2014 (3) TMI 771

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....ne Smt. N Radhabai as his power of attorney agent for conducting business of money lending and as franchise of M/s Wall Street Finance Ltd. According to the ld.representative, on 18-01- 2005, Circle Inspector of Police, Varkala seized Rs.3 lakhs from one Shri S Sabeer. The said S Sabeer is said to have been working under Shri S Basheer, the owner of Sulthana Jewellery. According to the ld.representative, the assessing officer, on the basis of the statement said to have been recorded from Smt. N Radhabai, the power of attorney holder of the assessee made the addition without giving any opportunity to cross examine the abovesaid Shri S Sabeer and Smt. N Radhabai. According to the ld.represntative, Smt. N Radhabai appears to have told the asse....

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....habai also admitted that she handed over Rs.3 lakhs on 18-01-2005, though she could not specifically remember the name of Shri S Sabeer, she clarified that the gentleman could be Shri S Sabeer. Therefore, the assessing officer verified the books of account and the assessee's financial transaction and found no entry with regard to transaction of Rs.3 lakhs. Therefore, according to the ld.DR, the assessing officer has rightly treated the transaction of Rs.3 lakhs as unaccounted transaction and the same was added as total income of the assessee. Since the books of account was not maintained properly, according to the ld.DR, the assessing officer estimated the income at 1% on the gross transactions. According to the ld.DR, 1% of the net profit ....

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....as not recorded in the books of account maintained by the assessee. Smt. N Radhabai, the power of attorney holder of the assessee was examined and she admitted in her sworn statement that the money given to Shri S Sabeer was not accounted in the books of account. 4.2 The question arises for consideration is whether the money seized from Shri S Sabeer is income of the assessee or not? Admittedly, the assessee is in the money lending business. The currency is the stock in trade of the assessee on 18-01-2005. The allegation against the assessee is that the power of attorney of the assessee handed over Rs.3 lakhs in exchange of Saudi Rials. It is not known from the materials available on record, how much Saudi Rial was handed over by Shri S ....

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....Rials as per the exchange rate as on 18-01-2005 should be available with the assessee. It is not forthcoming from the order of the assessing authority whether the equivalent amount of Saudi Rials as per the exchange rate was available with the assessee or not on that day. If the equivalent amount of Saudi Rials is not available with the assessee, then the entire transaction would be bogus and the claim of Shri S Sabeer that he received money from Smt. N Radhabai in exchange of Saudi Rials is also false. Therefore, this Tribunal is of the considered opinion that a proper enquiry was not conducted by the lower authorities to find out whether the transaction was made in exchange of Saudi Rials and if so what is the amount of Saudi Rials handed....