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TMI Blog2007 (7) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... -examination on March 28, 2005, was not retraction of the admission made during their examination on March 10, 2005 ?" 2. The Tribunal has allowed the appeal of the assessee by deleting an amount of Rs. 13,56,000, which was added by the Assessing Officer by invoking the provisions of section 68 of the Act. However, the Tribunal has upheld the other additions of Rs. 2,61,532 calculated on the basis of gross profit declared by the assessee in his books of account and also the addition of Rs. 60,000 which was claimed to be income earned from the agricultural operation. 3. Few skeleton facts may first be noticed. The assessee has two sons, namely, Sarvshri Vinay Malhotra and Ashok Malhotra, who were his employees and were also managing the affairs of the business. A survey was conducted at his business premises under section 133A of the Act on February 21, 2002. The assessee himself was not present during the course of survey proceedings but his son Shri Vinay Malhotra was present. During the course of survey it was found that the stock available physically at the shop did not tally with the closing stock calculated as per the books of account. The value of the stock was found short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat regard, the Assessing Officer has discussed various statements of both the sons of the assessee as well as the assessee himself. In that regard, the findings have been recorded in paragraph 3.7 and 3.8, which read as under: "3.7 On a careful reading of the statements given by Sh. K. C. Malhotra and his sons Sh. Vinay Malhotra and Sh. Ashok Malhotra (all enclosed as annexures to this assessment order and forming part of the assessment order), the following facts emerge : * Both the sons of the assessee are well versed with the business affairs of the assessee as they are the only ones who are looking after the same. * Facts told at the time of recording the statements on March 10, 2005, are in complete contradiction with the replies given at the time of cross-examination, * Similar questions asked by the assessee and similar replies to these at the time of cross-examination indicate that it was well planned and the answers given by the same were properly rehearsed prior to the recording of the statement whereas the original statement was the true representation of facts. In fact, the whole process of cross-examination was intentionally/ specifically designed for the purpose. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he had recovered a sum of Rs. 13,56,000 during the year and balance was outstanding. We find that the said explanation of the assessee stands corroborated by the statement of his two sons also. . ." 7. After quoting the statements of Ashok Malhotra, employee son of the assessee, made during cross-examination on March 28, 2005, before the Assessing Officer, the Tribunal has concluded that the identity of the creditors, nature and source of the credit stood explained. The Tribunal also discussed the reasoning weighing with the Assessing Officer for invoking section 68 of the Act. The Tribunal after perusing the statements of the sons of the assessee refused to endorse the view of the Assessing Officer who has drawn an inference from those statements that the two sons of the assessee did not pay the impugned amount to him. The Tribunal has held that the inference drawn by the Assessing Officer is totally misdirected and was in fact, contrary to what emerges from the reading of the statements. The Tribunal recorded the finding that the Assessing Officer did not in terms put any question to either of the sons of the assessee as to whether or not they have paid over to their father any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons recorded on March 10, 2005, which are placed in the paper book filed before us. The two statements are on similar lines. We may refer to the statement of Sh. Ashok Malhotra in this regard placed at page 16 of the paper book. We find that the Assessing Officer has drawn inference from some of the answers to deduce that the two Sons would not have paid the impugned amount to the assessee. In our view the inference of the Assessing Officer is misdirected and is, in fact, contrary to what emerges from a reading of the statement. Quite surprisingly, from a reading of the statement it emerges that the Assessing Officer did not categorically query the sons as to whether or not he has given any amount over to his father, the assessee, out of the sale of pilfered goods, although the entire case of the Assessing Officer was in the realm of doubt whether the impugned credits, represented moneys given by the sons to the assessee out of sale of pilfered goods. Moreover, the factum of pilferage of goods and its sale outside the books of account have been specifically admitted by the son as would be evident from the perusal of the following portion of the statement. Question : Have you been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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