Assessee who is regularly filing income tax returns, would have in possession of certain amount of past savings/accumulated funds – ITAT
In a recent judgment, the ITAT Raipur has held that assessee who is regularly filing income tax returns, would have in possession of certain amount of past savings/accumulated funds.
ABCAUS Case Law Citation:
4347 (2024) (12) abcaus.in ITAT Raipur
In the instant case, the assessee had challenged the order passed by the CIT(A), NFAC in sustaining addition on the count of unexplained investment u/s 69 of the Income Tax Act, 1961 (the Act).
The AO based on information that the assessee had purchased a piece of land along with two other co-owners for a consideration of Rs. 30 lacs and also incurred cost of Rs.2,75,500/-, reopened his case u/s. 147 of the Act.
During the course of assessment proceedings, the AO called upon the assessee to put forth an explanation as regards the source of his share of investment (1/3rd share). In reply, it was the claim of the assessee that the aforesaid investment was primarily sourced out of housing loan wherein his share in the borrowed funds was 33.33% of the total borrowing. Also, it was submitted by the assessee before the A.O that the balance investment in cash was sourced out of his past/accumulated savings.
However, as the copy of bank statement of the loan account revealed that the loan was not sanctioned in the name of the assessee therefore, the AO did not find any substance in the claim of the assessee that investment towards purchase of the subject property was partly sourced by raising loan from the bank. Further, the AO in absence of any supporting documentary evidence rejected the assessee’s claim as regards the source of the balance amount of investment.
Accordingly, the AO vide his order passed u/s. 147 r.w.s. 144 r.w.s. 144B of the Act after making an addition towards unexplained investment u/s 69 of the Act.
The CIT(Appeals) partly allowed the appeal of the assessee and deleted the addition to the extent of loan taken from bank but sustained the addition for investment claimed to havd been made out of past savings.
Before the Tribunal, the assessee submitted that the the assessee had been filing his income tax returns for the last ten years and was engaged in the business of retail trading of items related ready to eat foods items, packed food items etc. It was contended that the balance amount of investment in the subject property was sourced out of past/accumulated savings and income derived by the assessee during the current year.
The Income Tax Department contended that as the assessee had for the year under consideration filed his return of income declaring a meagre income, therefore, his claim as regards the availability of a substantial amount of cash in the form of past savings/accumulated funds did not merit acceptance.
The Tribunal observed that though the assessee had failed to substantiate the claim of past savings based on any irrefutable documentary evidence, however, as the assessee had been filing his income tax returns since last ten years he would have in possession of certain amount of past savings/accumulated funds.
In view of the facts of the case, the Tribunal opined that the assessee can safely be held to be in possession of cash amounting to Rs.1 lac at the time of making the subject cash payments.
Accordingly, the order of the CIT(Appeals) was modified and the addition was scaled down by Rs. one lakh.
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