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 Attachment on Cash Credit of Assessee under GST Act: Delhi HC directs Bank to Comply Instructions to Vacate

M/s Surya Processed Food Pvt.Ltd., Near Pushpa Bhawan, Madangir, New Delhi vs. Assistant Commissioner of Income Tax, Central Circle-8, New Delhi.
May, 07th 2019

Referred Sections:
Section 132 of the Income-tax Act, 1961
Section 132(4).
section 68
section 131
Section 245D(4)

Referred Cases / Judgments
B Kishore Kumar Vs CIT (62 taxmann.com 215, 234 Taxman 771) (Copy Enclosed)
B Kishore Kumar Vs CIT (52 taxmann.com 449) Madras High Court confirmed (Copy Enclosed)
Bhagirath Aggarwal Vs CIT (31 taxmann.com 274, 215 Taxman 229, 351 ITR 143) (Copy Enclosed)
CIT Vs M. S. Aggarwal [2018] 93 taxmann.com 247 (Delhi) (Copy Enclosed)
Smt Dayawanti Vs CIT [2016] 75 taxmann.com 308 (Delhi)/[2017] 245 Taxman 293 (Delhi)/[2017]
M/s Pebble Investment and Finance Ltd Vs ITO (2017-TIOL-238-SC-IT) (Copy Enclosed)
Raj Hans Towers (P.) Ltd. Vs CIT (56 taxmann.com 67, 230 Taxman 567, 373 ITR 9) (Copy Enclosed)
PCIT Vs Avinash Kumar Setia [2017] 81 taxmann.com 476 (Delhi)
ACIT Vs Hukum Chand Jain [2010] 191 Taxman 319 (Chhattisgarh)
PCIT Vs NRA Iron & Steel (P.) Ltd. [2019] 103 taxmann.com 48 (SC) (Copy Enclosed)
PCIT Vs NDR PROMOTERS PVT LTD (2019-TIOL-172-HC-DELIT)
ITO Vs Synergy Finlease Pvt. Ltd (ITA No.4778/Del/2013)
Prem Castings (P.) Ltd. Vs CIT [2017] 88 taxmann.com 189 (Allahabad) (Copy Enclosed)
Prem Castings (P.) Ltd. Vs CIT 2018-TIOL-274-SC-IT (Copy Enclosed)
CIT Vs MAF Academy (P.) Ltd (361 ITR 258) (Copy Enclosed)

 

              IN THE INCOME TAX APPELLATE TRIBUNAL
                    DELHI BENCH 'G': NEW DELHI

         BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND
                           KAMBLE, JUDICIAL MEMBER
             MS. SUCHITRA KAMBLE,

                           No.1156/Del/2019
                       ITA No.
                                       2013-14
                     Assessment Year : 2013-


M/s Surya Processed Food      Vs.    Assistant Commissioner of
Pvt.Ltd.,                            Income Tax,
2nd Floor,                                   Circle-8,
                                     Central Circle-
    Local Shopping Complex,
19, Local                            New Delhi.
Near Pushpa Bhawan,
Madangir,
New Delhi ­ 110 062.
PAN : AAKCS7174G.
     (Appellant)                         (Respondent)

                   Nos.1157/Del/2019 & 1158/Del/2019
               ITA Nos.1157/Del/2019
                           Years : 2013-
                Assessment Year              2014-15
                                   2013-14 & 2014-


M/s Surya Agrotech            Vs.    Assistant Commissioner of
Infrastructure Limited,              Income Tax,
2nd Floor,                                   Circle-8,
                                     Central Circle-
19, Local Shopping Complex,          New Delhi.
Near Pushpa Bhawan,
Madangir,
New Delhi ­ 110 062.
PAN : AALCS3053M.
     (Appellant)                         (Respondent)

            Appellants by     :     Shri Ved Jain, Advocate and
                                    Shri Himanshu Agarwal, CA.
            Respondent by     :     Shri S.S. Rana, CIT-DR.

     Date of hearing          :     16.04.2019
     Date of pronouncement    :     07.05.2019

                              ORDER

    G.D. AGRAWAL, VICE PRESIDENT :-
PER G.D.
                                  2                 ITA Nos.1156 to 1158/Del/2019



     These appeals by the assessees for the assessment years 2013-
14 and 2014-15 are directed against the order of learned CIT(A)-24,
New Delhi-24, New Delhi dated 7th January, 2019.


2.   In all these appeals, common grounds have been raised.
Therefore, they are all being taken up together for consideration. The
grounds of appeal raised in the above appeals read as under :-


                     :-
ITA No.1156/Del/2019 :-


     "1. 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 Commissioner of Income Tax, Central Circle-
     08, New Delhi (`the Ld. Assessing Officer') in upholding the
     addition of Rs.31,00,50,001 made u/s 68 of the Act on
     account of receipt of share capital.

     2.    That on facts and circumstances of the case and in
     law, the Ld.CIT(A), has erred in upholding the order of the
     Ld. Assessing Officer in upholding the addition of
     Rs.77,51,250/- made u/s 37 of the Act on account of
     alleged expenditure for commission incurred by the
     applicant company for channelizing the above share
     capital/share premium."

    No.1157/Del/2019 :-
ITA No.1157          :-


     "1. 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 Commissioner of Income Tax, Central Circle-
     08, New Delhi (`the Ld. Assessing Officer') in upholding the
     addition of Rs.2,60,00,000/- made u/s 68 of the Act on
     account of receipt of share capital.

     2.    That on facts and circumstances of the case and in
     law, the Ld.CIT(A), has erred in upholding the order of the
     Ld. Assessing Officer in upholding the addition of
                                  3                 ITA Nos.1156 to 1158/Del/2019



     Rs.6,50,000/- made u/s 37 of the Act on account of alleged
     expenditure for commission incurred by the applicant
     company for channelizing the above share capital/share
     premium."

    No.1158/Del/2019 :-
ITA No.1158/Del/2019 :-


     "1. 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 Commissioner of Income Tax, Central Circle-
     08, New Delhi (`the Ld. Assessing Officer') in upholding the
     addition of Rs.13,31,50,000 made u/s 68 of the Act on
     account of receipt of share capital.

     2.    That on facts and circumstances of the case and in
     law, the Ld.CIT(A), has erred in upholding the order of the
     Ld. Assessing Officer in upholding the addition of
     Rs.33,28,750/- made u/s 37 of the Act on account of
     alleged expenditure for commission incurred by the
     applicant company for channelizing the above share
     capital/share premium."

3.   At the time of hearing before us, it is stated by the learned
counsel that both the above assessee companies are part of group
companies of Priya Gold group. That search and seizure proceedings
under Section 132 of the Income-tax Act, 1961 were conducted on 16th
December, 2014 in the case of Priya Gold group and its group
companies which included both the companies under appeal before us.
During the course of search, statement of Shri Shekhar Agarwal,
Director of M/s Surya Food & Agro Limited, which is the flagship
company of the group, was recorded under Section 132(4). In the said
statement, he accepted that the said group has earned unaccounted
income which has been routed as bogus share capital during the
financial year relevant to assessment year 2013-14 and 2014-15. He
also admitted that the same income would be surrendered in the
respective assessment years.   The group has surrendered the entire
                                     4                ITA Nos.1156 to 1158/Del/2019



undisclosed income of the group in its flagship company M/s Surya
Food & Agro Limited by filing petition before the Settlement
Commission.     The additional income disclosed before the Settlement
Commission was `49,12,73,399/-.            In paragraph 12 & 13 of the
application    before   the   Settlement    Commission,   it    was      clearly
mentioned that the profit made outside books by the applicant was
utilized for making investment in the share capital of the group
concerns.     The assessee has also given the name of both the
companies under appeal and the amount of share capital.               That the
Settlement Commission has admitted the above application and also
passed the final order in which as against the income disclosed at
`49.12 crores, the income settled was `55.77 crores. The assessee as
well as Revenue both has accepted the order of the Settlement
Commission and which has become final.          In view of the above, no
further addition for unexplained share capital in the hands of above
two assessees is called for otherwise it would be double taxation of the
same income.


4.     Learned CIT-DR argued at length.         He also furnished written
submission, which is being reproduced below :-


        "In the above case, it is humbly submitted as follows:
     1. In statement on oath recorded u/s 132(4) on 17.12.2014,
        Sh. Shekhar Agarwal surrendered undisclosed income of
        Rs. 31 Cr. in F.Y 2012-13 and Rs. 15.91 Cr. in F.Y 2014-15.

     2. In revised return filed on 30.08.2016 assessee increased
        an amount of Rs. 2.6 Cr. in A.Y 2013-14 and Rs. 28.40 Cr.
        in A.Y 2014-15 on account of share application money.
        However, no taxes were paid thereon.
        In statement on oath recorded u/s 131(1) on 25.10.2016,
        Sh. Manoj Aggarwal, Director of assessee company, stated
        that all taxes will be paid by 30.09.2016 but were not paid.
                               5               ITA Nos.1156 to 1158/Del/2019



3. Detailed   investigation was made      with regard to
   investment made in M/s Subh Shree           Investment
   Management P. Ltd. and M/s Neelkanth Vincom P.
   Ltd.(pages 4 to 19 of AO) which showed that the entire
   investment was on account of accommodation entries.

4. As stated in para 4.9 of AO , statement of directors Sh.
   Navin Aggarwal and Sh. Manoj Aggarwal were recorded in
   which they stated that Sh. Shekhar Agarwal was
   responsible for managing the finance and accounts of
   assessee group.

5. Statement of directors Ms. Beena Aggarwal, Chhavi
   Aggarwal and Nidhi Aggarwal were recorded in which they
   stated that they were dummy directors(pages 20 and 21
   of AO).


6. As stated in para 4.12 of AO, various incriminating
   documents were seized from premises of the assessee.

7. As stated on page 30 of AO, Sh. Shekhar Agarwal admitted
   that unaccounted income earned through undisclosed
   sources was routed to the assessee company. No statutory
   register, minutes of meeting, share certificates and other
   documents were produced.


8. As stated in para 4.19 of AO, bank statements of investor
   companies     reflected   immediate    introduction  and
   withdrawal of funds.

9. As stated in page 37 of AO, summons were issued to Sh.
   Sudhir Satnaliwala but there was no compliance.
   Investigation Wing Kolkata examined Sh. Debashish Dutta
   who admitted providing accommodation entry to Priyagold
   group of companies.


10.
10.      As stated in page 38 of AO, statement of dummy
   directors Sh Bijay Kumar Aggarwal & Sh. Prakash Doshi
   was recorded in which they admitted that they were
   directors of entry operator Sh Debashish Dutta for earning
   commission. Sh Pankaj Agarwal also admitted that he was
   a dummy director.
                                6                ITA Nos.1156 to 1158/Del/2019



11.
11.     As stated in page 46 of AO, various incriminating
   documents pertaining to pre-planning were seized.


12.
12.     Various ban inquiries were conducted as discussed
   on pages 47 to 54 of Assessing Officer.

13.
13.      As stated in page 55 of AO, statement u/s 131(1) of
   dummy directors Sh. Dinesh Kumar Pandey was recorded
   in which he admitted that companies in which he or his
   wife were directors are dummy companies.


14.
14.      The assessee has failed to furnish justification for
   receiving such huge share premium.

       It is humbly submitted that the following decisions
  may kindly be considered with regard to validity of
  statement recorded u/s 132(4) of I.T.Act:

1. B Kishore Kumar Vs CIT (62 taxmann.com 215,            234
   Taxman 771) (Copy Enclosed)
   where Hon'ble Supreme Court dismissed SLP against High
   Court's order where it was held that since assessee himself
   had stated in sworn statement during search and seizure
   about his undisclosed income, tax was to be levied on
   basis of admission without scrutinizing documents.
   B Kishore Kumar Vs CIT (52 taxmann.com 449) Madras High
   Court confirmed (Copy Enclosed)

2. Bhagirath Aggarwal Vs CIT (31 taxmann.com 274,     215
   Taxman 229,      351 ITR 143) (Copy Enclosed)
   where Hon'ble Delhi High Court held that an addition in
   assessee's income relying on statements recorded during
   search operations cannot be deleted without proving
   statements to be incorrect.

3. CIT Vs M. S. Aggarwal [2018] 93 taxmann.com 247 247 (Delhi)
   (Copy Enclosed)
   where Hon'ble Delhi High Court held that where in course
   of block assessment proceedings, AO made addition to
   assessee's undisclosed income in respect of gift, in view of
   fact that assessee did not even know donor personally and,
   moreover, he himself in presence of his Chartered
   Accountant had made a statement under sec. 132(4)
                                7                ITA Nos.1156 to 1158/Del/2019



  admitting that said gift was bogus, impugned addition was
  to be confirmed.

4. Smt Dayawanti Vs CIT [2016] 75 taxmann.com 308
   (Delhi)/[2017] 245 Taxman 293 (D(Delhi)/[2017]
                                      elhi)/[2017] 390 ITR 496
   (Delhi)/[2016] 290 CTR 361 (Delhi) (Copy Enclosed)
   where Hon'ble Delhi High Court held that where inferences
   drawn in respect of undeclared income of assessee were
   premised on materials found as well as statements
   recorded by assessee's son in course of search operations
   and assessee had not been able to show as to how
   estimation made by Assessing Officer was arbitrary or
   unreasonable, additions so made by Assessing Officer by
   rejecting books of account was justified.

5. M/s Pebble I Investment                             -TIOL
                                                  (2017-
                 nvestment and Finance Ltd Vs ITO (2017     -
                                                        TIOL-
   238-
   238  SC-IT) (Copy Enclosed)
       -SC-
   where Hon'ble Supreme Court dismissed SLP challenging
   the judgment, whereby the High Court had held that
   statement made u/s 133A could be relied upon for
   purposes of assessment, in absence of any contrary
   evidence or explanation as to why such statement made
   was not credible.
                                                       -TIOL
                                                  (2017-
   M/s Pebble Investment and Finance Ltd Vs ITO (2017       -
                                                        TIOL-
   188-
   188  HC-MUM
       -HC- MUM- -IT) Bombay High Court confirmed (Copy
   Enclosed)

6. Greenview Restaurant Vs ACIT [2003] 133 Taxman 4        432
                                                            32
   (Gauhati)/[2003] 263 ITR 169 (Gauhati)/[2003] 185 CTR 651
   (Gauhati) (Copy Enclosed)
   "From facts, it was clear that there was a delay on the part
   of the appellant and its partner in retracting the
   statements recorded. The attention of the Court had also
   not been drawn to any material on record to establish that
   any attempt was made on behalf of the appellant to prove
   the allegation of inducement, threat or coercion through
   the witnesses. Having examined the impugned orders
   rendered by the Tribunal with the reasonings in support of
   its finding against the complaint of threat, inducement or
   coercion, no good and sufficient reason was found to differ
   from it. In the facts and circumstances of the case, having
   regard to the materials on record, the appellant had failed
   to establish that the statements of its partner had been
   recorded in the course of the search by using coercion,
   threat or inducement. Hence, the contentions advanced by
   the appellant in that regard were dismissed and the
                               8                 ITA Nos.1156 to 1158/Del/2019








  conclusion of the       Tribunal   on   that    count        was
  affirmed." [Para 9]

7. Raj Hans Towers (P.) Ltd. Vs CIT (56 taxmann.com 67, 230
   Taxman 567,        373 ITR 9) (Copy Enclosed)
   where Hon'ble Delhi High Court held that where assessee
   had not offered any satisfactory explanation regarding
   surrendered amount being not bona fide and it was also
   not borne out in any contentions raised before lower
   authorities, additions so made after adjusting expenditure
   were justified (SURVEY CASE).

8. PCIT Vs Avinash Kumar Setia [2017] 81 taxmann.com 476
       lhi) where Hon'ble Delhi High Court held that Where
   (Delhi)
   (De
   assessee surrendered certain income by way of declaration
   and withdraw same after two years without any
   satisfactory explanation, it could not be treated as bona
   fide and, hence, addition would sustain.

9. ACIT Vs Hukum Chand Jain [2010] 191 Taxman 319
   (Chhattisgarh) when assessee did not retract his statement
   immediately after search and seizure was over and in
   return also no explanation was offered for surrender of
   undisclosed income at time of search and seizure
   operations under section 132(4), it could be said that
   assessee had failed to discharge onus of proving that
   confession made by him under section 132(4) was as a
   result of intimidation, duress and coercion or that same
   was made as a result of mistaken belief of law or facts.

        In the above case, it is humbly submitted that the
  following decisions may kindly be considered with regard
  to addition made u/s 68 of I.T.Act:

1. PCIT Vs NRA Iron & Steel (P.) Ltd. [2019] 103 taxmann.com
                 Enclosed)
   48 (SC) (Copy Enclosed)
   where Hon'ble Supreme Court reverse order of lower
   Authorities holding that where there was failure of
   assessee to establish credit worthiness of investor
   companies, Assessing Officer was justified in passing
   assessment order making additions under section 68 for
   share capital / premium received by assessee company.
   Merely because assessee company had filed all primary
   evidence, it could not be said that onus on assessee to
   establish credit worthiness of investor companies stood
   discharged.
                               9                ITA Nos.1156 to 1158/Del/2019




2. PCIT Vs NDR PPROMOTERS             (2019-
                 ROMOTERS PVT LTD (2019     -TIOL-172
                                             TIOL-172-HC-DEL
                                                     -HC-   -
                                                         DEL-
   IT)
   where Hon'ble Delhi High Court held that a case involving
   make-believe paper work to camouflage the bogus nature
   of the transactions is to be treated as unexplained credit
   u/s 68.

3. ITO Vs Synergy Finlease Pvt. Ltd (ITA No.4778/Del/2013)
   where Hon'ble ITAT Delhi held that where investor of share
   application money had nominal income and cheques had
   been received just before issue of cheques for share
   application money, creditworthiness was not proved and
   addition u/s 68 was sustained.

4. Prem Castings (P.) Ltd. Vs CIT [2017] 88 taxmann.com 189
   (Allahabad) (Copy Enclosed)
   where Hon'ble Allahabad High Court held that additions u/s
   68 warrant being sustained where the identities &
   creditworthiness of investors in the assessee company are
   not established by the assessee & are also proved
   incorrect by the Department's Assessee Information
   System. In such circumstances, assessee cannot resist the
   additions on grounds that it did not have opportunity to
   cross-examine relevant witnesses. An assessee company
   cannot hide behind the shell of a corporate entity to feign
   ignorance regarding the identity of any person who invests
   in its share capital.

                                   2018-
  Prem Castings (P.) Ltd. Vs CIT 2018    TIOL-
                                        -TIOL 274-
                                             -274 SC-IT (Copy
                                                 -SC-
  Enclosed)
  where Hon'ble Supreme Court held as follows:
  "We do not find any merit in this petition. The Special
  Leave Petition is accordingly dismissed."

5. CIT Vs MAF Academy (P.) Ltd (361 ITR 258) (Copy Enclosed)
   where Hon'ble Delhi High Court held that where assessee,
   a private limited company, sold its shares to unrelated
   parties at a huge premium and thereupon within short
   span of time those shares were purchased back even at a
   loss, share transactions in question were to be regarded as
   bogus and, thus, amount received from said transactions
   was to be added to assesee's taxable income under section
   68 It was held as follows:
                               10                ITA Nos.1156 to 1158/Del/2019



   53. In contrast to the above judgments, in the present
  "53.
  case, the Assessee is a private limited company and in the
  factual matrix, we have held that the Assessee has not
  been able to discharge the initial onus and has not been
  able to establish the identity, creditworthiness of the share
  applicants and the genuineness of the transaction. Though,
  in our considered opinion, none of the above judgments,
  referred to by the Assessee respondent, are applicable in
  the facts of the present case and in view of the findings
  recorded by us hereinabove.
  54. In view of the above, we are of the view that the
  Assessee has not discharged the onus satisfactorily and
  the additions made by the Assessing Officer were justified
  and sustainable."


6. CIT Vs Navodaya Castle Pvt Ltd [2014] 367 ITR 306 (Del)
   (Copy Enclosed)
   where Hon'ble Delhi High Court accepted that since the
   assessee was unable to produce the directors and the
   principal officers of the six shareholder companies and also
   that as per the information and details collected by the
   Assessing Officer from the concerned bank, the Assessing
   Officer had observed that there were genuine concerns
   about identity, creditworthiness of shareholders as well as
   genuineness of the transactions.

  "20. Now, when we go to the order of the Tribunal in the
  present case, we notice that the Tribunal has merely
  reproduced the order of the Commissioner of Income-tax
  (Appeals) and upheld the deletion of the addition. In fact,
  they substantially relied upon and quoted the decision of
  its co-ordinate Bench in the case of MAF Academy P. Ltd., a
  decision which has been overturned by the Delhi High
  Court, vide its judgment in CIT v. MAF Academy P. Ltd.
  [2014] 206 DLT 277 ; [2014] 361 ITR 258 (Delhi)). In the
  impugned order it is accepted that the assessee was
  unable to produce directors and principal officers of the six
  shareholder companies and also the fact that as per the
  information and details collected by the Assessing Officer
  from the concerned bank, the Assessing Officer has
  observed that there were genuine concerns about identity,
  creditworthiness of shareholders as well as genuineness of
  the transactions.
                                11                ITA Nos.1156 to 1158/Del/2019



   21. In view of the aforesaid discussion, we feel that the
   matter requires an order of remit to the Tribunal for fresh
   adjudication keeping in view the aforesaid case law."

                                                         18
   Navodaya Castle Pvt Ltd Vs CIT ([2015] 56 taxmann.com 18
   (SC)/[2015] 230 Taxman 268 (SC)) (Copy Enclosed)
   SLP of assessee dismissed by Hon'ble Supreme Court.

7. Konark Structural Engineering (P.) Ltd. Vs DCIT [2018] 96
   taxmann.com 255 (SC) (Copy Enclosed)
   where assessee-company received certain amount as
   share capital from various shareholders, in view of fact that
   summons to shareholders under section 131 could not be
   served as addresses were not available, and, moreover,
   those shareholders were first time assessees and were not
   earning enough income to make deposits in question,
   addition made by Assessing Officer under section 68 was
   to be confirmed; SLP dismissed.

   Konark Structural Engineering (P.) Ltd. Vs DCIT [2018] 90
   taxmann.com 56 (Bombay) (Copy Enclosed)
   where Hon'ble Bombay High Court held that where
   assessee-company received certain amount as share
   capital from various shareholders, in view of fact that
   summons served to shareholders under section 131 were
   unserved with remark that addressees were not available,
   and, moreover, those shareholders were first time
   assessees and were not earning enough income to make
   deposits in question, impugned addition made by AO under
   sec. 68, was to be confirmed.

10 PCIT Vs Bikram Singh [2017] 85 taxmann.com 104
   (Delhi)/[2017] 250 Taxman 273 (Delhi)/[2017] 399 ITR 407
   (Delhi) (Copy Enclosed)
   (Delhi)
   where Hon'ble Delhi High Court held that even if a
   transaction of loan is made through cheque, it cannot be
   presumed to be genuine in the absence of any agreement,
   security and interest payment. Mere submission of PAN
   Card of creditor does not establish the authenticity of a
   huge loan transaction particularly when the ITR does not
   inspire such confidence. Mere submission of ID proof and
   the fact that the loan transactions were through the
   banking channel, does not establish the genuineness of
   transactions. Loan entries are generally masked to pump in
   black money into banking channels and such practices
   continue to plague Indian economy.
                               12                ITA Nos.1156 to 1158/Del/2019




8. Pratham Telecom India Pvt Ltd Vs DCIT (2018-TIOL
                                         (2018-    -1983
                                               TIOL-    -HC-
                                                    1983-HC-
   MUM-
   MUM  -IT) (Copy Enclosed)
   where Hon'ble Bombay High Court held that mere
   production of PAN numbers & bank statements is sufficient
   enough to discharge the burden on taxpayer to escape the
   realms of Section 68.

9. J J Development Pvt Ltd Vs CIT (2018  -TIOL
                                    (2018-    -395
                                          TIOL-   -SC-
                                               395-SC-IT) (Copy
   Enclosed)
   where Hon'ble Supreme Court held that when the assessee
   fails to provide a convincing explanation with regard to the
   cash credit before the AO and the same was accepted by
   the ITAT being a fact finding body, the same cannot be
   disputed further. Apex Court dismissed the Special Leave
   to Petition filed by the assessee.

10.      CIT Vs Nipun Builders & Developers (P.) Ltd (30
   taxmann.com 292, 214 Taxman 429, 350 ITR 407, 256
   CTR 34) (Copy Enclosed)
   where Hon'ble Delhi High Court held that where assessee
   failed to prove identity and capacity of subscriber
   companies to pay share application money, amount so
   received was liable to be taxed under section 68. It was
   held as follows:

  "12. A perusal of the order of the Tribunal shows that it has
  gone on the basis of the documents submitted by the
  assessee before the AO and has held that in the light of
  those documents, it can be said that the assessee has
  established the identity of the parties. It has further been
  observed that the report of the investigation wing cannot
  conclusively prove that the assessee's own monies were
  brought back in the form of share application money. As
  noted in the earlier paragraph, it is not the burden of the
  AO to prove that connection. There has been no
  examination by the Tribunal of the assessment
  proceedings in any detail in order to demonstrate that the
  assessee has discharged its onus to prove not only the
  identity of the share applicants, but also their
  creditworthiness and the genuineness of the transactions.
  No attempt was made by the Tribunal to scratch the
  surface and probe the documentary evidence in some
  depth, in the light of the conduct of the assessee and other
  surrounding circumstances in order to see whether the
  assessee has discharged its onus under Section 68. With
                              13                ITA Nos.1156 to 1158/Del/2019



  respect, it appears to us that there has only been a
  mechanical reference to the case-law on the subject
  without any serious appraisal of the facts and
  circumstances of the case.

  13. We, therefore, answer the substantial question of law
  framed by us in the negative, in favour of the revenue and
  against the assessee. The appeal of the revenue is allowed
  with no order as to costs."

11.      CIT Vs Nova Promoters & Finlease (P) Ltd (18
   taxmann.com 217, 206 Taxman 207, 342 ITR 169, 252 CTR
   187) (Copy Enclosed)
   where Hon'ble Delhi High Court held that amount received
   by assessee from accommodation entry providers in garb
   of share application money, was to be added to its taxable
   income under section 68. It Was held as follows:

  "41. In the case before us, not only did the material before
  the Assessing Officer show the link between the entry
  providers and the assessee-company, but the Assessing
  Officer had also provided the statements of Mukesh Gupta
  and Rajan Jassal to the assessee in compliance with the
  rules of natural justice. Out of the 22 companies whose
  names figured in the information given by them to the
  investigation wing, 15 companies had provided the so-
  called "share subscription monies" to the assessee. There
  was thus specific involvement of the assessee-company in
  the modus operandi followed by Mukesh Gupta and Rajan
  Jassal. Thus, on crucial factual aspects the present case
  stands on a completely different footing from the case of
  Oasis Hospitalities (P.) Ltd. (supra).

  42. In the light of the above discussion, we are unable to
  uphold the order of the Tribunal confirming the deletion of
  the addition of Rs. 1,18,50,000 made under section 68 of
  the Act as well as the consequential addition of Rs.
  2,96,250. We accordingly answer the substantial questions
  of law in the negative and in favour of the department. The
  assessee shall pay costs which we assess at Rs. 30,000/-."

12.     CIT Vs N R Portfolio Pvt Ltd [2014] 42 taxmann.com
   339 (Delhi)/[2014] 222 Taxman 157 (Delhi)(MAG)/[2014]
   264 CTR 258 (Delhi) (Copy Enclosed)
                                  14                ITA Nos.1156 to 1158/Del/2019



     where Hon'ble Delhi High Court held that if AO doubts the
     documents produced by assessee, the onus shifts on
     assessee to further substantiate the facts or produce the
     share applicant in proceeding. It was held as follows:
     "30. What we perceive and regard as correct position of
     law is that the court or tribunal should be convinced about
     the identity, creditworthiness and genuineness of the
     transaction. The onus to prove the three factum is on the
     assessee as the facts are within the assessee's knowledge.
     Mere production of incorporation details, PAN Nos. or the
     fact that third persons or company had filed income tax
     details in case of a private limited company may not be
     sufficient when surrounding and attending facts predicate
     a cover up. These facts indicate and reflect proper paper
     work or documentation but genuineness, creditworthiness,
     identity are deeper and obtrusive. Companies no doubt are
     artificial or juristic persons but they are soulless and are
     dependent upon the individuals behind them who run and
     manage the said companies. It is the persons behind the
     company who take the decisions, controls and manage
     them."

5.   In the rejoinder, it is stated by the learned counsel that the
assessee is not retracting the statement given by Shri Shekhar Agarwal
under Section 132(4) that the group had unaccounted income which is
routed through the share capital. In fact, the income was earned in the
flagship company viz., M/s Surya Food and Agro Limited which had the
turnover of more than `500 crores a year.          Therefore, the said
company filed the petition before the Settlement Commission by
disclosing its additional income. That in the appellant companies, it is
only the application of that income. That these facts have been duly
considered and accepted by the ITAT while granting stay to the
appellant companies in its order dated 1st March, 2019.          He further
stated that in the assessment order, the Assessing Officer himself has
mentioned at several places that it is the undisclosed income of the
group which is invested in the form of bogus share capital. However,
at the end, while making the addition, he took a different stand than
what is stated in the whole body of the assessment order. He stated
                                   15                ITA Nos.1156 to 1158/Del/2019



that when the income has been taxed, its application cannot be taxed
again otherwise it would amount to double taxation of income.


6.    We have carefully considered the arguments of both the sides
and perused the material placed before us.        The limited question
before us is whether the credit in the form of share capital in the
companies under appeal before us can be considered to be application
of undisclosed income of M/s Surya Food and Agro Limited who have
declared such income before the Settlement Commission. Let us first
see the stand of the Revenue i.e., the Assessing Officer. At the time of
hearing before us, both the parties have agreed that the facts in all the
above three appeals are identical and in fact, the assessment orders
are also more or less identically worded. They have referred to only
one assessment order i.e., assessment order in the case of M/s Surya
Processed Food Pvt.Ltd. for assessment year 2013-14. Therefore, we
will also refer herein below the said assessment order.


7.    In paragraph 1 of the order, the Assessing Officer has mentioned
as under :-


      "Search and seizure proceedings under section 132 of the
      Income Tax Act, 1961, (hereinafter `the Act') were
      conducted in the case of Priya Gold Group and its group
      concerns and residential/factory premises of partners,
      directors and proprietors of the group on 16.12.2014. The
      case of the assessee was also covered in operation u/s 132
      of the Income Tax Act, 1961."

8.    Paragraph 2.2 of the order reads as under :-


      "2.2 Sh. Shekhar Agarwal, one of the directors in the
      associated group companies, in his statement recorded on
      oath u/s 132(4) on 17.12.2014 has accepted that the
      undisclosed income on account of bogus share capital
                                  16                ITA Nos.1156 to 1158/Del/2019



      money will be surrendered in the A.Y. 2013-14 and 2014-
      15, but the same has not been surrendered by the
      assessee company in its return u/s 153A of the Act. In
      reply to ques. no.25, Sh. Shekhar Agarwal stated that :

      I accept the fact that our group has routed its unaccounted
      income earned through undisclosed sources amounting to
      `31 crore in F.Y. 2012-13 and `15.91 crore in F.Y. 2014-15
      in its companies M/s Surya Processed Food Pvt.Ltd. and M/s
      Surya Agrotech Infrastructure Limited through Kolkata
      based companies namely and M/s Subhshree Investment
      Management Private Limited, M/s Surya Vincom Private
      Limited and M/s Surya Vanijya Private Limited, M/s Garima
      Commerce Private Limited, M/s Lokenath Investments
      Consultants Private Limited respectively by way of share
      capital/share premium."

8.1   From the above, it is evident that the Assessing Officer himself
has considered the Priya Gold group as one group and the assessee
company being part of the same group. He relied upon the statement
of Shri Shekhar Agarwal who is Director in the associated group
companies.    It was pointed out by the learned counsel that Shri
Shekhar Agarwal is the Director in M/s Surya Food and Agro Limited
i.e., the flagship company.   In the statement, Shri Shekhar Agarwal
accepted the fact that the group has routed its unaccounted income in
the form of share capital in its companies M/s Surya Processed Food
Pvt.Ltd. and M/s Surya Agrotech Infrastructure Limited.


9.    The Assessing Officer has again relied upon the above statement
of Shri Shekhar Agarwal.       Paragraph 4.11 of the order of the
assessment order reads as under :-


      "4.11 The statement on oath dated 16.12.14 of Shri
      Shekhar Agrawal, who was handling all the investment
      related issues of the Priyagold group of companies, was
      also recorded at the residence and the statement
      substantiates the fact that all the financial and investment
      related decisions were taken by Shri Shekhar Agarwal and
                                  17               ITA Nos.1156 to 1158/Del/2019



      he is the key person handling investments and fund
      requirement in main companies of the group. Further
      questioning of Shri Shekhar Agarwal on the issue of
      accommodation entries taken by the Priyagold Group took
      place at the head office of the Priyagold Group."

9.1   Thus, the Assessing Officer himself has recorded the finding that
Shri Shekhar Agarwal was handling all the investment related issues of
Priya Gold group of companies. It is further noted that he is the key
person handling investments and funds requirements in the main
companies of the group.


10.   In paragraph 4.13, again the Assessing Officer has mentioned
"His statement reflects the fact that though Shri Shekhar Agarwal
inter-alia looked after the decisions related to finance and general
policy including decisions regarding assessment of funds requirement
by the group companies, he was unable to furnish any reply to the
questions regarding creditworthiness of investor companies, details of
meetings with investor companies, due diligence followed in issuance
of shares by the group, date of allotment of shares, face value and
premium charged".      Thus, the Assessing Officer admitted that Shri
Shekhar Agarwal looked after the decisions relating to finance and
general policy including the decision regarding funds requirement of
the group companies.


11.   At page 30 of the assessment order, the Assessing Officer, while
relying upon the statement of Shri Shekhar Agarwal, has reproduced
his statement. Question No.26 and answer thereto read as under :-


      "Q.26      Since you have accepted the fact that your
      group has routed its unaccounted income earned through
      undisclosed sources amounting to `31 crore in F.Y. 2012-
      13 and `15.91 crore in F.Y. 2013-14 in its companies M/s
      Surya Processed Food Pvt.Ltd. and M/s Surya Agrotech
                                  18               ITA Nos.1156 to 1158/Del/2019



     Infrastructure Limited through Kolkata based companies by
     way of share capital/share premium, please explain the
     modus operandi adopted by your group to route this
     unaccounted money.

     Ans.         I wish to state that our group had unaccounted
     funds available with it and wanted to introduce these funds
     into the books of accounts of our main companies. For this
     purpose I came in contact with Sh. Sudhir Satnaliwala, who
     assured the arrangement of bogus companies registered in
     Kolkata to introduce our unaccounted funds.             The
     unaccounted funds were handed over in cash to one of the
     confidants of Sh. Sudhir Satnaliwala. Accordingly Sh.
     Sudhir Satnaliwala introduced these unaccounted funds
     into the books of our main companies namely M/s Surya
     Processed Food Pvt.Ltd. & M/s Surya Processed Food
     Pvt.Ltd. in the form of share capital/share premium through
     a layer of Kolkata based companies. However I am not
     aware about the exact modus operandi followed by Sh.
     Sudhir Satnaliwala to arrange these transactions."

11.1 From the above, it is evident that Shri Shekhar Agarwal
repeatedly mentioned that it is the unaccounted income of the group
which is routed through the share capital in M/s Surya Processed Food
Pvt.Ltd. and M/s Surya Agrotech Infrastructure Limited i.e., the
companies in appeal before us.


11.2 The above statement of Shri Shekhar Agarwal has been relied
upon by the Assessing Officer time and again.      At page 31 of the
assessment order, after considering the statement of Shri Shekhar
Agarwal, the Assessing Officer concluded as below :-


     "The above admission of Shri Shekhar Agarwal established
     beyond doubt that Priyagold group had unaccounted funds
     which were introduced into main companies of the group
     by routing of these funds through layers of bogus (jama
     kharchi) accommodation providing companies.          This
     submission was reconfirmed by Mr. Shekhar Agarwal in his
     statement recorded during post-search proceedings on
     29.01.15."
                                    19               ITA Nos.1156 to 1158/Del/2019




11.3 Thus, the Assessing Officer himself has concluded that Priya Gold
group had undisclosed funds which were introduced into main
companies of the group by routing of these funds through layers of
bogus accommodation entries.


12.   Again at page 38, the Assessing Officer, in paragraph 4.24,
recorded the following finding :-


      "All the above statements further establish the fact that all
      these companies based in Kolkata purportedly investing in
      Priyagold Group are nothing but paper companies and all
      the investments from them in Priyagold group concerns in
      the form of share capital/share premium are nothing but
      accommodation entries, which have been obtained by
      Priyagold group in its books by routing its own
      unaccounted money."

13.   In paragraph 4.26, the Assessing Officer concluded as under :-


      "It is proved beyond any iota of doubt that this investment
      of over Rs.46.91 crores in the form of share
      capital/premium in various companies of Priyagold Group is
      nothing but an accommodation entry which has been
      obtained by routing its own unaccounted money in its
      books and is liable to be added in the hands of assessee
      group companies u/s 68 of the I.T. Act, 1961."

13.1 Thus, the Assessing Officer has concluded that the investment of
`46.91 crores in the form of share capital/premium in various
companies of Priyagold Group is nothing but an accommodation entry
and it is liable to be added in the hands of the assessee group
companies. As per Assessing Officer himself, the share capital is liable
to be assessed in the hands of the assessee group companies. From
the above observation of the assessment order, it is absolutely clear
that the stand of the Revenue was that the Priya Gold group had
                                     20                ITA Nos.1156 to 1158/Del/2019



undisclosed income which is routed in the form of share capital by
obtaining accommodation entries from Kolkata based entry provider
companies and the said share capital including premium is liable to be
taxed in the hands of the assessee group companies.


14.     In the context of this finding of the Assessing Officer, let us
examine the application before the Settlement Commission and the
order of the Settlement Commission in the case of M/s Surya Food and
Agro Limited, which is the flagship company of the assessee group.
The copy of the application before the Settlement Commission along
with the annexures are produced in the paper book from page 36
onwards. The application is signed by Shri Shekhar Agarwal, Director
of the said company. At page 4 of the application, the assessee has
given the names of the group companies which read as under :-







S.No.                  Name of the company
1.                     M/s Surya Food & Agro Ltd.
2.                     M/s Surya Agrotech Infrastructure Ltd.
3.                     M/s Surya Processed Food Pvt.Ltd.
4.                     M/s Surya Fresh Foods Ltd.
5.                     M/s Surya Shopping Arcade Pvt.Ltd.
6.                     M/s   Surya    Biscuit   Industries   (Proprietorship
                       concern)
7.                     M/s Surya Healthcare Industries (Prop. Concern)
8.                     M/s Garima Commerce Pvt.Ltd.
9.                     M/s Lokenath Investment Consultants Pvt.Ltd.
10.                    M/s Surya Vincom Pvt.Ltd. (formerly known as
                       M/s Neelkanth Vincom Pvt.Ltd.)
11.                    M/s Subhshree Investment Management Pvt.Ltd.
12.                    M/s Surya Vanijya Pvt.Ltd.
                                  21                ITA Nos.1156 to 1158/Del/2019



                      (formerly known as M/s Labhdhan Mercantile
                      Pvt.Ltd.)


15.   From the above, it is evident that it includes both the companies
under appeal before us. In paragraph 4 Annexure-A of the application,
there is full and true statement of facts and the manner in which the
income has been derived. The relevant portion thereof is reproduced
below:-


      "IV. FULL & TRUE STATEMENT OF FACTS AND MANNER IN
      WHICH INCOME HAS BEEN DERIVED.

      1.  The applicant company is           in   the    trade       of
      manufacturing and sale of biscuits.

      2.    The applicant company is managed by Agarwal
      family called Agarwal Group for short. The head-man of
      family is Sh. Ballabh Prasad Agarwala. The business
      operations and executive functions of business of the
      applicant company are conducted by his youngest son Sh.
      Shekhar Agarwal.
      3.    ..................
      4.    ..................
      5.    ..................
      6.    ..................
      7.    ..................
      8.    ..................
      9.    ..................
      10. ..................
      11. ..................
      12. The applicant introduced a part of the profit made in
      the hedging transaction kept outside books, in the books of
      the group concerns in the form of entries taken as Share
      capital in the group concerns. Thus the profit made
      outside books by the applicant was utilized by it for making
      investments in the share capital of other group concerns.

      13. The following are the amounts introduced in the
      shape of share capital of the group entities obtained from
      entry operators:-
                                           22                   ITA Nos.1156 to 1158/Del/2019



S.No.     Name of Entity in which entry         Amount              Assessment Year
          has obtained
1.        Surya Processed Food (P) Ltd.         31,00,50,000        2013-14
2.        Surya   Agrotech    Infrastructure    2,60,00,000         2013-14
          Ltd.
3.        Surya   Agrotech    Infrastructure    13,31,50,000        2014-15
          Ltd.
          Total                                 46,92,00,000


        Entries were introduced in the above companies by
        allotting shares to the bogus shareholders as per list
        placed in Annexure `C'. It is submitted that the entire
        bogus share capital was obtained by ploughing back
        money earned in hedging transactions in cash kept outside
        books.

        14. Below is a table showing the turn over and the gross
        profit earned by the applicant as per books:-

Asstt. Year       Turn Over                    Gross Profit         G.P. Rate
2009-10           3,80,95,14,651               68,54,42,867         17.99
2010-11           4,36,88,88,049               58,31,74,857         13.35
2011-12           4,73,68,11,191               87,91,34,327         18.56
2012-13           5,41,17,27,672               96,71,90,982         17.92
2013-14           6,39,80,48,593               1,11,61,57,254       17.45
2014-15           6,77,30,78,789               1,26,35,04,456       18.65
2015-16           7,18,85,42,615               1,36,45,98,055       18.98


        A reference to the above chart would show that there is a
        variation in the G.P. rate over the years. It shows the
        volatility in the trade because of the prices of raw material,
        which are end product of agricultural sector and thus their
        prices are fluctuating depending on the season and
        weather.      The applicant in order to save itself from
        fluctuations hedged the prices of raw material to maintain
        a reasonable gross profit at 19%.

        The additional income by taking the gross profit at 19% will
        be as follows:-
                                           23                   ITA Nos.1156 to 1158/Del/2019



Asstt.         Turnover (Rs.)     G.P.     @     19%   Gross profit as   Additional
Year                              Amount (Rs.)         per books (Rs.)   Income
2009-10        3,80,95,14,651     72,38,07,784         68,54,42,867      3,83,64,917
2010-11        4,36,88,88,049     83,00,88,729         58,31,74,857      24,69,13,872
2011-12        4,73,68,11,191     89,99,94,126         87,91,34,327      2,08,59,799
2012-13        5,41,17,27,672     1,02,82,28,258       96,71,90,982      6,10,57,276
2013-14        6,39,80,48,593     1,21,56,29,233       1,11,61,57,254    9,94,71,979
2014-15        6,77,30,78,789     1,28,68,84,970       1,26,35,04,456    2,33,80,514
2015-16        7,18,85,42,615     1,36,58,23,097       1,36,45,98,055    12,25,042
                                         Total                           49,12,73,399


         From the above it is seen that the additional income
         mentioned above covers the investment made by the
         applicant company in the shares of:-

         a)      Surya Processed Food Pvt.Ltd.
         b)      Surya Agrotech Infrastructure Ltd.

         15. It would be seen that the additional income offered
         by the applicant earned from the hedging of raw material
         covers the undisclosed assets/application of funds found
         during the course of search and there is no other
         undisclosed asset found or application of funds by the
         group over and above the income offered. Thus the
         income offered by the applicant is full and true."


16.      In Annexure-3 of the application, M/s Surya Food & Agro
Limited has given the complete details of bogus share capital
introduced in the group companies. The same read as under :-



                         Surya Food & Agro Ltd.
 List of bogus capital introduced by the applicant in group companies

              Company name : Surya Processed Food Private Limited
                        Details of bogus shareholders

S.No.     Particulars           No. of           Per        Amount           Assessment
                                Shares           share                       Years
                                                 24                     ITA Nos.1156 to 1158/Del/2019



                                                      value
1        M/s Subhshree              42,22,973         37          1562,50,000        2013-14
         Investment
         Management
         Pvt.Ltd.
2        M/s Surya Vincom           41,56,757         37          1538,00,000        2013-14
         Pvt.Ltd.
                  Total             83,79,730                     3100,50,000

              Company Name : Surya Agrotech Infrastructure Ltd.
                       Details of Bogus Shareholders

S.No.    Particulars                No. of            Per         Amount             Assessment
                                    Shares            share                          Years
                                                      value
1        M/s Surya Vanijya          26,00,000         10          260,00,000         2013-14
         Pvt.Ltd.
2        M/s Garima                 3,60,000          10          36,00,000          2014-15
         Commerce Pvt.Ltd.
3        M/s Surya Vanijya          126,30,000        10          1263,00,000        2014-15
         Pvt.Ltd.
4        M/s Lokenath               3,25,000          10          32,50,000          2014-15
         Investment
         Consultants Pvt.Ltd.
                    Total           159,15,000                    1591,50,000




17.     The above application is admitted by the Settlement Commission
and the final order was passed on 8th June, 2018. The computation of
income by the Settlement Commission under Section 245D(4) was as
under :-


Computation of Income u/s 245D(4)
Name     of   Asstt.    Total      Income    Income           Income              Total      income
the           Year      as per return        disclosed        settled      u/s    determined u/s
applicant               (in Rs.)             u/s 245C(1)      245D(4)       (in   245D(4)
                                             (in Rs.)         Rs.)                (in Rs.)
                        1                    2                3                   (1 + 3)
              2009-10   69,711,904           38,364,917       38,364,917          10,80,76,821
              2010-11   73,607,180           246,913,872      246,913,872         32,05,21,052
              2011-12   86,738,060           20,859,799       20,859,799          10,75,97,859
M/s Surya     2012-13   78,470,380           61,057,276       61,057,276          13,95,27,656
                                           25                 ITA Nos.1156 to 1158/Del/2019



Food        &   2013-14   11,442,840      99,471,979    99,471,979      21,49,14,819
Agro Ltd.       2014-15   153,641,060     23,380,514    23,380,514      17,70,21,574
                2015-16   501,459,130     1,225,042     6,76,76,042     56,91,35,172
                Total     1,079,070,554   491,273,399   55,77,24,399    1,63,67,94,953


18.    Thus, as against the income of `49.12 crores disclosed before the
Settlement Commission, the additional income finally settled was
`55.77 crores.          With regard to application of income in the form of
share capital in M/s Surya Processed Food Pvt.Ltd. and M/s Surya
Agrotech Infrastructure Ltd., the Settlement Commission declined to
give any finding with the following order :-


       "8.5.3       Another issue in this case is that the applicant
       is claiming that its Additional income has been invested in
       two     other   group    companies     to    the   tune    of
       Rs.46,92,00,000/-. However, those two companies are not
       before the commission and hence this issue cannot be
       adjudicated by us."

19.    Thus, the Settlement Commission declined to give any finding
with regard to the application of additional income disclosed before the
Settlement Commission. We find that the ITAT in assessee's own case,
while considering the stay petitions by these two companies which are
under appeal before us, in its order in Stay Application No.205 to
207/Del/2019, vide order dated 1st March, 2019, gave the following
finding :-


       "We have carefully considered the rival contentions and
       perused the orders of the lower authorities as well as the
       order of the settlement commission dated 8/6/2018. It is
       apparent 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
                                  26              ITA Nos.1156 to 1158/Del/2019



      hands of Surya Food and Agro Ltd. Therefore prima facie
      the case of the assessee shows that there is a double
      addition, once the source of income and secondly the
      application of income. Therefore according to us the
      balance of convenience lies in favour of the assessee."

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 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
                                   27                ITA Nos.1156 to 1158/Del/2019



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.


21.   With regard to ground No.2, both the parties admitted that this
ground would be consequential to the decision in ground No.1. The
Assessing Officer, apart from the addition on share capital, has also
made further addition of alleged expenditure being commission for
acquiring the accommodation entries in the form of share capital. Both
the parties have agreed that if it is accepted that the investment in the
                                   28                ITA Nos.1156 to 1158/Del/2019



share capital was out of the undisclosed income of M/s Surya Food &
Agro Limited, which is disclosed before the Settlement Commission,
the same finding would be squarely applicable with regard to
commission for arranging such accommodation entries. In view of the
finding with regard to ground No.1, we hold that the addition for
alleged expenditure on arranging the accommodation entries in the
form of share capital is also made from the undisclosed income offered
and settled by M/s Surya Food & Agro Limited before the Settlement
Commission.    Accordingly, ground No.2 of the assessee's appeals is
allowed.


22.   In the result, all the appeals of the assessees are allowed.
      Decision pronounced in the open Court on 07.05.2019.


                  Sd/-                                     Sd/-
                  KAMBLE)
       (SUCHITRA KAMBLE)                                 AGRAWAL)
                                                   (G.D. AGRAWAL)
        JUDICIAL MEMBER                            VICE PRESIDENT

VK.

Copy forwarded to: -

1.    Appellant    : M/s Surya Processed Food Pvt.Ltd. and
                     M/s Surya Agrotech Infrastructure Limited,
                     2nd Floor, 19, Local Shopping Complex,
                     Near Pushpa Bhawan, Madangir,
                     New Delhi ­ 110 062.

2.    Respondent : Assistant Commissioner of Income Tax,
                           Circle-8, New Delhi.
                   Central Circle-
3.    CIT
4.    CIT(A)
5.    DR, ITAT

                                                 Assistant Registrar

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