POOJA KANSAL,CHANDIGARH vs. INCOME TAX OFFICER, WARD-1, G.GARH, GOBINDGARH

That the Ld. CIT (A) has wrongly upheld additions of Rs. 3,84,19,515/- u/s 65A made by the Assessing Officer.

4 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh 10. That the Ld. CIT (A) has wrongly upheld additions wrongly made on account of alleged bogus sale to M/s Universal Industries even though the assessee in her Individual capacity has not entered into any transactions with the M/s Universal Industries.

That the Ld. CIT (A) has wrongly upheld initiation of penalty proceedings under section 271(1)(c).

That the Ld. CIT(A) has wrongly upheld interest of Rs. 1,12,01,325/- levied u/s 234A, 2348 and 234C.

That the assessee craves to add, amend or to leave any ground of appeal before it is finally heard.

Brief facts of the case, as given in the order of the Ld. CIT(A), are as under: - Assessee is an Individual deriving its income as partner from M/s Kansal Profiles, Mandi Gobindgarh during the financial year 2015-16, 5 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh relevant to the assessment year 2016-17. Besides, being partner in M/s Kansal Profiles, assessee is also a directors in M/s Kansal Sons Steels Limited during the year under consideration. During the year under consideration assessee has fled its income tax return derived from M/s Kansal Profiles as partner i.e interest on capital, share of profit from partnership firm and also remuneration from firm. Complete details of the income has duly been fled and uploaded with the Income tax department. A notice under section 148 was received from the AO stating that the assessee has derived income from the sales to M/s Universal Industries. It is also stated by the AO that although the sales to the firm M/s Universal Industries has been made by the company M/s Kansal Sons Steels Limited, in which Smt. Pooja Kansal is also a director. But protective assessment in hands of Smt. Pooja Kansal is being made. Further stated that Income Tax assessment in the case of M/s Kansal Sons Steels Limited was also completed by the National Faceless Assessment Centre, Delhi for the same assessment year by making similar additions as to the income of the Assessee i.e. Smt. Pooja Kansal. It is well settled law that same income cannot be 6 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh assessed in two different hands, otherwise it will amount to double taxation.

At the very outset, the ld. Counsel for the Assessee brought it to the notice of the Bench that the additions confirmed by the Ld. CIT(A) are protective additions made in the hands of the Assessee whereas, the substantive addition had already been made in the hands of the company. In fact, the Assessee is a director of that company. The Assessing Officer made the substantive addition in the hands of the company but at the same time made protective addition in the hands of the appellant. The Ld. Counsel for the Assessee argued that protective addition has been made in the hands of the Assessee as an individual whereas, the substantive addition has been made in the hands of the company. The Ld. counsel also argued that addition made in the hands of the company cannot be again done on protective basis in the hands of an individual whether or not he / she is a director in the company. The Ld. Counsel has filed a short note 7 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh bringing out facts of the case along with different case laws on this issue which is reproduced as under: - Short Note: The transactions of alleged bogus transactions were made in the accounts of the company and the expenses of said bogus purchases are also booked in the accounts of the companies. Thus, the benefit of any alleged bogus purchases was availed by the company, which is separate legal entity and the department did not establish any link of benefit/diversion to the appellant. Further, no statement of the appellant was recorded and only statement of her husband Vipin Kansal was recorded by the DGGI and on the basis of statement of her husband recorded by third party addition on protective basis in the hands of appellant as unexplained money u/s 69A is made without any enquiry by the assessing officer and the said addition in the hands of appellant is made on the borrowed satisfaction. Further, the alleged bogus purchases are recorded in the regular books maintained by 8 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh the company and the expenditure of the same is also claimed by the company and the Learned Assessing Officer had not proved that any money or funds relating to the alleged bogus purchases flowed to the appellant during the year. We rely on the judgement of Hon'ble ITAT Hyderabad Bench in the case of JCIT Vs. Naryana Reddy Bakati 88 ITR (TRIB) 190 ITD 466 (Hyderabad). In this case during the search the statement of all the directors was recorded for unexplained funds on the basis of seized incriminating material during the search pertaining to the company found. The Hon'ble ITAT has held as :- "5 We make it clear that there is not even an indication in the Revenue's grounds that the impugned additions pertain to the asses see himself than his company M/S. VNR Infrastructure Ltd. Hon'ble apex court's landmark decision in 170 vs. CH 170 vs. CH Atchaiah 218 YTR 239 (SC) held long back that the AO can and he must, tax the right person and the right person alone. By 'right person' it is meant the person who is liable to be taxed according to law with respect to a particular income. By the connotation of 9 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh 'right person', it is meant the person who is liable to be taxed, according to law, with respect to a particular income. And that the expression 'wrong person' is obviously used as an antithesis of the expression 'right person' only. We observe that this dssessee is the 'Managing Director of M/s. VNR Infrastructure Ltd. And that it is this latter entity which the fact is engaged in all the business activity(ies) and has been assessed separately throughout There is yet another landmark decision Soleman vs. Saloman and Co. Ltd. (1897 AC 22) hold long back in corporate parlance that a company is very a body corporate and a distinct entity apart from its Director.

We conclude in these circumstances that the CFT(A) has rightly deleted these twin additions in the assessee/individual's hands since corresponding undisclosed and unaccounted Income pertains to its company M/s. VNR Infrastructure Ltd. carrying out the business in its own name. We make it clear while holding so that the Revenue has not even indicated the fact above the company's assessment qua the very income(s). We thus see no reason to reverse the CLT(A) detailed findings for these precise reasons." Thus any addition as protective basis in the hands of one director for the alleged bogus purchases made by the company and claimed expenses or other benefit on the same by the 10 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh company is unwarranted and unjustified in this case. Further, any alleged irregularities or disputed transactions are attributable, if at all, to the company as a corporate body and not to any one individual director, unless specific evidence is brought on record to show personal involvement or benefit. In the present case, no such evidence has been produced by the department to suggest that Smt. Pooja Kansal, in her individual capacity, was the beneficiary of the alleged bogus transactions or that she had acted beyond her role as a director. Given the above facts, legal position, and supporting documents already on record, it is submitted that the proposed additions in the hands of the assessee are not only factually incorrect but also legally untenable. The entire basis of the additions is rooted in transactions undertaken by a distinct and legally separate corporate entity, which is already under assessment for the same. Therefore, we humbly request the Hon'ble 11 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh Tribunal to kindly drop the proceedings against Smt. Pooja Kansal and refrain from making any adverse inference or addition in her personal assessment for the aforesaid years. 6. Per contra, the ld. DR relied on the order of the authorities below.

We have considered the findings given by the Assessing Officer in the assessment order and the Ld. CIT(A) in the appellate order. We have also considered the written submissions filed by the Counsel of the Assessee and his arguments during the proceedings before us. We have taken into consideration the arguments made by the ld. DR. We find that the substantive addition has been made in the hands of the company and the protective addition has been made in the hands of the Assessee of the same amount. If fact, the AO failed to appreciate that a body corporate and an individual are two separate and different entities. Additions made in the hands of one cannot be done on 12 224 & 225-Chd-2025 – Pooja Kansal, Chandigarh protective basis in the hands of other. Here, in this case the Assessing Officer has made substantive addition in the hands of the company on the basis of certain documents found against the company but at the same time the protective addition of the same amount has been made in the hands of the appellant as an individual which is not permissible in the law.

Keeping in view, the facts as discussed above and taking note of different case laws brought on record by the Counsel of the Assessee, we are of this considered view that the protective assessment made by the Assessing Officer in the hands of an individual appellant, cannot be sustained. Accordingly, Assessee’s appeal on this issue is allowed.

We find that the facts and issue involved in this appeal of the Assessee are similar to that for A.Y. 2016-17. Even the submissions of the Ld. Representatives are similar as were made in Assessee’s appeal in ITA No. 224/Chd/2025. Therefore, keeping in view the facts and circumstances and issue involved, the decision arrived at by us for A.Y. 2016- 17, will apply mutatis-mutandis for this assessment year too.

In the result, both the appeals of the Assessee stand allowed.