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Facts
During a search action on the Swastik Group, cash introductions of Rs.35,00,000/- were found in the assessee's capital account for AY 2009-10, which were not disclosed. The AO reopened the assessment under Section 147 of the Income Tax Act, 1961, and made an addition under Section 68 for unexplained cash credit. The CIT(A) dismissed the assessee's appeal due to non-compliance.
Held
The Tribunal held that the amount of Rs.35,00,000/- had already been offered for taxation by the Swastik Group in Settlement Commission proceedings and taxes were paid. Allowing the addition would amount to double taxation, which is impermissible. Therefore, the addition was deleted for ITA No.4705/M/2023.
Key Issues
Whether the addition of Rs.35,00,000/- as unexplained cash credit is sustainable when the amount was already offered to tax and taxes paid in settlement proceedings, leading to double taxation.
Sections Cited
147, 148, 151, 68, 250, 132, 265, 245D(1), 245D(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
These appeals have been preferred by the Assessee against the orders even dated 27.10.2023, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2009-10 & 2010-11.
Both the appeals having involved identical issues therefore for the sake of brevity the same are heard together and are being disposed of by this composite order by taking into consideration the facts and circumstances and issues involved in as a lead case. the Assessing Officer (AO) recorded the following reasons for reopening of the case u/s 147 of the Act, which read as under:
"A search action u/s. 132 of the Act was carried out in the case of Swastic Group of cases on 31.07.2014. During the course of search back up of computer server of the assessee was taken. From the printout taken from the said back up it is seen that Smt. Pranita Thakur has introduced cash of Rs.3,25,000/- on 15.05.2007 and Rs.5,00,000/- on 12.09.2007. There are also cash introduction of Rs.35,00,000/- in F.Y. 2008-09 and Rs.19,00,000/- in F.Y. 2009-10 and Rs.7,50,000/- during F.Y. 2010-11.
On verification of assessment records, it is noticed that, Mrs. Pranita Pankaj Thakur, the assessee, has not filed her return of income for A.Y. 2009-10 and the sources of cash introduced amounting to Rs.35,00,000/-has not been disclosed by the assessee to the department.
In view of non-filing of return of income for A.Y. 2009-10, the income of Rs.35,00,000/- have escaped assessment.
In view of the information/facts mentioned in paras 1,2,3 above, I have reason to believe that, an amount of Rs.35,00,000/- has escaped assessment due to failure on the part of the assessee to disclosed her income by filing return of income. Therefore, I am satisfied that, it is a fit case for issue of notice u/s. 148 of the IT Act, 1961. It is therefore, proposed to re-open the assessment u/s. 147 of the Act, if approved by the Joint Commissioner of Income Tax, Range-4, Thane as required u/s. 151 of the Act.”
4. The AO thus, on the aforesaid reasons recorded, reopened the case of the Assessee u/s 147 of the Act by issuing notice dated 28.01.2016 u/s 148 of the Act.
5. Thereafter, the AO issued various statutory notices to the Assessee, which were responded to by the Assessee.
6. The AO vide Assessment Order, ultimately made the addition of Rs.35,00,000/- u/s 68 of the Act being unexplained cash credit by perusing the documents, such as copy of return of income along with computation of income, bank statement, P & L account, balance sheet and schedule of capital account etc. as filed by the Assessee during the assessment proceedings and by holding that that the Assessee in a capital account available with M/s. Swastik Group as revealed during the course of search action, is having closing balance of Rs.35,00,000/- during the AY under consideration and has not offered any explanation or explanation offered is not acceptable and therefore the addition of Rs.35,00,000/- u/s 68 of the Act being unexplained cash credit is made.
5. Though the Assessee, being aggrieved, challenged the said addition by filing first appeal before the Ld. Commissioner, however, the Assessee eventually made no effective compliance and therefore in the absence of relevant submissions/documents and constrained circumstances, the Ld. Commissioner dismissed the appeal of the Assessee in limine but not on merit.
The Ld. Adv/Counsel Shri Shreyash Shah, at the outset, by drawing attention of this Court to specific para No.3 of the order of the Co-ordinate Bench of the Tribunal in A.Y. 2011-12, has demonstrated that the amount of Rs.35,00,000/- has already been subjected to tax in the M/s. Swastik Group cases as offered during the Settlement Commission by paying the due taxes thereon. Therefore, no such addition as made by the AO and affirmed by the Ld. Commissioner, is sustainable.
The Ld. D.R. though controverted the claim of the Assessee but not the order (supra) of the co-ordinate Bench of the Tribunal, for ready reference, relevant part of which, read as under:
“2. Briefly stated facts of the case are that the assessee filed its return of income electronically on 27.11.2012 declaring total income at Rs. 11,09,580/-. Subsequently, a search u/s 132 of Income Tax Act, 1968 [in short the ‘the Act’] was carried out in the case of ‘Swastik’ group of cases on 31.07.2014. The assessee individually was also part of the ‘Swastik’ group, who was engaged in the business of the real estate development and dealing in land and its development. On the basis of the documents seized from the premises of the ‘Swastik’ group, it was found that the assessee had a credit of some of Rs. 7,50,000/- in cash during the financial year 2010-11 relevant to the A.Y. under consideration in its capital account. According to the Ld.AO, sources of the said cash was not explained and therefore, he recorded reasons to believe that income was escaped assessment and issued notice u/s 148 of the Act on 28.01.2016. During the course of reassessment proceedings, the assessee explained that source of the cash was from cash transactions with the Swastik groups, but said explanation was not accepted by the assessing officer and addition of Rs.7,50,000/- was made u/s 68 of the Act. The Ld. CIT(A) also dismissed the appeal of the assessee.
We have heard rival submissions of the parties and perused the relevant materials on record. Before us, ld. counsel for the assessee submitted that said sum of Rs. 7,50,000/- was already been admitted as unexplained receipt of the ‘Swastik’ group and taken into consideration for the cash flow statement of the entire group and on the basis of said cash flow statement, the Swastik group offered income before the settlement commission and already paid the due taxes thereon. The Ld. Counsel for the assessee referred to the copy of the cash flow statement and highlighted the entry of Rs. 7,50,000/- pertaining to assessee in the cash flow statement. A copy of said cash flow statement is pertaining to the assessee is reproduced as under:
The Ld. Counsel further referred to the proof of submission of the cash book before the Income Tax Settlement Commission as Annexure A, which is available on paper book page No. 20. Further the Ld. counsel relied on the decision of the Coordinate bench in another entity of the Swastik group namely M/s. Swastik construction in ITAT No. 4818/Mum/2023 for A.Y. 2010- 11, wherein amount of the disclosure as part of the cash flow statement filed before the Hon’ble ITSC was accepted and no separate addition was made in the hands of said assessee. Therelevant part of the decision is as under:
“7. We find that the application filed before the Hon'ble ITSC was admitted vide order dated 26/12/2019 passed under section 245D(1) of the Act and subsequently, the order under section 245D(4) of the Act was passed by the Hon'ble ITSC on 25/09/2023. In order to substantiate the payment of tax by Sharp Realtors on the disclosure of additional income, the assessee has placed on record the details of the self-assessment tax paid and the copy of Form 26AS. We further find that all these details were also furnished before the learned CIT(A) and submission was made that the Swastik group has duly considered the amount of ₹21,65,000 for arriving at its taxable income while filing its application before the Hon'ble ITSC. However, we find that the learned CIT(A) merely proceeded on the basis that the taxpayers before the Hon'ble ITSC do not include the name of the assessee. Having considered the various details as noted above regarding the amount appearing in the loose sheets found during the search proceedings, we are of the considered view that since the amount of 21,65,000 has already been considered in the application filed before the Hon'ble ITSC by the Swastik group and the disclosure of additional income and the application has been accepted by the Hon'ble ITSC, the addition of the said amount of 21,65,000 in the hands of the assessee on account of entries appearing in the loose sheets will amount to double taxation which is completely impermissible. Therefore, we direct the AO to delete the impugned addition of 21,65,000 in the hands of the assessee as the same has already been offered to tax by the Swastik group and the due tax thereon has been paid. Accordingly, ground no. 2 raised in assessee's appeal is allowed.”
In view of the aforesaid discussion, we are of the opinion that when said amount of Rs.7,50,000/- has already been offered for taxation and considered in the combined cash flow statement for the Swastik group entity and said disclosure made by group has already been accepted by the Hon’ble ITSC and taxes have already been paid on said disclosure in the income finally computed by the ITSC. Therefore, in our opinion, no further addition is required to be made in the hands of the assessee. The said addition made of Rs.7,50,000/- by Ld.AO is accordingly deleted.”
The contention raised by the Assessee with regard to the addition of Rs.35,00,000/- which was also offered by M/s. Swastik Group in the Settlement Commission proceedings is having substance and genuineness as reflects from the said order of the co-ordinate Bench of the Tribunal and therefore sustaining the addition under consideration, will amount to double taxation, which is not permissible as per Article 265 of the Constitution of India. Thus, this Court is inclined to delete the addition under consideration by allowing the appeal of the Assessee. Consequently, the addition is deleted and appeal filed by the Assessee is allowed. the Ld. Counsel for the Assessee has honestly conceded that out of total amount of addition of Rs.19,10,000/-, somehow Rs.2,10,000/- remained to be offered for taxation, therefore, appropriate order can be passed, otherwise facts and circumstances and the issue involved are exactly similar as considered by the Co-ordinate Bench of the Tribunal as well as by this Court in ITA No.4705/M/2023.
The Ld. D.R. though supported the orders passed by the authorities below but not controverted the claim/submissions of the Ld. Counsel for the Assessee.
Thus, considering the peculiar facts and circumstances of the case in totality, as the amount of Rs.17,00,000/- (Rs.15,00,000/- + Rs.2,00,000/-) has also been offered by M/s. Swastik Group during the Settlement Commission proceedings and subjected to taxation and by paying the due taxes thereon, the addition to the extent of Rs.17,00,000/- is un-sustainable. Thus, the same is deleted by allowing the appeal of the Assessee in part.
However, the addition of Rs.2,10,000/- is sustained being not offered for taxation purposes by the Assessee or the M/s. Swastik Group. is partly allowed and is completely allowed.
Order pronounced in the open court on 16.09.2025.