MOIN AKHTAR QURESHI AS REPRESENTATIVE ASSESSEE/AGENT OF M/S. JEAN LOUIS DENIOT,NEW DELHI vs. ACIT, CENTRAL CIRCLE- 19, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES “D” : DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER

ITA.Nos.6672, 6673, 6674 & 6675/Del./2018 Assessment Years 2009-10 to 2011-12 & 2014-15 Moin Akhtar Qureshi, The ACIT, Representative Assessee of Jean Louis vs. Central Circle – 19, Deniot, C-134, Ground Floor, Defence Colony, New Delhi. New Delhi – 110024 PAN AAAPQ4438L (Appellant) (Respondent) ITA.Nos.6668, 6669, 6670 & 6671/Del./2018 Assessment Years 2009-10 & 2010-11 & 2012-13 & 2014-15 Moin Akhtar Qureshi, Representative The ACIT, Assessee of Cabinet Jean Louis Deniot, Central Circle – 19, vs. C-134, Ground Floor, Defence Colony, New Delhi. New Delhi – 110 024 PAN AAAPQ4438L (Appellant) (Respondent)

2 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. ITA.No.6667/Del./2018 Assessment Year 2012-13 Moin Akhtar Qureshi, Representative The ACIT, Assessee of Design-39 vs. Inc. C-134, Ground Central Circle – 19, Floor, Defence Colony, New Delhi – 110024 New Delhi. PAN AAAPQ4438L (Appellant) (Respondent) For Assessee : Shri Hiren Mehta, C.A. & Shri Ashwani Gupta, C.A. For Revenue : Ms. Anupama Anand, CIT-DR Date of Hearing : 30.03.2022 Date of Pronouncement : 27.04.2022 ORDER PER R.K. PANDA, A.M. The above batch of 09 appeals filed by the Assessee are directed against the separate orders dated 20.09.2018, of the Ld. CIT(A)-27, New Delhi, relating to the respective assessment years mentioned therein. Since identical grounds are involved in all these appeals, therefore, these were heard together and are being disposed of by this common order for the sake of convenience.

3 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. 1.1. For the sake of convenience and brevity, we take- up facts from ITA.No.6672/Del./2018 for the A.Y. 2009-10 as the lead case. Both the parties have agreed that the decision taken in this appeal may be followed in remaining assessment years/appeals.

4 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. noted that during the course of search proceedings on 15.02.2014, Mr. Jean Louis Deniot was present at the search premises at the farm house and was also examined on oath wherein he admitted that he had provided interior designing services for furnishing the farm house but had not charged any money for the services. As per AO, Mr. Jean Louis Deniot, French Architect, is a non-resident but has business connection with the assessee and is in receipt of income directly/indirectly from the assessee for services rendered in India and, therefore, his income is liable to be taxed in India. This conclusion has been drawn by AO on account of payments made by assessee to Mr. Jean Louis Deniot and his both the companies in different years as reflected in the documents seized during the search proceedings, details of which are given by the A.O. from pages 3 to 5 of his order. In view of these facts, the A.O. of the searched person handed over the relevant seized documents/evidences belonging to the assessee, being other person and after recording satisfaction, proceedings u/s 153C r.w.s. 153A of I. T. Act were initiated.

5 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. 2.1. The A.O. analysed the details/transactions mentioned in the documents/evidence found during the search and worked-out the amounts paid by assessee to Mr. Jean Louis Deniot in different years and noted that no taxes were paid by him on the income earned. In view of this, since Mr. Jean Louis Deniot had left the country without payment of income tax on such income, the A.O. issued a show cause notice under section 163 of the of the I.T. Act, 1961 asking the assessee to explain as to why he should not be treated as representative assessee/agent of Mr. Jean Louis Deniot and his associate companies M/s Design 39 Inc. and M/s Cabinet Jean Louis Deniot. In reply, the assessee contended that he did not make any payment to Mr. Jean Louis Deniot and the farm house is owned by M/s Impres Estates Pvt. Ltd., therefore, the provisions of section 163 of the of the I.T. Act, 1961 were not applicable in his case. However, the A.O. did not accept the contention of the assessee. After discussing the facts, statements given by Mr. Jean Louis Deniot during the search proceedings, analyzing the-seized material found during the search wherein details

6 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. of payment made to Mr. Jean Louis Deniot were specifically mentioned and referring to the various conversations through emails regarding payments made by Mr. Moin Akhtar Qureshi to Mr. Jean Louis Deniot, the A.O. treated Mr. Moin Akhtar Qureshi as agent/representative assessee of Mr. Jean Louis Deniot as per provisions of section 163 of I. T. Act and initiated assessment proceedings.

2.2. During the course of assessment proceedings, the A.O. after analyzing the documents/evidence extracted from the seized records observed that the employees of Mr. Jean Louis Deniot, who were associated with this project, were sending decoration quotes through emails on regular basis to the employees of Mr. Moin Akhtar Oureshi during the currency of the project. These emails clearly evidence that Mr. Jean Louis Deniot was regularly paid by Mr. Moin Akhtar Qureshi for the decoration/services rendered in the farm house. He also observed that major payments were made through hawala/third party settlements abroad mainly through Mr. Lucky Yuan of Hong Kong who was one of the trade associates of M/s Abdul Masjid Qureshi and

7 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. M/s AMQ Agro India Pvt. Ltd., group entities of the assessee. After analyzing all these documents/evidence, the AO prepared a chart which reflects the entity-wise and year- wise payments made by Mr. Moin Akhtar Qureshi to Mr. Jean Louis Deniot and his two associates companies.

2.3. Despite providing several opportunities by the A.O. to the assessee viz., Mr. Moin Akhtar Qureshi Agent/ Representative Assessee in respect of Mr. Jean Louis Deniot, failed to file return of income for the A.Y. 2009-10. Hence, he completed the assessment on the basis of information and evidences available on record under section 144 of the of the I.T. Act, 1961. The A.O. noted that during year under consideration i.e. F.Y. 2008-09 relevant to AY 2009-10 Mr. Jean Louis Deniot has received dollar 72956.82 (Which is equivalent to Rs.36,95,263/- with conversion rate of Rs.50.65 per $ taken on 01st day of F.Y from the website www.x-rates.com.) for his services rendered in India to Mr. Moin Akhtar Qureshi. During the year under consideration the assessee viz., Mr. Moin Akhtar Qureshi or M/s Impress Estate Pvt. Ltd. was liable to

8 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. deduct TDS u/s 195 of the Income Tax Act, on the payments that were made to Mr. Jean Louis Deniot, but failed to deduct tax. Further, income earned by Mr. Jean Louis Deniot is not offered for taxation before French Taxation Authority. In view of the above, the A.O. held that the income earned by Mr. Jean Louis Deniot of Rs.36,95,263/- for A.Y. 2009-10 is taxable in hands of Mr. Moin Akhtar Qureshi as representative assessee/agent. Accordingly, the A.O. computed the income of the assessee as representative assessee/agent of Mr. Jean Louis Deniot at Rs.36,95,263/-.

2.4. On identical facts, addition of Rs.4,89,682/-, Rs.6,68,970/- and Rs.14,07,530/- have been made by the A.O. in A.Y. 2010-11, 2011-12 and 2014-15 respectively.

2.5. Similarly, addition of Rs.1,54,37,322, Rs.21,01,188/-, Rs.3,18,947/-, Rs.57,89,319/- for A.Ys. 2009-10, 2010-11, 2012-13 and 2014-2015 respectively were made by the A.O. by treating him as Representative Assessee of Cabinet Jean Louis Deniot.

9 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. 2.6. Further, the A.O. made addition of Rs.9,95,019/- for the A.Y. 2012-13 by treating Mr. Moin Akhtar Qureshi as Representative Assessee of Design-39 Inc.

3.1. However, the Ld. CIT(A) was not satisfied with the arguments advanced by the assessee. So far as the validity of the assessment under section 153C is concerned, he upheld the action of the A.O. by observing as under:

“6.3. In view of aforesaid satisfaction recorded by AO, it can be very well seen that the AO has emphatically demonstrated how the incriminating documents/evidence found during the search proceedings, which have been seized as per Annexures

10 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. mentioned above clearly reflect that in which year, how much amount in foreign currency has been paid to which entity and through whom. Thus, the AO has quantified the amounts of payments made by Mr. Moin Akhtar Qureshi to Mr. Jean Louis Deniot and his two associate companies in respective years as reflected in annexures mentioned above. It has also been mentioned by AO that none of these payments are reflected in regular books of account, therefore, they are unexplained as well as undisclosed. Since these payments have been received by Mr. Jean Louis Deniot and his two associate companies in lieu of quotation/vouchers raised or emails sent by them, clearly the documents/evidence, wherein these transactions are reflected, belong to these three entities only. The reliance of appellant on the decision of Hon'ble Jurisdictional High Court in the case PepsiCo India Holdings vs ACIT (supra) is misplaced as in the same decision Hon'ble Court has cited another example of photocopies of documents, which reflects the

11 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. transactions of investments made by assessee, by holding that the same belongs to assessee. In the case of appellant also, he has rendered services to Mr. Moin Akhtar Qureshi, raised quotation or sent emails asking the payments in lieu of services rendered by him and received- the payments and all these transactions are reflected in the documents/evidence found during the search proceedings as per annexures mentioned by AO. Clearly, these documents belong to appellant only. Moreover, the ratio given by Hon'ble Court in the case Pepsico India Holdings vs ACIT has been further defined in the case Pr. CIT vs Super. Malls Pvt. Ltd. 393 ITR 557 wherein it has been held that while construing a document, expressions should not be interpretated too literally as if they were words carved in stone or in a statute. As per Hon'ble Court, the expression "belong", in the context in which it is used has to be understood as imputing "relating to", or any other term was not persuasive. Hon'ble Court has further held that having regard to the conspectus of the

12 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. facts, the AO has to satisfy that the documents seized belong to the assessee in view of what is contained or brought out on a fair reading of their contents. Thus, in the case of appellant also, the fair reading of the contents as reflected in the seized documents as above, clearly uphold the view that the said documents belong to assessee only. Similarly, in other case Pr. CIT vs. Nau Alidhi Overseas Pvt. Ltd. 394 ITR 752, Hon'ble Jurisdictional High Court has held that the statements of director that the part of cash found at his residential premises belong to assessee company, constitutes as material for the purpose of recording satisfaction and initiating proceedings u/s 153C of the Act, However, the case of AO in respect of appellant is much stronger as here in this case, several incriminating documents were found reflecting undisclosed transactions, which constitute material sufficient for recording satisfaction and initiating proceedings u/s 153C of the I. T. Act. Similarly, two other conditions as per section 153C that the documents/evidence must be incriminating and

13 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. belonging to respective assessment year, are also satisfied as none of the transactions as per aforesaid documents/evidence have been disclosed in the regular books of account, therefore, incriminating and also relate to respective years, as mentioned by AO in the chart. The appellant also, while raising the additional grounds and making submissions in support of these grounds has failed to raise any objection on the documents or the transactions reflected therein or determination of year in which they are to be assessed. His objection is generic in nature only wherein without specifying any document or transaction, he has stated that the document/evidence do not belong to him, therefore, conditions as per section 153C are not fulfilled. In view of this, the additional grounds taken by appellant are dismissed and validity of assessment proceedings u/s 153C of the Act is upheld.”

3.2. So far as the addition on merit is concerned, the Ld. CIT(A) upheld the action of the A.O. by observing as under :

14 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. “8. Ground nos. 4 to 6 pertain to the merit of the case against the addition of Rs.36,95,263/- made by AO. As discussed above, during the assessment proceedings, AO had given several opportunities to appellant to explain the transactions as reflected in the documents/evidence seized during the search proceedings but none of the opportunities was availed by him. Finally, a show cause notice u/s 144 of the Act was issued to which the appellant replied by explaining that his case is covered by the provisions of DTAA and most of the payments are towards reimbursements of expenses which cannot be considered as income of appellant. However, no explanation was given by appellant in respect of specific transactions reflected in seized documents. During the appellate proceedings also, appellant has failed to give any submissions in support of grounds raised by him or additions made by AO. He has simply filed the copy of reply which was submitted to AO during the assessment proceedings. Since no submissions have been made by appellant

15 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. against the addition made by AO, the conclusions drawn by AO are upheld. Moreover, the genera! submissions given by appellant that his case is covered by DTAA or the payments made by him are in the nature of reimbursements, have no merit in absence of any specific details or supporting evidence. The appellant has failed to mention any instance to demonstrate that the payments made by Mr. Moin Akhtar Qureshi to Mr. Jean Louis Deniot or his two associate companies are nothing but reimbursements of payments. How the provisions of DTAA are applicable in his case, nothing has been submitting by appellant in this regard. In view of this, I uphold the conclusion drawn by AO that income of Rs.36,95,263/- earned by Mr. Jean Louis Deniot for A.Y. 2009-10 is taxable in the hands of Mr. Moin Akhtar Qureshi as representative assessee/agent and dismiss the grounds taken by appellant.”

16 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. 4. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds :

17 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. contrary to same detailed document wise submissions were filed during the appellate proceedings. 3. That on the facts and circumstances of the case and in law the CIT (A) was not justified in upholding the action of AO in making an addition of Rs.36,95,263/- by treating the appellant as representative assessee of Jean Louis Deniot on the basis of order passed u/s 163 of the I.T. Act, 1961. 3.1 That the Ld. CIT (A) erred in not considering the submission made by the appellant vide Written Submissions dated 21.02.2018 and further vide letter dated 19.09.2018 that Jean Louis Deniot being a non-resident is entitled to claim the benefit of Article- 15 of the DTAA between India and France and therefore any income accruing to a resident of France is not taxable in India who has not stayed in India for a period of more than 180 days. 3.2 That the Ld. CIT(A) has grossly erred in holding that the appellant failed to make any submission that the provisions of DTAA are applicable in the case of the

18 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. appellant whereas contrary to the same detailed and elaborate submissions were made vide letter dated 21.02.2018 and 19.09.2018. 3.3 That the Ld. CIT(A) failed to appreciate that in order to avail the DTAA benefits the appellant was not obliged to file substantiating evidence to the effect that Jean Louis Deniot did not stay in India for a period less than 180 days since if it was inferred otherwise afortiori the provisions of section 163 became inapplicable as the said section is only applicable in the case of a non resident. 4. That without prejudice to the above grounds of appeal even if such income were to be assessed in the hands of Moin Akhtar Qureshi as representative assessee only the income element was to be taxed and reimbursement of expenses was required to be eliminated. 5. That the appellant craves leave to add, alter, modify any of the grounds at the time of hearing or before the hearing.”

19 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. 5. Identical grounds have been taken by the assessee in the other appeals.

20 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. the said section is only applicable in the case of a non- resident. He submitted that the Ld. CIT(A) conveniently ignored to consider the submissions made by the assessee.

6.1. Without prejudice to the above, he submitted that even if such income were to be assessed in the hands of assessee as Representative Assessee, in that case, only the income element of such payment was to be taxed and reimbursement of expenses was required to be eliminated.

6.2. With respect to the validity of assessment under section 153C of the I.T. Act, 1961 is concerned, the Learned Counsel for the Assessee submitted that one of the important jurisdictional requirement under section 153C is that the seized document on the basis of which jurisdiction is being assumed must belong to the person other than the searched person i.e the non-resident being assessed to tax in the hands of a representative assessee, as per law applicable to search action prior to the amendment in section 153C. He submitted that the amendment in section 153C modifying this requirement to the words "pertains to

21 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. or relates to" came into effect from 01.06.2015 and is

prospective in nature. The Learned Counsel for the Assessee

drew the attention of the Bench to the following documents

belonging to Cabinet Jean Louis Deniot/Jean Louis Deniot/

Design 39 Inc. in the satisfaction note.

Annex. Page No. Description A-14 1-19 As per details below payment to beneficiary account of Cabinet Jean Louis A-ll Hard Disc Email conversation regarding payment to Mr. Jean Louis Deniot in foreign currencies A-12 Hard Disc A-14 Hard Disc Accounts of Impress Estates Pvt. Ltd. Email conversation regarding designing, furnishing and payment to Mr. Jean Louis Deniot in foreign currency.

A-18 Hard Disc Email conversation regarding payment to Mr. Jean Louis Deniot in foreign currencies Bills of for a hand knitted carpet purchased from M/s Textico A-20 Hard Disc Creations for the Farm House. Email conversation regarding payment to Mr. Jean Louis Deniot foreign currencies.

Copies Email conversation between Dinesh and Heather Walter A-2 28-29 and Virgine Deniot regarding invoices from Jean Louis Deniot's office.

6.3. The Learned Counsel for the Assessee drew the

attention of the Bench to the above and submitted that the

contents of the satisfaction note, the documents alleged to

22 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. be belonging to person other than searched person, can be broadly classified into following categories.

A. Hard Disc and contents thereof. B. Print outs of emails retrieved from the hard disc where name of Jean Louis Deniot, Cabinet Jean Louis and Design-39 Inc. is mentioned and also payments to these individuals/entities is mentioned, and C. Invoices sent by Jean Louis Deniot/Cabinet Jean Louis

6.4. He submitted that Hard Disc seized from the premises C-134, Defence Colony, New Delhi and recorded in the Panchnama in the name of AMQ Agro India (P) Ltd., would definitely belong to the AMQ Agro India (P) Ltd., and not the non-resident. The non-resident individual/entity did not have an office in India is an uncontroverted position. Even the assessing authorities have no where alleged that the nonresident had an office in India. Thus, these hard discs cannot be said to belong to the person other than the searched person. So far as the printouts of emails retrieved from the hard discs are concerned, he submitted that the

23 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. exchange of mails may be between the non-resident and AMQ group employees, but, the mails found in the inbox or outbox of the AMQ group employees would belong to the respective employee(s) and not the non-resident. Although, the mail may have been initiated by the non-resident or its staff and may figure name of Jean Louis Deniot/Cabinet Jean Louis/Design Inc. but, it cannot be said that the email found from the hard disc of the AMQ group, located at the premises in India, in inbox/outbox of the respective employee belongs to non-resident.

6.5. As regards the invoices raised by Jean Louis Deniot/Cabinet Jean Louis retrieved from the emails is concerned, he submitted that having raised the invoice on Mr. & Mrs. Qureshi, the said invoice would be the property of the person on whom it has been raised. Even a copy of the said invoice found in the email of the respective employee would belong to the said employee and not the non-resident. He submitted that what is to be examined is the ownership of the seized material. The authorship of the document or the fact that name of the non-resident

24 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. individual/entity figure in the document is not relevant. He, accordingly submitted that none of the seized material mentioned in the satisfaction note belongs to the non- resident individual/entity and hence the jurisdictional requirement for assumption of jurisdiction u/s 153C is not met. Thus, the order passed u/s 153C needs to be quashed on this ground alone. In support of the above, he relied on the decision of the Hon’ble Jurisdictional Delhi High Court in the case of Pepsico India Holdings vs., ACIT 50 Taxmann.com 299 (Delhi ) and the order of the ITAT in the case of Satyam Food Specialties Pvt Ltd vs., DCIT 57 taxmann.com 194.

6.6. The Learned Counsel for the Assessee drew the attention of the Bench about the item wise chart filed in the Paper Book at page No. 50-53 explaining nature of each and every seized material and clarifying why it does not belong to the non-resident, which the CIT(A) has not considered the same while adjudicating the appeal. So far as the reliance placed by the Ld. CIT(A) on the decisions of the Hon’ble Delhi High Court in the case of Pr.CIT vs., Super Malls (P)

25 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. Ltd. 76 Taxmann.com 267 (Delhi) and Pr. CIT vs., Nau Nidh Overseas (P) Ltd. 88 Taxmann.com 665 (Delhi) is concerned, he submitted that both the decisions are distinguishable and not applicable to the facts of the case and are misplaced. He submitted that that in the case of Super Malls (P) Ltd. (supra) the facts were that pen drives were seized from the individual (who also happened to be director of the company) and the print outs from the pen drive indicated cash receipts from the sale of shops and offices in assessee's other concern. On these facts the court held that contents belonged to the assessee i.e. the company. Similarly, in the case of Nau Nidh Overseas (P) Ltd. (supra) the facts were that during the course of search at his premises the director of the assesse company stated that some of cash seized from his premises belonged to the assessee. Based on the said statement it was held that statement of director u/s 132(4) constituted material for initiation of proceedings u/s 153C.

6.7. The Learned Counsel for the Assessee accordingly submitted that in both the cases there was a relationship

26 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. between the searched individual and the company as the searched individual was a Director of the Company. However, in the present case no such relationship exists. He submitted that addition has been made in the hands of Mr. Moin Akhtar Qureshi on account of payment made to Jean Louis Deniot and his associate concerns as unexplained expenditure. However, all payments have been made to the bank account of Jean Louis Deniot and his associates. The Learned Counsel for the Assessee, accordingly submitted that the facts of the above case laws are clearly distinguishable from the facts of the present case.

27 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. cases on 15.02.2014 including the office and residential premises of the assessee. During the course of search and post-search enquiry, it was found that Mr. Jean Louis Deniot, French Architect and Designer and his associates M/s Cabinet Jean Louis Deniot and Design-39 Inc. have rendered services for designing, decorating and renovation of farm house named as Manopsy Manor located at 4, Oak Drive, DLF Chattarpur Farm, Delhi. The said farm house is owned by a separate private limited company namely M/s Impress Estate Pvt Ltd. During the course of search, certain documents/evidences were found on the basis of which the A.O. drew the conclusion that Mr. Jean Louis Deniot and his associates i.e M/s Cabinet Jean Louis Deniot and Design-39 Inc. are in receipt of income directly/indirectly from the assessee for services rendered in India and, hence, their income is liable to be taxed in India. The payments worked- out on the basis of these seized documents are summarized at page No. 33 to 35 of the Assessment order for AY 2009- 10. Similar summary has also been given in Assessment orders for AY 2010-11, 2012-13 & 2014-15. On the basis of

28 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. these documents/evidences seized and summarized at page No.33 to 35 of the assessment order for AY 2009-10, it was held by the Assessing officer that the provisions of section 163 of the I.T. Act are squarely applicable to the assessee for his business connection with Mr. Jean Louis Deniot and his associates namely M/s Cabinet Jean Louis Deniot and Design-39 Inc., who are non-resident and have received income directly/indirectly from the assessee. Accordingly, order has been passed under section 163 treating the assessee as representative assessee/agent of Mr. Jean Louis Deniot and his associate concerns Cabinet Jean Louis Deniot and Design-39, Inc. and thereafter assessments have been framed under section 153C of the of the I.T. Act, 1961 for the block period from AY 2008-09 to 2014-15 in the hands of the assessee.

8.1. We find in appeal the Ld. CIT(A) upheld the validity of the assessment order passed under section 153C and also upheld the addition made by the A.O. on merit, the reasons of which have already been reproduced in the preceding

29 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. paragraph. It is the submission of the Learned Counsel for the Assessee that when the seized documents do not belong to Mr. Jean Louis Deniot or his associate concerns, assumption of jurisdiction under section 153C is not in accordance with law and, therefore, such assessment completed under section 153C/143(3) of the I.T. Act, 1961 should be quashed. It is also his contention that when the non-resident being a resident of France and rendering Independent Personal Services in the nature of architectural services was covered by the provisions of Article 15 of DTAA between India and France, income derived by individual or a partnership who is resident of France from the performance of professional services or other independent activities, such income shall be taxable only in France except under the specified circumstances when such income may be taxed in India.

8.2. We find sufficient force in the above arguments of the Learned Counsel for the Assessee. As per the provisions of Section 153C, one of the important jurisdictional requirement is that the seized document on the basis of

30 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. which jurisdiction is being assumed must belong to the person other than the searched person i.e the non-resident being assessed to tax in the hands of a representative assessee, as per law applicable to search action prior to the amendment in section 153C. The amendment in section 153C modifying this requirement to the words "pertains to or relates to" came into effect from 1.06.2015 and is prospective in nature. A perusal of the satisfaction note containing the documents details of which are already reproduced at Para number.6.2 of this order shows that the documents alleged to be belonging to the person other than the searched person can be broadly classified into the following three categories :-

A. Hard Disc and contents thereof. B. Print outs of emails retrieved from the hard disc where name of Jean Louis Deniot, Cabinet Jean Louis, Design-39 Inc. is mentioned and also payments to these individuals/entities is mentioned, and

31 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. C. Invoices sent by Jean Louis Deniot/Cabinet Jean Louis.

8.3. So far as the Hard Disc seized from the premises C-134, Defence Colony, New Delhi and recorded in the Panchnama in the name of AMQ Agro India Pvt. Ltd., is concerned, we find merit in the arguments of the Learned Counsel for the Assessee that the same would definitely belong to the AMQ group of cases and not the non-resident. The non-resident individual/entity did not have an office in India is an uncontroverted position. Even the assessing authorities have nowhere alleged that the nonresident had an office in India. Therefore, these hard discs, in our opinion, cannot be said to be belonging to the person other than the searched person.

8.4. So far as the printouts of emails retrieved from the hard discs mentioned above are concerned, we find merit in the arguments of the Learned Counsel for the Assessee that the exchange of mail may be between the non-resident and AMQ group employees, but the mails

32 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. found in inbox or outbox of the AMQ group employees would belong to the respective employee(s) and not the non- resident. In our opinion, although, the mail may have been initiated by the non-resident or its staff and may figure name of Jean Louis Deniot/Cabinet Jean Louis/Design Inc. but it cannot be said that the email found from the hard disc of the AMQ group, located at the premises in India, in inbox/outbox of the respective employee belongs to the non- resident.

8.5. As regards the invoices raised by Jean Louis Deniot/Cabinet Jean Louis retrieved from the emails are concerned, we find merit in the arguments of the Learned Counsel for the Assessee that having raised the invoice on Mr. & Mrs. Qureshi, the said invoice would be the property of the person on whom it has been raised. Even a copy of the said invoice found in the email of the respective employee would belong to the said employee and not the non-resident. In our opinion, what is to be examined is the ownership of the seized material. The authorship of the

33 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. document or the fact that name of the non-resident individual/entity figure in the document is not relevant.

8.6. In view of the above discussion, we are of the considered opinion that none of the seized material mentioned in the satisfaction note belongs to the non- resident individual/entity and hence the jurisdictional requirement for assumption of jurisdiction u/s 153C is not met. Thus, the order passed u/s 153C being not in accordance with law has to be quashed.

8.7. We find the Hon’ble Delhi High Court in the case of PepsiCo India Holdings Vs. ACIT 50 Taxmann.com 299 (Delhi) has held as under :

"15. Secondly, we may also observe that the finding of photocopies in the possession of a searched person does not necessarily mean and imply that they "belong" to the person who holds the originals. Possession of documents and possession of photocopies of documents are two separate things. While the Jaipuria Group may be the owner of the photocopies of

34 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. the documents it is quite possible that the originals may be owned by some other person. Unless it is established that the documents in question, whether they be photocopies or originals, do not belong to the searched person, the question of invoking Section 153C of the said Act does not arise.

35 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. this light, it is obvious that none of the three sets of documents - copies of preference shares, unsigned leaves of cheque books and the copy of the supply and loan agreement - can be said to "belong to" the petitioner."

8.7.1. Similar view has been taken in the case of Satyam Food Specialization (P) Ltd., (supra) relied on by the Learned Counsel for the Assessee.

8.8. So far as the decisions of the Hon’ble Delhi High Court in the case of Pr.CIT Vs. Super Malls (P) Ltd. 76 Taxmann.com 267(Delhi) and Pr. CIT Vs. Nau Nidh Overseas (P) Ltd. 88 Taxmann.com 665 (Delhi) relied on by Ld. CIT(A) are concerned, these decisions in our opinion are distinguishable and not applicable to the facts of the present case. In the case of Super Malls (P) Ltd. (supra) the facts were that pen drives were seized from the individual (who also happened to be director of the company) and the print outs from the pen drive indicated cash receipts from the sale of shops and offices in assessee's other concern. On

36 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. these facts the court held that the contents belonged to the assessee i.e. the company.

8.9. In the case of Nau Nidh Overseas (P) Ltd. (supra) the facts were that during the course of search at his premises the director of the assessee company stated that some of cash seized from his premises belonged to the assesse. Based on the said statement it was held that statement of director u/s 132(4) constituted material for initiation of proceedings u/s 153C. We find in both the cases referred above there was a relationship between the searched individual and the company as the searched individual was a director of the company. However, in the present case no such relationship exists.

8.10. In view of the above discussion and respectfully following the decision of Hon’ble Delhi High Court in the case of Pepsico India Holdings (supra) we are of the considered opinion that the assumption of jurisdiction under section 153C of the I.T. Act, 1961 is not in accordance with Law. We, therefore, quash the assessment

37 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. order passed under sections 144 r.w.s. 163 r.w.s. 153C of the I.T. Act, 1961. The ground raised by the assessee challenging the validity of assessment under section 153C of the I.T. Act, 1961 is accordingly allowed.

8.11. Even otherwise on merit also, we find the A.O. as well as the Ld. CIT(A) have categorically held that Jean Louis Deniot is a non-resident. Further the non-resident being a resident of France and rendering independent personal services in the nature of Architectural services is covered by the provisions of Article 15 of the DTAA between India and France which reads as under :

“ARTICLE 15 INDEPENDENT PERSONAL SERVICES

38 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. a. if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State ; or b. if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the relevant "fiscal year"; in that case, only so much of the income as is derived from his activities performed in that other Contracting State may be taxed in that other Contracting State.

8.12. A perusal of the above Article shows that it specifically provides that the income derived by an individual or a partnership, who is resident of France, from the

39 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. performance of professional services or other independent activities of a similar character shall be taxable only in France except the following circumstances when such income may be taxed in India.

a. If there is a fixed base regularly available for the purpose of performing activities in India; b. If the stay of the non-resident in India is for a period or periods amounting to or exceeding in aggregating 183 days in the relevant assessment year.

8.13. We find merit in the arguments of the Learned Counsel for the Assessee that on the facts and circumstances of the present case the necessity to bring on record copy of Passport of the non-resident is not required. The provisions of section 163 through which the assessee has been treated as representative assessee can only be applied in the case of a non-resident. In our opinion, if the said non-resident had stayed in India for 183 days or more during the relevant assessment year, automatically his status would not remain

40 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. that of a non-resident. If that is the case, then provisions of section 163 would no longer remain applicable. Definition of a non-resident is provided in section 2(30) of the Income Tax Act, 1961 which states that a person is said to be non- resident if he is not a resident. Further, section 6 of the Income-tax Act, 1961 clearly provides that a person is resident in India if he had stayed in India for a period of 183 days or more in the relevant assessment year. We, therefore, hold that Jean Louis Deniot and his associate concern M/s. Cabinet Jean Louis Denior and Design-39 Inc. being a non- resident is entitled to claim the benefit of Article-15 of DTAA between India and France and, therefore, any income accruing to a resident of France is not taxable in India who has not stayed in India for a period of more than 180 days.

8.14. We find the Hon’ble Delhi High Court in the case of Comverse Networks System India Pvt. Ltd., vs., CIT 48 Taxmann.com 1 (Del.) has held that where a person in respect of whom an Agent is sought to be made the representative- assessee does not attain the status of non-resident from the

41 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. relevant accounting period, provisions of Section 163 cannot be invoked in such a case. The relevant observations of the Hon’ble Delhi High Court reads as under :

42 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. present case, the year in question is the year ended on 31.03.2003. During that year Mr Francis Daly was not a non-resident. Therefore, the petitioner cannot even be regarded as a deemed agent under Section 163(1)(c) of the said Act. Consequently, the petitioner cannot be considered to be the representative assessee of Mr Francis Daly in respect of the assessment year 2003-04 (relating to the previous year ended on 31.03.2003).

8.15. In view of the above discussion, we are of the considered opinion that the Ld. CIT(A) was not justified in upholding the action of the A.O. in making the addition of Rs.36,95,263/- by treating the assessee as representative-

43 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. assessee of Jean Louis Deniot on the basis of the order passed under section 163 of the I.T. Act, 1961. We, therefore, set aside the order of the Ld. CIT(A) and direct the A.O. to delete the addition.

44 ITA.No.6672 to 6675, 6668 to 6671 & 6667/Del./2018 Moin Akhtar Qureshi, Representative Assessee/Agent of M/s. Jean Louis Deniot etc., New Delhi. Order pronounced in the open Court 27.04.2022.

Sd/- Sd/- (ANUBHAV SHARMA) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER Delhi, Dated 27th April, 2022 VBP/- Copy to 1. The appellant 2. The respondent 3. CIT(A) concerned 4. CIT concerned 5. D.R. ITAT ‘D’ Bench, Delhi 6. Guard File.

// By Order //

Assistant Registrar : ITAT Delhi Benches : Delhi.