2025 (6) TMI 939 - AT - Income Tax

Income Tax Appeal Succeeds: Medical Reasons Validate Late Filing, Retirement Funds Recognized as Legitimate Investment Source

ITAT Kolkata allowed taxpayer's appeal against income tax disallowance. Despite 12-day appeal delay, medical grounds justified extension. Tribunal found ... Disallowance of investment by the assessee in LIC - assessee is a retired employee of Government of India and received retirement benefits - HELD THAT:- Assessee invested ₹ 30 lacs in I-Core Services Ltd through account payee cheque. On the same day the assessee bought LIC (in two installments by account payee cheques drawn non SBI). Thereafter, at the time of maturity of FDR with I-Core Services Limited a cheque was issued dated 04.01.2013, which got bounced. Thereafter, the assessee was paid a cash and out of the said cash, the assessee paid LIC instalments which according to AO is unexplained and added to the income of the assessee . In our opinion, the addition made by the ld. AO and confirmed by the ld. CIT(A) is wrong and cannot be sustained on the basis of the facts available before us, which were duly corroborated with the evidences filed by the assessee as observe that assessee has sufficient sources available with him to make the investment in the LIC, which was apparently out the cash received from I-Core Services Limited. Accordingly, set aside the order of ld. CIT(A) and direct the ld. AO to delete the addition. Appeal of the assessee is allowed. The Appellate Tribunal (ITAT Kolkata) allowed the assessee's appeal against the order of the National Faceless Appeal Centre (Ld. CIT(A)) dated 13.08.2024 for AY 2013-14, which had confirmed the disallowance of Rs. 16,36,800 as unexplained investment under section 69 of the Income Tax Act. The assessee, a retired Government employee, had invested in LIC partly through cash, which the AO disallowed after reopening the case under section 147/148, treating the cash investment as unexplained.The Tribunal noted a 12-day delay in filing the appeal but condoned it on medical grounds. On merits, it was held that the addition was unsustainable because the assessee had adequate and legitimate sources of funds-retirement benefits and an investment in I-Core Services Ltd-corroborated by documentary evidence including bounced cheque details and subsequent cash receipts. The Tribunal concluded that the cash used for LIC installments was explained and directed the AO to delete the addition. The appeal was therefore allowed.