TMI Blog1998 (6) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... ounted valuables were ever found or seized; however two memoranda accounts (rough books) from 1st June, 1987 till the date of search 22nd Dec., 1987 (the assessee's year of accounting ended on 30th May, 1987 (Asst. yr. 1989-90) were found both in respect of Govindan Sons and Kanakambal Textiles, and these books indicated transactions that had been done that are outside the declared records. In statements recorded at the time of search Govindan admitted that the transactions found in the memoranda accounts were outside the declared records. Similarly Anbashagan admitted that all transactions in the memorandum accounts of Kanakambal Textiles were also outside the declare records and further that he had kept these transactions secret from the proprietrix (that is, his mother Smt. Kanakambal) and that he was appropriating the proceeds of this unaccounted business for himself for his own benefit. Both Govindan and Anbazhagan admitted that, the volume of the unaccounted and accounted turnover were more or less of equal inagritude. It was also admitted by both Govindan and Anbazhagan that the income arising from these unaccounted transactions were invested in a moneylending business bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k into consideration the amount of Rs. 1,69,231 representing the gross profit of the undisclosed sales operations. It appears that he did not separately add the amount of Rs. 1,66,667 for the admitted additional income in this year. 3. In the first appeal, the CIT(A) held that when the additional admitted income of Rs. 5 lakhs has already been offered by the assessee and also taxed separately (it may be reiterated in this connection that in asst. yr. 1988-89, the corresponding amount was not taxed by the AO separately), there was no case for further estimating the income out of the undisclosed sales and taxing the same in these three years. Accordingly, he deleted the separate additions of Rs. 1,56,159 and Rs. 1,59,305 for the asst. yr. 1986-87 and 1987-88, respectively. As regards the opening capital of Rs. 1,31,550 for asst. yr. 1986-87 also, he was of the view that the entire capital was being assessed under s. 69A in the year in which the search had taken place, on the basis of the statement of advances made. He held that when the entire amount was included in the year of search, the opening capital was also subsumed within this and no separate addition was called for. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said finding of the CIT(A) has been challenged. The learned Departmental Representative appearing before us has strongly contended in this regard that from the detailed list as filed by the assessee, no duplication of any item can be found out and furthermore that even if some duplication might have been there, they actually represent monies separately lent out by the assessee to the same party on different dates. It is thus contained that the relief allowed by the CIT(A) in respect of Rs. 3,20,000 be reversed. The learned counsel for the assessee appearing before us, however, strongly contends that the abovementioned list of monies lent totalling to Rs. 16.20 lakhs was submitted by the assessee fully out of his memory on the date of search and in the early hours (1.30 AM) of the next day. It is thus argued that there are every chance that the list would not be a correct one. It is also stated that the assessee had to come out with a list of certain amount just to get rid of the searching party. Before both the lower authorities, the assessee filed detailed list of the cases involving duplication of erroneous insertion of certain borrowings by the assessee as his lendings. The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e finding on the basis of the submissions made by the assessee and his son at the time of the search that the entire capital in the moneylending business came out of the undisclosed profit earned by the assessee and his son from sales made outside the books. It is also an admitted fact that the son of the assessee viz., Anbashagan did not himself carry out the moneylending business but handed over the capital represented by undisclosed profit out of the sales of the business belonging to her mother, to the assessee who alone carried on the entire money landing business for himself as well as his son. The CIT(A) found out that an amount of Rs. 5,60,000 had already been assessed to tax as profits arising out of the undisclosed sales in the hands of Anbashagan. He therefore, allowed credit of this amount of Rs. 5,60,000 in addition to the earlier amount of Rs. 3,20,000 (as discussed above), from the total amount of Rs. 16,20,000. He furthermore found out that the assessee himself had offered for taxation the amount of Rs. 5 lakhs by way of profits arising out of the undisclosed sales in the assessee's own textile business. Giving credit for that amount also, the CIT(A) ultimately held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the AO to examine them so as to find out whether they had any connection with the moneylending business of the assessee or not. Although the CIT(A) says that no further verification or corroboration is possible on this issue, we feel that inasmuch as the entire addition on account of undisclosed capital in the moneylending business is based solely on the statement given by the assessee on the night of the search without there being any other corroborating evidence in that regard, and since the assessee himself, at a later stage most probably on a detailed examination of the matter, wanted to shift from his earlier version, it was necessary for the AO, before making the addition, to have fully verified the latter version of the assessee also. So far as the issue relating to the claim of the assessee in respect of this further amount of Rs. 3,00,600 is concerned, we set aside the order of the CIT(A) and restore it back to the file of the AO with a direction that he would examine the parties comprising this particular list, whose names and addresses are stated to have been supplied by the assessee to him. On such examination, if the AO finds out that the parties under considera ..... X X X X Extracts X X X X X X X X Extracts X X X X
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