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Facts
The Revenue filed appeals against the order of the CIT(A) for Assessment Years 2011-12 to 2013-14. The appeals concerned additions made by the AO on the basis of information received from BVI authorities regarding undisclosed foreign bank accounts and assets offshore of the assessee, Ravi Bharadwaj, who was a director and shareholder of a BVI company, Lazare International Group Limited.
Held
The Tribunal held that the additions made by the AO were not sustainable as they were based on information from public domain and foreign tax jurisdiction, and not on material found during search and seizure operations. The Tribunal also noted that the protective assessment was made prior to substantive assessment under the Black Money Act, rendering it invalid. Therefore, the CIT(A) was justified in deleting the additions.
Key Issues
Whether the additions made by the AO based on offshore information without incriminating material found during search were sustainable. Whether a protective assessment made prior to substantive assessment under the Black Money Act is valid.
Sections Cited
132, 153A, 143, 142(1), 68, 57, 10(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCHES ‘A’: NEW DELHI.
Before: SHRI S.RIFAUR RAHMAN & SHRI ANUBHAV SHARMA
Order
: 21.01.2026 O R D E R
PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :
The Revenue has filed appeals against the order of the Learned Commissioner of Income Tax (Appeals), Delhi - 31 [“Ld. CIT (A)”, for short] dated 23.01.2025 for the Assessment Years 2011-12 to 2013-14.
Since the issues are common and the appeals are connected, hence the to 2232/Del/2025 same are heard together and being disposed off by this common order. We take up the Revenue’s appeal being Assessment Year 2013-14 as lead case to adjudicate the issues under consideration.
Brief facts of the case are, in the case of the assessee, a search and seizure operation u/s 132 of the Income-tax Act 1961 (for short ‘the Act)’ was carried out on 25.02.2016. The case of the assessee was centralized in this circle vide order dated 30.05.2016 passed by the Pr. CIT-15. Notice u/s I53A of the Act was issued on 05.05.2017 and duly served on the assessee, requiring the assessee to file the return of income. In response, the assessee filed return of income on 05.06.2017 showing an income of Rs.6,02,360/-. Notice u/s 143 was issued on 28.07.2017. The detailed questionnaire alongwith notices u/s 142(1) were issued. In response to same, ld. AR of the assessee attended the hearing from time to time, filed requisite details and documents.
With regard to issue relating to Lazare International Group Limited, the BVI Company and their Undisclosed Foreign Bank Accounts, the AO observed that certain Information was available on website of International Consortium of Investigative Journalists (ICIJ) regarding Indians having undisclosed foreign companies and assets offshore. Investigation was carried out by the Investigation Wing, Delhi.
to 2232/Del/2025 Investigations revealed that an Indian resident, Sh. Ravi Bharadwaj was Director and shareholder of a BVI Company, namely M/s Lazare International Group Limited, incorporated on 19.11.2007. Enquiry was initiated by investigation Wing, Delhi and letters/summons were issued to the above person. However, the assessee did not comply with letters/summons. Thereafter, information was sought by Competent Authority of British Virgin Island (“BVI”) under the Tax Information Exchange Agreement ("TIE-A”) between India and BVI. Information was received from British Virgin Islands (“BVI”) under the Tax Information Exchange Agreement (“TIEA”) between India and BVI on 14.07.2014.
As per Information received from BVI, M/s Lazare International Group Limited is a BVI company which was incorporated on 19.11.2007. The registered address of M/s Lazare International Group Limited was P.O. Box 958 Road Town, Tortola, VG1110, British Virgin Islands. The company is authorised to issue 50,000 shares out of which two shares at value USD 1.00 each were issued by the company. It was informed that Shri Ravi Bharadwaj was Director of M/s Lazare International Group Limited from 22.04.2008 to 09.04.2010. Besides, he was shareholder of the said BVI company holding one share for the said period. Thereafter, this share was transferred to M/s Prosper Management Ltd, Withheld to 2232/Del/2025 Tower, Third Floor, 4792 Coney Drive, P.O.Box 1777, Belize City, Belize on 09.04.2010. Further, copies of Registration of Charges for Standard Chartered Bank, Singapore and ABN AMRO Bank N.V. has been provided by BVI.
Thereafter, information was received from the Competent Authority of Singapore under “Exchange of Information” Article of Double Taxation Avoidance Agreement between India & Singapore. It was informed that company, Lazare International Group Limited had 16 different bank accounts with Standard Chartered Bank, Singapore. The details of bank accounts are mentioned as under : - S.No Account No. Account type Date on Date on which which opened closed 1 0170311945 USD Business 11.05.2011 One-NIB 2. 0170311996 FC Current 11.05.2011 Account 3 6205099910 Demand 21.12.2009 13.09.2013 4 6206086800 Savings 05.07.2010 13.09.2013 5. 6205099809 Demand 21.12.2009 13.09.2013 6. 6505100004 Demand 21.12.2009 13.09.2013 7. 6505100105 Demand 21.12.2009 13.09.2013 8. 6505100206 Demand 21.12.2009 13.09.201 3 9. 6505100307 Demand 21.12.2009 13.09.2013 10. 6505100408 Demand 21.12.2009 13.09.2013 to 2232/Del/2025 11. 6505100509 Demand 21.12.2009 13.09.2013 12. 6505100610 Demand 21.12.2009 13.09.2013 13. 6505100700 Demand 21.12.2009 13.09.2013 14. 6506086710 Savings 05.07.2010 13.09.2013 15. 6506086901 Savings 05.07.2010 13.09.2013 16. 6506087005 Savings 05.07.2010 13.09.2013
There are huge credits in these bank accounts. The year wise credits have been tabulated as below:
Fin. Credits in US Credits in Credits in New Total of credits Year Dollar Singapore Zealand Dollar equivalent to in Dollar Indian Rupees 2010-11 6,76,83,800.59 1,92,22,200 374.39.40.280.73 2011-12 8,76,95,948.71 3,02.22,735.19 96.38.554.22 572,51,27,040.01 2012-13 3,03,45,053.06 1.08.88.271.54 1.00.33.734.94 257,11,16,992.05 Total 18,57,24,802.36 6,03,33,206.73 1,96,72,289.16 120,401,84,312.79
Based on the above information, the AO observed that on analysis of information received from BVI Authorities, it was revealed that assessee was Director and shareholder of BVI Company, Lazare International Group Limited which had bank accounts in Singapore. Further, he observed that assessee is appointed as Director in Lazare International Group Limited till 09.04.2010 and the relevant shares of the assessee were transferred to Prosper Management Limited as per the declaration of Trust dated 09.04.2010 made by the Prosper Management Limited, one to 2232/Del/2025 share standing in their name in the books of Lazare International Group Limited does not belong to them but to which assessee is a beneficial owner.
Considering the above facts on record and after giving several opportunities to the assessee, the AO extracted the details of bank transactions as under :- Fin. Credits in US Credits in Credits in New Total of credits Year Dollar Singapore Zealand Dollar equivalent to in Dollar Indian Rupees 6,76,83,800.59 1,92,22,200 374.39.40.280.73 2010-11 2011-12 8,76,95,948.71 3,02.22,735.19 96.38.554.22 572,51,27,040.01 2012-13 3,03,45,053.06 1.08.88.271.54 1.00.33.734.94 257,11,16,992.05 Total 18,57,24,802.36 6,03,33,206.73 1,96,72,289.16 120,401,84,312.79
Accordingly, for the current assessment year i.e. 2013-14, the AO has made addition of Rs.2,57,11,16,992/-.
Based on the above facts on record, the AO made the addition as unexplained credit in the undisclosed foreign account and also made sundry addition of Rs.31,420/- from income from other sources.
Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A), Delhi -31 and made a detailed submissions before him. Ld. CIT (A) reproduced the same in the impugned order and finally held as under :- 14. Upon careful consideration of the matter, I find that the ratio of the aforesaid decision of Hon’ble Supreme Court in the case of to 2232/Del/2025 Abhisar Buildwell (supra) is squarely applicable to the case in hand. It is not in dispute that the additions have been made by the AO on the basis of information available in public domain and information received from BVI and not on the basis of material found/unearthed during the search and seizure operation u/s 132 of the Act; and that no assessment proceedings were pending at the time of search and seizure operation.
In view of the foregoing and respectfully following the law the land as laid down by Hon’ble Supreme Court in the case of Abhisar Buildwell ( supra), I am of the considered view that the AO was not justified in making the aforesaid protective additions under the Act on the basis of material/information available in public domain and information received from a foreign tax jurisdiction, namely BVI. The said protective additions of Rs.257,11,16,992/- u/s 68 and Rs.31,420 u/s 57 of the Act, therefore, are not sustainable in the eyes of law. The said addition, thus, is liable to be deleted. I hold accordingly. Hence, the said additions made by the AO are hereby deleted.
The appellant has further submitted that the AO has made protective assessment on the ground that the proceedings are pending under the BMA. Since the information was received from BVI in respect of Undisclosed Foreign Assets/ Income of the appellant, the AO contemplated to tax the appellant substantively under BMA. The appellant points out that the substantive additions have subsequently been made u/s 10(3) of the BMA for AY 2017- 18. This is the contention of the appellant that the protective assessment has been made prior to substantive assessment under the BMA which is an illegality. It has been contended that it is judicially settled that substantive assessment has to be made before the protective assessment. If protective assessment is made prior to substantive assessment, protective assessment is invalid and without jurisdiction. For this, he relied on the following judgments: G.K Consultants Ltd vs. ITO, i) M.P. RAMACHANDRAN vs. DCIT, (2010) 129 TTJ ii) (Mumbai) 190 iii) SURESH K. JAJJOO vs. ACIT, (2010) 39 SOT 514 (Mumbai) RAMESH CHAND PREM RAJ SONI (HUF) vs. ACIT, 105 iv) TTJ 904
The appellant also relied on the judgment of the Hon’ble ITAT Delhi in the case of DCIT vs. Ashok Kumar Singh, (2023) 151 taxman.com 207 (Delhi-Trib) to buttress his point that once addition have been made under the BMA, the same addition cannot be made under the Act. Since, I have deleted the additions following the ratio of the decision of Hon’ble Supreme Court in the case of Abhisar Buildwell (supra), this ground relating to protective addition preceding the substantive additions remains of academic interest only. Therefore, this ground is being not adjudicate upon in this order.
In the result, the appeal is allowed.”
Aggrieved, Revenue is in appeal before us raising following grounds of appeal :- “(i) The Ld. CIT (A) has erred in adjudicating that case of Abhisar Buildwell (supra) is squarely applicable in the present case as there was enough incriminating material which was found during the search operation which established that Sh. Ravi Bharadwaj was the beneficial owner of bank accounts of Lazare International Group Limited. (ii) The Ld. CIT(A) has erred in appreciating the facts and circumstances of the, case on which basis the protective addition was made. (iii) The Ld. CIT(A) has erred in deleting the addition of Rs.257, 11,16,992/-, made on protective basis without reaching the finality of the substantive addition made under Black Money Act which is under sub-judice. (iv) The Ld. CIT(A) has erred to delete addition to the tune of Rs.31 ,4201- under the head 'Income from other sources' without appreciating the merits and fact that the addition was not protectively made.”
14. At the time of hearing, both the counsels representing both the sides brought to our notice relevant facts on record and as per their submissions, ld. CIT (A) has deleted the addition on the basis of no incriminating material found in the case of the assessee relying on the decision of Abhisar Buildwell (supra) and further ld. CIT (A) has deleted to 2232/Del/2025 the addition on the basis of substantive addition, was initiated under Black Money Act which is under subjudice. Ld. CIT (A) observed the above facts on record and that the substantive additions have been subsequently made u/s 10(3) of the Black Money Act for AY 2017-18. Therefore, the protective assessment was made prior to substantive assessment under Black Money Act which is illegal. Ld. CIT (A) gave relief on the basis of protective assessment is made prior to substantive assessment, therefore, protective assessment is invalid and without jurisdiction by relying on the following decisions :- iii) G.K Consultants Ltd vs. ITO, iv) M.P. RAMACHANDRAN vs. DCIT, (2010) 129 TTJ(Mumbai) 190 v) SURESH K. JAJJOO vs. ACIT, (2010) 39 SOT 514 (Mumbai) v) RAMESH CHAND PREM RAJ SONI (HUF) vs. ACIT, 105 TTJ 904 15. Accordingly, he allowed the appeal preferred by the assessee.
16. Considered the rival submissions and perused the material placed on record. We observed that the assessments for AYs under consideration are reassessed on the basis of search conducted in the place of the assessee and based on the material received from the BVI Company and also subsequent verification from the assessee side. Since the proceedings under Black Money Act and Income-tax proceedings were initiated simultaneously and we observed that the AO completed the assessment in the case of the assessee before completion of substantive to 2232/Del/2025 assessment under Black Money Act and proceeded to complete the proceedings under the Income-tax Act on the protective assessment basis. Since the proceedings under Black Money Act is still pending before the lower authorities, in our considered view, completion of protective assessment under Income-tax is premature and ld. CIT (A) has rightly deleted the same and also there is no evidence brought on record by the Revenue on the issue of no incriminating material brought on record. At this stage, we are inclined not to disturb the findings of the ld. CIT (A). Accordingly, the grounds raised by the Revenue are dismissed.
17. In the result, the appeal filed by the Revenue for the AY 2013-14 is dismissed.
18. With regard to appeals for AYs 2011-12 and 2012-13 are concerned, since the facts are exactly similar to AY 2013-14 our above findings in Assessment Year 2013-14 are applicable mutatis mutandis in Assessment Years 2011-12 and 2012-13. Accordingly, the appeals for AYs 2011-12 & 2012-13 filed by the Revenue are also dismissed.
19. To sum up : all the appeals filed by the Revenue are dismissed. Order pronounced in the open court on this 21st day of January, 2026. Sd/- sd/- (ANUBHAV SHARMA) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 21.01.2026 TS