2022 (7) TMI 1299 - AT - Income Tax

Tribunal Allows Appeal, Finds Investment from Own Savings, Overturns AO Decision

The Tribunal condoned the delay in filing the appeal due to valid reasons, allowed the appeal, and adjudicated on merits. It found the investment in land ... Additions towards unexplained investment in land - as per assessee sources for the same is out of earlier period savings in salary derived from Yugaandhar Housing Private Limited and also current year salary - HELD THAT:- Admitted facts are that the assessee’s sources of income from salary Rs. 18 lakhs was not disputed by the AO and the Ld. AO has considered Rs. 13 lakhs as surplus available for investment made by the assessee. It is observed that the AO has not given any credit for the savings made by the assessee out of the salary income earned during the earlier years. We find merit in the argument of the AR that the amount is met out of the own savings of the assessee and cannot be treated as unexplained investment. AO has merely stated that the savings from salary earned in the previous years is not acceptable and hence could not be treated as investment in the immovable properties. AO has considered a surplus balance available with the assessee Rs. 13 lakhs out of the salary income of Rs. 18 lakhs earned during the current Financial Year but has failed to appreciate the fact that the similar savings shall be available with the assessee for the earlier assessment years. We are of the considered view that the mere assumption of the AO that the assessee was not having sufficient accumulated cash balances out of the salary income earned during the earlier years is not acceptable and therefore we hereby quash the orders of the Ld. Revenue Authorities and allow the appeal of the assessee. Issues:1. Condonation of delay in filing the appeal before the Tribunal.2. Addition of unexplained investment in land by the Assessing Officer.3. Consideration of savings from salary income for investment in immovable property.4. Dismissal of the appeal by the Ld. CIT(A) without considering merits.Condonation of Delay:The appeal filed by the assessee before the Tribunal was delayed by 31 days. The Ld. AR explained that the delay was due to the shifting of the office and change of address, which caused a delay in receiving the CIT(A)'s order. The Tribunal, after reviewing the affidavit and reasons provided, condoned the delay as there was a reasonable cause for the delay, allowing the appeal to be adjudicated on merits.Unexplained Investment in Land:The case involved a Director in a company who declared a total income and faced a search operation under section 132 of the Income Tax Act. The Assessing Officer (AO) made additions to the income of the assessee as unexplained money under section 69 of the Act. The Ld. CIT(A) dismissed the appeal as the assessee did not provide necessary details. However, the Tribunal found that the AO did not consider the savings made by the assessee from salary income in earlier years. It was held that the amount invested in immovable property was from the own savings of the assessee and not unexplained. The Tribunal quashed the orders of the Revenue Authorities and allowed the appeal.Savings from Salary Income for Investment:The assessee, a salaried employee, derived income from salary, and the investment in immovable property was explained to be from funds available from salary income and savings from earlier years. The Ld. AO did not credit the savings from previous years, leading to the dispute. The Tribunal accepted the argument that the investment was from own savings and not unexplained. It was noted that the AO failed to consider the accumulated cash balances from salary income earned in earlier years, leading to the decision in favor of the assessee.Dismissal of Appeal Without Considering Merits:The assessee raised various grounds of appeal challenging the orders of the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal without considering the merits of the case. The Tribunal, after hearing both sides and reviewing the material, found in favor of the assessee, highlighting that the AO's assumption regarding the availability of accumulated cash balances from salary income earned in earlier years was not acceptable. Consequently, the Tribunal allowed the appeal of the assessee, overturning the decisions of the Revenue Authorities.This detailed analysis of the judgment from the Appellate Tribunal ITAT VISAKHAPATNAM highlights the key issues, arguments presented, and the ultimate decision rendered in favor of the assessee.