TaxTMI 
TaxTMI 
2010 (1) TMI 918
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....ad 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 exhaustive contentions put-forth by the assessee, the CIT(A) has observed thus: "8...............................It is a fact that the statement of accounts suffered omissions and commissions of various assets in the Balance sheet for the AY 2006-07 and earlier years. The appellant attempted to get the books of accounts written in the computerized format after the assessment order and the annual statement of accounts as on 31.3.05 and 31.3.06 were not filed before the AO. The appellant's request to admit the additional evidence under Rule 46A was not commented upon by the AO. The AR of the appellant justified the claim of the appellant by furnishing cash book, ledger account, bank statement of ICICI Bank and Corporation Bank, revised balance s....
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....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/-; (iii) omission to reflect amounts paid for Brigade Enterprises on behalf of his son Divyesh Kotecha; (iv) FDR with Corporation Bank as on 31.3.05 was shown in the Balance Sheet of Rs.465250/- as against actual amounts of Rs.2410528 as per Bank pass book; (v) Omitted to show Rs.2 lakhs invested in Prudential ICICI Dynamic Plan Units on 30.6.03; - omitted to account for gain of Rs.749940/- made on swapping the Prudential ICICI Dynamic Plan Units to Prudential ICICI Liquid Plan Units etc., (vi) Drawings: adequate sum of Rs.85000/- was drawn from the banks from time to time for house hold expenses - amounts were withdrawn from the S.B.Accounts maintained in ICICI Ban....
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.... 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 of the same and omissions of certain exempted incomes such as dividends etc. attributed the difference in the capital account balance. (viii) with regard to applicability of s.69, it was contended that- - in the case of the assessee, s.69 has no application for the reason that the AO had not found any investment made by the assessee which has not been recorded in his books of account; - the AO had made the addition as alleged unexplained investments merely on surmise, suspicion etc without analyzing judiciously the facts of the case; - the explanation offered and the evidences produced during the course of assessment proceedings clearly show that the asses....
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.... 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 Commissioner (Appeals) to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal or for any other substantial cause including the enhancement of the assessment....." 5.3.2. However, the AO had duly submitted a remand report vide her communication dated 25.5.2009 [Page 150 of PB] which goes to establish that the AO has been afforded a reasonable opportunity of being heard. Thus, the CIT (A), in our considered view, was not justified in rejecting to admit the fresh evidences under rule 46A for the reason cited in the impugned order ....
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....nt 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 statements etc., (iii) The balance of Rs.48142/- being the net differences, according to the assessee, were due to omissions and commissions in drawing up the abstract of receipts and payments during the year which could not be reconciled because of the prime reason of. erratic way of maintenance of the books of account by the assessee. 5.5.3. During the course of hearing, it was submitted on behalf of the assessee that there was no question of any unexplained investments as alleged by the assessing officer, though it appears to be, but, du....