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TMI Blog1978 (10) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... sonal accounts. This is not a part of the business and so the balance did not find a place in the account books. 2. The accounting year, we are concerned with, is the year ended 31st March,75. The earlier accounting period was the year ended 31st March, 74. The capital account showed as on 1st April, 73 an opening balance of Rs. 36,594. The assessee had borrowed funds from his wife and his mother. From his mother he had borrowed Rs. 45,000. This amount was credited first to his personal bank account. From that personal account he drew funds and brought into the business. Thus, in the accounting year 1st April, 73 to 31st March, 74 he brought in Rs. 69,349. A part of this represented the loan taken from his mother and his wife. A part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account. The extra credit given to the mother's account which ought to have been reversed was balanced by giving a credit to his own personal account. Thus Rs. 45,000 was credited to the mother's account and the corresponding debit was only partly in his capital account and partly in the buildings account. 4. The ITO who examined the books of accounts found that as against a debit of Rs. 45,000 required to bring in the loan from the mother in the books there was only a debit of Rs. 25,000. It may be mentioned here that out of the loan of Rs. 45,000, Rs. 5,000 was already drawn by his mother. So the net balance was only Rs. 40,000. The ITO thought that the difference between Rs. 40,000 and the amount debited Rs. 25,000 was a fictitious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount is by and large correct. However, the personal bank account has number of credits during this accounting year. The assessee should have explained from where these credits had come. While accepting the explanation of the assessee, the AAC ought to have looked into this aspect and found out whether the credits found in the personal bank account are also properly explained. In fairness to the Department, it is necessary to make an investigation and the assessee is bound to explain these credits to the satisfaction of the ITO. For this purpose, we are setting aside this part of the order of the AAC. The assessee would explained the credits found in the personal bank account. 10. For statistical purposes, the appeal is partly allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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