DCIT Vs Rathinam Prabakaran (ITAT Chennai)
ITAT Chennai Upholds Deletion of ₹2 Crore Loan Addition – Loan Already Taxed in Borrower’s Hands- Same Transaction Cannot Be Taxed Twice – Loan in Seized Material Belonged to Borrower, Not Assessee
Chennai ITAT examined Revenue’s appeal against deletion of addition of ₹2 crore as unexplained investment.
The Assessee, an individual & partner in money-lending firms, filed return declaring ₹5,08,180. AO reopened assessment u/s 147 on the basis that he advanced ₹2 crore loan to one Shri Seetharaman during FY 2014-15. Assessee denied the transaction, stating that it did not belong to him, and that Seetharaman had already offered such loan amounts before the IT Settlement Commission in AYs 2016-17 & 2017-18.
AO rejected this explanation & added ₹2 crore u/s 69 as unexplained investment. CIT(A) deleted the addition, holding:
- Seized material did not bear Assessee’s name.
- Seetharaman himself offered the transaction before ITSC & Revenue accepted it in his hands for AYs 2016-17 & 2017-18.
- AO cannot take contradictory stands by taxing same transaction in borrower’s hands for later years & again in lender’s hands for AY 2015-16.
On appeal, Revenue argued that reopening u/s 147 was valid even if material came from search, and that Seetharaman had not offered ₹2 crore for AY 2015-16.
