Section 68 and 115BBE Addition on Unexplained Cash Credits Deleted to Avoid Double Taxation

The ITAT Ahmedabad upheld the CIT(A)'s deletion of the addition under section 68 read with section 115BBE relating to unexplained cash credits from seized cash. The AO had made a substantive addition of the seized cash in another party's hands and included the amount in the assessee's bank account as part of a larger addition. The CIT(A) found that allowing the addition again in the assessee's hands would result in double addition. The tribunal agreed with the CIT(A), noting the revenue failed to rebut this finding. Consequently, the appeal by the revenue was dismissed for lack of merit.

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ISSUES:

Whether the addition of Rs. 5,35,72,646/- made on account of unexplained cash credits in the hands of the assessee under Section 68 read with Section 115BBE of the Income Tax Act is justified.Whether the deletion of the said addition by the Commissioner of Income Tax (Appeals) was correct in law and on facts.

RULINGS / HOLDINGS:

The deletion of the addition of Rs. 5,35,72,646/- in respect of seized cash was upheld because the amount was already included in the total deposits brought to tax in the hands of the assessee, and a substantive addition for the same amount was made in the hands of another person, making the addition in the hands of the assessee "double taxation of same receipt."The Commissioner of Income Tax (Appeals) correctly held that the addition was only protective in the hands of the assessee and substantive in the hands of another, thus deletion of the addition was justified.

RATIONALE:

The Court applied the provisions of Section 68 read with Section 115BBE of the Income Tax Act, 1961, concerning unexplained cash credits and taxation of undisclosed income.The principle against double taxation was recognized, noting that the same amount cannot be taxed twice in the hands of different persons.The appellate authority's approach was based on factual appreciation that the seized cash formed part of the total bank deposits already taxed, and the substantive addition was made in the hands of the actual owner, thus deletion in the assessee's hands was warranted.

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