Tribunal directs re-examination of double taxation issue & deletes undisclosed income addition under Section 68

The Tribunal partially allowed the appeal, directing the Assessing Officer to re-examine the issue of double taxation of Rs. 19,00,000 for proper verification. Additionally, the Tribunal deleted the addition of Rs. 19,00,000 as undisclosed income under Section 68 due to the absence of maintained books of account. The order was issued on 10/04/2019.

---

---

Issues Involved:
1. Double taxation of Rs. 19,00,000 due to cash deposit in the bank.
2. Addition of Rs. 19,00,000 as undisclosed income under Section 68 of the Income Tax Act against declared agricultural income of Rs. 20,00,000.

Issue-wise Detailed Analysis:

1. Double Taxation of Rs. 19,00,000:

The assessee filed an appeal against the CIT(A)'s order confirming the addition of Rs. 19,00,000 on account of cash deposit in the bank account. The assessee argued that the amount was mistakenly declared as income twice—once separately and once included in other income of Rs. 25,00,000. The lower authorities did not accept this contention due to the absence of a revised return of income.

The Tribunal noted that under the Income Tax Act, the Assessing Officer (AO) is required to compute income based on the facts available and should not take advantage of an assessee's mistake. The Tribunal cited the Delhi High Court's decision in CIT Vs Sam Global Securities Ltd., which distinguished the Supreme Court's decision in Goetze (India) Ltd., asserting that the Tribunal has the power to entertain claims not made in the revised return.

Given the lack of detailed verification of the other income of Rs. 25,00,000, the Tribunal found it just to restore the matter to the AO for re-adjudication after proper verification, ensuring a fair opportunity for the assessee to be heard. This ground of appeal was allowed for statistical purposes.

2. Addition of Rs. 19,00,000 as Undisclosed Income under Section 68:

The assessee's second grievance was the confirmation of the addition of Rs. 19,00,000 as undisclosed income under Section 68 against the declared agricultural income of Rs. 20,00,000. The AO added Rs. 20,00,000 to the assessee's income, invoking Section 68, due to the absence of evidence supporting agricultural income claims. The CIT(A) confirmed this but restricted the addition to Rs. 19,00,000.

The assessee argued that since no books of account were maintained, the addition under Section 68 was invalid, citing the Bombay High Court's decision in CIT Vs Bhaichand H. Gandhi and the Delhi Tribunal's decision in Nitin Agarwal (HUF) Vs ITO. The Tribunal agreed, noting that Section 68 applies only to credits found in the books of account. Since the assessee did not maintain any books, the addition under Section 68 was unsustainable.

The Tribunal referred to several precedents, including the Delhi Tribunal's decision in Inder Singh vs. ITO and Vijay Kumar Prop. V.K. Medical Hall vs. ITO, which held that bank passbooks do not constitute "books of account" under Section 68. Consequently, the Tribunal deleted the addition of Rs. 19,00,000, allowing the appeal on this ground.

Conclusion:

The Tribunal partially allowed the appeal for statistical purposes, restoring the issue of double taxation to the AO for re-adjudication and deleting the addition of Rs. 19,00,000 under Section 68 due to the absence of books of account. The order was pronounced in the Open Court on 10/04/2019.

---