TMI Blog2007 (7) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... s of law would arise for determination of this court : "(i) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in ignoring the admitted facts that sale proceeds of the sold stocks were not available with the employee sons for introduction in the books? . (ii) Whether, on the facts and in the circumstances of the case, the statement given by two employee sons of the assessee on cross-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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sons of the assessee. (ix) Sum of Rs.10 lakhs deposited in cash in bank on March 27, 2002, i.e., after almost one month after from the date when recovery is stated to have been made." 4. On the basis of the aforementioned findings, the Assessing Officer hurriedly concluded that the money deposited by the sons of the assessee, as recorded at Sr. No. (v) of paragraph 2.8 above, appears to belong to the assessee himself being his undisclosed income. In that 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 contradictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification to reject the corresponding sales realization. Secondly, it is noteworthy that the stand of the assessee has been consistent on this aspect. At the time of survey, when the statement of Sh. Vinay Malhotra, son of the assessee, was recorded the fact of shortage of stock was confronted to him. ... In the return of income filed and during the assessment proceedings, the assessee explained that the sale of the pilfered stock was carried out by his two sons out of which 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 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been placed by learned counsel for the Revenue, has been noticed, discussed and explained by the Tribunal in its order as is evident from the perusal of paragraph 7 thereof and the same reads as under : "7. Similarly, the Assessing Officer also noticed that in the course of the statement recorded on March 10, 2005, the sons of the assessee denied having giving any money to the assessee. In order to appreciate this stand of the Assessing Officer we have perused the statements of the sons 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 ove ..... X X X X Extracts X X X X X X X X Extracts X X X X
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