Double taxation on seized diary entries rejected where firm's settlement disclosure already covered the same income.

Income already disclosed by a partnership firm and accepted in settlement proceedings could not be brought to tax again in a partner's hands under section 69C on the same seized diary material without clear, independent evidence of separate personal liability. The diary entries were treated as business-related receipts and payments connected with the firm, and the assessee's statement was not a clear admission that the entries represented his unexplained personal expenditure. In the absence of cogent material dislodging that explanation, a second assessment of the same amount was unsustainable as double taxation on the same facts.

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Issues: Whether the addition made under section 69C of the Income-tax Act, 1961 on the basis of seized diary entries was sustainable when the same diary-related income had already been offered by the partnership firm before the Settlement Commission and accepted in settlement proceedings.

Analysis: The seized diary contained receipts and payments connected with the partnership firm, and the assessee's statement did not amount to a clear admission that the entire diary entries represented his personal unexplained expenditure. The diary transactions were explained as business-related, and the firm had already owned up the diary and disclosed the related income before the Settlement Commission, which accepted the disclosure. In these circumstances, the same income could not be assessed again in the hands of the assessee merely because the Department had indicated in the Rule 9 report that the seized material would be considered in the assessee's assessment. Once the explanation was found plausible and no cogent material was brought to dislodge it, a second assessment of the same amount was not justified.

Conclusion: The deletion of the addition under section 69C was upheld, and the issue was decided in favour of the assessee.

Final Conclusion: The Revenue's challenge failed because the impugned amount was found to have already been disclosed and accepted in the firm's settlement proceedings, making a further addition in the assessee's hands unsustainable as a case of double assessment.

Ratio Decidendi: Income already disclosed and accepted in settlement proceedings in the hands of the firm cannot be taxed again in the hands of a partner on the same factual material in the absence of clear, independent evidence of separate personal liability.

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