9911796707
TMI Blog1998 (7) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the AO for the following reasons. 3. The assessee is an individual. One V. Govindan is her husband and Anbashagan is their son. Govindan Sons is a proprietary concern of V. Govindan. M/s Kanagambal Textiles is the proprietary concern of the assessee, Smt. Kanagambal. Her business was entirely managed by her son Anbazhagan. A search was conducted on 22nd Dec., 1987, in the business of the above three persons and also at the residences. No cash, stocks or pronotes or other unaccounted valuables were found but some jewellery was seized. However, two memoranda accounts (rough books) were found both in respect of Govindan Sons and Kanagambal Textiles which related to 1st June, 1987 on the date of search 22nd Dec., 1987. The assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the basis dt. 15th Feb., 1988. But the AO did not accept the explanation contained in the above letter. According to the AO, the amounts must be actually assessed in the hands of the assessee as her undisclosed business income. For coming to the above conclusion, the following weight with the AO : (i) It was clear from the statements recorded from the assessee and her husband and son that the son was managing the affairs of Kanagambal Textiles and the son was deriving only salary income from Kanagambal Textiles; (ii) The son did not have any separate business premises, nor any separate sales-tax registration number or bank account for business purposes and his bank account was used only for depositing the salary income from Kanagam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Govindan and Anbazhagan. The CIT(A) next considered the ownership of the unaccounted capital in moneylending business. The CIT(A) found that the monies accumulated from the unaccounted transactions of Govindan Sons belonged to Govindan alone. With regard to the unaccounted transaction of Kanagambal Textiles, he found that the entire management was with Anbazhagan and that she knew only about the declared transactions. In those circumstances, according to the CIT(A), the money earned by Anbazhagan could only be treated as a form of defalcation, if it could be shown that those transactions were at the detriment of the mother's capital and if there was no detriment to mother's capital in the carrying out of these undisclosed transactions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , deleted the additions of Rs. 1,66,667, Rs. 1,37,190 and Rs. 1,66,667 respectively for the three years under consideration. Aggrieved, the Revenue is on appeal before us. 5. The learned Departmental Representative contended that the CIT(A) erred in deleting the above additions. According to the learned Departmental Representative the amounts represented profits outside the books of account. It is contended that the finding of the CIT(A) is only based on speculation and not supported by any evidence. He also contended that it is admitted that transactions have been recorded in a memoranda book titled 'Kanagambal Textiles' and that Anbazhagan was acting as an accountant and manager of his mother. Therefore, it is contended that the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individual business. Before the CIT(A), Smt. Kanagambal had also filed an affidavit a copy of which has been furnished before us and this can be seen at pp. 20 to 26 of the paper-book filed on behalf of the assessee. She has also admitted the aversions of her son Anbazhagan in his affidavit. But the fact that Anbazhagan has given statement due to threat by the investigating officers cannot be accepted for no witness was produced to that effect. 7. The question to be decided is regarding the credibility of the versions given at the time of search that unaccounted moneys earned in the cloth business were utilised for moneylending business. Anbazhagan has stated that the amounts earned by him outside the books were handedover to his father ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s necessary. The case of the assessee is that she is not aware of the undisclosed transactions but knew only about the disclosed transactions. Hence she cannot be assessed on the amounts undisclosed by her son. She has no undisclosed income. Her son, as shown above, has offered the undisclosed earnings for taxation. Hence, we hold that the CIT(A) is justified in deleting the additions of Rs. 1,66,667, Rs. 1,37,190 and Rs. 1,66,667 made by the AO for the asst. yrs. 1986-87, 1987-88 and 1988-89 respectively. We uphold his orders in this regard. 9. In the result, the appeals filed by the Revenue are dismissed. 10. Coming to the cross-objections filed by the assessee, we find that they are only in support of the order of the CIT(A). No po ..... X X X X Extracts X X X X X X X X Extracts X X X X
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