Income already assessed in the hands of third party cannot be re-assessed in the hands of assessee

Brief of the case:

The Hon’ble Kerala HC in the case of Jose Kuruvinakunnel vs. CIT held that the I.T Act does not envisage double taxation and assessment should be in the hands of the right person and that there cannot two assessments for the same income.

Facts of the case:

• During the course of assessment proceedings, AO made an addition of Rs. 3,00,000/- for the deposit made by the assessee in the bank account of Mr. Francis Joseph (brother in law of the assessee).
• Joseph given a statement to DDIT (Investigation) that the account was operated by assessee using the cheque leaves signed by him.
• AO however, did not make available Mr. Francis Joseph for cross examination.
• The addition made by AO was confirmed by CIT(Appeals) as well as Tribunal on the ground that since the assessee himself has accepted that the account of Mr. Joseph was operated by him then there is no need to produce Mr. Joseph for cross examination.
• The assessee against the order of tribunal is appeal before High Court.

Contention of Revenue:

• Since the assessee has himself accepted the account of Mr. Joseph was operated by him, department is not bound to present Mr. Joseph for cross-examination.
• And since the account was operated by assessee the incomes are assessable in his hands as the assessee has not put forth any material to prove that the incomes should not be assessed in his hand.
  

Contention of Assessee:

• When the Department proceeded to initiate action on the basis of the statement of Mr. Joseph, Department should have made available Mr. Joseph for cross examination.
• Further, the amount of Rs. 3, 00,000/- added in the hands of assessee has already been assessed in the hands of Mr. Joseph (the copy of such assessment order was also produced).
• Further, the bank account was though operated by assessee but the same for on the behalf of Mr. Joseph and for his benefit, that’s why all cheque leaves and pay in slips contained his signature.

Held by Hon’ble High Court:

• It is well settled that when the Department is proceeding against an assessee on the basis of the statement of a third party, it is necessary that the Department should make available that third party for cross examination and the burden to prove the allegation is also on the Department.

• But such principals not applicable to present case because assessee himself admitted that he had been operating the bank account of Mr. Joseph , therefore, department is not bound to present Mr. Joseph for cross examination.
• However, the contention of assessee that the same income as added in his hands has already been assessed in the hands of Mr. Joseph. Such contention of assessee has not been dealt properly by AO as well as CIT (A) & Tribunal.
• Apex Court in the case of ITO vs. Bachu Lal Kapoor Kewal Ram held that assessment should be in the hands of the right person and that there cannot two assessments for the same income.
• Placing reliance on the aforementioned judgement court held that assessment of same income in the hands of Mr. Joseph has attained finality and, therefore, cannot be re-assessed in the hands of assessee.
• In result the appeal filed by assessee was allowed.