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Facts
The appeal by the department challenges an order by CIT(A) which allowed the assessee's appeal and set aside a rectification order. The rectification order was passed to correct the tax rate applied to unaccounted income from 30% to 60% under Section 115BBE.
Held
The Tribunal held that since a co-ordinate bench had already deleted the addition of Rs. 3,96,05,000/- in a prior appeal (ITA No. 587/JP/2024), the subsequent rectification to apply a higher tax rate was unjustified. Consequently, the CIT(A)'s order setting aside the rectification was upheld.
Key Issues
Whether a rectification order applying a higher tax rate is justified when the original addition was deleted by a co-ordinate bench of the Tribunal in a previous appeal.
Sections Cited
250, 154, 153C, 143(3), 153B(1)(b), 115BBE, 132(1), 139, 143(2), 142(1), 69A, 132(4), 131
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”A-Bench” JAIPUR
vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER . By way of this appeal, department has challenged order dated 24.06.2025, passed by Learned CIT(A), Udaipur-2 passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
Vide impugned order, Learned CIT(A) has allowed the appeal filed by the assessee-respondent herein, and set aside the rectification order dated
Arguments heard. File perused.
Assessment Order
As per record, vide assessment order dated 27.12.2019, the Assessing Officer computed total income of the assessee, relating to the assessment year 2018-19 as under:-
“ 7. After examination of the information and details placed on record, the total income of the assessee is computed as under:-
Gross Income Rs. 6,27,307/- Deduction under Chapter VIA Rs. 0 Unaccounted on-money Rs. 3,96,05,000/- Disallowance of expense Rs. 24,253/- Net Income Rs. 4,02,56,560/- Assessed total income Rs. 4,02,56,560/- R/o Rs. 4,02,56,560/-
Subsequently, order dated 28.02.2023 u/s 154 of the Act came to be passed, rectifying the abovesaid assessment order dated 27.12.2019, and thereby total income of the assessee was computed as under:-
Assessed income as per order u/s 153C read with Rs. 4,02,56,560/- section 143(3) r.w.s. 153B(1)(b) of the Income Tax Act, 1961 dated 27.12.2019.
Demand raised as per original order Rs. 1,66,20,550/- Total demand raised after charging tax as per Rs. 3,70,55,474/- provision of section 115BBE of the IT Act on the undisclosed income of Rs. 3,96,05,000/- Assessee challenges the Rectification Order
The assessee-respondent herein felt aggrieved by the rectification order and challenged the same.
Rectification Order is set aside
Vide impugned order, Learned CIT(A) set aside the rectification order by observing as under:-
Srishti Associates, Kota. “During the course of appellate proceedings, the appellant submitted that the matter is squarely covered by the decision of the Hon'ble Income Tax Appellate Tribunal, Jaipur Bench in (Srishti Associates vs. ACIT, Central Circle, Kota), dated 16.07.2024. In that case, the Hon'ble ITAT held:
"........... It is pertinent to state that when person has not stated anything about the assessee in his statement recorded u/s 132(4) of the Act during search operation which has a evidentiary value in the eyes of law then any further statement recorded u/s 131 of the Act that too after Hon'ble ITSC order, it shall not be sufficient to make addition in the assessee's case. In view of the factual matrix, we hold that the Id CIT(A) has erred in SRISHTI ASSOCIATES VS ACIT, CENTRAL CIRCLE, KOTA confirming the addition in all the four years. In this view of the matter, the appeals of the assessee are allowed."
The Hon'ble ITAT, Jaipur has deleted the addition of Rs. 3,96,05,000/- made in the hands of the appellant. As the addition made by the Assessing Officer has been deleted by Hon'ble ITAT, Jaipur bench, so chargeability of 60% tax u/s 115BBE is not relevant now. Accordingly, the ground of appeal raised by the appellant is allowed, and the addition made is hereby deleted.
Hence, the ground of appeal filed by the appellant is allowed.”
Admittedly, assessment proceedings were initiated against the assessee on the basis of outcome of a search and seizure operation u/s 132(1) of the Act, carried out on 07.09.2017, at various premises of “Resonance Group, Kota”, to which the assessee belongs.
As per case of the department cash, jewellery and other documents were found and seized from some persons, residence and business Srishti Associates, Kota. premises ; that some documents/informations seized/collected from others, were found relating to transactions carried out with the assessee or having effect on the total income of the assessee. That is how, notice u/s 153C was issued to the assessee.
On 30.10.2018, the assessee filed return of income u/s 139 of the Act, declaring its total income at Rs. 6,27,310/-.
Notices u/s 143(2) and 142(1) of the Act were issued by the department to the assessee. The assessment proceedings led to passing of the assessment order dated 27.12.2019, whereby total income of the assessee was assessed at Rs. 4,02,56,560/-, including one of the additions i.e. Rs. 3,96,05,000/- made due to “unaccounted on-money” said to have been received in cash against sale of certain flats.
Admittedly, subsequent to the passing of the assessment order, notice dated 15.02.2023 was issued by the department to the assessee thereby informing that a mistake had crept in the assessment order dated 27.12.2019 i.e. the above said income of Rs. 3,96,05,000/-, on account of “unaccounted on-money” having been treated as undisclosed income as per provisions of section 69A of the Act, which was actually required to be taxed as per provisions of section 115BBE of the Act i.e. @ 60%, but the
The assessee filed its reply to the above said notice dated 15.02.2023.
Ultimately, rectification order dated 28.02.2023 was passed while observing that the mistake was apparent from record calling for rectification u/s 154 of the Act, as regards applicability of the provisions of section 115BBE of the Act, as regards the above said undisclosed income of Rs. 3,96,05,000/-.
As noticed above, when the assessee challenged the rectification order, Learned CIT(A) allowed said appeal and set aside the rectification order taking into consideration, the submission on behalf of the assessee that while deciding filed by the assessee, Co- ordinate Bench, ITAT, Jaipur Benches had deleted the above said addition of Rs. 3,96,05,000/-.
As a result, Learned 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”.
Srishti Associates, Kota. 11. In the course of arguments, Ld. DR for the department-appellant has not disputed passing of order dated 16.07.2024, by the Coordinate Bench of ITAT, Jaipur Benches, in and that thereby the above said addition of Rs. 3,96,05,000/- stands deleted.
It is not a case of the department that the order dated 16.07.2024, passed by the Coordinate Bench in has been challenged by the department, before the Hon’ble High Court.
In the given situation, when the addition of Rs. 3,96,05,000/- stood deleted vide order dated 16.07.2024, passed by the Coordinate Bench, ITAT Jaipur Benches, we are of the considered view that Learned CIT(A) was justified in setting aside the rectification order dated 28.02.2023, 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.
No other argument has been advanced before us from any side.