TMI Blog2010 (1) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... : This appeal of the assessee - an individual - is directed against the order of the Ld. CIT (A)-V, Bangalore in ITA No.143/W 8(1)/CIT(A)-V/08-09 dtd.16.6.2009 for the assessment year 2006-07. 2. The assessee has raised five exhaustive and illustrative grounds. However, the substances of the issues raised are confined to: (i) the AO erred in making an addition of Rs.75000/- towards drawings; (ii) the AO erred in making an addition of Rs.2283518/- as unexplained investment u/s 69 of the Act; and (iii) the assessee denies liable to be charged interest u/s 234B and 234C of the Act. The facts, in brief, are that the assessee was an LIC Agent and derives income from commission and from other sources. As per AIR information, the assessee had made investments of Rs.8 lakhs in mutual funds. After due verification of the working and also the capital account of the assessee, the AO had made the additions of Rs.75000/- and Rs.2283518/- being insufficient drawings and unexplained investments u/s 69 of the Act respectively for the reasons set-out in the impugned order. 3. Aggrieved, the assessee took up the issues with the Ld.CIT(A) for relief. After examining the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us, the Ld. A R reiterated more or less what has been contended before the first appellate authority. In furtherance to the above, the arguments of the Ld. A R are summarized as under: (i) it was an admitted fact that before the AO it was conceded that no books of account in the normal manner maintained and the I and E account for the year-ended 31.3.06 and the balance sheet showing the statement of affairs as on 31.3.06 were compiled on the basis of rough abstract of entries in the bank statements/pass books as was being done in the earlier years; (ii) the assessee who in his advanced age - above 72 years - with physical disabilities was unable to maintain books of accounts normally maintained and, thus, suffered from certain accounting deficiencies as the assessee had omitted to take into account various assets while preparing the necessary statements not only for the AY under dispute, but for the earlier AYs and such deficiencies are that - - omission of cost of Site No.223 at HBR Layout [Rs.121770/-] purchased during the FY 1988-89 in all the balance sheets up-to 31.3.05; - omission to reflect the gains made on sale of the said site for Rs.2142000/-; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on 16.3.05 and earned a book profit of Rs.2020230/- which was not reflected in the I and E account and B.S. for the year-ended 31.3.05 on the notion that it was exempted u/s 54F of the Act, however, the same fact was disclosed as a note in the B.S. as on 31.3.05; - the difference in capital account to the extent of Rs.21.42 lakhs out of total difference of Rs.2337863/- and the balance difference of Rs.195863/- [2337863 - 2142000] was on account of- (a) dividend of Rs.104865/- from Mutual funds was not reflected in the annual accounts for the year-ended 31.3.05 was it was exempt; (b) Rs.42586/- received on redemption of mutual funds investment made in the earlier years but was not reflected in the B.S as on 31.3.04 and earlier periods; and (c) the balance of Rs.48142/- being net differences arising out of possible omissions/commissions in preparing the abstracts of receipts and payments during the year which could not be reconciled during the course of assessment proceedings due to non-maintenance of proper books of account; - the assessee in his letter to dt.30.10.08 had admitted that a residential site in HBR Layout was sold for Rs.21.42 lakhs, the omission o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additions of Rs.75000/- + Rs.2283518, he made a faux pas while computing the income by not mentioning the addition for insufficient drawings of Rs.75000 in the computation]. 5.3. After drawing up Income and Expenditure account, Balance Sheet, capital adjustment account with the help of a tax consultant, he had approached the CIT(A) with a plea to admit the additional evidence and to render justice. However, the CIT(A) had declined to admit the additional evidences with a strange and intriguing reasoning that "the same without the comment of the concerned AO will amount to violation of Rule 46A of the I.T.Rules 1962." 5.3.1. However, Rule 46A says thus- "46A (1)the appellant.......................... (3) The Commissioner (Appeals) shall not take into account any evidence produced under sub-rule (1) unless the assessing officer has been allowed a reasonable opportunity- (a) to examine the evidence or document or to cross-examine the witness produced by the applicant, or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant. (4) Nothing contained in this rule shall affect he power of the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the balance of Rs.1237320/- was to be payable as on 31.3.06. While drawing up the balance sheet, by sheer ignorance of accounting principles as on 31.3.2005, the assessee had shown the liabilities and assets [Esteem gardenia property] at Rs.1237320 and Rs.,1126000/- instead of Rs.1237320 and Rs.2663320/- respectively, which contributed to the difference in the capital account's closing balance as on 31.3.2005 and O.B. as on 1.4.2006. 5.5.2. On a careful perusal of the redrawn statements of Balance Sheet, Income and Expenditure account and the Capital adjustment account for the years-ended 31.3.2005 and 31.3.2006, we find that the difference (as attributed by the assessing officer in his impugned order as unexplained investments) has been narrowed down to Rs.195863 [2337863 - 2142000] for which the assessee's explanation was that- (i) Dividend of Rs.104865 from Mutual funds was not reflected in the annual accounts for the year-ended as the same was exempt; (ii) Rs.42586/- being redemption mutual funds investment made in the earlier years which was not reflected in the balance as on 31.3.2004 and for earlier years due the assessee's inexperience in preparing the stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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