The Income Tax Appellate Tribunal ruled that the determination of commission @ 2.5% on the value of Rs.15.38 crores which was transferred by book entry to Surya Processed Food Pvt. Ltd. is justified.
The tribunal observed that during the assessment year i.e. 2013-14 based on the material found during search, AO observed that certain funds were moved through the assessee by Surya Processed Food Pvt. Ltd. which belongs to Priya Gold Group.
The bench further observed that the AO made substantive addition in the hands of Surya Processed Food Pvt. Ltd. and protective addition in the hands of the assessee. CIT (A) deleted the protective assessment in the hands of the assessee considering the fact that assessee is only a paper company and substantive addition is already made in the hands of Surya Processed Food Pvt. Ltd..
Facts
After considering the facts on record, the Tribunal does not see any reason to disturb the findings of CIT(A). Accordingly, the appeal filed by the Revenue is dismissed.
The assessee has filed appeal against the order of the Commissioner of Income Tax, New Delhi for the Assessment Year 2009-10 and the cross appeals have been filed by the Assessee and Revenue against the order of CIT (A) for Assessment Year 2013-14.
Submissions
DR submitted that the return of income of the assessee was originally filed declaring nil income. A search and seizure operation was carried out in the case of Priya Gold Group and its premises. During the search and seizure action on the Head Office of the Group, substantial documents were found and seized. The documents seized contained documents relating to assessee company also. After recording satisfaction, notices under section 153A of the Income-tax Act, 1961 read with section 153 C were issued on the assessee.
He further submitted that during assessment proceedings, the Assessing Officer observed that assessee has received share application money including share premium of Rs.490 per share aggregating to Rs.15,37,00,000/- from the group entities of Priya Gold Group. During post-search enquiries, it was found that assessee is a paper company/conduit company to facilitate and rotate the funds of the Priya Gold companies. Accordingly, the addition was made under section 68 of the Act.
Conclusion
The bench observed that the assessee has received share premium from various entities and failed to establish the identity and creditworthiness of the share applicants and also genuineness of the transactions.
The tribunal noted that the AO observed that the assessee being a paper company which was utilised for channelizing the unaccounted funds of Surya Processed Food Pvt. Ltd., he observed that normally 2 – 3% to the total value were charged as commission. Accordingly, he determined the commission @ 2.5% at Rs.38,45,000/- as the income of the assessee.
The tribunal observed that the AO has determined the commission @ 2.5% on the value of Rs.15.38 crores which was transferred by book entry to Surya Processed Food Pvt. Ltd.. Since no representation from the assessee side the bench was not in a position to appreciate the facts on record and CIT (A) has sustained the above said addition, it does not see any reason to disturb the same.
Case Details
Case Name: Surya Vincom P. Ltd. v/s ACIT
Citation: ITA No.1098/DEL/2019
Tribunal: ITAT Delhi
Coram: Shri S.Rifaur Rahman, Accountant Member And Shri Vimal Kumar, Judicial Member