Income Already Taxed cannot be Treated Again as Unexplained Cash Credit: ITAT [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT)held that income already taxed cannot be treated again as unexplained cash credit.

Dipakkumar Pushkarray Vyas,appellant-assessee, filed his return declaring income of Rs. 19,85,572 for the year 2012-13. The case was reopened after approval and notice under section 148 was issued in March 2019. He filed a revised return in April 2019 showing income of Rs. 19,81,572. Reasons for reopening were shared in June 2019 along with a notice under section 143(2). Further notices were issued, and the assessee provided information and objected to the reopening in November 2019.

The Assessing Officer (AO)found that Shripal Pravinchandra Shah, owner of M/s. Akshar Corporation, ran a bogus billing and accommodation entry business with no real sales or purchases. Transactions between the assessee’s firm, Krupa Jewellers, and Akshar Corporation were found to be sham. Bank records showed Rs. 41,99,500 debited from Krupa Jewellers’ account during 2012-13 linked to these bogus entries. The AO treated this amount as unexplained income and added it to the appellant-assessee’s total income.

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The assessee, being aggrieved by the assessment order, filed an appeal before the  Commissioner of Income Tax(Appeals)[CIT(A)]. The CIT(A) dismissed the appeal. The assessee  then appealed before the tribunal.

The two member bench comprising Dr.BRR Kumar(Vice President) and Suchitra Kamble(Judicial Member) heard both sides and reviewed the material on record. It noted that the assessee had submitted sale invoices, account copies, VAT returns, and bank statements to justify the sales. The AO did not question the sales or purchases, nor did he reject the books of account or stock details.

The assessee relied on a Gujarat High Court ruling in Vishal Exports Overseas Ltd., which held that income already offered to tax cannot be taxed again as unexplained cash credit.

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During the assessment, the assessee provided details of transactions with M/s. Akshar Corporation, along with purchase and sale records, closing stock valuation, and audit reports. These details were ignored by both the AO and the CIT(A).

The appellate tribunal found that the addition under section 68 was made only on the basis of third-party information without considering the assessee’s records. It held that the addition confirmed by the CIT(A) was not justified.

Therefore the appeal was partly allowed.

To Read the full text of the Order CLICK HERE

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