23/09/2026
SAME CASH DEPOSIT TAXED TWICE — ITAT SURAT DELETES ₹31.69 LAKH ADDITION
A recent ITAT Surat ruling has highlighted an important issue: the same income cannot effectively be taxed in the hands of two different assessees.
In Usha Jewellers vs ITO, AY 2017-18, the partnership firm was dissolved on 31 October 2016. From 1 November 2016, the same business continued as a proprietorship concern of Shri Harsukhbhai Parshottambhai Soni.
Cash deposits of ₹31,69,500 were made on 10, 11 and 22 November 2016 — after the firm had already been dissolved. The amount was subsequently disclosed and assessed as undisclosed income in the hands of the successor proprietor.
However, the same ₹31,69,500 had also been added in the assessment of the erstwhile partnership firm under Section 69A.
The assessee approached the department under Section 154, pointing out that the very same deposits had already been taxed in the hands of the successor proprietor.
The ITAT found that the records clearly established:
• The partnership firm had dissolved on 31 October 2016
• The deposits were made after dissolution
• Separate books were maintained for the firm and proprietorship
• The same ₹31,69,500 had already been disclosed and assessed in the proprietor’s hands
The Tribunal held that retaining the same addition in the hands of the firm would result in the same income being assessed in the hands of two different assessees.
It therefore held the mistake to be apparent from the record and rectifiable under Section 154, directing deletion of the ₹31,69,500 addition.
Important takeaway for taxpayers and professionals:
If the same income or transaction has genuinely been taxed in the hands of another assessee, the assessment records and supporting documents should be carefully examined before accepting a second taxation of the identical amount.
Case: Usha Jewellers vs ITO
ITAT Surat | AY 2017-18
Addition deleted: ₹31,69,500
Section involved: 69A and 154
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