2024 (5) TMI 1075 - AT - Income Tax

Addition u/s 69 - Addition based on assessee made disclosure of his income during the course of survey operations - AO taxed this amount u/s 115BBE - CIT(A) confirmed the addition by holding that the appellant had failed to explain the source of investment - HELD THAT - Both the AO as well as the CIT(A) had fell in serious error in resorting to the provisions of section 69, inasmuch as, the investments were not made during the previous year relevant to the assessment year under consideration. No doubt, the admission is extremely an important piece of evidence but it cannot be said that it is conclusive as observed in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala 1971 (9) TMI 64 - SUPREME COURT It is always open to an assesee to show that it is incorrect. From the material on record, it is patently clear that the acquisition of assets in respect of which the addition was made were acquired prior to the previous year relevant to the assessment year under consideration. Therefore, provisions of section 69 cannot be invoked for the year under consideration. The question of offering any explanation in support of the source for the acquisition of the said assets does not arise for the year under consideration as said investment was not made during the previous year relevant to the assessment year under consideration. Therefore, the reasoning adopted by the CIT(A) is totally contrary to the settled position of law, which cannot be appreciated/sustained. Assessee appeal allowed.

Summary

Issues:
1. Addition on account of unexplained investments made by the assessee.
2. Delay in filing the appeal and condonation of the same.

Analysis:

Issue 1: Addition on account of unexplained investments made by the assessee

The appellant, an individual engaged in the Medical Profession, filed a Return of Income for the A.Y. 2018-19, initially declaring an income of Rs. 66,07,520/-. Subsequently, a survey operation was conducted, resulting in a revised income declaration of Rs. 38,96,920/-. The Assessing Officer (AO) completed the assessment at a total income of Rs. 38,18,920/-, including an addition of Rs. 9,80,780/- for unexplained investments. The appellant contested this addition before the CIT(A), arguing that the investments were not made during the relevant previous year and therefore should not be taxed. However, the CIT(A) upheld the addition, citing the appellant's failure to explain the source of the investment. Upon appeal to the Tribunal, it was observed that the assets in question were not acquired during the relevant previous year and that invoking section 69 for the addition was erroneous. The Tribunal referenced legal precedents to emphasize that an admission, while important, is not conclusive and can be challenged. Consequently, the Tribunal set aside the lower authorities' orders and directed the AO to delete the addition of Rs. 9,80,780/-, ruling in favor of the appellant.

Issue 2: Delay in filing the appeal and condonation

The Tribunal noted a delay of 408 days in filing the appeal and considered the appellant's affidavit seeking condonation of the delay. The appellant attributed the delay to the Chartered Accountant's health issues, supported by an affidavit from the CA citing medical treatment for prostate cancer as the reason for the delay. After examining the facts and legal principles governing the condonation of delay, the Tribunal found the explanation satisfactory and decided to condone the delay, emphasizing the importance of substantial justice over technical considerations. The Tribunal highlighted that delay does not necessarily imply deliberate action or negligence, ultimately ruling that the delay in filing the appeal should be condoned.

This detailed analysis of the legal judgment highlights the key issues, arguments presented, legal principles applied, and the ultimate decision rendered by the Appellate Tribunal ITAT Pune in the case.