2025 (12) TMI 1180 - AT - Income Tax

Rectification bid to tax alleged unaccounted 'on-money' receipts at 60% u/s115BBE fails after addition deleted

The dominant issue was whether rectification under s.154 could levy tax at 60% under s.115BBE on alleged 'unaccounted on-money' receipts when the ... Rectification u/s 154 - Chargeability of 60% tax u/s 115BBE - “unaccounted on-money” said to have been received in cash against sale of certain flats - HELD THAT:- When the assessee challenged the rectification order, CIT(A) allowed said appeal and set aside the rectification order taking into consideration, the submission on behalf of the assessee that while deciding ITA filed by the assessee, Coordinate Bench, ITAT, Jaipur Benches had deleted the above said addition of Rs. 3,96,05,000/-. As a result, CIT(A) set aside the rectification order whereby the rate of tax i.e. 60% was made applicable as regards the said income by way of “unaccounted on-money”. It is not a case of the department that the order dated passed by the Coordinate Bench in [2024 (7) TMI 1368 - ITAT JAIPUR] has been challenged by the department, before the Hon’ble High Court. In the given situation, when the addition stood deleted we are of the considered view that Learned CIT(A) was justified in setting aside the rectification order whereby higher rate of tax as regards the above said sum of Rs. 3,96,05,000/- was applied, and in allowing the appeal filed by the assessee. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether the rectification order applying tax at the higher rate under section 115BBE on the amount earlier assessed as 'unaccounted on-money' could survive when the underlying addition of that amount had already been deleted by a coordinate bench of the Tribunal. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Sustainability of rectification applying section 115BBE after deletion of the underlying addition Legal framework (as discussed in the judgment): The Court considered the department's rectification under section 154 on the premise that the amount treated as undisclosed income (referred to as falling under section 69A) ought to have been taxed under section 115BBE at 60% rather than at 30% in the assessment order. Interpretation and reasoning: The Court proceeded on the admitted position that, subsequent to the assessment, a coordinate bench of the Tribunal had deleted the very addition of Rs. 3,96,05,000 relating to 'unaccounted on-money'. The department did not dispute the existence or effect of that deletion order, and it was also not the department's case that such deletion had been challenged further. In these circumstances, the Court held that once the foundational addition itself no longer survived, the rectification solely aimed at applying a higher tax rate to that deleted amount became untenable; the question of charging tax at 60% under section 115BBE was rendered irrelevant. Conclusions: The Court upheld the setting aside of the rectification order and affirmed that the appellate authority was justified in cancelling the section 154 rectification that had sought to apply section 115BBE to the deleted addition. The department's appeal was dismissed.