Double taxation of disclosed peak balance and unsupported notional interest additions were both rejected for lack of evidentiary basis.

Same income cannot be taxed twice by artificially splitting a disclosed peak balance across assessment years; the addition was unsustainable because the amount had already been offered to tax and paid in the relevant year. Notional interest also cannot be added on a foreign bank balance without material showing that interest was actually earned; an estimate based only on a domestic savings-rate assumption had no evidentiary foundation. On both issues, the additions were deleted and relief was granted to the assessee.

---

---

Issues: (i) Whether the income disclosed in A.Y. 2007-08 could again be bifurcated and added in A.Ys. 2006-07 and 2007-08 so as to sustain additions on the same amount twice; (ii) Whether notional interest could be added on the foreign bank account balance in the absence of any material showing that interest was actually earned.

Issue (i): Whether the income disclosed in A.Y. 2007-08 could again be bifurcated and added in A.Ys. 2006-07 and 2007-08 so as to sustain additions on the same amount twice.

Analysis: The disclosed amount had already been offered to tax in A.Y. 2007-08 and tax had been paid thereon. The attempt to reallocate the same peak balance across two assessment years would result in taxation of the same income twice. The assessment record did not dislodge the assessee's explanation that the disclosure was made on the basis of the tax authorities' computation of peak balance.

Conclusion: The addition could not be sustained by bifurcating the same income across two years, and the issue was decided in favour of the assessee.

Issue (ii): Whether notional interest could be added on the foreign bank account balance in the absence of any material showing that interest was actually earned.

Analysis: The alleged foreign bank material did not record any interest payment to the assessee, and the Assessing Officer's estimate based on a domestic savings-rate assumption had no evidentiary foundation. In the absence of documentary support, the addition rested on presumption rather than real income.

Conclusion: The notional interest addition was unsustainable and the issue was decided in favour of the assessee.

Final Conclusion: The assessee succeeded on the substantive additions in dispute, while the revenue's appeals challenging deletion of the interest-related additions failed. The common order thus granted relief on the additions arising from the foreign bank account dispute and upheld deletion of the notional interest additions.

Ratio Decidendi: The same income cannot be taxed twice by artificially splitting a disclosed peak balance across assessment years, and an addition for interest cannot be sustained on mere presumption without evidence that such income was actually earned.

---