Once Additions Made Under Black Money Act The Same Addition Cannot Be Made Under Income Tax Act: ITAT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that once additions have been made under the Black Money Act, the same additions cannot be made under the Income Tax Act on the same set of facts.

The bench of C.N. Prasad (Judicial Member) and N.K. Billaiya (Accountant Member) has upheld the order of the CIT(A), in which it was held that the addition so made by the AO amounts to double addition and, therefore, it should be deleted.

A search and seizure operation was carried out on April 7, 2016. The statutory notices were issued and served on the assessee. During the course of the assessment proceedings, certain information was available on the website of the International Consortium of Investigative Journalists (ICIJ) regarding Indians having undisclosed foreign companies and assets offshore. An investigation was carried out by the Investigation Wing, Delhi, which revealed that the assessee was the director and shareholder of a BVI company, namely M/s. Everbez Business Inc. The assessee was asked to explain his relationship with the company, and he submitted that he has neither been a beneficial owner, trustee, or settler in any foreign entity nor has he had a foreign bank account after April 1, 1997.

The information was received from the BVI under the tax information exchange agreement. Thereafter, information was also received from a competent authority in Singapore, who informed that the company, M/s. Everbez Business NIC, had one bank account with UBS AG Singapore, dealing in three foreign currencies.

The AO held that proceedings under the Black Money (Undisclosed Foreign Income and Assets) and imposition of the Tax Act 2015 (BM Act) have also been initiated after examining the details, including the information relating to the incorporation of the BVI company Everbez Business Inc. According to Ashok Kmar Singh, unexplained credits in the bank account of Everbez Business Inc. are being added to his income for AY 2013–14 u/s. 68 r.w.s. 115BBE of the Income-tax Act, 1961. Accordingly, penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961, were initiated separately.

The assessee challenged the matter before the CIT(A) and convinced the CIT(A) that the addition so made by the AO amounts to double addition and, therefore, the same should be deleted.

The CIT (A) deleted the addition of Rs. 2,43,11,824.

The department contended that the additions made under the Black Money Act are subjudice before the first appellate authority and that to safeguard the interests of revenue, a protective addition has been made under the Income Tax Act.

The tribunal dismissed the appeal filed by the department.

Case Title: DCIT Versus Ashok Kumar Singh

Case No.: ITA No.426 & 427/Del/2022

Date: 13/04/2023

Counsel For Appellant: B. S. Anand

Counsel For Respondent: Gautam Jain

Click Here To Read The Order