27.
[2019] 200 TTJ (Del.) 375 Km. Preeti Singh vs. ITO ITA No. 6909/Del./2014 A.Y.: 2009-10 Date of order: 31st October,
2018;
Section 69 – No addition u/s 69 could be
made in year under consideration in respect of investment in immovable property
made in earlier year(s)
FACTS
The AO made an
addition of Rs. 55.39 lakhs while completing the assessment, being the entire
amount of investment in immovable property. The aforesaid amount of Rs. 55.39
lakhs consisted of cost of property of Rs. 51.86 lakhs and stamp duty of Rs.
3.53 lakhs. The investment made by the assessee during the year under
consideration was only Rs. 12.58 lakhs. The remaining amount of investment was
made in the earlier year(s) for which no addition could be made in the year
under consideration. The assessee
submitted that the aforesaid investment of Rs. 12.58 lakhs during this
year included Rs. 6.05 lakhs by cheque out of the assessee’s bank account and a
payment of Rs. 6.53 lakhs made in cash. The assessee provided copies of the
accounts from the books of the builder from whom the property was purchased.
She also provided copies of statements of bank accounts. The assessee showed
that there were sufficient deposits in her bank accounts carried forward from
the earlier year to explain the source of the aforesaid cheques. The brought
forward opening balance at the beginning of the year in the bank accounts of
the assessee had accumulated over a period of time in the past few years.
On appeal, the CIT(A) upheld the addition of
Rs. 38.58 lakhs out of the aforesaid addition of Rs. 55.39 lakhs made by the
AO.
HELD
The Tribunal held that on perusal of section
4(1), it was obvious that in the year under consideration no addition could be
made in respect of investments in property made by the assessee in earlier
years or in respect of deposits in bank accounts of the assessee made in the
earlier year which was brought forward to this year for making cheque payments
of the aforesaid total amount of Rs. 6.05 lakhs. Moreover, certain amounts were
invested by the assessee and certain other amounts were deposited in the bank
account of the assessee in previous years relevant to earlier assessment years;
such investments or deposits could not possibly have been out of the income of
the previous year under consideration.
It is well settled that each year is a
separate and self-contained period. The income tax is annual in its structure
and organisation. Each ‘previous year’ is a distinct unit of time for the
purposes of assessment; further, the profits made and the liabilities of losses
made before or after the relevant previous year are immaterial in assessing the
income of a particular year. Even if certain income has escaped tax in the
relevant assessment year because of a devise adopted by the assessee or
otherwise, it does not entitle Revenue to assess the same as the income of any
subsequent year when the mistake becomes apparent.
In view of the
above, the AO was directed to delete the additions in respect of those amounts
which were invested by the assessee in earlier years, i.e., before previous
year 2008-09. Secondly, the AO was directed to delete the addition amounting to
Rs. 6.05 lakhs which was made by the assessee during the year under
consideration through cheque transactions from the bank account because, as
stated earlier, it was not disputed that the assessee had sufficient deposits
in her bank account at the beginning of the year to explain the source of the
aforesaid transactions by cheque. Thirdly, as far as investment aggregating to
Rs. 6.53 lakhs in cash was concerned, the matter was restored to the file of
the AO with the direction to pass a fresh order on merits on this limited issue
after considering the explanation of the assessee.
