2024 (10) TMI 174 - AT - Income Tax

Addition u/s 69A - unexplained money - onus to prove - addition made by AO on account of alleged cash transaction on the basis of loose papers found during the course of search proceedings at Swastik Group/third party - CIT(A) dismissing the appeal filed by the assessee held that since the assessee could not explain the nature and source of cash paid, the amount has rightly been added to its total income by the AO u/s 69A - Assessee submitted amount disclosed in these loose papers has been offered to tax by the other entities of the Swastik group in their application filed before the Hon ble ITSC and the said application has also been accepted by the Hon ble ITSC HELD THAT - We find that the CIT(A) merely proceeded on the basis that the taxpayers before the Hon ble ITSC do not include the name of the assessee. Having considered the various details as noted above regarding the amount appearing in the loose sheets found during the search proceedings, we are of the considered view that since the amount has already been considered in the application filed before the Hon ble ITSC by the Swastik group and the disclosure of additional income and the application has been accepted by the Hon ble ITSC, the addition of the said amount of ₹ 21,65,000 in the hands of the assessee on account of entries appearing in the loose sheets will amount to double taxation which is completely impermissible. Therefore, we direct the AO to delete the impugned addition in the hands of the assessee as the same has already been offered to tax by the Swastik group and the due tax thereon has been paid - Assessee appeal allowed.

Summary

Issues:
1. Re-opening of assessment under section 147
2. Addition on account of unexplained money under section 69A

Analysis:

Issue 1: Re-opening of assessment under section 147
The appeal was filed challenging the order passed by the Commissioner of Income Tax (Appeals) confirming the re-opening of the assessment under section 147. The assessee contended that the re-opening was bad in law. The Assessing Officer treated unaccounted cash of Rs. 21,65,000 as unexplained money and added it to the total income of the assessee. The appellant argued that the cash transactions were related to a loan from M/s Vrushi Enterprises. However, the CIT(A) rejected the submission, stating that the name of the assessee was not included in the taxpayers who went before the Income Tax Settlement Commission (ITSC). The CIT(A) held that since the assessee failed to explain the nature and source of the cash paid, the addition was justified under section 69A of the Income Tax Act, 1961.

Issue 2: Addition on account of unexplained money under section 69A
The assessee contended that the loose papers found during the search proceedings did not mention the name of the assessee and that the amount disclosed in those papers had been offered to tax by other entities of the Swastik group before the ITSC. The ITSC accepted the application of the group, including the additional income. The ITAT observed that the loose papers did not mention the assessee's name and that the amount had already been considered in the application filed before the ITSC by the Swastik group. The ITAT held that adding the same amount in the hands of the assessee would lead to double taxation, which is impermissible. Therefore, the ITAT directed the Assessing Officer to delete the addition of Rs. 21,65,000 in the hands of the assessee as it had already been offered to tax by the Swastik group. The appeal was allowed on this ground.

In conclusion, the ITAT allowed the appeal of the assessee, directing the deletion of the addition of Rs. 21,65,000 in the hands of the assessee. The issue regarding the re-opening of the assessment under section 147 was left open since relief was granted on the second ground.