Sky Ocean Infrastructure assessed Rs 3.31 crore in tax case

Sky Ocean Infrastructure Limited was assessed a total tax demand of Rs 3.31 crore for Assessment Year 2019-20 after the Income Tax Department treated a Rs 2 crore immovable-property purchase as unexplained expenditure. The March 18, 2024 assessment was completed ex parte, with separate penalties of Rs 30,000 and Rs 15.60 lakh subsequently ordered.

What did the tax department assess against Sky Ocean Infrastructure?

Sky Ocean Infrastructure was assessed at total income of Rs 2 crore for Assessment Year 2019-20, with the full amount added as unexplained expenditure under Section 69C of the Income-tax Act, 1961. The disclosed assessment order was issued on March 18, 2024 under Sections 147, 144 and 144B, and the matter appears in the litigation disclosures concerning the company’s promoters.

The underlying information related to Financial Year 2018-19, when Sky Ocean Infrastructure was reported to have purchased immovable property worth Rs 2 crore. The Income Tax Department’s Risk Management Strategy, or RMS, flagged the matter through the Insight Portal as a non-filing-of-return case. RMS is the department’s information-based system for selecting cases for examination.

The department used third-party verification under Section 133(6) to confirm that Sky Ocean Infrastructure had undertaken the property transactions, according to the disclosure. It then treated the Rs 2 crore as unexplained expenditure under Section 69C, a provision that permits an income addition where the taxpayer does not satisfactorily explain expenditure. The assessment did not describe the amount as a valuation difference or a declared operating expense.

Why was the Sky Ocean Infrastructure assessment completed ex parte?

Sky Ocean Infrastructure was assessed ex parte because the department alleges it neither filed a return for Assessment Year 2019-20 nor responded to statutory notices. An ex parte assessment is completed on the material available to the tax authority when the taxpayer does not provide the requested return, explanation or supporting evidence.

The reassessment began with a Section 148 notice dated March 25, 2023 and an order under Section 148A(d), requiring Sky Ocean Infrastructure to furnish its return for Assessment Year 2019-20. The disclosure records further notices dated August 21, October 10 and October 20, 2023, followed by communications and show-cause notices dated November 23 and December 13, 2023. These communications were stated to have been served through the registered email address on the income-tax e-filing portal.

The assessing officer proceeded under Section 144, the best-judgment assessment provision, alongside Sections 147 and 144B after the alleged continued non-compliance and as the limitation period approached. A final show-cause notice proposed the Rs 2 crore Section 69C addition. Sky Ocean Infrastructure was again alleged not to have responded by the stipulated deadline, after which the department confirmed the proposed addition.

How does the Rs 3.31 crore demand relate to the Rs 2 crore addition?

The Rs 3.31 crore amount is the total demand disclosed from the March 18, 2024 reassessment, while Rs 2 crore is the income addition made under Section 69C. The disclosure does not provide a line-by-line computation reconciling the Rs 3.31 crore demand with tax, interest, fees or other consequential components, so the amounts represent different measures.

The assessment order directed the issuance of a computation of income and a demand notice under Section 156, the statutory provision for a tax demand. It also recorded fees under Section 234F for failure to furnish a return. In addition, the assessment initiated two distinct penalty processes: one relating to alleged failure to comply with notices and another arising from the unexplained-expenditure addition.

The later unexplained-income penalty order provides a stated tax component of the case. Tax under Section 115BBE on the Rs 2 crore addition was stated at Rs 1.56 crore, including surcharge and cess. Section 115BBE is the special tax treatment cited in the disclosure for certain unexplained income, including an amount assessed under Section 69C, and it became the basis for the later penalty calculation.

The primary assessment and two subsequent orders therefore concern the same Financial Year 2018-19 property transaction but apply separate provisions. The March 18, 2024 reassessment established the Rs 2 crore addition and stated Rs 3.31 crore demand; the June 20, 2024 order addressed notice compliance; and the August 9, 2024 order addressed the tax consequence of the Section 69C addition.

What separate penalties has Sky Ocean Infrastructure received?

Sky Ocean Infrastructure received a Rs 30,000 penalty order dated June 20, 2024 under Section 272A(1)(d), which addresses failures to comply with specified income-tax notices. The department imposed Rs 10,000 for each of three alleged defaults associated with Section 142(1) notices dated August 21, October 10 and October 20, 2023.

The disclosure says further show-cause notices were issued on December 7, 2023, April 2, 2024 and April 18 or April 26, 2024, but alleges that Sky Ocean Infrastructure remained non-responsive. A Section 156 demand notice dated June 20, 2024 required payment of the Rs 30,000 penalty within the applicable statutory period.

A separate order dated August 9, 2024 imposed a Rs 15.60 lakh penalty under Section 271AAC(1). The department calculated this at 10% of the stated Rs 1.56 crore tax payable on the Section 69C addition, including surcharge and cess. The disclosure identifies charge notices dated March 18, April 15, May 14 and May 20, 2024, and alleges that Sky Ocean Infrastructure did not respond.

The Rs 30,000 and Rs 15.60 lakh orders are described as consequential to the March 18, 2024 ex parte assessment, rather than findings on separate transactions. The disclosure states that setting aside, modifying or annulling the foundational reassessment and Section 69C addition would render the related penalty proceedings unsustainable. That connection makes the status of the primary Rs 2 crore addition central to both penalty orders.

Conclusion

Sky Ocean Infrastructure’s disclosed matter combines a Rs 2 crore unexplained-expenditure addition with a stated Rs 3.31 crore reassessment demand, followed by Rs 30,000 and Rs 15.60 lakh penalty orders. The figures should be distinguished: Rs 2 crore is assessed income under Section 69C, Rs 3.31 crore is the disclosed total demand, and the two penalty orders arise from different provisions linked to the same reassessment.

The next development is whether Sky Ocean Infrastructure takes procedural action against the March 18, 2024 reassessment or obtains a change to the Section 69C addition. The disclosure identifies no appeal, rectification application or hearing date for Sky Ocean Infrastructure, while expressly stating that the June 20, 2024 and August 9, 2024 penalty orders depend on the legal outcome of the primary assessment.