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of <h1>Tribunal rules in favor of assessee, overturning addition for unexplained investment & directing deduction for municipal tax.</h1> <h3>C VEERAPPA. Versus INCOME TAX OFFICER.</h3> The Tribunal allowed the appeal in favor of the assessee, deleting the addition of Rs. 40,000 as unexplained investment and directing the ITO to allow the ... - Issues:1. Dispute over unexplained investment of Rs. 29,287 and deduction of municipal tax.Detailed Analysis:1. The individual assessee disputed an unexplained investment of Rs. 29,287 and the deduction of municipal tax. The Income Tax Officer (ITO) found that the assessee could only save Rs. 8,713 from agricultural income, reducing the unexplained investment to Rs. 29,287. The ITO also added Rs. 29,287 as unexplained investment from house property income, as the assessee was deemed unable to save any amount from it.2. The assessee appealed to the Appellate Assistant Commissioner (AAC), arguing that the investment in the house was made from agricultural and house property income, totaling Rs. 40,000. The AAC found that the possible saving from agriculture for the relevant year was Rs. 1,000 and that the ITO did not consider any saving from house property. The AAC reduced the addition by Rs. 3,000, confirming the unexplained investment at Rs. 26,287. The assessee provided various documents to support the claim, showing salary received, income tax paid, agricultural income, and certificates from relevant authorities.3. The assessee invested Rs. 40,000 in the house construction, received Rs. 1,73,955 as salary from 1962-63 to 1974-75, and had agricultural income supported by certificates from authorities. Considering the lack of further substantial investments and the combined income sources, the Tribunal found that the assessee could have invested Rs. 40,000 from his own sources, thus deleting the addition of Rs. 40,000.4. The assessee contested the AAC's decision to allow a deduction of only Rs. 8 for municipal tax instead of Rs. 895. The assessee provided receipts showing payment of Rs. 895 as municipal tax related to the property generating income. The Tribunal directed the ITO to allow the deduction of Rs. 895, correcting the error in the initial deduction allowed by the AAC.5. The Tribunal allowed the appeal in favor of the assessee, considering the explanations and evidence presented, and adjusting the deductions accordingly.
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