Facts of the Case

The present appeal was filed by the Revenue challenging the order of the Income Tax Appellate Tribunal (ITAT), which upheld the deletion of an addition of ₹2,43,11,824/- made by the Assessing Officer (AO) on a protective basis.

The addition was linked to alleged undisclosed foreign assets connected with a company, Everbez Business Inc., where the respondent assessee, Ashok Kumar Singh, was a director and sole shareholder.

Notably, substantive proceedings had already been initiated against the said company under the Black Money Act, 2015. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the protective addition, and the ITAT affirmed the same.

Issues Involved

  1. Whether a protective addition can be sustained when substantive proceedings are already initiated under the Black Money Act, 2015 against a related entity.
  2. Whether the Revenue can pursue parallel remedies under different statutes for the same alleged undisclosed income.

Petitioner’s Arguments (Revenue)

  • The Revenue sought to challenge the deletion of the protective addition by CIT(A) and ITAT.
  • It was argued that the addition was justified to safeguard the interest of Revenue.
  • However, during proceedings, the Revenue conceded that:
    • The matter was already being pursued substantively under the Black Money Act, 2015.
    • The appeal may be closed with liberty to revive if proceedings under the 2015 Act fail.

Respondent’s Arguments (Assessee)

  • The respondent did not appear during the hearing.
  • However, based on the record:
    • The assessee relied on the fact that substantive addition had already been made in the hands of the company (Everbez).
    • Therefore, protective addition in the individual’s hands was unjustified.

Court’s Findings / Order

  • The Hon’ble Delhi High Court agreed with the submission of the Revenue.
  • It observed that:
    • Since substantive proceedings were already ongoing under the Black Money Act, continuing the present appeal was unnecessary.
  • Order:
    • The appeal was closed.
    • Liberty was granted to the Revenue to approach the Court again if proceedings under the 2015 Act fail.

Important Clarification

  • The Court did not adjudicate on merits of the addition.
  • It emphasized procedural prudence:
    • Parallel proceedings should not unnecessarily continue when substantive proceedings are already in motion.
  • The ruling reinforces that:
    • Protective additions are contingent and cannot survive independently where substantive liability is being determined elsewhere.

 

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/60814122023ITA7622023_173256.pdf

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