Case Law Details
Nitin Rekhan Vs DCIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, allowed the assessee’s appeal and held that adding an amount already disclosed as business profit and taxed in the return of income by treating it as undisclosed income amounted to double taxation.
The assessee had filed the return for Assessment Year 2013-14 declaring total income of Rs. 2,06,342/-. Following a survey under Section 133A in the case of another person allegedly engaged in providing accommodation entries through various concerns, the Assessing Officer (AO) reopened the assessment under Sections 147 and 148 on the ground that the assessee had obtained accommodation entries in the form of alleged bogus Bikri sales amounting to Rs. 16,05,826/- through M/s Gayatri Maa Enterprises.
The assessee contended that profit of Rs. 3,15,634/- arising from these Bikri sales had already been disclosed in the return of income and taxed after claiming deductions under Chapter VIA. The AO rejected this contention and treated the same amount of Rs. 3,15,634/- as undisclosed income under Section 28, increasing the assessed income. The Commissioner of Income Tax (Appeals) upheld the assessment.
Before the Tribunal, the assessee argued that the profit had already been offered to tax and any further addition of the same amount would result in double addition. The Revenue argued that income earned from alleged accommodation entries should be separately assessed as undisclosed income.
The Tribunal observed that the reassessment was based on information regarding alleged accommodation entries. It further noted that the assessee had already declared the profit arising from the disputed Bikri sales in the income tax return and had paid tax after claiming deductions available under Chapter VIA. Since the AO had accepted the existence of the declared profit but again added the same amount as undisclosed income, the Tribunal held that such an addition amounted to double addition, which was not permissible.
Accordingly, the Tribunal directed the AO to delete the addition of Rs. 3,15,634/-. Grounds relating to the addition were allowed, while the legal challenge to the reopening was treated as academic and was not adjudicated. The appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is filed by the assessee against order of Learned Commissioner of Income Tax (Appeals)-30, New Delhi dated 30.09.2025 u/s 250 of the Income Tax Act, 1961 (“the Act” in short) arising out of the assessment order passed u/s 147 r.w.s. 143(3) of the Act dated 30.03.2022 for Assessment Year 2013-14.
2. Briefly stated the facts are that the assessee has filed its return of income on 18.03.2015 declaring total income at Rs.2,06,342/-. The return was processed u/s 143(1) of the Act. Thereafter, subsequent to the survey action u/s 133A of the Act carried out by the Investigation Wing in the case of the Shri Ashok Kumar Gupta, it was found that he was engaged in providing accommodation entries of non-genuine purchases/sales including consignment/Bikri Sales through various concerns owned and operated by him. It was found that during the year under appeal assessee has taken the accommodation entry in the form of bogus Bikri through M/s Gayatri Maa Enterprises owned by Shri Ashok Kumar Gupta of Rs.16,05,826/-. Accordingly, after recording the reasons for reopening, the case of the assessee was reopened u/s 147 after obtaining the approval from PCIT u/s 151 of the Act. Thereafter notice was issued u/s 148 on 19.01.2021. In response, the assessee has filed the return of income on 06.02.2022 declaring total income at Rs.2,06,340/-. The assessee submit that from the transactions of Bikri sales with M/s Gayatri Maa Enterprises he has earned profit of Rs.3,15,634/- which has already been declared in the return of income filed, therefore, no addition is required to be made. However, the AO has not accepted the contention of the assessee and made the addition of the profit of Rs.3,15,635/- as undeclared income u/s 28 of the Act and, accordingly, the total income was assessed at Rs.5,21,974/-. Against the said order, the appeal was filed before who vide impugned dated 30.09.2025 has dismissed the appeal.
3. Aggrieved by the said order, the assessee filed the present appeal before the Tribunal by taking following the grounds of appeal:
“1. The action of the Learned AO in reopening the assessment proceedings under section 147/148 is illegal, arbitrary, unjust and against the facts of the case.
2. The action of the Learned AO in arbitrarily addition Rs.3,15,634.00 to the income of the appellant despite of the fact that Rs.3,15,634.00 has been already offered for taxation in the computation of income is illegal, arbitrary unjust and against the facts of the case.
3. The act of the Learned AO in enhancing the gross profit by Rs.3.15,634.00 is illegal, arbitrary, unjust and against the facts of the case.
4. The Appellant craves leave to add, modify, alter, or delete any ground of appeal, till the appeal is heard and disposed off.”
4 Before us, with respect of grounds of appeal No.2 & 3, the Ld. AR submits that the assessee has already disclosed the profits of Rs.3,15,634/- from the Bikri sales of Rs.16,05,826/- and after claiming the deduction in Chapter VIA, has declared the income of Rs. 2,06,340/-. The Ld. AR submits that assessee had already declared profit of such alleged as accommodation entries, therefore, further addition of the same amount tantamount to double addition and, therefore, requested for the deletion of the same.
5. On the other hand, the Ld. Sr. DR vehemently supported the order of the lower authorities and submits that once it is established that the assessee has taken accommodation entries of Bikri sales, the income earned from such ingenuine sales in the shape of commission/gross profit should be separately assessed as undisclosed income of the assessee and, therefore, the AO has rightly made the additions and he requested for the confirmation for the same.
6. Heard both the parties and perused the materials available on record. In the instant case, the reopening of the case of the assessee was done on the basis of the information that assessee has obtained accommodation entry of Bikri sales from M/s Gayatri Maa Enterprises operated by one Sh. Ashok Kumar Gupta engaged in providing accommodation entries for purchase/sales. It is further observed that the assessee has declared profit of Rs.3,05,633/- in the ITR field as on such Bikri sales of Rs.16,05,826/- made through M/s Gayatri Maa Enterprises. Despite of accepting such profits, the AO again made the addition of the said profit by treating it as undisclosed income of the assessee. Once the assessee has declared the profit from the sales of alleged Bikri sales in the ITR and after claiming the deduction available under Chapter VIA, has paid the taxes. Under these circumstances making further addition of the said profit as undisclosed income in the hands of assessee is double addition which is not permissible. Accordingly, we direct the AO to delete the addition made of Rs.3,15,634/- as the same has already been offered for tax by the assessee. Accordingly, ground of appeal Nos. 2 & 3 of the assessee are allowed.
7. Since, we have already deleted the additions made, therefore, the legal ground of appeal No.1 taken by the assessee become academic and not adjudicated.
8. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on 24.06.2026.
Author Bio
