2018 (11) TMI 630 - AT - Income Tax

Investment in property - Charge of income-tax - Year of assessment - investments in property made by the assessee in earlier years or in respect of deposits in bank accounts of the assessee made in earlier year which brought forward to this year - Held that - On perusal of Section 4(1) of I.T. Act, it is obvious that in the year under consideration, no addition can be made in respect of investments in property made by the assessee in earlier years or in respect of deposits in bank accounts of the assessee made in earlier year which brought forward to this year for making cheque payments of the aforesaid total amount of ₹ 6,05,100/-. Moreover, in any case, when certain amounts were invested by the assessee and also, certain other amounts were deposited in the bank account of the assessee, in previous years relevant to earlier A.Ys.; such investments or deposits could not possibly have been out of the income of the previous year under consideration (relevant to A.Y. 2009-10). It is well settled that each year is separate and self-contained period. Income Tax is annual in its structure and organization. Firstly, in computation of assessee s total income for the year under consideration, we direct the AO to delete the additions in respect of those amounts which were invested by the Assessee in earlier years i.e. before previous year 2008-09 relevant for A.Y. 2009-10. AO is directed to quantify this amount while giving effect to this order. Secondly, we also direct the AO to delete the addition amounting to ₹ 6,05,000/- which was made by the assessee during the year under consideration through cheque transactions of the assessee in her bank accounts in Allahabad Bank and Punjab National Bank; because, as stated earlier, it is not disputed that the assessee had sufficient deposits in her bank account at the beginning of the year to explain the source of aforesaid transactions by cheque. Thirdly, as far as investment totaling aforesaid amount of ₹ 6,53,100/- in cash is concerned, we restore the matter to the file of the AO with the direction to pass a fresh order on merits on this limited issue after considering the explanation of the assessee. At this stage we are expressing no opinion on merits of the explanation tendered by the assessee. AO will decide the issue on this limited point in accordance with law and facts of the case. This order is limited in its application to A.Y. 2009-10, which is the year under consideration for this appeal filed by assessee. Undisputedly, the investment in property has been made by the assessee partly in this year and partly in other years. Undisputedly deposits in the bank accounts of the assessee include deposits made in earlier years. Our observations, directions and order are applicable only for this particular appeal filed by assessee for A.Y. 2009-10. As no other appeal for any year is before us; we decline to express any opinion for any other year.

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Validity of additions made by the Assessing Officer (AO) regarding the source of investment in property.
3. Justification of partial relief granted by the Commissioner of Income Tax (Appeals) [CIT(A)].
4. Assessment of the source of investment in property and the related evidences provided by the assessee.
5. Reassessment of cash investments made during the year under consideration.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appeal by the assessee was filed late by 5 days. The assessee explained the delay was due to a bonafide belief that the appeal would reach the court in time, which was delayed due to speed post services. The tribunal found the reasons satisfactory and condoned the delay under Section 253(5) of the Income Tax Act (I.T. Act), admitting the appeal for adjudication on merits.

2. Validity of Additions Made by the AO Regarding the Source of Investment in Property:
The AO added ?55,39,100/- as the entire amount of investment in immovable property, noting the cost of the property and stamp duty. The CIT(A) partially upheld this addition, confirming ?38,58,100/- and deleting the rest. The assessee contended that the actual sole consideration of the property was ?35,00,000/-, with the higher value considered only for stamp duty purposes. The tribunal agreed that the investment made in earlier years should not be added in the year under consideration, emphasizing that each assessment year is separate and self-contained.

3. Justification of Partial Relief Granted by CIT(A):
The CIT(A) allowed partial relief by deleting part of the addition made by the AO but upheld ?38,58,100/-. The assessee argued that the CIT(A) erred in confirming the additions despite providing confirmation certificates, bank accounts, and source of income from the persons from whom the money was taken to invest in the property. The tribunal directed the AO to delete additions related to investments made in earlier years and cheque transactions adequately explained by the assessee's bank balances.

4. Assessment of the Source of Investment in Property and the Related Evidences Provided by the Assessee:
The assessee provided a detailed breakdown of payments made towards the property, including copies of bank accounts, confirmation from family members, and relevant judgments supporting their case. The tribunal noted that the total investment during the year was ?12,58,100/-, with ?6,05,100/- paid by cheque and ?6,53,100/- in cash. The tribunal found that the cheque payments were adequately explained by the brought forward opening balances in the bank accounts and directed the AO to delete these additions. The tribunal also restored the matter of cash investments to the AO for fresh consideration.

5. Reassessment of Cash Investments Made During the Year Under Consideration:
The tribunal directed the AO to pass a fresh order on the merits of the cash investment totaling ?6,53,100/-, considering the explanation provided by the assessee. The tribunal expressed no opinion on the merits at this stage, instructing the AO to decide the issue in accordance with the law and facts of the case.

Conclusion:
The tribunal concluded that the additions related to investments made in earlier years and adequately explained cheque transactions should be deleted. The matter of cash investments was remanded to the AO for fresh consideration. The tribunal emphasized that its observations and directions were limited to the assessment year 2009-10, with no opinion expressed for any other year.

Order Pronouncement:
The order was pronounced in the open court on 31/10/2018.

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