In this case merely on the basis of statement recorded during the search where Smt. Meena Garg i.e the assessee has said that she was not running any business concern in the name of M/s Punjab Timber Trading Co (Proprietorship Concern of the Assessee) Assessing officer has added the Income of the Assessee to Income of Punjab Plywood Industries in which male members of the family were partners.
Later on in respect of question No. 24, during the assessment proceedings she clearly stated that she was confused and nervous. Question No. 24 and its answer reads as under;-
“Q24. In the statement recorded on the date of search you have specified that you are not filing any return of income or have any business concern. Please clarify as to why you had stated so when today you are doing timber business.
Ans. I denied doing any business as I was nervous and thought the questions being asked related to my husband’s business.”
In the case it has not been shown by the revenue that any material was being purchased form M/s Punjab Plywood Industries or any amount has come from that firm. It is also not brought on record that business was conducted from the same premises.
Every person during the search sometimes nervous. Further, we find that Revenue has not shown whether any capital has moved from Punjab Plywood Industries to M/s Punjab Timber Trading Company. In the absence of such nexus, there is no provision to hold that the firm i.e. M/s Punjab Timber Trading Co run by the assessee was ‘benami’ of M/s Punjab Plywood Industries. Therefore, we set aside the order of Ld. CIT(A) and hold that M/s Punjab Timber Trading Company is not a bogus proprietary concern.