No Separate Tax Addition On Cash Already Owned By Group Company: ITAT New Delhi

On 16 April, the New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that once cash seized during search proceedings has already been owned and taxed in the hands of a group company before the Settlement Commission, authorities cannot again add the same amount in the hands of an individual, even if it was found in a locker held in his name.

The Bench comprising Accountant Member S. Rifaur Rahman and Judicial Member Vimal Kumar dismissed the Revenue's appeal against Lalit Kumar Taluja for Assessment Year 2020–21, holding:

“no doubt there was some cash found in the Locker No.75 maintained with HDFC Bank and the locker was owned by the assessee. The assessee, being the employee of the group company, the group company had owned up the above said cash kept in the abovesaid locker and the issue was settled before the IBS. Since the above cash owned up by the company, the same addition cannot be made in the hands of the assessee even though the assessee is not one of the applicants before the IBS. Therefore, we do not see any reason to disturb the findings of the ld. CIT (A).”

The case arose from a search under Section 132 of the Income Tax Act, 1961, during which officials found cash amounting to Rs. 99.98 lakh in a bank locker held in the Lalit Kumar Taluja's name.

The Assessing Officer treated the amount as unexplained money under Section 69A and taxed it under Section 115BBE. The Revenue argued that the Commissioner (Appeals) wrongly relied on the Settlement Commission's order, as the taxpayer was not a party to those proceedings and had not filed any application before the Interim Board of Settlement.

Taluja submitted that the group company had already admitted ownership of the cash before the Settlement Commission and settled the issue. Since the company owned the cash, the authorities could not tax the same amount again in the individual's hands, as it would result in double taxation.

The Tribunal accepted Taluja's contention and held that once the group company had already established and accepted ownership of the cash before the Settlement Commission, authorities could not make a separate addition in the hands of the individual under Section 69A, even though the locker stood in his name.

Accordingly, the ITAT dismissed the Revenue's appeal.

For Appellant: KVSR Krishna, Advocate

For Respondent: Harpreet Kaur Hansra, Sr. DR