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Challenge to addition of income from undisclosed sources in assessment for the assessment year 1976-77. Analysis: The appellant contested the addition of Rs. 35,000 as income from undisclosed sources in the assessment for the assessment year 1976-77. The dispute arose from the construction of a building where the appellant claimed to have invested Rs. 55,000 in 1974-75. The Income Tax Officer (ITO) estimated the investment at Rs. 60,000, leading to the addition of Rs. 45,000 as unexplained income. The Appellate Assistant Commissioner (AAC) later reduced the addition to Rs. 35,000 based on increased savings estimation. The appellant argued that the investment should be considered for the respective financial years, contending that the unexplained investment should have been distributed between 1974-75 and 1975-76. The Tribunal allowed this additional ground raised by the appellant, emphasizing the relevance of the financial year for unexplained investments under section 69 of the Income Tax Act. The Tribunal highlighted the importance of the financial year in determining unexplained investments under section 69 of the Income Tax Act. The appellant claimed to have invested Rs. 54,000 in 1974-75, following an accounting year from 1st July to 30th June annually. As per the appellant's submission and supporting documentation, the investment in question was made during the accounting period of 1st July, 1974, to 30th June, 1975. Since section 69 considers investments in a particular financial year, only investments made from 1st April, 1976, to 30th June, 1976, could be taxed. The Tribunal noted the absence of evidence regarding investments during this period, leading to the conclusion that no amount could be taxed under section 69 for the assessment year 1976-77, warranting the deletion of the addition made by the ITO and upheld by the AAC. Regarding the appellant's savings, the Tribunal considered the appellant's lifestyle, occupation, and family circumstances to determine the plausibility of the claimed savings. The appellant, an elderly individual residing in a small village with familial support and ancestral property, presented a case for substantial past savings. Given the appellant's simple lifestyle, long-standing business, and familial resources, the Tribunal found the appellant's assertion regarding the source of funds credible and acceptable. Consequently, the Tribunal allowed the appeal, concluding that the addition of Rs. 45,000 made by the ITO should be entirely deleted. In conclusion, the Tribunal allowed the appeal, deleting the addition of Rs. 45,000 as income from undisclosed sources in the assessment for the assessment year 1976-77. The decision was based on the interpretation of section 69 of the Income Tax Act, emphasizing the relevance of the financial year for taxing unexplained investments and considering the appellant's circumstances and past savings in reaching a favorable judgment.
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