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2020 (12) TMI 297 - AT - Income TaxAddition u/s 69A - unaccounted income of the assessee company - Double addition - whether the receipt of ₹81 lakhs against the sale of shops needs to be taxed in the hands of the assessee? - HELD THAT - Firstly, in the hands of director of the company namely, Shri Dhirajlal Sanghvi has included the impugned amount for working out the undisclosed income based on search documents in his individual capacity. Secondly, the AO has added the sum of ₹81 lakhs representing the receipt against the sale of shops in the hands of the assessee. Thus, the inference drawn is this that the receipt of ₹81 lakhs has suffered tax 2 times which is not desirable under the provisions of law until and unless it is specifically provided. In our considered view, once the AO has reached to the conclusion that the impugned income belongs to the assessee than he was under the obligation to reduce the same from the income of the director. But the AO has not done so despite the fact that the receipt of 81 lakhs was included in the cash flow statement of the director was also admitted by him (the AO) in his order AO was under the obligation to reduce the sum of 81 lakhs from the income of the director in the situation where he proposed to add the same in the hands of the assessee. But the AO has not done so despite having sufficient information in his hand. As such the action of the AO has resulted the double addition of the same income. In the case on hand, the assessee has claimed that receipt of ₹81 lakhs has already been considered in the hands of the director which was not disputed by the authorities below. It implies that owner of the receipt of ₹81 lakhs was the director of the company and not the assessee. Accordingly, the assessee cannot be held the owner of the receipts of ₹81 lakhs and consequently the impugned receipt cannot be made subject to tax in the hands of the assessee under the provisions of section 69A of the Act. - Decided in favour of assessee.
Issues Involved:
1. Validity of the assessment order. 2. Addition of ?81,00,000 under section 69A for alleged on-money receipts. 3. Double taxation of the same income. 4. Levy of interest under sections 234A, 234B, and 234C. Issue-Wise Detailed Analysis: 1. Validity of the Assessment Order: The assessee contended that the assessment order passed by the Assessing Officer (AO) was void ab initio and invalid. However, the judgment did not provide specific details or a separate discussion on this issue, implying that the primary focus was on the substantive additions and tax implications rather than procedural validity. 2. Addition of ?81,00,000 under Section 69A for Alleged On-Money Receipts: The core issue revolved around the addition of ?81,00,000 as unaccounted income under section 69A of the Income Tax Act. The AO found loose papers during a search at the premises of the Sanghvi Group, which indicated receipt of ?81,00,000 in cash against the sale of shops in a commercial project. The AO held that this amount was unaccounted income of the assessee. The assessee argued that the project had not started commercial activities by the date of the search and that the cash receipt did not belong to it. The assessee also claimed that the amount was included in the cash flow statement of its director, Shri Dhirajlal Sanghvi, and offered to tax in his return of income. The AO rejected this contention, stating that the project was registered in the name of the assessee and the cash receipt represented unaccounted money. 3. Double Taxation of the Same Income: The assessee contended that the addition of ?81,00,000 in its hands would result in double taxation since the same amount was already included in the director's cash flow statement and offered to tax. The AO, however, did not accept the cash flow statement of Shri Dhirajlal Sanghvi, reasoning that the receipt belonged to the assessee, a separate legal entity. The CIT(A) upheld the AO's decision, rejecting the assessee's argument of double taxation. On appeal, it was noted that the director's cash flow statement, including the ?81,00,000 receipt, was accepted by the CIT(A) in the director's case. The Tribunal observed that the AO should have reduced the amount from the director's income if it was to be taxed in the hands of the assessee to avoid double taxation. The Tribunal held that the AO's action resulted in double addition, which is not permissible under the law. 4. Levy of Interest under Sections 234A, 234B, and 234C: The assessee challenged the levy of interest under sections 234A, 234B, and 234C. However, the judgment primarily focused on the substantive issue of the addition of ?81,00,000 and did not provide a detailed discussion on the interest levy. Given that the primary contention of double taxation was resolved in favor of the assessee, the issue of interest levy became secondary. Conclusion: The Tribunal concluded that the addition of ?81,00,000 under section 69A was not justified as it resulted in double taxation. The receipt was already included in the director's cash flow statement and taxed accordingly. Therefore, the addition in the hands of the assessee was deleted, and the appeal was allowed. The Tribunal did not find it necessary to adjudicate other contentions raised by the assessee, as the primary issue was resolved in its favor.
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