2020 (11) TMI 898 - AT - Income Tax

Addition u/s 69A - assessee offered a sum of ₹ 3,00,000 as Miscellaneous Receipt in her revised computation of income - Authorities have made and confirmed the instant addition on the ground that this receipt of ₹ 3,00,000 was different from the deposit of ₹ 3,00,000 in the bank account - HELD THAT - We are unable to appreciate the view point of the authorities below on the ground that once the assessee offered a sum of ₹ 3,00,000 on receipt of the amount, there could have been no occasion of making another similar addition on spending/investing the said amount. If a person earns ₹ 100 from undisclosed sources and thereafter offers it for taxation, its later utilization, and that too, through undisclosed transactions, would not invite any further addition. AO cannot make one addition at the time of earning the undisclosed income and another similar addition at the time of spending the same. Here is a case in which the assessee offered ₹ 3,00,000 as Miscellaneous Receipt , which has been duly taxed also. The utilization of such amount of ₹ 3,00,000 by the assessee by means of deposit in the bank account, cannot, in our opinion, call for any addition. We, therefore, order to delete the addition. - Decided in favour of assessee.

Summary

Issues:
Confirmation of addition under section 69A of the Income-tax Act, 1961.

Analysis:
The appeal arose from an order related to the assessment year 2010-11 where the only issue raised was against the confirmation of an addition of ?3,00,000 made under section 69A of the Income-tax Act, 1961. The assessee had made certain deposits in their bank account, with details not provided initially. The Assessing Officer accepted all transactions except the ?3,00,000 for which no documentary evidence was available. This addition was affirmed in the first appeal.

During the proceedings, the assessee remained unrepresented, and the case was heard ex-parte. The assessee had offered the sum of ?3,00,000 as 'Miscellaneous Receipt' in the revised computation of income. The authorities confirmed the addition on the basis that this receipt was different from the deposit in the bank account. However, the Tribunal found the authorities' viewpoint flawed as once the assessee offered the amount as income, there should be no further addition when utilizing the same amount. The Tribunal highlighted that if undisclosed income is offered for taxation, subsequent undisclosed transactions should not invite additional additions. In this case, the assessee had already offered and taxed the amount as 'Miscellaneous Receipt', hence the utilization of the same amount in the bank account should not lead to another addition. Consequently, the Tribunal ordered the deletion of the addition and allowed the appeal.

In conclusion, the Tribunal found the addition of ?3,00,000 under section 69A unjustified as the amount had already been offered and taxed as income. The Tribunal emphasized that making an addition at the time of earning undisclosed income and then again at the time of spending the same amount was unwarranted. Therefore, the Tribunal ruled in favor of the assessee, deleting the addition in question.