2023 (7) TMI 229 - AT - Income Tax

Accommodation entries received from paper companies - taxation in hands of ultimate beneficiary - maintainability of protective additions - HELD THAT - CIT(A) in the case of present assessee had observed that M/s. Surya Processed Food Pvt. Ltd. is ultimate beneficiary and while confirming the substantial additions in hands of M/s. Surya Processed Food Pvt. Ltd. had deleted the protective additions in the hands of present assessee, the same require reconsideration on merits, in the light of orders 2019 (5) TMI 687 - ITAT DELHI of the Tribunal wherein substantial additions in the hands of M/s. Surya Processed Food Pvt. Ltd. have also been deleted since the income has already been taxed in the hands of M/s Surya Food and Agro Limited. Ground raised by Revenue is sustained for statistical purposes and the issue is restored to the files of Ld. CIT(A) with direction to decide the issues afresh - Revenue appeal allowed for statistical purposes.

Summary

Issues involved:
The appeal by Revenue against CIT(A)'s order dated 07.01.2019, arising from order passed by ACIT under section 143(3) of the Income Tax Act, 1961.

Issue 1: Non-appearance of assessee and deletion of protective addition:
The assessee did not appear despite repeated notices, leading to the Ld. AO's findings being supported by Ld. DR. The Ld. CIT(A) observed that M/s. Surya Processed Food Pvt. Ltd. was the ultimate beneficiary of unexplained credits, justifying the substantive addition in their case but deleting the protective addition in the appellant company's hands.

Issue 2: Deletion of additions in the hands of M/s. Surya Processed Food Pvt. Ltd.:
The co-ordinate Bench's order dated 07.05.2019 revealed that additions for A.Y. 2013-14 in M/s. Surya Processed Food Pvt. Ltd.'s hands were deleted as the income had already been taxed in M/s. Surya Food and Agro Limited's hands. The Tribunal agreed with the ITAT's finding that there was double taxation, leading to the deletion of the addition for unexplained share capital.

Issue 3: Reconsideration of CIT(A)'s decision in light of Tribunal's order:
Considering the Tribunal's decision dated 07.05.2019, where substantial additions in M/s. Surya Processed Food Pvt. Ltd.'s hands were also deleted, the Ld. CIT(A)'s decision regarding protective additions in the present assessee's hands requires reconsideration on merits. The issue is restored to the files of Ld. CIT(A) for fresh consideration based on the Tribunal's observations.

In conclusion, the Revenue's appeal was allowed for statistical purposes, directing the Ld. CIT(A) to reexamine the issues in light of the Tribunal's decision dated 07.05.2019.