No Double Taxation on Protective Addition: ITAT Lucknow Upholds Deletion of Rs. 2.29 Crore Addition in Benami Property Case

Case Overview

Case: ACIT Vs Vicky Bahal
Forum: Income Tax Appellate Tribunal, Lucknow
**ITA No.😗* 107/Lkw/2024
Assessment Year: 2017-18
Order Date: 07.04.2026

The Income Tax Appellate Tribunal (ITAT), Lucknow, delivered a significant ruling reaffirming a foundational principle of Indian tax law — that the same income cannot be subjected to taxation twice, whether in the hands of the same assessee or in the hands of two different assessees. The Tribunal dismissed the Revenue's appeal and upheld the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which had deleted a protective addition of Rs. 2,29,13,360/- made under Section 69 of the Income Tax Act, 1961.

Background and Facts of the Case

The Property Transaction

The case revolved around the purchase of a residential property located at 385 (Part), Moti Nagar, Lucknow. The property was registered in the name of Shri Vicky Bahal (the assessee), who himself admitted during assessment proceedings that he was merely a benamidar — meaning he held the property on behalf of the real beneficial owner, Shri Virendra Kumar Gupta.

According to the assessee, the property was purchased from Shri Raj Singh on 28.10.2016 for a sale consideration of Rs. 84,36,000/-, against a stamp duty value of Rs. 84,35,812.50/-. The funds used for this purchase were obtained by the assessee as an unsecured loan from Shri Virendra Kumar Gupta, who made payment directly to the seller on behalf of the assessee after deducting applicable taxes.

The Assessment Order

The Assessing Officer passed an assessment order dated 31.12.2018 under Section 143(3) of the Income Tax Act, 1961, assessing the total income of the assessee at Rs. 2,42,62,720/-, as against the returned income of merely Rs. 13,49,360/-.

The Assessing Officer made an addition of Rs. 2,29,13,360/- under Section 69 of the Act, treating the investment in the property as unexplained investment. However, this addition was made on a protective basis, since the identical amount had already been added on a substantive basis in the case of Shri Virendra Kumar Gupta — identified as the beneficial owner — by the adjudicating authority under the Prohibition of Benami Property Transactions Act, 1988.

The relevant extract from the assessment order reads as follows:

"The fact of the matter remains that he himself has admitted that he is benamidar of this property whereas Shri Virendra Kumar Gupta is the beneficial owner. In this background the proceedings under Prohibition of Benami Property Transactions Act, 1988 are separately under progress. In view of this the sources of investment are required to be looked into the case of Shri Virendra Kumar Gupta. However as the purchase deed has been made in the case of Shri Vicky Bahal the addition of the unexplained investment is also to be made in the case of Shri Vicky Bahal u/s 69 of I.T.Act although on protective basis."