Tribunal quashes assessment order citing jurisdictional issues, prevents double taxation under Section 68

The Tribunal allowed the appeal, quashing the assessment order due to jurisdictional issues and deleting the addition under Section 68 for unexplained cash credit. It prevented double taxation of income declared under the Income Declaration Scheme 2016 by ruling that the income of the partnership firm should be taxed in the hands of the firm, not the partner. The decision was based on various legal precedents and CBDT circulars.

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Issues Involved:
1. Jurisdiction of the Assessing Officer.
2. Addition under Section 68 of the Income Tax Act for unexplained cash credit.
3. Double taxation of income declared under the Income Declaration Scheme (IDS) 2016.

Summary:

Issue 1: Jurisdiction of the Assessing Officer
The assessee argued that the assessment order passed by the DCIT was without jurisdiction as per CBDT Instruction No. 1/2011, which states that cases with declared income less than Rs. 20 lakhs should be assessed by the ITO, not the DCIT. The assessee's declared income was Rs. 11,50,260/-. The Tribunal admitted this additional ground for adjudication, referencing the Supreme Court judgment in National Thermal Power Company Ltd. Vs. CIT. The Tribunal considered previous judgments, including the Bombay High Court in Ashok Devichand Jain vs UOI and the Kolkata Bench of the ITAT in Krishnendu Chowdhury Vs ITO, which supported the assessee's contention. Consequently, the Tribunal held that the assessment completed by the DCIT was without jurisdiction and quashed the assessment order.

Issue 2: Addition under Section 68 for Unexplained Cash Credit
The Assessing Officer added Rs. 6,16,83,505/- to the assessee's income under Section 68, treating it as unexplained cash credit. The CIT(A) upheld this addition, stating that the assessee failed to explain the nature and source of the credit entry in his capital account. The CIT(A) noted that the amount was credited on 01/04/2015 and utilized by the assessee, indicating it was not a mere book entry. The CIT(A) emphasized that the assessee did not provide financial statements of the partnership firm to substantiate the credit entry. The Tribunal, however, found that the income declared under IDS 2016 by the partnership firm should be taxed in the hands of the firm, not the partner, referencing CBDT Circular No.8/2014 and the Special Bench decision in ACIT vs KT. Joseph. The Tribunal concluded that the addition under Section 68 was not justified and deleted the addition on merits.

Issue 3: Double Taxation of Income Declared under IDS 2016
The assessee contended that the income declared under IDS 2016 by the partnership firm should not be taxed again in his hands, as it would result in double taxation. The Tribunal agreed, noting that the income declared under IDS 2016 was already assessed in the hands of the partnership firm, which was in appeal before the CIT(A). The Tribunal referenced the Cochin Bench decision in KT.Joseph and the CBDT Circular No.8/2014, which clarified that income of the firm, whether disclosed or undisclosed, should be taxed in the hands of the firm, not the partners. Consequently, the Tribunal held that the income of Rs. 6,16,83,505/- could not be taxed as the assessee's income under Section 68 and deleted the addition.

Conclusion:
The Tribunal allowed the appeal of the assessee, quashing the assessment order on the grounds of jurisdiction and deleting the addition under Section 68 on merits, thereby preventing double taxation of the income declared under IDS 2016.

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