.T. Act for the purpose of tax liability whereas on the basis of seized documents/e-mails and various statements of Sh. Ajay Kalsi/Sh. Anil Aggarwal, it has been established that control and management of the assessee company is situated wholly in India. 3. 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 are the Indian Companies. 4. 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 and Smt. Mala Kalsi, who have created different verticals of corporate veil under them to avoid taxability in India. 5. 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 e....
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....9(1) of the Act. Accordingly, Ld. A.O. passed an assessment order on 28/03/2014u/s 153C/144 of the Act by holding that income of the Assessee of Rs. 3,69,36,809/- for the year under consideration is liable to be taxed in India. 6. Aggrieved by the above assessment order dated 28/03/2014, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) by challenging assessment order on the merits as well as on certain legal issues including the jurisdiction of the A.O. u/s 153C of the Act. The Ld. CIT(A) allowed the Appeal of the Assessee on 31/03/2015 on the ground that the impugned assessment order has been passed without passing the Draft Assessment Order as per Section 144C of the Act, the initiation of proceeding u/s 153C of the Act is unlawful and also on the ground of non-compliance of provisions of section 124 to 127 of the Act. 7. As against the order of the Ld. CIT(A) dated 31/03/2015, the Revenue preferred the above Appeal and the Assessee has also filed Cross Objection in support of the order of the Ld. CIT(A) on the Grounds mentioned above. 8. The Ld. Department's Representative addressing on the ground No. 1 of Appeal of the Revenue, submitted....
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....tion for 15 Assessee's, the A.O. breached the settle principal of law. The said fact can be corroborated from para 7.5 of the satisfaction note, which reads as under:- "Therefore, in view of the aforesaid discussion action u/s 153C is to be taken in respect to overseas companies listed in Para 1 above, wherever documents pertaining to overseas companies have been seized." 11. From the above, it is crystal clear that, single consolidated satisfaction note has been treated as satisfaction for some of the foreign companies listed in para 1 including the Assessee. The Hon'ble Supreme Court in the case of CIT(A) Vs. Singhad Education Society (supa) held as that no adverse assessment can be made for a particular assessment year unless it is proved that the incriminated material so found pertains to that year. The relevant portion of the Hon'ble Supreme Court is reproduced as under:- "18) The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act....
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....de the assessment order on the ground that the assessment order has been passed without passing the draft assessment order. 14. The Ld. Departmental Representative submitted that the Ld. CIT(A) committed error in holding that Assessee is not a resident and erroneously held that passing of the assessment order in the absence of the draft assessment order illegal. Thus, sought for allowing the Ground No. 2 to 6. 15. Per contra, the Ld. AR submitted that the Assessee is a foreign company and is an "eligible assessee" within the meaning of section 144C(15)(b) of the Act, therefore, as per section 144C(1) of the Act, it is mandatory for the AO to pass draft assessment order. As the Assessing Officer has not passed draft assessment order, the final assessment order passed by the AO deserves to be set aside. The ld. AR by relying on the plethora of judicial precedents sought for dismissal of the ground Nos. 2 to 6 of the Revenue. 16. We have heard both the parties and perused the material available on the record. The assessee is a foreign company and the Assessee herein is an 'eligible assessee' in terms of section 144C(15)(b) of the Act. As per the provisions of section 144C(1) ....
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....DB) of the Andhra Pradesh High Court categorically held that the failure to pass a draft assessment order under Section 144C (1) of the Act would result in rendering the final assessment order "without jurisdiction, null and void and unenforceable." In that case, the consequent demand notice was also set aside. The decision of the Andhra Pradesh High Court was affirmed by the Supreme Court by the dismissal of the Revenue's SLP (C) [CC No. 16694/2013] on 27th September, 2013. 13. In Vijay Television (P) Ltd. v. Dispute Resolution Panel [2014] 369 ITR 113 (Mad.), a similar question arose. There, the Revenue sought to rectify a mistake by issuing a corrigendum after the final assessment order was passed. Consequently, not only the final assessment order but also the corrigendum issued thereafter was challenged. Following the decision of the Andhra Pradesh High Court in Zuari Cement Ltd. v. ACIT (supra) and a number of other decisions, the Madras High Court in Vijay Television (P) Ltd. v. Dispute Resolution Panel (supra) quashed the final order of the AO and the demand notice. Interestingly, even as regards the corrigendum issued, the Madras High Court held that it was bey....
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....2015, 3351/Del/2015 & 3352/Del/2015 and in cross objections bearing Co. Nos.353/Del/2015, 354/Del/2015, 355/Del/2015 & 356/Del/2015. 2. The Revenue has projected the following questions of law in the present appeals: "2.1 Whether on the facts and in the circumstances of the case, the Ld. ITAT has erred in law in holding that assessment orders passed are unsustainable for not passing the draft assessment order as per the provisions of Section 144C(1) of the Act which is applicable to non-residents and the assessee in this case is a resident of lndia? 2.2 Whether on the facts and in the circumstances of the case, the Ld. ITAT has erred by relying on facts in ignoring statements of Sh. Ajay Kalsil Sh. Anil Aggarwal and the documents seized wherein it was established that the control and management of the assessee company is situated wholly in India with Sh. Ajay Kalsi and Smt. Mala Kalsi, who have created different verticals of corporate veil under them to avoid taxability in India?" 3. The context in which the aforesaid questions of law arise are briefly narrated as under: 3.1 Search and seizure operations were conducted by the Investigati....
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....Section 144C(1) of the Act had not been complied with as no draft assessment order was framed. 5. According to the Assessee, it is an eligible assessee and therefore it was necessary for the AO to pass a draft assessment order and not to proceed straightaway to pass a final assessment order. The said issue is covered in favour of the Assessee by the decision of this Court in Pr. Commissioner of Income Tax-7 v. Sumitomo Corporation India (P) Ltd.: 2024 SCC OnLine Del 6125. 6. The term "eligible assessee" is defined under Section 144C(15)(b) of the Act. which reads as under: "144C. ***** Reference to dispute resolution panel. *** (15) For the purposes of this section, (a) *** *** *** (b) "eligible assessee" means, (i) any person in whose case the variation referred to in subsection (1) arises as a consequence of the order of the Transfer Pricing Officer passed under subsection (3) of section 92CA; and (ii) any non-resident not being a company, or any foreign company." 7. The first question projected by the Revenue proceeds on the basis that the Assessee is taxable as a resident of India. However, it is not disput....
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.... these materials had shown that M/s. Focus Energy Ltd. had international transactions with the assessee. M/s. Focus Energy Ltd. is undisputedly an Indian Company. It is, therefore, inferred that since the transaction between Focus Energy Ltd. with the assessee was accepted as an international transaction continuously over a period of time, it goes without saying that other party, i.e., the assessee is a foreign company. Any transaction between Indian Company and Indian company cannot be an international transaction and therefore, the international transaction of Focus Energy Ltd. which is an Indian Company, will necessarily be with the foreign company. On this premise also, CIT(A) concluded that it an unmistakable pointer that the assessee is a foreign company and such a fact is admitted by the Assessing Officer while dealing with the transactions of Focus Energy Ltd. with its foreign AEs continuously over a period of time. Basing on these facts, learned CIT(A) concluded that the material on record is more than enough to conclude that the assessee is a foreign company and therefore, under the provisions of section 144C, the Assessing Officer shall, in the first instance, forward a ....
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....PN Star Sports Mauritius S.N.C. ET Compagnie v. Union of Indi [2016] 388 ITR 383 (Del.), following the decision of the Andhra Pradesh High Court in Zuari Cement Ltd. v. ACIT (supra), the Madras High Court in Vijay Television (P) Ltd. v. Dispute Resolution Panel, Chennai (supra) as well as the Bombay High Court in International Air Transport Association v. DCIT (2016) 290 CTR (Bom) 46, came to the same conclusion. 15. Mr. Dileep Shivpuri, learned counsel for the Revenue sought to contend that the failure to adhere to the mandatory requirement of issuing a draft assessment order under Section 144C (1) of the Act would, at best, be a curable defect. According to him the matter must be restored to the AO to pass a draft assessment order and for the Petitioner, thereafter, to pursue the matter before the DRP. 16. The Court is unable to accept the above submission. The legal position as explained in the above decisions in unambiguous. The failure by the AO to adhere to the mandatory requirement of Section 144C (1) of the Act and first pass a draft assessment order would result in invalidation of the final assessment order and the consequent demand notices and penalty pr....