Case Law Details
PCIT Vs Shriti Verma (Delhi High Court)
The Delhi High Court dismissed four appeals filed by the Revenue against a common order of the Income Tax Appellate Tribunal (ITAT) relating to Assessment Years 2011-12, 2012-13, 2013-14, and 2014-15.
The dispute arose from assessment proceedings initiated against the assessee on a protective basis under the Income Tax Act, 1961. The Assessing Officer (AO) had simultaneously initiated proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. While passing the assessment order under the Income Tax Act, the AO expressly stated that the same income could not be taxed under both statutes and, therefore, the assessment under the Income Tax Act would remain only protective in nature.
Subsequently, another AO conducting proceedings under the Black Money Act passed an order dated 06.12.2021. In that order, it was concluded that the assessee was not the beneficial owner of the foreign assets that formed the basis of the proceedings. The authority found that the assets held through STEL and Master Experts Investments Ltd. were beneficially owned by the assessee’s mother, Ms. Ritu Verma. It was observed that the inclusion of the assessee’s name as a beneficial owner stemmed from the mother’s intention that the assets would devolve upon the assessee in the event of her death. However, such intention did not make the assets taxable in the hands of the assessee. Accordingly, the authority under the Black Money Act held that no addition could be made in the assessee’s case.
In light of these findings, the Commissioner of Income Tax (Appeals) and thereafter the ITAT set aside the assessment order dated 27.12.2018 passed under the Income Tax Act.
Before the High Court, the Revenue argued that the appellate authorities were not justified in setting aside the assessment order. It was further contended that proceedings involving the assessee’s mother were still pending and had not attained finality. According to the Revenue, until those proceedings concluded, no clean chit should be granted to the assessee. The Revenue also relied upon the stand taken during proceedings under the Black Money Act that the property would ultimately vest in the assessee after the demise of her mother.
The High Court examined the submissions and the material available on record. It observed that its jurisdiction under Section 260A of the Income Tax Act was limited and did not warrant interference in the present case.
The Court noted that the assessee’s mother had taken a primary stand before the authority under the Black Money Act that she was not the beneficial owner of the assets. She had also raised an alternative plea that, if she were ultimately held to be the beneficial owner, the property would devolve upon the assessee after her death.
The Court held that the mere possibility of future inheritance could not alter the existing legal position. Simply because the assessee might inherit the property in the future did not justify making an addition in her hands during the assessment years under consideration. The Court emphasized that a future succession or inheritance could not form the basis for taxation of the assessee in the relevant years.
The Court also rejected the Revenue’s apprehension that the mother might later change her stand and claim that the assets actually belonged to the assessee. It found no substance in such speculation.
Since the authority under the Black Money Act had already concluded that the assessee was not the beneficial owner of the foreign assets and no addition was warranted in her hands, the High Court found no reason to interfere with the orders of the CIT(A) and the ITAT.
Accordingly, all the Revenue’s appeals were rejected.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Exemptions are allowed, subject to all just exceptions.
2. The applications stand disposed of.
3. For the reasons stated in the applications, the delay of 3 days in filing the appeals is condoned.
4. The applications stand disposed of.
5. For the reasons stated in the applications, the delay of 16 days in re-filing the appeals is condoned.
6. The applications stand disposed of.
ITA 395/2026
ITA 402/2026
ITA 404/2026
ITA 412/2026
7. By way of the instant appeals, the appellant has challenged the order dated 04.11.2025 passed by the Income Tax Appellate Tribunal, Delhi Bench: ‘G’, New Delhi (hereinafter referred to as ‘the Tribunal’) in ITA No. 4483/Del/2024 Assessment Year: 2013-14, ITA No. 4484/Del/2024 Assessment Year: 2012-13, ITA No. 4485/Del/2024 Assessment Year: 2011-12 and ITA No. 4486/Del/2024 Assessment Year: 2014-15.
8. The facts lie in a very narrow compass. The Assessing Officer (AO) initiated the proceedings to frame assessment in hands of the respondent on protective basis, by observing that he had initiated the proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (hereinafter referred to “the Act of 2015”).
9. At the time of passing the assessment order, the AO made it clear that since the income cannot be taxed under both the Acts, namely, the Act of 2015 and the Income Tax Act, 1961 (hereinafter referred to as ‘the Act of 1961’), the assessment made under the Act of 1961 shall remain protective. 10. It is an admitted fact that subsequently by way of an order dated 06.12.2021, another AO under the Act of 2015 concluded the proceedings against the respondent-assessee by observing thus:
“7.4 In view of the totality of circumstances, it is clear that for STEL, Ms. Shriti Verma is clearly not the beneficial owner. In-fact, as per the express instruction of Ms. Ritu Verma, the assessee, Ms. Shriti Verma would have become the beneficiary only in the event of the death of Ms. Ritu Verma.
7.4.1 Even for the case of Master Experts Investments Ltd, the control and ownership of the assets clearly lies with Ms. Ritu Verma. Assets have been received in the entity Master Experts Investments Ltd from STEL, an entity clearly beneficially owned by Ms. Ritu Verma. The inclusion of the name of Ms. Shriti Verma in the list of beneficial owners of Master Experts Investments Ltd, in addition to Ms. Ritu Verma clearly stems from the intention of Ms. Ritu Verma to bestow the assets held in Master Experts Investments Ltd to Ms. Shriti Verma, an intention clearly expressed through her letter dated 09.06.2009 issues in respect of STEL. This however does not make such assets taxable in the hands of Ms. Shriti Verma. It is clear that such undisclosed foreign assets in the form of assets held in STEL, and Master Experts Investments Ltd have Ms. Ritu Verma as the beneficial owner.
7.4.2 In view of the above, I find that the various foreign assets forming the basis of issue of the notice u/s 10(1) dated 30.12.2020 in the case of the assessee are actually not held by the assessee Ms. Shriti Verma as the beneficial owner but are held by Ms. Ritu Verma as the beneficial owner. Accordingly, no addition is being made herein so far as the assessee Ms. Shriti Verma is concerned.”
11. In view of the above observations made by the AO in the order passed under the Act of 2015 that the respondent-assessee was not a beneficial owner, the Commissioner of Income Tax (Appeals)-31, New Delhi so also the Tribunal set aside the assessment order dated 27.12.2018.
12. Mr. Puneet Rai, learned Senior Standing Counsel for the appellant argued that the Appellate Authority was not legally justified in setting aside the assessment order dated 27.12.2018.
13. He further submitted that the appeal filed by the mother of the assessee, namely Ms. Ritu Verma is still pending and until such proceedings attain finality, no clean chit could be given to the respondent-assessee, who is the daughter of said Ms Ritu Verma.
14. He argued that according to the submissions made by the respondent-assessee during the proceedings under the Act 2015, the property would vest in the respondent after demise of Ms. Ritu Verma.
15. Having heard learned counsel for the appellant and upon perusal of the material available on record, we are of the view that no interference is warranted under this Court’s limited appellate jurisdiction under Section 260A of the Act of 1961.
16. The assessee’s mother Ms. Ritu Verma took the plea before the Authority under the Act of 2015 that firstly, she is not the beneficial owner of the subject property while also taking an alternative plea that if the property is held to be owned by her as the beneficial owner, then the property would ultimately devolve in Shriti Verma-assessee after her demise.
17. The mere fact that she stated that the property would vest in the respondent-assessee after her demise, cannot change the legal position. In other words, simply because the respondent-assessee is likely to inherit such property, the addition cannot be made, that too in the year under consideration.
18. We do not find any substance in the apprehension expressed by Mr. Puneet Rai, learned Senior Standing Counsel for the appellant that tomorrow Ms. Ritu Verma can change her version and take the plea that the property belong to her daughter namely, the respondent-assessee.
19. The appeals are, therefore, rejected.
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