2012 (9) TMI 255 - AT - Income Tax

Viability of taxing amount deposited in bank accounts which assessee contended to be out of income surrendered during search operations and available to assessee as opening cash balance - assessee vehemently argued that having accepted the income as surrendered u/s.132(4) the assessing authorities have tried to tax the income held as an asset by the assessee which is nothing but double taxation - Held that - Amounts purported to be brought to tax by the AO as confirmed by CIT(A) for the AYs 2003-04 and 2004-05 stood explained by the assessee to the extent that the amounts generated and rendered to tax was the amounts available on the basis of declaration of income up to the AY 2006-07 when the search took place in August, 2005. Therefore having paid tax u/s.132(4) the undisclosed investment u/s.69 cannot be taxed when the Assessing Officer and the learned CIT(A) have contradicted their own findings that the assessee was having sufficient funds to make these deposits by identifying the amount as belonging to it when the ultimate withdrawals could not be considered as expenditure. There was no requirement by the assessee to establish the nexus. Addition is directed to be deleted - Decided in favor of assessee.

Summary

Issues Involved:
1. Treatment of revised returns filed by the assessee.
2. Addition of income for Assessment Years 2003-04 and 2004-05.
3. Addition of Rs. 1.10 Crores for Assessment Year 2008-09.

Detailed Analysis:

1. Treatment of Revised Returns Filed by the Assessee:
The assessee filed revised returns for the Assessment Years 2003-04 and 2004-05 after a search and seizure operation. The revised returns included surrendered income, but the Assessing Officer treated these revised returns as non-est (invalid) and used the information contained in them as evidence for assessment. The Tribunal noted that the assessee had sufficient funds and had paid taxes on the surrendered income. The Tribunal found no merit in the contention of the CIT(A) and concluded that the amounts stood explained by the assessee.

2. Addition of Income for Assessment Years 2003-04 and 2004-05:
For Assessment Year 2003-04, the Assessing Officer added Rs. 30 lakhs to the income, despite the assessee having surrendered this amount under Section 153A. The Tribunal agreed with the assessee that this amounted to double taxation. Similarly, for Assessment Year 2004-05, the addition of Rs. 10 lakhs was confirmed by the CIT(A) on the grounds that there was no specific basis for the assessee's self-disclosure. The Tribunal found that the assessee had sufficient funds and had paid taxes on these amounts. Therefore, the Tribunal directed that these additions be deleted.

3. Addition of Rs. 1.10 Crores for Assessment Year 2008-09:
The assessee was found to have deposited Rs. 1.10 Crores in a bank account under another person's name during a survey operation. The Assessing Officer added this amount to the assessee's income under Section 68, treating it as income from undisclosed sources. The assessee denied ownership of the account but later accepted that the funds belonged to him. The Tribunal held that the assessee had sufficient funds and had paid taxes on these amounts. The Tribunal found that the addition under Section 68 was unjustified as the funds were already taxed. Therefore, the Tribunal directed that this addition be deleted.

Conclusion:
The Tribunal found that the assessee had sufficient funds and had paid taxes on the amounts in question. The additions made by the Assessing Officer for Assessment Years 2003-04, 2004-05, and 2008-09 were unjustified and amounted to double taxation. Therefore, the Tribunal allowed the appeals filed by the assessee for all three assessment years.