A search and seizure operation was carried out in case of assessee in course of which it was found that assessee had set up a private discretionary trust for benefit of his family members in British Virgin Islands.  None of investments made in trust were accounted for at any stage or disclosed to revenue authorities . Subsequently, trust was terminated and amount received by beneficiaries was offered to tax. In course of assessment proceedings, AO brought  to tax partial withdrawals as income of beneficiary who withdrew money.  CIT (A) confirmed action of AO  . On appeal the Tribunal held that as far as beneficiary is concerned, once source of funds received by him is explained, taxation could possibly be confined only to income component.  In case of settlor, he has to explain investments, which were not accounted for in his books of account or disclosed to revenue authorities at any stage prior to detection in search proceedings. On facts  since in instant case, investment in trust remained unexplained and uncorroborated, matter was to be remitted to AO for  examination de novo on all aspects. ( AY.2007 -08, 2008 -09)