ITAT: Deletes protective addition on shareholder-assessee considering substantive addition on overseas-companies

Delhi ITAT deletes protective addition of Rs.371.34cr in respect of income of overseas companies made in the hands of shareholder assessee (individual) while conducting search and seizure operation u/s 132(1) for AYs 2006-07 to 2012-13; Notes that Revenue had made addition in the hands of 3 persons – 1) overseas companies (on substantive basis) 2) assessee’s husband (on protective basis on the grounds that he exercised control and management of the affairs of the overseas companies) 3) assessee (on protective basis on the ground that even though profits of all the overseas companies were taxable in India being ‘Resident’ u/s 6(3), they did not admit to be in jurisdiction of India and hence no valid return was filed by them); ITAT opines 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”; Further, noting that based on the assessment of assessee’s husband, Revenue made addition of similar amount in case of assessee, ITAT opines 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 companies in her hands without any basis”; Observing that CIT(A) had deleted entire protective addition in assessee’s husband’s case, ITAT states that the same would apply mutatis mutandis to assessee’s case and thus deletes the addition as ‘unwarranted and unjustified’:ITAT