Mr. Shantilal N. Kotecha, Bangalore v. ITO, Bangalore

ITA 840/BANG/2009 | 2006-2007
Pronouncement Date: 29-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 84021114 RSA 2009
Assessee PAN INING1178P
Bench Bangalore
Appeal Number ITA 840/BANG/2009
Duration Of Justice 5 month(s) 10 day(s)
Appellant Mr. Shantilal N. Kotecha, Bangalore
Respondent ITO, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 29-01-2010
Assessment Year 2006-2007
Appeal Filed On 18-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO.840/BANG/2009 ASSESSMENT YEAR : 2006-07 SHRI SHANTHILAL N. KOTECHA FLAT NO.75A IMPERIAL COURT APARTMENTS NO.33/1 CUNNINGHAM ROAD BANGALORE 560 052. : APPELLANT VS. THE INCOME TAX OFFICER WARD 8(1) BANGALORE. : RESPONDENT APPELLANT BY : SHRI NINGOJI RAO RESPONDENT BY : SMT. V.S. SREELEKHA O R D E R PER A. MOHAN ALANKAMONY ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE - AN INDIVIDUAL - IS DI RECTED 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 ILLU STRATIVE GROUNDS. HOWEVER THE SUBSTANCES OF THE ISSUES RAISED ARE CO NFINED TO: (I) THE AO ERRED IN MAKING AN ADDITION OF RS.75000/- TO WARDS DRAWINGS; ITA NO.840/BANG/09 PAGE 2 OF 10 (II) THE AO ERRED IN MAKING AN ADDITION OF RS.2283518/- AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT; & (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 L IC AGENT AND DERIVES INCOME FROM COMMISSION AND FROM OTHER SOURCES. AS PER AIR INFORMATION THE ASSESSEE HAD MADE INVESTMENTS OF RS.8 LAKHS IN MUTU AL FUNDS. AFTER DUE VERIFICATION OF THE WORKING AND ALSO THE CAPITAL AC COUNT 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 CONTENT IONS PUT-FORTH BY THE ASSESSEE THE CIT(A) HAS OBSERVED THUS: 8.IT IS A FACT THAT THE STATEMENT OF ACC OUNTS SUFFERED OMISSIONS AND COMMISSIONS OF VARIOUS ASSETS IN THE BALANCE SHEET FOR THE AY 2006-07 AND EARLIER YEARS. THE APPELLANT AT TEMPTED TO GET THE BOOKS OF ACCOUNTS WRITTEN IN THE COMPUTERIZED FORMA T AFTER THE ASSESSMENT ORDER AND THE ANNUAL STATEMENT OF ACCOUN TS AS ON 31.3.05 AND 31.3.06 WERE NOT FILED BEFORE THE AO. THE APPE LLANTS REQUEST TO ADMIT THE ADDITIONAL EVIDENCE UNDER RULE 46A WAS NO T COMMENTED UPON BY THE AO. THE AR OF THE APPELLANT JUSTIFIED THE C LAIM OF THE APPELLANT BY FURNISHING CASH BOOK LEDGER ACCOUNT BANK STATE MENT OF ICICI BANK AND CORPORATION BANK REVISED BALANCE SHEETS AS ON 31.3.05 AND 31.3.06. AS ALREADY STATED ALL THESE DOCUMENTS AN D ANNEXURES ARE FRESH AND ADDITIONAL EVIDENCES AND ACCEPTANCE OF TH E SAME WITHOUT THE COMMENT OF THE CONCERNED AO WILL AMOUNT TO VIOLATIO N OF RULE 46A OF THE I.T.RULES 1962. IN VIEW OF THIS THE FRESH EVIDE NCES FILED BEFORE ME CANNOT BE ACCEPTED AND CONSIDERED AND THE SAME ARE HEREBY REJECTED. THE APPELLANTS VIEW THAT DRAWING WERE MADE FROM T HE BANK AMOUNTS CANNOT BE ACCEPTED SINCE THOSE WITHDRAWALS MAY NOT BE FOR THE PURPOSE OF PERSONAL OR HOUSEHOLD EXPENSES. THE APPELLANT C ANNOT PROVE WITH EVIDENCE AND THE AO HAD RIGHTLY POINTED OUT THAT NO WITHDRAWALS WERE SHOWN IN THE CAPITAL ACCOUNT. WHEN NO WITHDRAWAL I S SHOWN IN THE CAPITAL ACCOUNT THE ADDITION MADE ON ACCOUNT OF NO WITHDRAWAL IS JUSTIFIED. THE ACTION OF THE AO IS JUSTIFIED AND T HE SAME IS SUSTAINED. IN REGARD TO THE ADDITION MADE OUT OF THE DIFFERENCE OF RS.2283518/- I AGREED WITH THE VIEW OF THE AO THAT RS.2142000/- TH E SALE PROCEEDS ON 16.3.05 WAS RECEIVED IN THE FY 04-05 AND NOT IN FY 05-06. THE CLAIM OF THE APPELLANT IN THE RECONCILIATION STATEMENTS AND SAME WERE NOT FURNISHED BEFORE THE AO DURING THE COURSE OF ASSESS MENT PROCEEDINGS. THE FACT THAT THE OPENING BALANCE AS ON 1.4.05 IS R S.4917900/- AND THE CLOSING BALANCE AS ON 31.3.05 WAS RS.2580037/- AS P ER THE RETURN OF INCOME ALSO STRENGTHENED AND SUPPORTED THE ACTION O F THE AO IN ADDING THE DIFFERENCE AS UNEXPLAINED INVESTMENT OF THE APP ELLANT. THE ACTION OF THE AO IS JUSTIFIED AND THE ADDITION IS HEREBY CONF IRMED ACCORDINGLY. ITA NO.840/BANG/09 PAGE 3 OF 10 DISILLUSIONED THE ASSESSEE HAS COME UP WITH THE PR ESENT APPEAL. DURING THE COURSE OF HEARING BEFORE 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 UNDE R: (I) IT WAS AN ADMITTED FACT THAT BEFORE THE AO IT WAS C ONCEDED THAT NO BOOKS OF ACCOUNT IN THE NORMAL MANNER MAINTAINED AND THE I & E ACCOUNT FOR THE YEAR-ENDED 31.3.06 AND THE BALA NCE 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 EARL IER YEARS; (II) THE ASSESSEE WHO IN HIS ADVANCED AGE ABOVE 72 YEA RS WITH PHYSICAL DISABILITIES WAS UNABLE TO MAINTAIN BOOKS OF ACCOUNTS NORMALLY MAINTAINED AND THUS SUFFERED FROM CERTA IN ACCOUNTING DEFICIENCIES AS THE ASSESSEE HAD OMITTED TO TAKE IN TO ACCOUNT VARIOUS ASSETS WHILE PREPARING THE NECESSARY STATEM ENTS 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.1 21770/-] 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 S AID SITE FOR RS.2142000/-; (III) OMISSION TO REFLECT AMOUNTS PAID FOR BRIGADE ENTERP RISES ON BEHALF OF HIS SON DIVYESH KOTECHA; (IV) FDR WITH CORPORATION BANK AS ON 31.3.05 WAS SHOWN I N THE BALANCE SHEET OF RS.465250/- AS AGAINST ACTUAL AMOU NTS 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 PRUDENTI AL 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 MAI NTAINED IN ICICI BANK KUMARA PARK BRANCH & IN CORPORATION BA NK M.G.ROAD BRANCH DURING THE PERIOD UNDER DISPUTE; (VII) ADDITION OF RS.2283518/- : THE BALANCES IN THE ASSESSEES BALANCE SHEETS AS ON 31.3.05 AND 31.3.06 ARE AS UNDER: ITA NO.840/BANG/09 PAGE 4 OF 10 PARTICULARS AS ON 31.3.05 AS ON 31 .3.06 OPENING BALANCE B/F 2156832 4917900 ADD: NET INCOME FOR THE YEAR 423205 584518 DIVIDEND INCOME ------- 105675 TOTAL 2580037 5608093 CLOSING BALANCE C/F 2580037 5608093 THE DIFFERENCE BETWEEN THE C.B OF CAPITAL SHOWN AS ON 31.3.05 AND O.B. AS SHOWN IN THE B.S. AS ON 31.3.06 WAS RECONCILED AND EXPLAINED TO THE AO VIDE LETTER DT;30.10.08. - THE ASSESSEE HAD SOLD A SITE AT BHR LAYOUT FOR RS. 2142000 ON 16.3.05 AND HAD PAID RS.890656/- AS ADVANCE FOR A FLAT AT ESTEEM GARDENI A AS UP-TO 31.7.05 AS PER THE AGREEMENT ENTERED INTO. - A SUM OF RS.2363320/- WAS PAYABLE FOR THE FLAT AN D FOR HAVING PAID RS.1126000/- OUT OF HIS OWN ACCOUNT [RS.291992/- FROM THE JOINT ACCO UNTS WITH HIS WIFE SON AND DAUGHTER-IN-LAW WAS IGNORED AND OMITTED] WAS TO PAY THE BALANCE OF RS.1237320/- AS ON 31.3.06 AND FURTHER PAID RS.886881/- TOTALING IN ALL TO RS.2737537/- WHICH WAS REFLECTED BY MISTAKE IN THE B.S AS ON 31.3.05 AS A RESULT THERE WAS A DIFFERENCE OF RS.2283518/- IN THE CAPITAL ACCOUNT C.B AS ON 31.3. 05 AND O.B AS ON 1.4.05. - THE ASSESSEE HAD PURCHASED A RESIDENTIAL SITE IN HBR LAYOUT FROM BDA UNDER SALE- CUM-LEASE AGREEMENT DT.4.2.89 FOR RS.121770/-. THE COST OF THE SAID SITE WAS NOT SHOWN IN THE BALANCE SHEETS FOR THE EARLIER YEARS B Y OVERSIGHT. - THE SAID SITE WAS SOLD FOR RS.21.42 LAKHS ON 16.3 .05 AND EARNED A BOOK PROFIT OF RS.2020230/- WHICH WAS NOT REFLECTED IN THE I & E A CCOUNT 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 O F RS.21.42 LAKHS OUT OF TOTAL DIFFERENCE OF RS.2337863/- AND THE BALANCE DIFFERENCE OF RS.19 5863/- [2337863 2142000] WAS ON ACCOUNT OF - (A) DIVIDEND OF RS.104865/- FROM MUTUAL FUNDS WAS N OT REFLECTED IN THE ANNUAL ACCOUNTS FOR THE YEAR-ENDED 31.3.05 WAS IT WAS EXEMPT; (B) RS.42586/- RECEIVED ON REDEMPTION OF MUTUAL FUN DS INVESTMENT MADE IN THE EARLIER YEARS BUT WAS NOT REFLECTED IN THE B.S AS ON 31.3.0 4 AND EARLIER PERIODS; & (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 COURS E OF ASSESSMENT PROCEEDINGS DUE TO NON-MAINTENANCE OF PROPER BOOKS OF ACCOUNT; - THE ASSESSEE IN HIS LETTER TO DT.30.10.08 HAD ADM ITTED 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 APPLICAT ION 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 ; ITA NO.840/BANG/09 PAGE 5 OF 10 - THE AO HAD MADE THE ADDITION AS ALLEGED UNEXPLAIN ED INVESTMENTS MERELY ON SURMISE SUSPICION ETC WITHOUT ANALYZING JUDICIOUSLY THE FAC TS OF THE CASE; - THE EXPLANATION OFFERED AND THE EVIDENCES PRODUCE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS CLEARLY SHOW THAT THE ASSESSEE HAD DISC HARGED HIS ONUS AND THUS THE AO ERRED IN EXERCISING THE POWERS U/S 69 OF THE ACT I NJUDICIOUSLY; - RELIES ON THE FINDING OF THE HONBLE SUPREME COUR T IN THE CASE OF CIT V. NOORJAHAN P.K. (SMT) REPORTED IN 237 ITR 570. 4. DURING THE COURSE OF HEARING THE LD. A R HAD FURNISHED A PAPER BOOK CONTAINING 1 178 PAGES WHICH CONSISTS OF IN TER ALIA COPIES OF I & E ACCOUNT BALANCE SHEET AND COMPUTATION OF INCOME P RINT OUT OF CASH BOOK ETC TO JUSTIFY HIS STAND. 4.1. ON THE OTHER HAND THE LD. D R WAS VERY EMPHA TIC IN HER URGE THAT THE AO AFTER DUE CONSIDERATION OF THE FACTS O F THE ISSUES AND ALSO GIVING DUE WEIGHT-AGE TO THE ASSESSEES CLAIM HAD CONCLUD ED THE ASSESSMENT AND THAT THE FIRST APPELLATE AUTHORITY HAD ALSO CONFIRM ED THE STAND OF THE AO FOR A VERY REASON THAT THE STATEMENT OF ACCOUNTS OF THE A SSESSEE SUFFERED FROM OMISSIONS AND COMMISSIONS OF VARIOUS ASSETS IN THE BALANCE SHEET FOR THE AY 2006-07 AND FOR THE EARLIER YEARS. IN VIEW OF THE ABOVE IT WAS PLEADED THAT THE STAND OF THE AUTHORITIES BELOW REQUIRES TO BE S USTAINED. 5. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS PERUSED THE RELEVANT RECORDS AND ALSO THE VOLUMINOUS PAPER BOO K FURNISHED BY THE LD. A.R. 5.1. AT THE OUT-SET WE WOULD LIKE TO POINT OUT TH AT THE ASSESSEE PERHAPS MADE AN EXPERIMENT TO DRAW UP HIS INCOME & EXPENDITURE ACCOUNT BALANCE SHEET CAPITAL ADJUSTMENT ACCOUNT HIMSELF WITH A LIMITED KNOWLEDGE IN ACCOUNTANCY WITHOUT SEEKING THE PROFESSIONALS ASSISTANCE WHICH IN FACT HAD MESSED UP THE ENTIRE ISSUE. ITA NO.840/BANG/09 PAGE 6 OF 10 5.2. HIS POOR REPRESENTATION BEFORE THE ASSESSING AUTHORITY HAD IN FACT CULMINATED WITH A WHOPPING ADDITION OF RS.235 8518 [EVEN THOUGH THE AO HAD PROPOSED TO MAKE ADDITIONS OF RS.75000/- + RS.2 283518 HE MADE A FAUX PAS WHILE COMPUTING THE INCOME BY NOT MENTIONING TH E ADDITION FOR INSUFFICIENT DRAWINGS OF RS.75000 IN THE COMPUTATION]. 5.3. AFTER DRAWING UP INCOME & EXPENDITURE ACCOUNT BALANCE SHEET CAPITAL ADJUSTMENT ACCOUNT WITH THE HELP OF A TAX C ONSULTANT HE HAD APPROACHED THE CIT(A) WITH A PLEA TO ADMIT THE ADDI TIONAL EVIDENCE AND TO RENDER JUSTICE. HOWEVER THE CIT(A) HAD DECLINED T O ADMIT THE ADDITIONAL EVIDENCES WITH A STRANGE AND INTRIGUING REASONING T HAT THE SAME WITHOUT THE COMMENT OF THE CONCERNED AO WILL AMOUNT TO VIOL ATION 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 TA KE 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 WITN ESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFF ECT 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 O THER 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] WHIC H GOES TO ESTABLISH THAT THE AO HAS BEEN AFFORDED A REASONABLE OPPORTUNITY O F BEING HEARD. THUS THE CIT (A) IN OUR CONSIDERED VIEW WAS NOT JUSTIFIED IN REJECTING TO ADMIT THE ITA NO.840/BANG/09 PAGE 7 OF 10 FRESH EVIDENCES UNDER RULE 46A FOR THE REASON CITED IN THE IMPUGNED ORDER WHICH SUFFERS FROM LEGAL PROPRIETY. 5.4. REVERTING BACK TO THE ISSUE ON HAND ON A PER USAL OF THE COMPUTERIZED CASH BOOK FOR THE PERIOD FROM 1.4.2005 TO 31.3.2006 HAD MADE THE DRAWING TO THE EXTENT OF RS.88000/-. THE DRAWI NGS MADE FROM HIS SAVING BANK ACCOUNTS MAINTAINED WITH THE ICICI BANK KUMAR A PARK BRANCH AND CORPORATION BANK. WE HAVE DULY PERUSED THE BANK STA TEMENTS OF RESPECTIVE BRANCHES [P 35 -74 & 75 89 PB]. IN VIEW OF THE A BOVE FACTS WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE MADE SUFFICIENT D RAWINGS DURING THE PERIOD UNDER DISPUTE WHICH HAVE BEEN DULY VOUCHED BY THE B ANK STATEMENTS REFERRED SUPRA AND THUS THE ADDITION MADE UNDER INSUFFICI ENT DRAWINGS OF RS.75000/- STANDS DELETED. THE MISUNDERSTANDING HAD CROPPED U P DUE TO ERRONEOUS WAY IN WHICH THE ACCOUNTS STATEMENT OF AFFAIRS AND COM PUTATION OF INCOME WERE ORIGINALLY PREPARED BY THE ASSESSEE. 5.5. WITH REGARD TO THE ALLEGED UNEXPLAINED INV ESTMENTS WE HAVE DULY CONSIDERED THE SUBMISSION OF THE LD. A R AND A LSO PERUSED THE REDRAWN INCOME & EXPENDITURE ACCOUNT BALANCE SHEET AND COM PUTATION OF INCOME ETC. 5.5.1. THE ASSESSEE WAS ALLOTTED A RESIDENTIAL SIT E NO.223 IN HBR LAYOUT BY THE BDA UNDER SALE-CUM-LEASE AGREEMENT DA TED 4.2.1989 FOR RS.1 21 770 AND THE ABSOLUTE SALE DEED WAS EXECUTED ON 21.8.2002 [P 114 119 OF PB] AND THE SAID PROPERTY WAS SOLD DURING MA RCH 2005 FOR RS.21.42 LAKHS; HE HAD ADVANCED A SUM OF RS.1890656/- FOR A FLAT IN ESTEEM GARDENIA UP-TO 31.7.2005 BY AN AGREEMENT ENTERED INTO ON 10. 9.2004. A TOTAL SUM OF RS.2363320/- ACCORDING TO THE ASSESSEE WAS TO BE PAYABLE FOR THE FLAT AT ESTEEM GARDENIA AND HAD PAID RS.11.26 LAKHS OUT OF HIS OWN ACCOUNT [RS.291992/-FROM THE JOINT ACCOUNTS WITH HIS WIFE SON AND DAUGHTER WAS IGNORED DUE TO LACK OF ACCOUNTING PRINCIPLES] AND T HE BALANCE OF RS.1237320/- ITA NO.840/BANG/09 PAGE 8 OF 10 WAS TO BE PAYABLE AS ON 31.3.06. WHILE DRAWING UP T HE BALANCE SHEET BY SHEER IGNORANCE OF ACCOUNTING PRINCIPLES AS ON 31.3 .2005 THE ASSESSEE HAD SHOWN THE LIABILITIES AND ASSETS [ESTEEM GARDENIA P ROPERTY] AT RS.1237320 AND RS. 1126000/- INSTEAD OF RS.1237320 AND RS.2663320 /- RESPECTIVELY WHICH CONTRIBUTED TO THE DIFFERENCE IN THE CAPITAL ACCOUN TS 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 STATEME NTS OF BALANCE SHEET INCOME AND EXPENDITURE ACCOUNT AND THE CAPITAL ADJU STMENT ACCOUNT FOR THE YEARS-ENDED 31.3.2005 AND 31.3.2006 WE FIND THAT T HE DIFFERENCE (AS ATTRIBUTED BY THE ASSESSING OFFICER IN HIS IMPUGNED ORDER AS UNEXPLAINED INVESTMENTS) HAS BEEN NARROWED DOWN TO RS.195863 [2 337863 2142000] FOR WHICH THE ASSESSEES EXPLANATION WAS THAT (I) DIVIDEND OF RS.104865 FROM MUTUAL FUNDS WAS NOT REF LECTED IN THE ANNUAL ACCOUNTS FOR THE YEAR-ENDED AS THE SAME WAS EXEMPT; (II) RS. 42586/- BEING REDEMPTION MUTUAL FUNDS INVESTMEN T MADE IN THE EARLIER YEARS WHICH WAS NOT REFLECTED IN THE BA LANCE AS ON 31.3.2004 AND FOR EARLIER YEARS DUE THE ASSESSEES 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 COMMISSI ONS IN DRAWING UP THE ABSTRACT OF RECEIPTS AND PAYMENTS DU RING THE YEAR WHICH COULD NOT BE RECONCILED BECAUSE OF THE P RIME REASON OF ERRATIC WAY OF MAINTENANCE OF THE BOOKS OF ACCOU NT BY THE ASSESSEE. 5.5.3. DURING THE COURSE OF HEARING IT WAS SUBMITT ED ON BEHALF OF THE ASSESSEE THAT THERE WAS NO QUESTION OF ANY UNEXPLAI NED INVESTMENTS AS ALLEGED BY THE ASSESSING OFFICER THOUGH IT APPEARS TO BE BUT DUE TO THE ADVANCED AGE WITH DISABILITIES WHICH HAD PLAYED A M AJOR ROLE IN CONTRIBUTING THE MISUNDERSTANDING AND THE MISHANDLING OF THE AFF AIRS BY THE ASSESSEE. IT ITA NO.840/BANG/09 PAGE 9 OF 10 WAS THEREFORE PRAYED THAT A LENIENT VIEW MAY BE TAKEN IN CONSIDERING THE TOTALITY OF THE ISSUE AS SUBMITTED SUPRA. 5.5.4. IN AN OVER ALL CONSIDERATION OF THE FACTS A ND CIRCUMSTANCES OF THE ISSUE AND ALSO THE PERUSAL OF THE DOCUMENTARY EVIDE NCES ADVANCED BY THE ASSESSEE DURING THE COURSE OF HEARING WE ARE OF TH E UNANIMOUS VIEW THAT (I) THERE WAS ADEQUATE DRAWING DURING THE YEAR UNDER DI SPUTE AND THAT THE AO WAS NOT JUSTIFIED IN MAKING AN ADDITION OF R S.75000/-; & (II) DUE TO TOTAL MISHANDLING OF THE AFFAIRS AS ADMITTE D BY THE ASSESSEE WITH HIS LIMITED KNOWLEDGE IN ACCOUNTANCY-WITHOUT A NY PROFESSIONALS ASSISTANCE AND ALSO LACK POOR REPR ESENTING OF THE CASE BEFORE THE ASSESSING OFFICER WHICH LED THE ASS ESSING OFFICER TO COME TO A CONCLUSION THAT THERE WAS AN UNEXPLAINED INVESTMENT THEREBY INVOKING THE PROVISIONS OF S.69 OF THE ACT AND SO ON SO FORTH. - ON A CRUCIAL PERUSAL AND VERIFICATION OF THE REDRAW N STATEMENTS REFERRED SUPRA THERE WAS NO UNEXPLAINED INVESTMEN T WHICH NECESSITATED FOR INVOKING THE PROVISIONS OF S. 69 O F THE ACT. (III) IT IS APPARENT FROM THE RECORDS PRODUCED BEFO RE US THAT THE ASSESSEE HAD SOLD THE SITE OWNED BY HIM FOR RS.21 4 2 000 AND REINVESTED IN A RESIDENTIAL FLAT FOR RS.23 63 320. 5.5.5. IN A NUT-SHELL:- (I) THE ADDITION OF RS.75000/- MADE FOR INSUFFICIENT DR AWING IS DELETED AS THERE WERE SUFFICIENT DRAWINGS DURING YEAR UNDER DISPUTE; & (II) THE UNEXPLAINED INVESTMENT OF RS.2283518/- MADE U/S 69 OF THE ACT IS DELETED AS THE RECEIPTS AND INVESTMENTS HAVE SIN CE BEEN PROPERLY EXPLAINED AND THAT THERE WAS NO UNEXPLAINED INVESTM ENT AS ALLEGED BY THE AO. 6. THE ASSESSEES OTHER GRIEVANCE IS WITH REGARD TO CHARGING OF INTEREST U/S 234B AND 234C OF THE ACT. CHARGING OF INTEREST U/S 234B AND 234C OF THE ACT ARE MANDATORY AND CONSEQUENTIAL IN NATURE THIS GROUND IS NOT MAINTAINABLE AND THUS DISMISSED AS SUCH. ITA NO.840/BANG/09 PAGE 10 OF 10 7. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF JANUARY 2010. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED THE 29 TH JANUARY 2010. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.