Case Summary: ITA 1158/DEL/2019
Appellant: Surya Agrotech Infrastructure Ltd, New Delhi
Respondent: ACIT, Central Circle-8, New Delhi
Assessment Year: 2014-15
Case Filed On: February 13, 2019
Order Type: Final Tribunal Order
Date of Order: May 7, 2019
Pronounced On: May 7, 2019
Introduction
This case revolves around the appeal filed by Surya Agrotech Infrastructure Ltd. (hereinafter referred to as ‘the appellant’) against the order passed by the Assistant Commissioner of Income Tax (ACIT), Central Circle-8, New Delhi, for the assessment year 2014-15.
Background
The appellant is part of the Priya Gold group, which underwent a search and seizure operation under Section 132 of the Income Tax Act, 1961, on December 16, 2014. During the search, the statement of Shri Shekhar Agarwal, Director of M/s Surya Food & Agro Limited, was recorded. He admitted that the group had unaccounted income routed through bogus share capital in the group companies, including Surya Agrotech Infrastructure Ltd.
Grounds of Appeal
The appellant raised several grounds of appeal against the order of the learned Commissioner of Income Tax (Appeals)-XXIV, New Delhi, who upheld the additions made by the ACIT. The key grounds included:
- Upheld the addition of Rs. 13,31,50,000 made under Section 68 of the Income Tax Act on account of receipt of share capital.
- Upheld the addition of Rs. 33,28,750 made under Section 37 of the Income Tax Act on account of alleged expenditure for commission incurred by the company for channelizing the share capital/share premium.
Arguments by the Appellant
The learned counsel for the appellant argued that the undisclosed income of the group was already disclosed by the flagship company, M/s Surya Food & Agro Limited, before the Settlement Commission. The additional income disclosed before the Settlement Commission covered the undisclosed income routed through the share capital in the appellant company. Therefore, taxing the same income again would result in double taxation.
Arguments by the Respondent
The learned CIT-DR argued that the statement of Shri Shekhar Agarwal during the search was a valid basis for the additions made by the ACIT. The respondent emphasized the various investigations and statements recorded during the search, which indicated that the share capital was unaccounted money routed through accommodation entries.
Tribunal’s Analysis
The Income Tax Appellate Tribunal (ITAT) carefully considered the arguments of both sides and examined the assessment order, the statement of Shri Shekhar Agarwal, and the application and order of the Settlement Commission. The Tribunal noted that the ACIT had consistently mentioned that the share capital in the appellant company was unaccounted income of the group routed through accommodation entries.
Tribunal’s Findings
The Tribunal found that:
- The flagship company, M/s Surya Food & Agro Limited, had disclosed additional income before the Settlement Commission, which included the undisclosed income routed as share capital in the appellant company.
- The Settlement Commission’s order, which became final, accepted this additional income, and no further application of funds or undisclosed assets were found.
- Taxing the same income again in the hands of the appellant company would result in double taxation.
Conclusion
The Tribunal concluded that since the income had already been taxed in the hands of M/s Surya Food & Agro Limited, the application of the same income in the form of share capital in the appellant company could not be taxed again. Therefore, the additions made under Sections 68 and 37 of the Income Tax Act were deleted, and the appeal was allowed.
Final Judgment
In the Income Tax Appellate Tribunal, Delhi Bench ‘G’, New Delhi, before Shri G.D. Agrawal, Vice President, and Ms. Suchitra Kamble, Judicial Member, the appeal by Surya Agrotech Infrastructure Ltd. for the assessment year 2014-15 is allowed. The order pronounced on May 7, 2019, reflects the detailed consideration and deletion of the additions made by the ACIT, Central Circle-8, New Delhi.