2001 (11) TMI 219 - AT - Income Tax

Summary

Issues:
- Appeal against separate orders of CIT(A) for asst. yrs. 1988-89 & 1989-90
- Addition of Rs. 53,979 on account of draft not entered into books of account
- Addition of Rs. 62,193 for another draft not reflected in books
- Justification for additions based on cash availability and book entries
- Applicability of Sec. 69 regarding unrecorded investments
- Opportunity to explain and confront evidence before making additions

Analysis:

In the appeals, the assessee contested the additions made by the AO for two drafts - Rs. 53,979 and Rs. 62,193. The AO noted that the first draft was not entered into the books of account on the purchase date, leading to the addition. The CIT(A) upheld this addition, emphasizing the importance of entries in books of accounts and rejected the contention of clerical error. The Tribunal, drawing parallels with a previous case, found sufficient cash availability on the purchase date and deleted the addition of Rs. 53,979 based on Sec. 69 criteria.

Regarding the second draft of Rs. 62,193, the AO made the addition as the draft was not reflected in the books, and the explanation provided by the assessee was not considered satisfactory. The Tribunal observed that the assessee was not given adequate opportunity to explain and set aside the CIT(A)'s decision, directing a fresh adjudication by the AO to verify cash availability and actual purchase of the draft.

In another appeal, the AO added Rs. 62,171 for a draft purchased and entered in the books on subsequent days. The AO rejected the assessee's claim of sufficient cash availability, leading to the addition. The CIT(A) upheld this addition, referencing a similar issue in the previous year. The Tribunal, considering the facts and contentions, deleted the addition of Rs. 62,171, following the decision on the earlier draft.

Overall, the Tribunal emphasized the importance of proper opportunity for the assessee to explain, the relevance of cash availability, and the necessity for entries in books of account. The decisions were based on legal provisions and previous case precedents, ensuring a fair assessment process.