DCIT(IT)-4(1)(2), MUMBAI vs. ARUN MADHAVACHARI RANGACHARI, MUMBAI

Grounds no.1-5, raised in Revenue’s appeal, pertain to the taxability of INR 465 crores in the hands of the assessee.

The brief facts of the case pertaining to this issue, as emanating from the record, are: Pursuant to the information received from the Investigation Wing, Thane, regarding the search operation carried out under section 132 of the Act in the case of Valuable Group and the assessee and his companies, wherein, inter-alia, it was found that the assessee, who claims to be resident of UAE, has rendered consultancy services to two non-resident entities, i.e. Gulf Finance House (“GFH”) and Khaleej Bank of Commerce (“KBHC”), and GFH has, over the years, for certain of its projects in India paid amount of USD 51.15 million to DAR Capital Ltd., Mauritius, and USD 41.5 million to Thurles International Ltd., British Virgin Islands, in which the assessee is a Director and owned 100% shareholding in both entities, notice under section 148 of the Act was issued to the assessee and proceedings under section 147 of the Act were initiated. During the search proceedings, the assessee claimed to have rendered consultancy services to GFH and KBHC, including the identification of land, local partners in India, and allied activities for projects, namely Energy City Panvel and Logistics Park Pen in India, and also claimed to have acted as a liaison between GFH and KBHC and their local partners. As in the email from GFH, it was claimed that DAR Capital Ltd. and Thurles International Ltd. were paid the amount equivalent to INR 465 crores over the years, in the absence of year-wise details been provided by the assessee, (A.Y. 2011-12) 4 the entire receipt of INR 465 crores was taxed in the hands of the assessee on a substantive basis in the assessment year 2009-10. Accordingly, in view of the aforesaid facts and circumstances, vide reasons recorded for reopening the assessment it was alleged that the amount of INR 465 crore needs to be taxed in the hands of the assessee in each year separately, subsequent to the assessment year 2009-10, on a protective basis up to the date of email, i.e. 06/06/2013, in order to protect the interest of the Revenue. In his objections to the reopening of assessment, the assessee, inter alia, submitted that in the evidence found during the course of search, there is no mention that any money was received by the assessee in the period under consideration. The assessee submitted that the money was received by DAR Capital Ltd. and Thurles International Ltd., which have separate legal identities and do not have any Permanent Establishment in India. The objections filed by the assessee were disposed of vide order dated 03/10/2018, and the reopening of the assessment in order to tax the amount of INR 465 crore in the hands of the assessee was upheld for the year under consideration on a protective basis. During the reassessment proceedings, the assessee was asked to give the details of the amount of INR 465 crore received from GFH, and if he fails to do so, the entire amount will be taxed in his hands on a protective basis.

The Assessing Officer (“AO”), vide order dated 26/12/2019 passed under section 147 r.w. section 143(3) of the Act, held as follows: – (a) The assessee, through DAR Capital Ltd. and Thurles International Ltd., has received fees for consultancy services on account of services provided to GFH and KBHC.

Accordingly, treating the entire sum of INR 465 crore as taxable in India, the AO made an addition of INR 325,50,00,000 in the hands of the assessee after allowing a deduction of 30% as business expenditure.

The learned CIT(A), vide impugned order, following the decision of the Tribunal in assessee’s own case for the assessment year 2009-10, in wherein similar addition in the hands of the assessee on account of the money received from GFH was deleted, allowed the grounds of appeal raised by the assessee on this issue, and quashed the addition amounting to INR 325.5 crore made by the AO. Being aggrieved, the Revenue is in appeal before us.

On the contrary, the learned Departmental Representative (“learned DR”), by vehemently relying upon the findings of the AO, submitted that the assessee has not furnished any evidence to prove that he was a tax resident of the UAE in the year under consideration, and therefore, the provisions of the India-UAE DTAA are not applicable. The learned DR submitted that the assessee has stayed in India for 121 days and has been found to have been rendering his consultancy and other business activities from his office in India. Thus, the learned DR submitted that the amount received by the assessee is taxable under section 9(1)(i) of the Act. The learned DR submitted that the statement recorded under section 132(4) of the Act shows enough evidence that brings the amount received by the assessee within the ambit of section (A.Y. 2011-12) 13 9(1)(i) of the Act. As regards the decision of the Tribunal in the assessee’s own case for the assessment year 2009-10, the learned DR submitted that in the said decision, Grounds no.2-5, as raised by the Revenue in the present appeal, were not adjudicated, and therefore, the said decision is not applicable to the present case. Further, the learned DR submitted that there are no findings in the said decision regarding the taxability of the amount as fees for technical services under section 9(1)(vii), and therefore, the addition made under section 9(1)(vii) of the Act is not covered by the decision of the Tribunal in the earlier year. Without prejudice to his submission that the applicability of the provisions of the India-UAE DTAA has not been established by the assessee, the learned DR submitted that the definition of the term “professional services” is an inclusive definition, and includes within its ambit the consultancy services provided by the assessee. Therefore, it was submitted that, in any case, the amount received by the assessee is taxable under Article 14 of the India-UAE DTAA.

From the perusal of the assessment order, we find that there is no direct or indirect evidence that assessee had rendered any services from alleged business premises of Dar Media Pvt. Ltd. One of the main reasons given by the ld. AO that assessee had failed to provide the copies of agreement for this liaison work, invoices, etc., between GFH and KBHC and M/s. Dar Capital Ltd and M/s. Thurles International Ltd. Thus, AO has assumed that assessee had earned from the projects undertaken in India by using the business premises in India. Even in the entire search, there was no such document or evidence found that assessee was rendering any consultancy services from India, barring one e-mail from GFH addressed to the assessee which stated that, “Please note that GFH over the years, has for certain of its projects made (A.Y. 2011-12) 15 payments amounting to USD $1.5 m to DAR Capital Limited and USD 41.5 m to Thurles International Limited". This content in e-mail is some kind of confirmation of payment in connection of projects and does not prove in any manner the activity was carried out from India or to treat it as a part of evidence to establish that assessee had any PE or the office premise of Dar Media were at the disposal of the assessee for carrying out the consultancy work for GFH and KBHC. It only states that it has made payments to Dar Capital Ltd and Thurles International Ltd for its projects. Nowhere, it has been brought on record or any enquiry has been done, whether assessee had used the premises of Dar Media Pvt. Ltd. for rendering consultancy services to two foreign entities. To establish that assessee had a PE in India, the onus is heavily on the department, because the allegation that assessee has a PE in India is by the AO, so he has to bring on record that assessee was carrying out consultancy from the premises of Dar Media in India. AO has to conduct some enquiry or bring some evidence or material to prove that assessee had been carrying out his activity from India through PE or any premise was at his disposal for rendering services to the foreign entities so as to constitute business connection or PE in India. AO’s presumption is that, since assessee was one of the Directors in Dar Media Pvt. Ltd. which is based in Mumbai, therefore, he must be doing his consultancy services on behalf of the two foreign companies from these premises. The assessee is a non-resident, rendering consultancy services to two UAE based banks and the payment has been made on account of consultancy services to two foreign entities of assessee. Now to tax the consultancy fees in the hands of the assessee in his individual capacity and not in the hands of DAR Capital Ltd. or Thurles Investments Ltd., that to be as business income in India, then, something should be brought on record by the AO that these services have been rendered from India by the assessee and not based on some conjecture and premise. Even in the statement of the assessee this fact has been clarified by him during the course of the search and has specified the nature of liasoning and consultancy work done on behalf of GFH and KBHC from Dubai.

The premise drawn by the ld. AO that the payment received by Dar Capital Ltd and Thurles Investments Ltd is in the nature of payment to the assessee, because, firstly, these two are shell companies with no substantial activity; and secondly, assessee is 100% shareholder in these companies. If that is the case, then AO should have called for the information through proper channel about these two companies and then adverse inference should have been drawn for taxing this income in the hands of these two companies. In fact, if at all, this payment could have be taxed in the hands of these two companies if they have any business connection in India or source of income has accrued and arisen in India; and here in this year in the hands of M/s. Thurles International Ltd., a British Virgin Island entity It has been brought on record that in assessment order dated 14/02/2018 u/s.144C r.w.s 147/144 has been filed in the case of M/s. Thurles Interational Ltd., the copy of which has also been placed before us by the ld. Counsel that this amount has been taxed on protective basis in the A.Y.2009-10. There the ld. AO had asked for information from foreign authorities through FT & TR about these companies, however, till the passing of the order, no such information has been received. The relevant observation of the AO in the case of M/s. Thurles International Ltd wherein he has taxed the payment received from GFH not only as business income but also as fee for technical services u/s.9(1)(vii). For the sake of ready reference,

Income earned through the business activity of India:- 9.1 It is established that the services have been provided by the assessee company, M/s Thurles International Ltd which is based at British Virgin Islands through Mr. Arun Rangachari, who is a 100% share holder of the assessee company. During the course of post search proceedings, summons was issued to Shri Arun Rangachari asking to appear on 03/09/2013, 19/09/2013, 04/10/2013 and 17/10/2013 in the Investigation Wing. Thane and provide the names of employees, date of visits by the employees who have actually provided the services for acquisition of land. Further, he was asked to submit copies of invoices raised by him and the company on GFH and KHCB. These information were called for by the notices issued from this office also. However. Arun Rangachari has neither appeared nor submitted any details called for in the instant case of M/s Thurles International Ltd. Thus the submission of the assessee is nothing but Ipse Dixit. The only conclusion which can be drawn from this is that all the activities have been carried out by Arun tangachari himself on behalf of M/s Thurles International Lid 9.2 Here it is pointed out that Sh. Arun Rangachari is 100% shareholder of Thurles International Lid and as such he is in a position to control it totally. They were asked to give details of the names and addresses of the persons who work for Thurles International Ltd and other information about the assessee company but no such information has been provided. Thus, the money amounting to USD 41.5 million received by M/s Thurles International Ltd is money actually received for the consultancy work given by Sh. Arun Rangachari to GFH in India on behalf of M's Thurles International Ltd. 9.3 Sh. Arun Rangachari has received payments amounting to USD 41.5 million in the name M's Thurles International based at British Virgin Islands. This company is mere shell company existing only on paper. The assessee company was formed for the sole purpose of receiving abroad the income earned by Sh. Arun Rangachari in India. 9.4 Sh. Arun Rangachari and M/s Thurles International Lid were asked several times to produce copies of agreement for consultancy work, the invoices raised, payment received. Had these documents been provided, the nature of consultancy work and nature of payment in lieu thereof would have become clear. But these were not provided either in the case of the assessee company or in the case of Sh. Arun Rangachari. No project wise break up of money received of the exact purpose for which the money was received from GFH and KBHC was also not given. Thus the assessee has made unsubstantiated assertions which are Ipse Dixit. 9.5 If we put the facts of the case together, we come to only one conclusion. GFH and KBHC wanted to invest in some real estate project India. For this Sh. Arun Rangachari gave them consultancy services on behalf of M/s Thurles International (A.Y. 2011-12) 18 Lad and he arranged for their meetings with some prospective parties for this purpose in India. GFH and KBHC selected Valuable Group for this work. They started the two projects namely, Energy City at Panvel and Logistics Park at Pen, both in Maharashtra, Near Mumbai. These projects materialised because of active liasoning and consultancy service given by Sh. Arun Rangachari to GFH and KBHC. He brought GFH and KBHC and Valuable Group together. As a result, above two projects were started. Due to his services, Sh. Arun Rangachari was to receive payment on behalf of M/s Dar Capital Ltd and M/s Thurles International Ltd. For tax management purpose, Arun Rangachari decided to route these payments through his foreign based company. For this purpose he received USD 41.5 million in the name of M/s Thurles International Lad, British Virgin Islands from GFH. Thus the consultancy service was given to GFH and KBHC for operations in India but payment was received by M/s Thurles International Ltd, a foreign company based outside India, in tax haven. This was done purely to save tax in India.

In view of the above facts and circumstances of the case, the income of the assessee is taxable as business income under the provisions of the IT Act of India u/s 9(1) of the Income tax Act. 11 Without prejudice, it is observed that if Sh. Arun Rangachari is working for M/s Thurles International Ltd and giving consultancy services to GFH and KBHC for the project work in India. Hence, the money received by M/s Thurles International Ltd would become taxable as Fees for Technical Services and would be liable to tax as such as per the provisions of section 9(1)(vii) of the Income tax Act.

The total amount received by M/s Thurles International Ltd from GFH is 207,50,00,000/- Taking a genuine stand 30% of it is allowed as business expenditure and an amount of Rs.145,25,00,000/- is taken us net income from this work. The amount of Rs.145,25,00,000/- is added in the hands of the assessee company M/s Thurles International Ltd on protective basis. (Penalty proceedings u/s 271(1)(c) of the 1 T Act, 1961 tins been initiated for furnishing inaccurate particulars of income.) 13. It is notable that reassessment proceedings u's 147 of the Income tax Act in the case of Sh. Arun Rangachari has been initiated and in the said proceedings, the above stated Income has been added in the hands of Sh. Arun Rangachari on substantive basis. 14 The notice u/s 148 of the IT Act was issued on 30/03/2016. But the case was referred to foreign authority through FT & TR for obtaining information in the case of Sh. Arun Rangachari. M/s Dar Capital Ltd and Mis Thurles International Ltd. The requested information has not been received till now. Accordingly, the time burring date is 31/12/2017. The quantum of the additions will be altered based on the information, if it is received from the FT &TR CBDT. Moreover, the assessee has not filed any income tax return. Therefore, the assessment order is being passed u/s 144 of the IT Act, 1961.

Thus, protective addition has been made pending information from FT &TR CBDT.

The term "professional services" includes independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants.”

Even otherwise, both the conditions mentioned in Article 14(1(a) are also not applicable:- a) Condition 1: If the assessee has a fixed base in India and the income earned can be attributable to that fixed base – It is not in dispute that the assessee is a NRI, and does not have any fixed base in India. AO could not establish that the assessee had any such PE/ fixed base available to him in India to render services in individual capacity and treated office of M/s Dar Media Pvt. Ltd. as his fixed base where the assessee was present at the time of search. The so called office at Mumbai was leased office of M/s. Dar Media Pvt. Ltd. and the assessee was present there in his capacity as a director to carry out business activities and was not carrying out any activities in the form of a sole proprietorship/ sole enterprise. The same is clearly evident from the assessee’s statement recorded u/s 132(4) of the Act, for which our attention was drawn at page 30 of the paper book, and from perusal it is seen that the company was involved in activity of Film Production and distribution whereas the income taxed in the hands of the assessee is on account of providing consultancy services on real estate affairs. Thus, there is no correlation whatsoever in between them.

Further, the contention of the Ld. DR stating that the assessee was found during search at the office premises of Dar Media Pvt. Ltd. in the capacity of director of this entity, and therefore the same constitutes his PE is flawed as mere presence of an enterprise at a particular location does not necessarily mean that the location is at the disposal of that enterprise. For this purpose, reference is drawn on OECD guidelines which states as under:- “4.2 Whilst no formal legal right to use a particular place is required for that place to constitute a permanent establishment, the mere presence of an enterprise at a particular location does not necessarily mean that that location is at the disposal of that enterprise”

In the present case, there is no evidence to prove that the assessee was using the premises for his own enterprise. Furthermore the provisions of treaty mention that for an income to be taxed in India, it is not enough that the Assessee has a fixed place of business in India but the Assessee should carry on business in India through that fixed place of business. How this income was earned by the assessee through the so called “fixed base/ permanent establishment” in India has never been established & substantiated by the revenue or Ld. DR. Hence, the condition 1 of the Article 14 is not satisfied. b) Condition 2: if the assessee has stayed in India for more than 183 days on the relevant assessment years.

This condition is also not satisfied as the revenue has themselves assessed the income by treating the assessee as Non-resident and the same is evident from page 1 of the assessment order. Further, the AO once again on page 24 of the assessment order para 8.7 has calculated the days, the assessee was present in India. Further on page 25, the Ld. AO drew a conclusion that the assessee was present for 110 days for the instant year in India. Hence on combined conclusion, drawn by the revenue itself, it is clear that the assessee was in India for less than 183 days and hence even the condition 2 of Article 14 is also not satisfied.

Further as held above and reiterated again that Article 14 has described the services which will fall under the category of Independent Personal Services. On perusal of the said services it can be seen that only professional services in nature of independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants can be taxed under the said Article. In the instant case, it has been alleged by the revenue that the assessee has provided ‘consultancy services’ which falls under any of the category mentioned in the said article. However, provision of the article has to be read as is and no assumption can be drawn from the same. If the said approach is allowed that one can assume all the services and professions to be included and defeat the purpose of such DTAA entered between countries. On this issue, the Ld. DR stated that the Article 14(2) is inclusive definition and not an exhaustive one. But in stating so, the Ld. DR failed to substantiate the same with any evidence as to how such assumption was drawn by him. 31. Thus, we agree with the contention of the ld. Counsel and hold that consultancy services do not fall under any category mentioned in said Article and therefore, the consultancy services cannot be taxed under Article 14(2). Accordingly the order of Ld. CIT (A) is upheld.”

Thus, the findings of the Coordinate Bench of the Tribunal in assessee’s own case for the assessment year 2009-10 cited supra, can be summarised as follows: – (a) There is no direct or indirect evidence that the assessee had rendered any services from the alleged business premises of M/s Dar Media Pvt. Ltd. Even in the entire search, no such document or evidence was found indicating that the assessee was rendering any consultancy services from India.

In the present case also, as noted in the foregoing paragraphs, the AO merely on the basis of the assessee’s presence, at the time of search action under section 132 of the Act, at the premises of M/s Dar Media Pvt Ltd. held that the assessee was rendering his consultancy and other business activities from the said premises, without bringing any material on record or conducting an enquiry, whether the assessee has used the said premises for rendering consultancy services to GFH and KBHC. Thus, it is ostensible that the mere presence of the assessee at the premises was considered equivalent to the usage of the premises by the assessee for rendering the services. It is pertinent to note that the assessee in his statement recorded under section 132(4) of the Act submitted that M/s Dar Media Pvt. Ltd. is engaged in film production and distribution. In the present case, no evidence has been brought on record to controvert the statement of the assessee, and merely due to the presence of the assessee at the premises of M/s Dar Media Pvt. Ltd., the AO held that the assessee was rendering his consultancy and other business activities from the said premises. As noted above, similar findings of the AO have already been rejected by the Coordinate Bench of the Tribunal in the assessee’s own case in the preceding year, wherein the addition was made on a substantive basis. It is also pertinent to note that the statement recorded during the search was also taken into consideration by the Tribunal while rendering the findings in favour of the assessee. Therefore, respectfully following the aforesaid decision, we do not find any merit in the submissions of the learned DR that the amount received by the assessee is taxable under section 9(1)(i) of the Act, as the business connection of the assessee in India

As regards the applicability of the India-UAE DTAA, it is pertinent to note that the AO invoked the provisions of the DTAA to tax the income in the hands of the assessee in India as business income as well as under Article 14 of the DTAA. On the other hand, it is the consistent plea of the assessee that the said amount was received by his group companies, which are incorporated outside India and not by him. Further, by referring to the evidence relied upon by the Revenue, the assessee has always submitted that nowhere has it been mentioned that any money has been received by the assessee. Therefore, as per the assessee, the money is not taxable in his hands. In support of the aforesaid submission, it is evident from the record that the assessee did not rely on any provisions of the India-UAE DTAA. The assessee claimed himself to be a resident of the UAE. However, as evident from the record, he did not furnish a Tax Residency Certificate from the UAE in support of his claim. At the same time, it is undisputed that his stay in India is limited to 121 days. Therefore, in the present case, after invoking the provisions of the India-UAE DTAA to tax the income in the hands of the assessee, the Revenue itself is now raising a question on the applicability of the DTAA to the present case. Be that as it may, as noted in the foregoing paragraph, the Coordinate Bench of the Tribunal in the preceding year held that in the absence of Permanent Establishment or the business connection of the assessee in India, the income cannot be taxed in the hands of the assessee as business income. Thus, in the absence of any change in facts or in law in the year under consideration, (A.Y. 2011-12) 28 respectfully following the decisions cited supra rendered in assessee’s own case, Ground no.3, raised in Revenue’s appeal, is dismissed. Further, the submission by the learned DR, as well as Ground no. 2 raised in Revenue’s appeal, challenging the applicability of the provisions of the India-UAE DTAA, is rendered merely academic in the facts and circumstances of the present case.

As regards the submissions of the learned DR that the definition of the term “professional services” is an inclusive definition, and includes within its ambit the consultancy services provided by the assessee, it is pertinent to note that the Coordinate Bench of the Tribunal in assessee’s own case for the assessment year 2009-10 cited supra, recorded a categorical finding that both the conditions mentioned in Article 14(1) of the India-UAE DTAA are not applicable to the present case. Regarding the First Condition, the Coordinate Bench held that the assessee did not have any fixed base in India, and the AO could not establish that the assessee had any such Permanent Establishment/fixed base available to him in India to render services in an individual capacity. Further, as regards the Second Condition, it was held that the assessee’s stay in India was less than 183 days during the year. We find that in the present case also, the AO failed to establish the availability of a fixed base to prove the existence of Permanent Establishment of the assessee in India to render services in an individual capacity. It is also undisputed that in the year under consideration, the assessee stayed in India only for a period of 121 days. Therefore, even in the year under consideration, neither of the conditions mentioned in Article 14(1) of the India-UAE DTAA is applicable.

Now, as regards the taxability of the income in the hands of the assessee as fees for technical services under section 9(1)(vii) of the Act, it is evident from the record that the AO rejected the contention of the assessee that the amount was received by his group companies, i.e. DAR Capital Ltd. and Thurles International Ltd., which were incorporated outside India and not by him, as the assessee failed to furnish the documents as sought. The AO held that the assessee is a 100% shareholder of these two companies, and in the absence of information sought, the only conclusion which can be drawn is that all the activities have been carried out by the assessee himself, and these two companies are shell companies, based in tax havens to avoid taxation in India. Accordingly, the AO held that INR 465 crore received by DAR Capital Ltd. and Thurles International Ltd. is actually for the consultancy services rendered by the assessee to GFH in India.

We find that a similar contention of the AO that these two companies are shell companies with no substantial activity and the assessee is a 100% shareholder in these companies, as the basis to hold that the payment (A.Y. 2011-12) 30 received by DAR Capital Ltd. and Thurles International Ltd. is in fact in the nature of payment to the assessee for the consultancy services rendered to GFH in India, was rejected by the Coordinate Bench of the Tribunal in assessee’s own case in para-24 noted above, on the basis that if that is the case of the Revenue, then the AO should have called for the information through proper channel about these two companies. The Coordinate Bench held that if at all, this payment could have been taxed in the hands of these two companies if they have a business connection in India or if a source of income has accrued or arisen in India. In this regard, as noted above, the Coordinate Bench also took into consideration the assessment order passed in the case of Thurles International Ltd., for the assessment year 2009-10 on protective basis, wherein the money received by Thurles International Ltd. was held to be taxable as fees for technical services in its hands as per the provisions of section 9(1)(vii) of the Act and the AO has also sought information from foreign authorities through FT&TR.

Thus, in sum and substance, it is evident that the similar basis for rejecting the claim of the assessee that the amount is received by DAR Capital Ltd. and Thurles International Ltd. and holding that the same is income of the assessee from rendering the consultancy services in India has been found not to have merit by the Coordinate Bench of the Tribunal in assessee’s own case for the assessment year 2009-10 cited supra. During the hearing, the learned DR, inter alia, relied on the response given by the assessee to Question No. 33 of his statement recorded under section 132(4) of the Act and submitted that the invoices were raised by the assessee to both GFH and KBHC for the (A.Y. 2011-12) 31 services rendered. In this regard, it is pertinent to note that there is no dispute that the assessee is a Director of DAR Capital Ltd. and Thurles International Ltd. Further, a person in a higher managerial position can only sign certain documents for the company. Thus, the mere fact that the assessee admitted to having raised the invoices cannot obliterate the fact that such invoices can be raised as a Director in the company, which can only mean invoices raised by the company, and nothing else. In the present case, the AO also failed to bring any material on record to substantiate its claim that both companies are merely shell companies. Therefore, in the absence of any change in facts or in law, respectfully following the decision of the Coordinate Bench cited supra, we are of the considered view that in the present case there is no basis for the Revenue to hold that the amount received by the assessee’s group companies is the income of the assessee under the head fees for technical services under section 9(1)(vii) of the Act. As a result, Ground no. 5, raised in Revenue’s appeal, is dismissed.

In view of the aforesaid findings, Ground no. 1, raised in Revenue’s appeal, is also dismissed as the income is not taxable in the hands of the assessee.

Grounds no. 6 and 7, raised in Revenue’s appeal, pertain to the deletion of addition on account of investments made by the assessee’s foreign companies.

We have considered the submissions of both sides and perused the material available on record. During the year under consideration, the (A.Y. 2011-12) 32 assessee’s group companies made investments in various companies of the Valuable Group in India. As per the assessee, he has not invested in the said Indian entity through its group companies, and he has no knowledge of the said investments or their sources. The AO, on the basis that the assessee is the Chairman of Dar Capital Group and hence all the relevant information regarding the investments made by the said companies is in the knowledge of the assessee, held that all the investments were made by the assessee and the money was routed through these entities, which are mere shell companies. Accordingly, the AO made the addition of INR 69,12,21,808.60 by treating the same as the assessee’s own money earned from undisclosed sources.

In the result, the appeal by the Revenue is dismissed. Order pronounced in the open Court on 26/02/2026