TaxTMI 
TaxTMI 
2018 (3) TMI 579
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....nfronted the assessee with AIR information received by him which was to the effect that the assessee has made the following investments in various mutual fund schemes : 4. The AO called upon the assessee to explain the source of funds out of which the aforesaid investments were made by the assessee. According to the AO there was a failure on the part of the assessee to explain the source of funds for making the aforesaid investments. The AO accordingly added a sum of Rs. 3..29 crores of the total income of the assessee as unexplained investment u/s 69 of the Act. 5. Before CIT(A) the assessee explained that the source of investments was out of the redemption proceeds of investments of units of mutual funds that were made in the earlier assessment year. The details of each of the 14 investments set out by the AO in the order of assessment was furnished by the assessee which was as follows :- "Source of each of the investment added by the AO U/S 69 during the assessment year 2008-09 1. 22.06.2007 25,00,000/- AIG GIG Mutual Fund This investment made from AXIX Bank (Al/c 53) Cheque cleared on 5.6.2007 and this matured on 27.7.2007 (Rs. 2578622/-) vid....
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....ed on 12.7.2007. Hence the source of investment in SL 5, Sl 4, sl 7, is explained during this assessment year. The balance Rs. Rs. 25 lakhs was also invested in Reliance Mutual Fund which is not in the AIR report available with AO Since the investment came out of the redemption of earlier years investments, no addition can be made during the assessment year in question. 6 8.08.2007 3,25,000/- Reliance Mutual Fund Investment made from Standard Chartered Bank (A/c 7-0) cheque cleared on 14.7.2007. This was made out of the maturity of the investment of Rs. 3,25,484/- in SBI Mutual Fund on 11.7.2007. Copy of bank account and certificate of SBI attached. The investment with SBI Mutual Fund was made on 17.1.2007 vide Paper book page 9. The investment was redeemed on 28.9.2007 (Rs. 3,38,499/- A/c 7-0) vide Paper book page 10 and put in Std Ch Bank. Since the investment came our of the redemption of earlier years investments, no addition can be made during the assessment year in question. 7 8.08.2007 25,00,000/- Reliance Mutual Fund Source explained vide SL 5, the investment was matured on 21.9.2007 vide Paper book page 11 and put in Axix Bank bank....
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....ney given to them on 18.12.2007 (Rs. 5283292/- from A/c no. 53. This amount was received back on redemption on 16.1.2008 vide page 14 and put in Axix bank a/c no.53." 6. Since the details filed by the assessee before CIT(A) were in the nature of additional evidence the CIT(A) forwarded the details filed by the assessee to the AO and called for a remand report from the AO on the additional evidence filed by the assessee. 7. The AO vide his remand report dated 11.12.2015 submitted that the investments made by the assessee in the earlier assessment year were not disclosed. Therefore the addition made by the AO was justified and the investments made in the previous year had to be regarded as made out of undisclosed sources of income and are liable to be added u/s 69 of the Act. 8. On a consideration of the evidence before him the CIT(A) was of the view that in the remand report the AO has accepted the fact that the maturity proceeds of investments made by the assessee in the earlier assessment years was the source out of which various investments were made by the assessee during the previous year. He found that the objection of the AO in the remand report was that since the in....
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....o addition can be made during the year.. 14. We have carefully considered the rival submissions. It will be desirable to examine the provisions of section 69 which are as under: "Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books 0/ account, if any, maintained by him for any source 0/ income, AND the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year ." - 15. A reading of the provisions contained in sec. 69, shows that if any investment is found to have been made by the assessee during the financial year which is not recorded in the books of accounts , it can be treated as income of the assessee for such financial year. However, if the assessee is in a position to offer explanation about the nature and source of the investments or if the explanation offered by the assessee is not in the opinion of the A.O satisfactory only then such investment can be added as i....