Disclosure in reopening return prevents treating the same receipts as unexplained income; reassessment addition held unsustainable.

Where income from sale of shares was disclosed and offered to tax in the revised return filed in response to a notice of reopening, the same amount cannot be subsequently recharacterised and added as unexplained income under the provision relied upon by the assessing officer; the tribunal allowed the appeal of the assessee on that basis. The dominant legal point is that disclosure in a reassessment return bars fresh addition of the identical income as unexplained credits, so no separate treatment under the unexplained income rule is sustainable.

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Issues: Whether the addition of Rs. 6,24,490/- under treatment as unexplained income (Section 68) can be sustained where the assessee had already offered the profit from sale of shares (including the penny scrip) in the return filed in response to the notice of reopening (Section 148).

Analysis: The issue turns on whether profits from sale of shares, identified by the Department as penny scrip transactions, were included and offered to tax in the return filed in response to the notice of reopening. The assessee filed a revised return in response to the reopening notice and declared net profits from sale of shares received through broking houses, which included profits attributable to the penny scrip. Where the revised return filed in response to the reopening notice discloses and offers the income in question, there is no basis for a fresh addition treating the same amount as unexplained income under the provision relied upon by the assessing authority.

Conclusion: Addition of Rs. 6,24,490/- under treatment as unexplained income is not sustainable because the profit from sale of shares was already offered to tax in the return filed in response to the reopening notice; appeal allowed in favour of the assessee.

Ratio Decidendi: Where income has been disclosed and offered to tax in the return filed in response to a notice of reopening, the same income cannot be treated again as unexplained income and added under the provision for unexplained credits.

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