Correct assessment year principle deletes addition where share investment is proved to belong to an earlier year.

An investment or receipt must be taxed in the correct assessment year, and where evidence shows the transaction belongs to an earlier year, no addition can be sustained in the year under appeal. The assessee supported the purchase of 5,000 shares with a contract-cum-bill, ledger account and IDS disclosure, establishing that the shares were acquired on 02.07.2010 in an earlier year. On that record, the Tribunal accepted that the investment did not relate to the year under consideration and deleted the addition as unaccounted investment.

---

---

Issues: Whether the addition of Rs. 2,30,806 as unaccounted investment in the relevant assessment year was sustainable when the shares were shown to have been purchased in an earlier year.

Analysis: The assessee produced the contract-cum-bill, ledger account and IDS disclosure to establish that 5,000 shares of Alpha Graphics were purchased on 02.07.2010, which fell in an earlier assessment year. On the record, the Tribunal accepted that the investment related to that earlier year and not to the year under consideration. The Tribunal also applied the principle that an item of income or investment must be assessed in the correct year of taxability and cannot be brought to tax in a different year merely because it is noticed later.

Conclusion: The addition of Rs. 2,30,806 was deleted and the assessee succeeded on this issue.

Ratio Decidendi: An investment or receipt must be brought to tax in the correct assessment year, and where the evidence shows that the transaction belongs to an earlier year, no addition can be sustained in the year under appeal.

---