ITAT deletes Rs. 21.65 lakh addition under section 69A citing double taxation as amount already disclosed by group entities

ITAT Mumbai allowed the assessee's appeal against addition of Rs. 21,65,000 under section 69A for unexplained money. The addition was based on loose papers found during search proceedings at third party premises. While CIT(A) upheld the addition stating assessee failed to explain cash transaction's nature and source, ITAT found the amount was already disclosed by other Swastik group entities before ITSC and accepted. The tribunal held that adding the same amount in assessee's hands would constitute impermissible double taxation, directing AO to delete the addition.

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Issues:
1. Re-opening of assessment under section 147
2. Addition on account of unexplained money under section 69A

Analysis:

Issue 1: Re-opening of assessment under section 147
The appeal was filed challenging the order passed by the Commissioner of Income Tax (Appeals) confirming the re-opening of the assessment under section 147. The assessee contended that the re-opening was bad in law. The Assessing Officer treated unaccounted cash of Rs. 21,65,000 as unexplained money and added it to the total income of the assessee. The appellant argued that the cash transactions were related to a loan from M/s Vrushi Enterprises. However, the CIT(A) rejected the submission, stating that the name of the assessee was not included in the taxpayers who went before the Income Tax Settlement Commission (ITSC). The CIT(A) held that since the assessee failed to explain the nature and source of the cash paid, the addition was justified under section 69A of the Income Tax Act, 1961.

Issue 2: Addition on account of unexplained money under section 69A
The assessee contended that the loose papers found during the search proceedings did not mention the name of the assessee and that the amount disclosed in those papers had been offered to tax by other entities of the Swastik group before the ITSC. The ITSC accepted the application of the group, including the additional income. The ITAT observed that the loose papers did not mention the assessee's name and that the amount had already been considered in the application filed before the ITSC by the Swastik group. The ITAT held that adding the same amount in the hands of the assessee would lead to double taxation, which is impermissible. Therefore, the ITAT directed the Assessing Officer to delete the addition of Rs. 21,65,000 in the hands of the assessee as it had already been offered to tax by the Swastik group. The appeal was allowed on this ground.

In conclusion, the ITAT allowed the appeal of the assessee, directing the deletion of the addition of Rs. 21,65,000 in the hands of the assessee. The issue regarding the re-opening of the assessment under section 147 was left open since relief was granted on the second ground.

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