SURYA VANIJYA P.LTD,NEW DELHI V. ACIT, CENTRAL CIRCLE-8, NEW DELHI

ITA 2205/DEL/2019

AI Insights

The case involves two appeals: one by the Department of Revenue challenging the deletion of a protective addition of Rs. 15,23,00,000 by the CIT(A), and another by Surya Vanijya Pvt. Ltd. challenging the addition of Rs. 38,07,500 as unexplained expenditure on commission. The Tribunal found that the income related to the protective addition had already been taxed in the hands of the ultimate beneficiary, M/s Surya Agrotech Infrastructure Ltd., and thus upheld the CIT(A)'s decision to delete the addition. Regarding the commission income, the Tribunal agreed with the CIT(A) that the Assessee, treated as an entry operator, was liable to tax the commission income calculated at 2.5% of the entry value.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474852 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Other Referred Cases: ITA No. 1158/Del/2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR BHARATI
• Keywords: Unexplained cash credit; Unexplained expenditure; Search and seizure; Accommodation entries; Source of fund
• Section: 37

Judgement Text

" 1 ITA Nos. 3302 and 2205/Del/2019 DCIT Vs. Surya Vanijya Pvt. Ltd. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘B’ NEW DELHI) BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SH. YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No. 3302/Del/2019 (A.Y. 2014-15) DCIT Room No. 333, E-2, ARA Centre, Jhandewalan Extension, New Delhi Vs. Surya Vanijya P. Ltd. 2nd floor, 19- Local Complex, Near PushpaBhawan, Madangir, New Delhi PAN: AABCL5108L Appellant Respondent ITA No. 2205/Del/2019 (A.Y. 2014-15) Surya Vanijya P. Ltd. 2nd floor, 19- Local Complex, Near PushpaBhawan, Madangir, New Delhi PAN: AABCL5108L Vs. ACIT Room No. 333, E-2, ARA Centre, Jhandewalan Extension, New Delhi Appellant Respondent Assessee by None Revenue by Sh. Sanjay Kumar Bharati, CIT(DR) Date of Hearing 14/01/2025 Date of Pronouncement 07/02/2025 ORDER PER YOGESH KUMAR, U.S. JM: The above captioned appeals are filed by the Department and the Assessee respectively challenging the order of Commissioner of Income 2 ITA Nos. 3302 and 2205/Del/2019 DCIT Vs. Surya Vanijya Pvt. Ltd. Tax (Appeals) (‘Ld. CIT(A)’ for short)- 24, New Delhi, dated 07/01/2019 pertaining to Assessment Year 2014-15. 2. The Grounds of Appeal are as under:- ITA No. 3302/Del/2019 (A.Y. 2014-15) (Revenue) “1. The order of Ld. CIT(A) is not correct in law and facts. ii. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 15,23,00,000/- made by the assessing officer in view of the unexplained credits in the books of accounts of the assessee. iii. On the facts and in the circumstances of the CIT(A) has erred in deleting the addition made by the assessing officer on account of unexplained credits when the assessee had failed to discharge it's onus w.r.t. the source of credits in books of accounts and could not explain & substantiate the same during the course of assessment proceedings. iv. The appellant craves for leave to add, amend any/all the ground of appeal before or during the course of hearing of the appeal.” ITA No. 2205/Del/2019 (A.Y. 2014-15) (Assessee) “That on facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals)- XXIV, New Delhi ['the Ld. CIT(A)'], has erred in upholding the order of the Assistant Commission of Income tax, Central Circle-08, New Delhi (the Ld. Assessing Officer') in upholding the addition of Rs. 38,07,500/- made u/s 37 of the Act on account of alleged unexplained expenditure on commission.” 3. None appeared for the Assessee, on perusal of the order sheet it is found that, right from filing of the present Appeals neither the Assessee nor its representatives have appeared even after service of notice. 3 ITA Nos. 3302 and 2205/Del/2019 DCIT Vs. Surya Vanijya Pvt. Ltd. Therefore, we deem it fit to decide the above Appeals on hearing the Ld. Department's Representative and on perusing the material available on record. 4. Brief facts of the case are that, a search and seizure operation u/s 132 of the Act was conducted at the business premises of Priya Gold Group of Companies/firm its Directors/partners and its family on 16/12/2014 by the Investigation Wing, Delhi. Subsequently, it is found that the Assessee Company had provided accommodation entry in form of share capital/share premium amounting to Rs. 15,23,00,000/- to M/s Surya Agrotech Infrastructure Ltd. (recipient Company). An assessment order came to be passed for Assessment Year 2014-15 by making protective addition of Rs. 15,23,00,000/- as the substantial addition has been made in the hands of ultimate beneficiary i.e. M/s Surya Agrotech Infrastructure Ltd., further an addition of Rs. 38,07,500/- has been made in the hands of the Assessee on account of unexplained expenditure on commission. Aggrieved by the assessment order dated 28/12/2017, the Assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 07/01/2019,deleted the protective addition of Rs. 15,23,00,000/-made on account of unexplained credits in the books of accounts of the Assessee and 4 ITA Nos. 3302 and 2205/Del/2019 DCIT Vs. Surya Vanijya Pvt. Ltd. confirmed the addition of Rs. 38,07,500/- made on account of commission income. 5. Aggrieved by the order of the Ld. CIT(A) in deleting the protective addition of Rs. 15,23,00,000/-made on account of unexplained credits in the books of accounts of the Assessee, the Department of Revenue preferred the present Appeal and as against the confirmation of addition of Rs. 38,07,500/- made on account of commission income, the Assessee preferred the Appeal on the Grounds of mentioned above. 6. The Ld. Department's Representative submitted that the Ld. CIT(A) committed error in deleting the protective addition made by the A.O. and further submitted that the Ld. CIT(A) has rightly confirmed the addition made on account of commission income. Thus, the Ld. Department’s Representative sought for allowing the Appeal of the Revenue and dismissal of the Appeal of the Assessee. 7. We have heard both the parties and perused the material available on record. The Ld. CIT(A) while deleting the addition held as under:- “5.3.14 In the light of the above observations I hold that M/s Surya Agrotech Infrastructure Pvt. Ltd. is the ultimate beneficiary of the transfer of unexplained credits of the appellant company. Further, the appellant company cannot shirk from its legal obligation to prove the identity and credit worthiness in respect of source of the credits and genuineness 5 ITA Nos. 3302 and 2205/Del/2019 DCIT Vs. Surya Vanijya Pvt. Ltd. of transactions by adjudging itself as shell company. It is proved beyond doubt that M/s Surya Agrotech Infrastructure Pvt. Ltd. is beneficiary of funds to the tune of Rs. 2,60,00,000/- in AY 2013-14 and Rs. 12,63,00,000/- in AY 2014-15. I therefore, hold that substantive addition of Rs. 2,60,00,000/- in AY 2013-14 and Rs. 12,63,00,000/- in AY 2014-15 in the case of M/s Surya Agrotech Infrastructure Pvt. Ltd. is justified whereas, in the facts and circumstances of the case, the protective addition of Rs. 15,23,00,000/- in the hands of the appellant company is not justified and therefore deleted. Ground No. 2 is accordingly allowed.” 8. It is also brought to our notice by the Ld. Department's Representative that the substantial addition which was made in the hands of M/s Surya Agrotech Infrastructure Ltd. which has been challenged before the Co-ordinate Bench of the Tribunal in ITA No. 1158/Del/2019. The Co-ordinate Bench of the Tribunal considering the fact that the income has already been taxed in the hands of M/s Surya Food &Agro Ltd., held that the application of the said income in the form of share capital in M/s Surya Agrotech Infrastructure Ltd. cannot be taxed. The relevant portion of the order of the Tribunal in ITA No. 1157/Del/2019 and 1158/Del/2019 are reproduced as under:- “20. Learned DR has contended that the conclusion drawn by the ITAT in the order of stay is a wrong conclusion and should not be relied upon while deciding the appeals on merits. However, after considering the submissions of both the sides and the facts of the case and going through the orders of the lower authorities as well as Settlement Commission, we entirely agree with the above finding of the ITAT given in the stay petitions. From the assessment order, the relevant portion of which has already been reproduced above in this order, it is clear that the stand of the Assessing Officer throughout 6 ITA Nos. 3302 and 2205/Del/2019 DCIT Vs. Surya Vanijya Pvt. Ltd. was that there was undisclosed income of the Surya Group which is routed in the form of share capital in the group companies by obtaining the accommodation entries from Kolkata based entry provider companies. Such share capital/share premium is liable to be added in the hands of the group companies. The flagship company of the group viz., M/s Surya Food and Agro Limited has already offered the additional income to the tune of 49.12 crores before the Settlement Commission, which the Settlement Commission has enhanced to 55.77 crores. The order of the Settlement Commission is accepted by both the parties and thus has become final. Before the Settlement Commission, the assessee has repeatedly stated, which we have already mentioned above while reproducing the relevant portion of the application before the Settlement Commission, that the undisclosed income which is being offered before the Settlement Commission has been applied by way of introduction in the shape of share capital to group entities viz., M/s Surya Processed Food Pvt.Ltd. and M/s Surya Agrotech Infrastructure Limited. In paragraph 15 of the application before the Settlement Commission, M/s Surya Food & Agro Limited has made it clear that “there is no other undisclosed asset found or application of funds by the group”. This statement made before the Settlement Commission has neither been found to be incorrect nor before us it has been shown that M/s Surya Food and Agro Limited has applied the undisclosed income offered before the Settlement Commission for acquisition of any other asset. In view of the above, we entirely agree with order of the ITAT passed in stay petition wherein the ITAT held that “the disclosure has been made by the company who has earned the undisclosed income and routed in books through the petitioner companies as unaccounted share capital. The application of the income is taxed in the hands of the petitioner companies apparently it seems and sources of income is taxed in the hands of Surya Food and Agro Ltd. Therefore prima facie the case of the assessee shows that there is double taxation, once the source of income and secondly the application of income”. We entirely agree with the above finding of the ITAT in the order passed in the stay petition filed by M/s Surya Processed Food Pvt. Ltd. and M/s Surya Agrotech Infrastructure Ltd. In view of the above, since the income has already been taxed in the hands of M/s Surya Food and Agro Limited, the application of the said income in the form of share capital in M/s Surya Processed Food Pvt. Ltd. and M/s Surya Agrotech Infrastructure Ltd. i.e., the appellants before us, cannot be taxed again. Accordingly, we delete the addition for unexplained share capital and allow ground No.1 in all the appeals.” 7 ITA Nos. 3302 and 2205/Del/2019 DCIT Vs. Surya Vanijya Pvt. Ltd. 9. Considering the fact that the substantial addition made in the hands of Surya Agro-tech Infrastructure Ltd. has been deleted by the Tribunal on the ground that the income has already been taxed in the hands of Surya Food & Agro Ltd., we find no error or infirmity in the order of the Ld. CIT(A) in deleting the protective addition made in the hands of the Assessee.Accordingly, finding no merits in the Grounds of Appeal of the Revenue, we dismiss the same. 10. In the result, Appeal of the Revenue is dismissed. ITA NO. 2205/Del/2019 11. The only grievance of the Assessee is in the present Appeal isagainst upholding the addition of Rs. 38,07,500/-made u/s 37 of the Act on account of unexplained expenditure on commission. The Ld. CIT(A) while upholding the said addition held as under:- “5.4. With regard to Ground No. 3 I hold that the action of the A.O. in making addition of Rs. 38,07,500/- on account of commission is justified as entry operator generally charge 2-3% of total entry value as commission. As the appellant company has given entry of Rs. 15,23,00,000/- to M/s Surya Agrotech Infrastructure Pvt. Ltd. the A.O. is fair enough to quantify and tax commission income of Rs. 38,07,500/- @ 2.5% of Rs. 15,23,00,000/-. The addition on account of commission income of Rs. 38,07,500/- is therefore confirmed. Thus, Ground No. 3 of Appeal is dismissed.” 8 ITA Nos. 3302 and 2205/Del/2019 DCIT Vs. Surya Vanijya Pvt. Ltd. 12. Considering the fact that the Ld. CIT(A) confirmed the above addition treating the Assessee as an entry operator and imposed the commission @ of 2.5% on Rs. 15,23,00,000/-. In the absence of any contrary material or facts on record, we find no reason to interfere with the findings and conclusion of the Ld. CIT(A) in confirming the addition of Rs. 38,07,500/- made on account of commission income. Findings no merits in the grounds of Appeal of the Assessee, we dismiss the same. 13. In the result, Appeal of the Assessee dismissed. Order pronounced in the open court on 07th February, 2025 Sd/- Sd/- (M. BALAGANESH) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 07.02.2025 R.N, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI 9 ITA Nos. 3302 and 2205/Del/2019 DCIT Vs. Surya Vanijya Pvt. Ltd. "