2016 (12) TMI 173 - AT - Income Tax

Addition on undisclosed income on account of alleged profit earned on sale of flat - profit on sale of flat - taxability in the hands of Mr. Ravi Kiran Aggarwal or Mr. Dinesh Kiran Aggarwal - Held that - The AO for both the tax payers is same i.e. DCIT, Central Circle-47, Mumbai. It has been held by the Hon ble Supreme Court in Laxmi Path Singhania vs. CIT (1968 (8) TMI 8 - SUPREME Court) that it is the fundamental rule of the law of taxation that, unless otherwise expressly provided, income cannot be taxed twice. In view of the above, the order of the ld. CIT(A) is set aside and the case is restored back to the file of the AO to examine the above issue and make a fresh assessment as per the provisions of the Act , keeping in mind the above observation, after giving reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Appeal against addition of undisclosed income on sale of flat, Double taxation of income, Burden of proof on assessee, Interpretation of seized documents, Jurisdiction over tax assessment.

Analysis:
1. The appeal was filed against the addition of undisclosed income on the sale of a flat at Ashok Tower. The assessee contended that the profit had already been offered for taxation by another individual, Mr. Ravi Kiran Agarwal, and thus should not be taxed twice. The AO, however, attributed the profit to the assessee, leading to the dispute.

2. The AO based the addition on seized documents indicating the sale of the flat and statements made by the assessee during search proceedings. The assessee explained that he was merely looking after the property on behalf of his brother, Mr. Ravi Kiran Agarwal, who had already declared the profit in his return. The AO rejected this explanation, asserting that the profit belonged to the assessee.

3. The ITAT considered the burden of proof on the assessee and cited relevant case laws. It was noted that the fundamental rule of taxation is to avoid double taxation unless expressly provided otherwise. As Mr. Ravi Kiran Agarwal had already offered the profit for taxation, the ITAT set aside the CIT(A)'s order and directed the AO to re-examine the issue and make a fresh assessment, ensuring no double taxation occurs.

4. The ITAT emphasized that the jurisdiction over tax assessment should prevent double taxation, as per the principle established by the Supreme Court. The appeal was allowed for statistical purposes, highlighting the importance of avoiding double taxation and ensuring a fair assessment process.

In conclusion, the ITAT's judgment focused on preventing double taxation and ensuring a fair assessment by re-evaluating the attribution of profit on the sale of the flat at Ashok Tower. The decision underscored the fundamental rule of taxation against double taxation and directed a fresh assessment to uphold this principle.