K.B. LOKESH vs. ITO, MANDYA

This appeal by the assessee is directed against the order dated 17.10.2014 of the CIT(Appeals), Mysore relating to assessment year 2008- 09.

Return of income for the A.Y. 2008-09 in his individual status was filed by the assessee beyond the specified date, but within the extended period allowed u/s. 139(4) of the Act on 30.9.2008 declaring total income of Rs.2,44,862. Return was processed u/s. 143(1) and an amount of Rs.30,230 was determined as payable by the assessee as per the intimation dated 28.1.2010.

The case was selected for scrutiny and notice u/s. 143(2) was issued on 27.8.2009 and served on the assessee on 3.9.2009. Assessment was completed u/s. 143(3) of the Act. While completing the assessment, the AO made addition with respect to opening capital of Rs.1,50,000 and difference in sales of Rs.1,38,263 to the returned income.

Aggrieved, the assessee filed appeal before the CIT(Appeals). With respect to addition of opening capital of Rs.1.50 lakhs, the assessee stated that it was the opening capital which was accumulated out of his savings.

There is a delay of 141 days in filing the appeal by the assessee before the Tribunal, for which the assessee has filed affidavit for condonation of delay. It is pleaded that the assessee could not approach his CA for further instructions, immediately on the receipt of the impugned order, as his wife was ailing and had passed away on 13.05.2015. It was submitted that he was pre-occupied in assisting and looking after his wife as she was ailing for a long period. Later he approached his CA who is representing his case now before us, who had advised him to seek for condonation of delay in filing the appeal. We find that the delay in filing the appeal before the Tribunal is due to reasonable cause and on account of circumstances beyond the control of the assessee. Hence, the delay not being intentional or willful, is condoned and we admit the appeal.

The ld. counsel for the assessee, Shri S. Venkatesan, submitted that assessee is aged about 33 years and whatever he had saved from the last 10 years i.e., an amount of Rs.1,50,000, the assessee had introduced as initial capital to his business and this amount cannot be treated as income of the current year.

The ld. DR, Smt. Rukmini Attri, on the other hand, objected by stating that the assessee has not proved the source for the capital introduced and hence the sum of Rs.1.50 lakhs was rightly added as income of the year.

We have heard both the parties. The assessee has pleaded that from the age of 23 (now 33 years) he has been saving an amount of Rs.1,250 per month i.e., Rs.15,000 per year for the past ten years which comes to Rs.1,50,000. We are of the opinion that the assessee could have accumulated the sum of Rs.1,50,000 by saving a meager amount of Rs.1,250 per month and hence in the interest of justice, we are of the view that proof for the source is established by the assessee. In these circumstances, we are of the opinion that the sum of Rs.1,50,000 which has been invested by the assessee in the start of his business is not to be added as income of the year and hence we delete the same. Ground No.2 is allowed.

Ground No.3 is with regard to charging of interest u/s. 234B and 234C of the Act which is consequential and hence we are not adjudicating the same.

In the result, the appeal of the assessee is allowed.