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2022 (8) TMI 1011 - AT - Income TaxAddition of income from unaccounted sales - additional income was declared by the assessee in the statement recorded u/s 132(4) - HELD THAT:- In view of the above finding of the in the case of Arti Gases v. Director of Income-tax (Investigation) [2000 (5) TMI 10 - GUJARAT HIGH COURT] we hold that the statement recorded subsequent to the search by the ADIT has got evidentiary value and can be relied upon in making the addition - Hence, the above contention raised by the AR is rejected as devoid of any merits. Excess stock found during the course of search - AO in the assessment order has stated that as per the recorded statement from Mr.Aravind u/s.132(4) that the excess stock belongs to N R Halagappa & Sons and N R Halagappa & Company. During the course of hearing the bench questioned whether any addition towards the excess stock is made in the hands of partnership firm N R Halagappa & Company for which the DR could not provide any details - the contention of the ld DR is that the CIT(Appeals) have merely accepted the statement of assessee without verification of facts or records. Further it is the submission of the AR that the assessee was not provided with sufficient opportunity to confront the statement recorded from Mr.Arvind as the copy of the same was not provided. In view of the above discussion, we remit the issue back to the AO, for verification of the issue afresh after giving a reasonable opportunity of being heard to the assessee. Addition towards capital account balance in M/s. N R Halagappa & Company - CIT(Appeals) has verified and given a clear finding of each of the line items pertaining to the movement of the balance during the year under consideration and has decided on the taxability. However the CIT(Appeals) has not verified whether the balance is correctly reflected in the assessee’s books of accounts. Tribunal in the individual case for AY 2012-13 has remitted that issue back to the AO to verify the whether the investments are recorded in the books including the opening balance. Further in the present case, the AO has made the addition on the basis that the capital account of the assessee in the partnership firm is not reflecting in the proprietorship balance sheet. This, in our considered view, is not the correct basis as the balance sheet of the proprietorship would only reflect the transaction that are routed through the same and would not reflect the transactions if any done by the assessee directly from the HUF account. Therefore it is important that the consolidated balance sheet of the assessee HUF needs to be verified to examine if the transactions of partnership firm are correctly recorded in the assessee HUF account. We therefore remit this issue to AO to verify the consolidated statement of accounts of the assessee and decide the issue afresh in accordance with law. Needless to say that the assessee should be given an opportunity of being heard. - Appeal by the revenue is allowed for statistical purposes
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