Khosla Ice & General Mills, Ambala City V. DCIT, Ambala

ITSSA 32/CHANDI/2002

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8986 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-09-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 31-05-2002
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNITA PURI
• Keywords: Unexplained investment; Unexplained expenditure; Gift; Search and seizure; Loose papers; Document seized; Opportunity of being heard; Principle of natural justice; Source of fund; Retrospective amendment; Corroborative evidences; Assessment record; Block assessment; Documents seized
• Section: 69C; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI G. S.PANNU, ACCOUNTANT MEMBER AND MS.SUSHMA CHOWLA, JUDICIAL MEMBER I.T.(SS)A. NO.32 /CHANDI/2002 ( BLOCK ASSESSMENT PERIOD 01.04.1988 TO 07.10.1998 ) KHOSLA ICE & GENERAL MILLS. VS. D.C.I.T. (INVESTI GATION), 604, CIRCULAR ROAD, CIRCLE-II, AMBALA CITY. AMBALA. AND I.T.(SS)A. NO.44 /CHANDI/2002 ( BLOCK ASSESSMENT PERIOD 01.04.1988 TO 07.10.1998 ) A.C.I.T., VS. KHOSLA ICE & GENERAL MILLS. AMBALA. 604, CIRCULAR ROAD, AMBALA CITY. AND I.T.(SS)A. NO.33 /CHANDI/2002 ( BLOCK ASSESSMENT PERIOD 01.04.1988 TO 07.10.1998 ) M/S VED PARKASH PARDEEP KUMAR, VS. D.C.I.T. (INVES TIGATION), CIRCULAR ROAD, CIRCLE-II, AMBALA CITY. AMBALA. AND I.T.(SS)A. NO.43 /CHANDI/2002 ( BLOCK ASSESSMENT PERIOD 01.04.1988 TO 07.10.1998 ) A.C.I.T., VS. M/S VED PARKASH PARDEEP KUMAR, AMBALA. CIRCULAR ROAD, AMBALA CITY. AND I.T.(SS)A. NO.38 /CHANDI/2002 ( BLOCK ASSESSMENT PERIOD 01.04.1988 TO 07.10.1998 ) SMT.BHARTI KHOSLA (IND), VS. D.C.I.T. (INVESTIGA TION), 630, CIRCULAR ROAD, CIRCLE-II, AMBALA CITY. AMBALA. AND 2 I.T.(SS)A. NO.39 /CHANDI/2002 ( BLOCK ASSESSMENT PERIOD 01.04.1988 TO 07.10.1998 ) SMT.PREM LATA KHOSLA, VS. D.C.I.T. (INVESTIGATIO N), 630, CIRCULAR ROAD, CIRCLE-II, AMBALA CITY. AMBALA. AND I.T.(SS)A. NO.50 /CHANDI/2002 ( BLOCK ASSESSMENT PERIOD 01.04.1988 TO 07.10.1998 ) A.C.I.T., VS. RAKESH KHOSLA (HUF), AMBALA. 630,CIRCULAR ROAD,AMBALA CITY. PAN: - (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VINEET KRISHAN DEPARTMENT BY : SMT. SUNITA PURI O R D E R PER G. S. PANNU, AM : THE CAPTIONED APPEALS RELATE TO ASSESSEES OF SAME GROUP CALLED KHOSLA GROUP. SINCE SOME OF THE ISSUES IN VOLVED ARE COMMON AND ARISE FROM A SINGLE SEARCH AND SEIZURE O PERATION U/S 132(1) OF THE INCOME-TAX ACT, 1961 (IN SHORT T HE ACT), WE ARE PASSING A COMMON ORDER FOR THE SAKE OF CONVENIE NCE. 2. BEFORE WE TAKE UP FOR CONSIDERATION THE INDIVIDU AL APPEALS AS PER THE RESPECTIVE GROUNDS OF APPEAL, IT WOULD B E EXPEDIENT TO NARRATE THE BACKGROUND OF THE DISPUTE. THE PRIM ARY FACT LEADING TO THE CAPTIONED APPEALS IS THAT A SEARCH A ND SEIZURE OPERATION U/S 132(1) OF THE ACT WAS CONDUCTED AT VA RIOUS 3 RESIDENTIAL AND BUSINESS PREMISES OF THE GROUP ON 7 .10.1998. THEREAFTER, NOTICES U/S 158BC OF THE ACT WERE ISSUE D AND IN RESPONSE THE ASSESSEES FILED THEIR RESPECTIVE RETUR NS OF INCOME, WHICH HAVE BEEN SUBJECT TO BLOCK ASSESSMENT IN TERMS OF CHAPTER-XIVB OF THE ACT. IN THE SEARCH OPERATI ON, CERTAIN DOCUMENTS AND MATERIAL WERE FOUND AND SEIZED AS PER THE RESPECTIVE PANCHNAMAS PREPARED. THE ASSESSING OFFI CER HAS DETERMINED UNDISCLOSED INCOME IN THE COURSE OF BLOC K ASSESSMENT PROCEEDINGS FINALIZED IN THE CASE OF THE CAPTIONED ASSESSES AT FIGURES HIGHER THAN THOSE RETURNED. TH E ADDITIONS SO MADE WERE CARRIED IN APPEAL BEFORE THE COMMISSIO NER OF INCOME-TAX (A), WHO HAS ALLOWED PARTIAL RELIEF. NO T BEING SATISFIED WITH THE ORDERS OF THE COMMISSIONER OF IN COME-TAX (A), CAPTIONED ASSESSEES ARE IN APPEAL BEFORE THE T RIBUNAL AND IN CERTAIN CASES, REVENUE HAS ALSO CONTESTED THE RE LIEFS GRANTED BY THE COMMISSIONER OF INCOME-TAX (A) BY WA Y OF CAPTIONED APPEALS, BEFORE THE TRIBUNAL. 3. IN THE ABOVE CONTEXT, WE HAVE EXTENSIVELY HEARD THE RIVAL COUNSELS. THE ASSESSEE AS WELL AS THE REVENUE HAS FILED PAPER BOOKS IN THE RESPECTIVE APPEALS, TO WHICH OUR ATTENTION WAS DRAWN DURING THE COURSE OF THE HEARING. THE SU BMISSIONS MADE BY THE RIVAL COUNSELS HAVE BEEN CONSIDERED AND THE MATERIAL TO WHICH OUR ATTENTION WAS DRAWN HAS BEEN PERUSED. ON THE BASIS OF THE AFORESAID, WE PROCEED TO TAKE U P THE INDIVIDUAL APPEALS HEREINAFTER. 4. WE FIRST TAKE UP IT(SS)A.NOS.32 AND 44/CHANDI/20 02 WHICH ARE CROSS APPEALS BY THE ASSESSEE AND THE REV ENUE 4 RESPECTIVELY IN THE CASE OF M/S KHOSLA ICE AND GENE RAL MILLS, AMBALA CITY AND ARISE FROM THE ORDER OF THE COMMISS IONER OF INCOME-TAX (A) DATED 19.3.2002 WITH RESPECT TO THE BLOCK ASSESSMENT FINALIZED BY THE ASSESSING OFFICER U/S 1 58BC OF THE ACT DATED 30.10.2000 PERTAINING TO THE BLOCK PERIOD 1.4.1988 TO 7.10.1998. THE ASSESSEE IS A PARTNERSHIP FIRM CONS TITUTED OF TWO PARTNERS, S/SHRI RAJESH KHOSLA AND VED PARKASH KHOSLA HOLDING 95% AND 5% SHARE IN PROFITS AND LOSSES OF T HE FIRM RESPECTIVELY. THE FIRM IS ENGAGED IN RUNNING OF R ICE SHELLER IN AMBALA. IN RESPONSE TO A NOTICE U/S 158BC OF THE A CT ISSUED BY THE ASSESSING OFFICER REQUIRING THE ASSESSEE TO FILE ITS RETURN OF UNDISCLOSED INCOME, ASSESSEE FILED A RETU RN ON 7.2.2000 DECLARING NIL UNDISCLOSED INCOME. THE ASSE SSING OFFICER HOWEVER, DETERMINED THE TOTAL UNDISCLOSED I NCOME FOR THE BLOCK PERIOD AT RS.27,65,690/- IN THE ASSESSMEN T FINALIZED U/S 158BC OF THE ACT ON 30.10.2000. THE ADDITIONS MADE BY THE ASSESSING OFFICER WERE CHALLENGED IN APPEAL BEF ORE THE COMMISSIONER OF INCOME-TAX (A), WHO ALLOWED PARTIAL RELIEF. THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL A GAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A) ON VARI OUS GROUNDS WHICH WE SHALL DEAL IN SERIATIM HEREINAFTER . 5. IN THE APPEAL OF THE ASSESSEE, THE FIRST GROUND RAISED IS GENERAL IN NATURE AND THE SAME DOES NOT REQUIRE ANY ADJUDICATION AND IS ACCORDINGLY DISMISSED. 6. THE SECOND GROUND RAISED BY THE ASSESSEE READS A S FOLLOWS :- 5 2. THAT THE LEARNED COMMISSIONER OF INCOME- TAX (A) IN THE ABSENCE OF ACTUAL WEIGHMENT OF PADDY AND RICE LYING LOOSE IN HEAPS AT THE TIME OF SEARCH HAS ERRED IN ESTIMATING THE ALLEGED EXCESS STOCK AT 40 QTLS AS AGAINST 75.37 QLS WORKED OUT BY THE ASSESSING OFFICER ON ESTIMATION WITHOUT ANY BASIS, THEREBY RETAINING AN ADDITION OF RS.33,200/-. IN FACT THERE IS NO DIFFERENCE IN STOCK. ON THIS ASPECT, THE ASSESSING OFFICER HAD MADE A TO TAL ADDITION OF RS.83,287/- WHICH HAD BEEN REDUCED TO RS.33,200/ - BY THE COMMISSIONER OF INCOME-TAX (A), WHICH IS CONTESTED BY THE ASSESSEE BY WAY OF THE ABOVE GROUND OF APPEAL. THE REVENUE, IN THE CROSS APPEAL, HAS CONTESTED THE REL IEF OF RS.50,087/- ALLOWED BY THE COMMISSIONER OF INCOME-T AX (A) BY WAY OF GROUND NO.(I). SINCE THE RESPECTIVE GROUNDS RAISED BY THE ASSESSEE AS WELL AS THE REVENUE RELATE TO THE S AME CONTROVERSY, THE TWO CROSS-GROUNDS ARE BEING TAKEN UP TOGETHER. 7. BRIEFLY STATED THE DISPUTE ON THIS ISSUE IS ON A CCOUNT OF INVENTORY OF STOCK FOUND AT THE TIME OF SEARCH. AT THE TIME OF SEARCH AT THE BUSINESS PREMISES OF THE ASSESSEE FIR M, A PHYSICAL INVENTORY OF STOCK WAS PREPARED. IN THE C OURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED T O RECONCILE DIFFERENCE IN THE STOCK FOUND ON PHYSICAL VERIFICATION VIS-A-VIS THE STOCK POSITION AS PER THE BOOKS OF AC COUNT, AS ON THE DATE OF SEARCH. THE ASSESSING OFFICER NOTED TH AT AT THE TIME OF SEARCH, STOCKS OF PADDY, RICE, NAKKU AND PO LISH WERE FOUND. THE ASSESSING OFFICER, AFTER CONSIDERING TH E REPLIES OF THE ASSESSEE AND THE POSITION DEPICTED IN THE BOOKS OF ACCOUNT 6 HAS CONCLUDED THAT IN PHYSICAL TERMS THERE WAS AN E XCESS STOCK OF RICE OF 75.37 QTLS. FOUND DURING SEARCH AS COMPA RED TO THE STOCK POSITION AS PER THE BOOKS OF ACCOUNT. THE A SSESSING OFFICER APPLIED SALE PRICE OF RS.2251/- PER QTL. ON SUCH EXCESS STOCK AND COMPUTED THE UNDISCLOSED INCOME AT RS.83, 287/-. 8. THE ASSESSEE FIRM CONTENDED BEFORE THE COMMISSIO NER OF INCOME-TAX (A) THAT THE ASSESSING OFFICER WAS NOT J USTIFIED IN MAKING THE IMPUGNED ADDITION BECAUSE THE DIFFERENCE IN THE STOCK WAS COMPUTED ONLY ON AN ESTIMATE BASIS. IT W AS POINTED OUT THAT CERTAIN QUANTITY OF RICE AND PADDY WAS FOU ND LYING IN LOOSE HEAPS DURING PHYSICAL INSPECTION AND WAS NOT ACTUALLY FILLED IN BAGS. SUCH NUMBER OF BAGS WERE ESTIMATED, WHILE NO ACTUAL WEIGHMENT WAS DONE. IT WAS EXPLAINED THAT P ROCUREMENT AND ACTUAL SHELLING OF PADDY HAD STARTED ONLY 2-3 D AYS BEFORE THE DATE OF SEARCH AND IN SUCH A SHORT SPAN OF TIME THERE WOULD NOT BE MUCH DIFFERENCE, IF THE STOCK WAS ACTUALLY W EIGHED. IT WAS POINTED OUT THAT ASSESSEE WAS MAINTAINING COMPL ETE STOCK REGISTERS, WHICH WERE FOUND AND EXAMINED DURING THE COURSE OF SEARCH. FURTHER, WITH REGARD TO THE VALUE OF RS.2 251/- PER QTL. APPLIED BY THE ASSESSING OFFICER, IT WAS CONTENDED THAT SUCH RATE WAS RELATING TO BASMATI RICE, WHEREAS IN THE C ASE OF THE ASSESSEE, THE ONLY RICE FOUND WAS PARMAL, WHICH HAD A LOWER SALE RATE. THE COMMISSIONER OF INCOME-TAX (A) AGR EED WITH THE PLEA OF THE ASSESSEE THAT THE EXCESS STOCK CALC ULATED BY THE ASSESSING OFFICER INVOLVED AN ELEMENT OF ESTIMA TION. HE ALSO AGREED WITH THE ASSESSEE THAT THE RATE OF RICE TAKEN AT RS.2251/- PER QTL. BY THE ASSESSING OFFICER WAS NOT JUSTIFIED. AN ERROR IN THE ADDITION COMPUTED BY THE ASSESSING OFFICER WAS 7 ALSO NOTICED, IN AS MUCH AS THE COMMISSIONER OF INC OME-TAX (A) HAS POINTED OUT THAT THE COST OF 75.37QTLS. OF EXCESS STOCKS CALCULATED BY THE ASSESSING OFFICER AT RS.83,287/- WAS WRONG BECAUSE THE SAME CAME TO RS.67,657/- AFTER APPLYING THE RATE ADOPTED BY THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME-TAX (A) HAS PARTIALLY AGREED WITH THE ASSESS EE AND SCALED DOWN THE ESTIMATE OF EXCESS STOCK TO 40 QTLS . INSTEAD OF 75.37 QTLS AND ADOPTED THE SALE RATE OF RS.830/- PE R QTL, ON THE BASIS OF SALE BILLS OF THE ASSESSEE, THEREBY RETAIN ING AN ADDITION OF RS.33,200/- (I.E.RS.830X40 QTLS) AND DE LETED THE BALANCE OF RS. 50,087/-. 9. IN THE ABOVE BACKGROUND, THE LEARNED COUNSEL FOR THE ASSESSEE HAS VEHEMENTLY ARGUED THAT IN THE ABSENCE OF ANY ACTUAL WEIGHMENT OF THE STOCK DONE AT THE TIME OF P HYSICAL VERIFICATION, THE DIFFERENCE IN PHYSICAL STOCK VIZ- A-VIZ THE STOCK MAINTAINED AS PER THE BOOKS OF ACCOUNT, IS NOT RELI ABLE SO AS TO CONSTITUTE AN UNDISCLOSED INCOME ASSESSABLE TO TAX UNDER CHAPTER-XIVB OF THE ACT. IT WAS SUBMITTED THAT BY MERELY ESTIMATING THE PHYSICAL QUANTITY OF STOCK, IT COULD NOT BE SAID THAT THERE WAS ANY UNDISCLOSED INCOME DETECTED DURI NG THE COURSE OF SEARCH WITH RESPECT TO THE DIFFERENCE VIS --VIS THE STOCK AS PER THE BOOKS OF ACCOUNT. IN THIS REGARD, RELIANCE WAS PLACED ON THE DECISION OF THE DELHI BENCH OF THE TR IBUNAL IN THE CASE OF BANSAL STRIPS (P) LTD. VS. ACIT, 99 ITD 177 (DEL). 10. ON THE OTHER HAND, THE LEARNED D.R. APPEARING F OR THE REVENUE HAS ASSAILED THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A) AND SUPPORTED THE ADDITION MADE BY T HE 8 ASSESSING OFFICER. THE FIRST ARGUMENT PUT-FORTH BY THE LEARNED D.R. IS THAT THE PHYSICAL INVENTORY UNDERTAKEN AT T HE TIME OF SEARCH WAS IN THE PRESENCE OF THE ASSESSEE AND THE SAME WAS NOT OBJECTED TO, AT ANY STAGE PRIOR TO THE SHOWCAUS E NOTICE ISSUED BY THE ASSESSING OFFICER DURING THE ASSESSME NT PROCEEDINGS. THEREFORE, ACCORDING TO HER, THE EXCES S STOCK WORKED OUT BY THE ASSESSING OFFICER IN PARA 5.5 OF HIS ORDER, CANNOT BE ASSAILED BY THE ASSESSEE AT THIS STAGE. IT IS EMPHASIZED THAT EVIDENTLY AT THE TIME OF SEARCH, PH YSICAL STOCK WAS FOUND IN EXCESS OF THE STOCK SHOWN IN THE BOOKS OF ACCOUNT AND, THEREFORE, THE ADDITION IN QUESTION HAS BEEN R IGHTLY MADE IN THE BLOCK ASSESSMENT FINALIZED U/S 158BC OF THE ACT. 11. WE HAVE CAREFULLY EXAMINED THE RIVAL STANDS ON THIS ASPECT. FROM THE ORDERS OF THE AUTHORITIES BELOW, IT IS EVIDENT THAT THE IMPUGNED ADDITION HAS BEEN MADE ON ACCOUNT OF EXCESS STOCK FOUND AT THE TIME OF SEARCH IN COMPARI SON TO THE STOCK POSITION IN THE BOOKS OF ACCOUNT. THE PRIMAR Y CONTENTION OF THE ASSESSEE IS THAT THE PHYSICAL VERIFICATION O F STOCKS WAS CARRIED OUT ON ESTIMATION AND THEREFORE, THE DIFFER ENCE IN STOCK, DOES NOT ESTABLISH ANY UNDISCLOSED INCOME IN THE HA NDS OF THE ASSESSEE. ON THIS POINT, IN OUR CONSIDERED OPINION, THE LEARNED CIT-DR HAS RIGHTLY CONTENDED THAT THE PHYSICAL INVE NTORY WAS TABULATED IN THE COURSE OF SEARCH PROCEEDINGS IN TH E PRESENCE OF THE ASSESSEE FIRM OR ITS REPRESENTATIVE AND THER E IS NO MATERIAL ON RECORD TO SHOW THAT ANY OBJECTIONS HAVE BEEN RAISED BY THE ASSESSEE AT THE EARLIEST OPPORTUNITY AGAINST SUCH INVENTORY. EVEN OTHERWISE, WE FIND AMPLE FORCE IN THE OBSERVATION OF THE CIT(APPEALS) THAT SINCE THERE WA S LOOSE 9 HEAPS OF RICE AND PADDY, CERTAIN ELEMENT OF ESTIMAT ION IN PHYSICAL INVENTORY COULD NOT BE RULED OUT. CONSIDE RING THE FACT POSITION, WE THEREFORE ARE NOT INCLINED TO ENTERTAI N THE PRESENT OBJECTION OF THE ASSESSEE THAT THE PHYSICAL INVENTO RY DURING SEARCH DID NOT REVEAL ANY EXCESS STOCK. REGARDING T HE QUANTIFICATION OF THE ADDITION, IT IS SEEN THAT THE ASSESSING OFFICER ESTIMATED THE EXCESS STOCK AT 75.37 QTLS. O F RICE AND APPLIED A RATE OF RS.2251/- PER QUINTAL TO COMPUTE THE ADDITION AT RS.83,287/-. THE CIT(APPEALS) HAS SCALED DOWN THE ESTIMATION OF EXCESS STOCK TO 40 QTLS. AND HAS ADOP TED A RATE OF RS. 830/- PER QUINTAL TO WORK OUT AN ADDITION OF RS .33,200/-. IN OUR VIEW, RATE OF RS.830/- ADOPTED BY THE CIT(APPEA LS) IS QUITE JUSTIFIED BECAUSE THE ASSESSEE POINTED OUT THAT THE RATE ADOPTED BY THE ASSESSING OFFICER WAS OF BASMATI RIC E, WHEREAS ADMITTEDLY, IN THIS CASE THE EXCESS STOCK FOUND WAS OF PARMAL RICE VARIETY, WHOSE SALE RATE IS OSTENSIBLY LOWER. AT PAGE 30 OF THE PAPER BOOK IS PLACED COPY OF THE SALE BILL O F THE ASSESSEE WHICH CORROBORATES THE ADOPTION OF THE RAT E OF RS.830/- PER QUINTAL BY THE CIT(APPEALS). CONSIDER ING THE OVERALL CIRCUMSTANCES, WE HEREBY AFFIRM THE ORDER O F THE CIT(APPEALS) ON THIS ASPECT. ACCORDINGLY, GROUND NO .2 IN THE APPEAL OF THE ASSESSEE AND GROUND NO.(II) IN APPEAL OF THE REVENUE ARE DISMISSED. 12. THE THIRD GROUND OF APPEAL RAISED BY THE ASSE SSEE READS AS FOLLOWS:- 3. THAT THE LEARNED ASSESSING OFFICER PROCEEDED ON WRONG ASSUMPTION AND THE 10 LEARNED COMMISSIONER OF INCOME-TAX (A) ERRED IN CONFIRMING THE SAME THAT D.NO.22 OF ANNEXURE A-18 BELONGED TO THE APPELLANT AND CONTAINED DETAILS OF SALE OF RICE AS THE DOCUMENT UNDER REFERENCE IS A DUMB DOCUMENT AND DOES NOT BELONG TO THE APPELLANT. THEREFORE, THE ADDITION OF RS.11,76,596/- AND RS.5,95,000/- AND THEIR CONFIRMATION IS HIGHLY UNJUSTIFIED. BRIEFLY STATED THE FACTUAL POSITION ON THIS DISPUTE CAN BE APPRECIATED AS FOLLOWS. IN THE COURSE OF SEARCH OPE RATION AT THE RESIDENCE OF SHRI PARDEEP KHOSLA S/O SHRI VED PARKA SH KHOSLA, A DOCUMENT IDENTIFIED AS D NO.22 OF ANNEXURE A-18 W AS FOUND AND SEIZED. A COPY OF THE SAID DOCUMENT HAS BEEN P LACED IN THE PAPER BOOK OF THE ASSESSEE AT PAGE NO. 95. THI S DOCUMENT CONTAINED SOME NOTINGS ON THE FRONT AS WEL L AS THE BACK SIDE, WHICH HAVE BEEN REPRODUCED BY THE ASSESS ING OFFICER IN PARA 8.1 OF HIS ORDER. THE SAID DOCUMEN T CONTAINED THE WORDS KHOSLA SAHIB AT THE TOP OF THE FRONT PAGE. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN THE NATURE OF THE NOTING MADE ON BOTH SIDES OF THE DOCUMENT. AS PER THE ASSESSING OFFICER, IN TERMS OF SECTION 132(4A) OF T HE ACT, BURDEN IS ON THE ASSESSEE TO EXPLAIN THE CONTENTS O F THE DOCUMENT FOUND DURING THE COURSE OF SEARCH. AFTER CONSIDERING THE EXPLANATION RENDERED BY THE ASSESSEE, WHICH HA S BEEN REPRODUCED BY THE ASSESSING OFFICER IN PARA 8.3 OF HIS ORDER, HE HAS INFERRED THAT THE TRANSACTIONS NOTED ON THE DOCUMENT, REFLECT UNACCOUNTED SALES OF RICE AND BROKEN RICE UNDERTAKEN BY THE ASSESSEE. ACCORDINGLY, IN RELATION TO THE TR ANSACTIONS ON THE FRONT SIDE OF THE DOCUMENT, HE TREATED THE SAME AS 11 UNACCOUNTED SALE CONSIDERATION OF RICE, AMOUNTING T O RS.5,95,900/-, AND ASSESSED IT AS UN-DISCLOSED INCO ME FOR THE ASSESSMENT YEAR 1998-99. SIMILARLY, WITH REGARD TO THE TRANSACTIONS ON THE BACK SIDE OF THE DOCUMENT, A SU M OF RS.11,17,596/- HAS BEEN TREATED AS UNACCOUNTED SALE CONSIDERATION OF BROKEN RICE, WHICH IS ASSESSED AS UN- DISCLOSED INCOME FOR THE ASSESSMENT YEAR 1998-99. T HE COMMISSIONER OF INCOME-TAX (A) HAS ALSO UPHELD THE ADDITIONS MADE BY THE ASSESSING OFFICER. 13. IN THIS BACKGROUND, THE LEARNED COUNSEL FOR THE ASSESSEE HAS REITERATED BEFORE US SIMILAR SUBMISSIONS WHICH WERE MADE BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE COMMISSIONER OF INCOME-TAX (A), WHICH ARE ON THE FO LLOWING LINES. THE STAND OF THE ASSESSEE IS THAT THE DOCUM ENT DOES NOT PERTAIN EITHER TO THE FIRM OR TO ANY OF ITS PARTNER S; THAT IT IS NEITHER WRITTEN BY ANY OF THE PARTNERS OR MUNIM OF THE ASSESSEE FIRM; THAT THE NATURE OF THE NOTINGS MADE IN THE DO CUMENT ARE NOT IN THE KNOWLEDGE OF THE ASSESSEE OR ITS PARTNER S; THAT EXCEPT MENTION OF KHOSLA SAHIB , IT DOES NOT BEAR THE NAME OF ANY PERSON AND UNDER SUCH CIRCUMSTANCES THE SAID DO CUMENT CANNOT BE ATTRIBUTED TO THE ASSESSEE FIRM OR ITS PA RTNERS; IT IS FURTHER SUBMITTED THAT THE SAID DOCUMENT DOES NOT S HOW THE NATURE OF NOTINGS OF THE FIGURES CONTAINED THEREIN ; THAT THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER OF IN COME-TAX (A) MERELY PRESUMED THAT IT REFLECTED SALES OF RICE AND BROKEN RICE, WITHOUT THERE BEING ANY EVIDENCE OR MATERIAL TO SUPPORT THE SAME; THAT THE DOCUMENT DOES NOT EVEN SHOW THE NATURE OF GOODS, ITS QUALITY OR VARIETY, ETC. TO SUPPORT THE THEORY OF THE 12 ASSESSING OFFICER THAT THE DOCUMENT SHOWS UNACCOUN TED SALES. FURTHER IT IS POINTED OUT THAT THERE IS NO MATERIAL WHATSOEVER, TO SUPPORT THE PRESUMPTION OF THE ASSESSING OFFICER TH AT THE ENTRIES RELATE TO THE FINANCIAL YEAR RELEVANT TO TH E ASSESSMENT YEAR 1998-99, FOR WHICH THE ADDITION HAS BEEN MADE. IN NUTSHELL, IT IS CONTENDED THAT THE IMPUGNED DOCUME NT WAS ONLY A DUMB DOCUMENT WHICH DOES NOT SHOW ANY INCOME MUCH LESS UN-DISCLOSED INCOME ASSESSABLE IN THE HANDS OF THE ASSESSEE UNDER CHAPTER-XIV-B OF THE ACT. ON THIS ASPECT, TH E ASSESSEE HAS RELIED UPON ON THE FOLLOWING DECISIONS :- I) JAGDAMBA RICE MILLS,67 TTJ 838(CHD) II) ASHWANI KUMAR VS. ITO,39 ITD 183(DEL) III) BANSAL STRIPS (P) LTD.,99 ITD 177 (DEL) IV) DELUXE SANITARY APPLIANCES VS. ACIT, I.T.A.NO. 379/CHD/01 14. IT WAS, THEREFORE, ARGUED THAT NO ADDITION CAN BE MADE ON THE BASIS OF THE IMPUGNED DOCUMENT SINCE THE SAME W AS NOT A SPEAKING DOCUMENT AS IT DID NOT CONTAIN ANY NARRATION/DESCRIPTION ETC. OF THE ENTRIES NOTED THE REIN. THE LEARNED COUNSEL ALSO SUBMITTED THAT SECTION 132(4A) OF THE ACT, RELIED BY THE ASSESSING OFFICER, ONLY RAISES A REBU TTABLE PRESUMPTION THAT THE SAID DOCUMENT PERTAINS TO THE ASSESSEE, AND THE ASSESSEE HAS DEMONSTRATED THAT THE SAID DOC UMENT NEITHER PERTAINS TO IT AND NOR DOES IT REFLECT ANY UNACCOUNTED SALES EFFECTED BY THE ASSESSEE AND, THEREFORE, THE BURDEN CAST ON THE ASSESSEE IN TERMS OF SECTION 132(4A) OF THE ACT HAS BEEN DISCHARGED. AT THIS STAGE, THE LEARNED COUNSE L ALSO REFERRED TO THE WRITTEN SUBMISSIONS DATED 30.10.200 0, FILED 13 BEFORE THE ASSESSING OFFICER, WHEREIN THE PRESENCE OF SUCH DOCUMENT WITH THE ASSESSEE HAS BEEN EXPLAINED. IT W AS EXPLAINED THAT THE DOCUMENT IN QUESTION WAS INADVER TENTLY LEFT AT ASSESSEES PREMISES BY A VISITOR AND THE SAME GO T MIXED-UP WITH ASSESSEES OWN PAPERS WITHOUT GETTING NOTICED. WITH REGARD TO THE SUSTENANCE OF ADDITION BY THE COMMIS SIONER OF INCOME-TAX (A), IT IS SUBMITTED THAT THOUGH THE COM MISSIONER OF INCOME-TAX (A) CONCURRED WITH THE ASSESSEE THAT THE DOCUMENT WAS NOT WRITTEN BY ANY OF THE MEMBERS OF KHOSLA FAM ILY BUT AT THE SAME TIME HE HAS HELD THAT THE NOTINGS CONTAINE D IN THE DOCUMENT BELONGED TO THE KHOSLA FAMILY. IT IS SUBM ITTED THAT THIS CONTRADICTION IN THE APPROACH OF THE COMMISSIO NER OF INCOME-TAX (A), CLEARLY SHOWED THAT THE CONCLUSION OF THE COMMISSIONER OF INCOME-TAX (A) IS UNSUSTAINABLE. 15. ON THE OTHER HAND, THE LEARNED D.R. APPEARING F OR THE REVENUE HAS DEFENDED THE CONCLUSION DRAWN BY THE LO WER AUTHORITIES BY RELYING ON THE DISCUSSION MADE IN TH E RESPECTIVE ORDERS. FIRSTLY, IT IS CONTENDED BY THE LEARNED D. R. THAT THE DOCUMENT WAS FOUND IN THE RESIDENCE OF THE SON OF O NE OF THE PARTNERS OF ASSESSEE FIRM AND IT CONTAINED THE NAME OF KHOSLA SAHIB AND, THEREFORE, IN TERMS OF SECTION 132(4A) OF THE ACT, THERE WAS A PRESUMPTION THAT THE SAME BELONGED TO T HE ASSESSEE FIRM. IN ANY CASE, IT IS CONTENDED BY THE LEARNED D.R. THAT THE DOCUMENT HAVING BEEN FOUND IN THE RES IDENTIAL PREMISES, THE ONUS WAS ON THE ASSESSEE TO EXPLAIN T HE NOTINGS MADE THEREIN. IN THIS CONNECTION, THE LEARNED D.R. POINTED OUT THAT THE DOCUMENT WAS SEIZED FROM THE RESIDENCE OF SHRI PARDEEP KHOSLA, S/O SHRI VED PARKASH KHOSLA AND IN THE 14 COURSE OF STATEMENT RECORDED AT THE TIME OF SEARCH, SHRI PARDEEP KHOSLA WAS REQUIRED TO EXPLAIN THE CONTENTS OF THE IMPUGNED DOCUMENT. IN THIS CONNECTION, COPY OF THE STATEMENT OF SHRI PARDEEP KHOSLA RECORDED ON 7.10.1998, AT TH E TIME OF SEARCH WAS REFERRED TO. IT IS POINTED OUT THAT SHR I PARDEEP KHOSLA DENIED ANY KNOWLEDGE OF THE SAID DOCUMENT DU RING HIS EXAMINATION ON THE DATE OF THE SEARCH. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FIRM WAS CONFR ONTED WITH THE SAID DOCUMENT BECAUSE THE CASE OF THE ASSE SSING OFFICER IS THAT THE ENTRIES IN THE SAID DOCUMENT IN DICATE BILL NUMBER, WEIGHT, RATE AND THE AMOUNT AT WHICH THE SA LES HAVE BEEN MADE BY THE ASSESSEE. IT IS EXPLAINED THAT LO OKING AT THE AMOUNTS ENTERED IN THE COLUMN OF RATE, ASSESSING OF FICER HAS INFERRED THAT THE ENTRIES ON THE FRONT SIDE OF THE DOCUMENT REFLECT SALES OF RICE AND THE ENTRIES ON THE BACK S IDE REFLECT SALES OF BROKEN RICE. THE LEARNED D.R. ALSO POINTE D OUT THAT IN THE ABSENCE OF ANY EXPLANATION PUT-FORTH BY THE ASS ESSEE, THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE IMPUG NED ADDITION. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. THE SUM AND SUBSTANCE OF THE DISPUTE IN THIS GROUND REL ATES TO THE ADDITION MADE BY THE ASSESSING OFFICER ON THE BASIS OF A DOCUMENT SEIZED DURING THE COURSE OF SEARCH FROM TH E RESIDENCE OF SHRI PARDEEP KUMAR KHOSLA, WHO IS SON OF SHRI V.P.KHOSLA, A PARTNER OF THE ASSESSEE FIRM. THE AD DITION HAS BEEN MADE BY THE ASSESSING OFFICER IN ORDER TO DETE RMINE UNDISCLOSED INCOME OF THE BLOCK PERIOD 01.04.1988 T O 07.10.1998 IN TERMS OF CHAPTER XIV-B OF THE ACT. I T IS A SETTLED 15 PROPOSITION THAT UNDISCLOSED INCOME OF THE BLOCK PE RIOD IS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE A CT, BASED ON THE EVIDENCE FOUND AS A RESULT OF THE SEARCH OR OTHER DOCUMENTS AND SUCH OTHER MATERIAL AND INFORMATION A S IS AVAILABLE WITH THE ASSESSING OFFICER, WHICH IS RELA TABLE TO SUCH EVIDENCE. SECTION 158BB OF THE ACT PERMITS DETERMI NATION OF UNDISCLOSED INCOME PRIMARILY ON THE BASIS OF THE EV IDENCE FOUND AS A RESULT OF SEARCH. IN THIS CASE, THE IMPU GNED DOCUMENT CONTAINING SOME ENTRIES WAS SEIZED FROM TH E RESIDENCE OF AN INDIVIDUAL WHO IS SON OF ONE OF THE PARTNERS OF THE ASSESSEE FIRM. THE FIRM SUBMITTED THAT THE SEI ZED DOCUMENT WAS NEITHER IN THE HANDWRITING OF ANY OF T HE PARTNERS AND NOR DID IT BELONG TO THE FIRM OR ANY OF ITS PAR TNERS. THE ASSESSING OFFICER, HOWEVER TREATED THE FIGURES ON T HE FRONT SIDE OF THE DOCUMENT AS REFLECTING SALE CONSIDERATION OF RICE AND THE FIGURES APPEARING ON THE BACK SIDE OF THE DOCUMENT AS REFLECTING SALE CONSIDERATION OF BROKEN RICE, SOLD BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT. NO DOUBT, W HILE COMPLETING AN ASSESSMENT, ASSESSING OFFICER IS NOT BOUND BY THE STRICT RULES OF EVIDENCE. HE IS ENTITLED TO DRA W HIS OWN CONCLUSIONS AND INFERENCES BASED ON THE CUMULATIVE EFFECT OF VARIOUS CIRCUMSTANCES, CONSIDERING THE TESTS OF HUM AN PROBABILITIES ALSO. SO HOWEVER, WHILE TECHNICAL RUL ES OF EVIDENCE MAY NOT STRICTLY APPLY TO ASSESSMENT PROCE EDINGS UNDER THE ACT, YET NO ASSESSMENT CAN BE BASED ON ME RE SUSPICION, CONJECTURES AND SURMISES. IN THIS CASE, THE DOCUMENT IN QUESTION WAS CONFRONTED TO THE ASSESSEE AND AS PER THE ASSESSING OFFICER, PRESUMPTION U/S 132(4A) OF THE ACT OPERATES AGAINST ASSESSEE AND THEREFORE, THE ASSESS EE IS 16 LIABLE TO EXPLAIN THE SAID DOCUMENT. SECTION 132(4 A) PROVIDES THAT WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR TH INGS ARE FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE C OURSE OF SEARCH, IT MAY BE PRESUMED THAT SUCH ITEMS BELONG T O SUCH PERSON AND THAT THE CONTENTS OF SUCH BOOKS OF ACCOU NT AND OTHER DOCUMENTS ARE TRUE. QUITE CLEARLY, IN TERMS O F SECTION 132(4A) OF THE ACT, A PERSON FOUND IN POSSESSION OR CONTROL OF ANY DOCUMENT OR OTHER ASSET IS REQUIRED TO EXPLAIN THE SAME. IT IS WELL UNDERSTOOD THAT THE PRESUMPTION IN SECTION 132(4A) IS A REBUTTABLE PRESUMPTION AND SUCH A PRESUMPTION BY ITSELF IS NOT CONCLUSIVE TO FASTEN ANY TAX LIABILITY ON THE P ERSON FOUND IN POSSESSION OR CONTROL OF ANY DOCUMENT OR OTHER ASSE T MENTIONED IN SECTION 132(4A) OF THE ACT. 17. IN THIS BACKGROUND, WE MAY NOW CONSIDER THE FAC TS OF THE INSTANT CASE. A COPY OF THE SEIZED DOCUMENT IN QUE STION HAS BEEN PLACED AT PAGE 95 OF THE PAPER BOOK. THE ENTR IES FOUND NOTED ON THE FRONT-SIDE AS WELL AS ON THE BACK-SIDE HAVE BEEN ENUMERATED BY THE ASSESSING OFFICER IN PARA 8.1 OF ASSESSMENT ORDER. EVEN A CURSORY GLANCE AT THE IMPUGNED DOCUM ENT SHOWS THAT THERE IS NO DESCRIPTION OF THE NATURE OF ENTRI ES MADE THEREIN. IT DOES NOT INDICATE AS TO WHETHER THE EN TRIES REFLECT PURCHASES EFFECTED BY THE ASSESSEE OR SALES EFFECTE D BY THE ASSESSEE, INFACT IT DOES NOT EVEN CONTAIN THE NAME OF THE ASSESSEE FIRM. IT IS ALSO CLEAR THAT THE DOCUMENT I S UNSIGNED. IN NUT-SHELL, A PERUSAL OF THE DOCUMENT INDICATES THAT THERE IS NO LANGUAGE USED TO DECIPHER THE FIGURES AND THE ENTRI ES MADE THEREIN. THE ASSESSING OFFICER HAS PRESUMED THAT E NTRIES ON 17 THE FRONT-SIDE REFLECT SALES OF RICE WHILE THE ENTR IES ON THE BACK-SIDE REFLECT SALES OF BROKEN RICE. PERTINENTL Y, WE FIND NO CORROBORATIVE EVIDENCE ON RECORD TO SUPPORT THE INF ERENCE OF THE ASSESSING OFFICER THAT THE ENTRIES IN THE SAID DOCUMENT REFLECT SALES OF RICE AND BROKEN RICE. NEITHER IS T HERE ANY MATERIAL TO SHOW THAT SUCH SALES HAVE BEEN UNDERTAK EN BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT. 18. NOTABLY, THE SAID DOCUMENT WAS FOUND FROM THE RESIDENCE OF SHRI PARDEEP KUMAR KHOSLA, SON OF ONE OF THE PARTNERS OF THE ASSESSEE FIRM. IN THE COURSE OF HEA RING, LEARNED CIT-DR HAS FURNISHED A REPORT OF THE ASSESSING OFFI CER DATED 14.10.2009 WHEREBY IT IS POINTED OUT THAT THE SAID DOCUMENT WAS CONFRONTED TO SHRI PARDEEP KUMAR KHOSLA ALSO DU RING THE COURSE OF SEARCH PROCEEDINGS ON 07.10.1998. A COPY OF THE STATEMENT OF SHRI PARDEEP KUMAR KHOSLA RECORDED ON 07.10.1998 HAS ALSO BEEN PLACED ON RECORD. IN REPLY TO A QUESTION, IT HAS BEEN DEPOSED BY SHRI PARDEEP KUMAR KHOSLA THAT HE HAD NO KNOWLEDGE ABOUT THE DOCUMENT. NO FU RTHER QUESTIONS HAVE BEEN PUT TO SHRI PARDEEP KUMAR KHOSL A ON THE STATED DOCUMENT. DURING ASSESSMENT PROCEEDINGS, AS SESSEE FIRM WAS CONFRONTED WITH THE SAID DOCUMENT AND IN R ESPONSE, IT WAS CONTENDED THAT THE SAID DOCUMENT DID NOT PERTAI N TO THE ASSESSEE FIRM. IT WAS FURTHER CONTENDED THAT THE EN TRIES MADE IN THE SAID DOCUMENT WERE NEITHER IN THE HANDWRITIN G OF ANY OF THE PARTNERS NOR OF THE MUNIM OF THE ASSESSEE FIR M. IT WAS ALSO CONTENDED THAT THE SAME DOES NOT BEAR THE NAME OF THE ASSESSEE FIRM. CLEARLY, THE ASSESSEE FIRM DENIED T HE OWNERSHIP OF THE DOCUMENT AND ALSO THE INFERENCE SO UGHT TO BE 18 DRAWN BY THE ASSESSING OFFICER. CLEARLY, IN THE FAC E OF DENIALS BY THE PERSON ON WHOM THE SEIZED DOCUMENT WAS FOUND (I.E. SH. PRADEEP KUMAR KHOSLA) AND THE ASSESSEE FIRM AND , CONSIDERING THAT THERE IS NO CLINCHING NARRATION OF THE ENTRIES MADE IN THE DOCUMENT TO LINK THE ASSESSEE FIRM, THE BURDEN WAS ON THE REVENUE TO ESTABLISH THAT THE SEIZED DOC UMENT REFLECTED ANY INCOME IN CONTROL AND POSSESSION OF T HE ASSESSEE FIRM. IN OUR CONSIDERED OPINION, ASSESSEE RIGHTLY C ONTENDED THAT THE IMPUGNED DOCUMENT WAS A DUMB DOCUMENT IN A S MUCH AS IT DOES NOT CONTAIN ANY INTELLIGIBLE NARRATION I N SUPPORT OF THE INFERENCE DRAWN BY THE ASSESSING OFFICER THAT I T REFLECTED SALES CARRIED OUT BY THE ASSESSEE OUTSIDE THE REGUL AR BOOKS OF ACCOUNT. 19. WHEN A DUMB DOCUMENT, LIKE THE PRESENT BEFORE U S, IS TO BE MADE THE BASIS TO FASTEN TAX LIABILITY ON THE AS SESSEE, THE BURDEN IS ON THE REVENUE TO ESTABLISH WITH CORROBOR ATIVE EVIDENCE THAT THE NATURE OF ENTRIES CONTAINED THERE IN REFLECT INCOME AND ALSO THAT SUCH INCOME WAS IN THE CONTROL OF THE ASSESSEE. THUS, IN THIS CASE, REVENUE HAS TO ESTAB LISH, WITH NECESSARY CORROBORATIVE EVIDENCE, THAT VARIOUS ENTR IES CONTAINED IN THE SEIZED DOCUMENT REFLECT SALES OF R ICE AND BROKEN RICE EFFECTED BY THE ASSESSEE. OSTENSIBLY, NO COGENT EVIDENCE OR MATERIAL HAS BEEN BROUGHT OUT BY THE AS SESSING OFFICER TO SUPPORT HIS INFERENCE THAT THE ENTRIES R ECORDED IN THE SEIZED DOCUMENT REFLECT SALES EFFECTUATED BY THE AS SESSEE OUTSIDE THE BOOKS OF ACCOUNT. IN FACT, STRICTLY SP EAKING THE SAID DOCUMENT CANNOT BE SAID TO HAVE BEEN FOUND IN THE P OSSESSION OF THE ASSESSEE FIRM AS IT HAS NEITHER BEEN RECOVER ED FROM THE 19 BUSINESS PREMISES OF THE ASSESSEE FIRM AND NOR FROM ANY OF ITS PARTNERS. ON THE CONTRARY, IT HAS BEEN FOUND ON S HRI PARDEEP KHOSLA, SON OF ONE OF THE PARTNERS OF THE ASSESSEE FIRM. CURIOUSLY, WHEN SHRI PRADEEP KUMAR KHOSLA WAS QUEST IONED ABOUT THE SEIZED DOCUMENT, HE HAS MERELY DENIED KNO WLEDGE ABOUT IT. WITHOUT ANY FURTHER QUESTIONING, IT IS IN EXPLICABLE AS TO WHAT PROMPTED THE ASSESSING OFFICER TO CONCLUDE THAT THE DOCUMENT PERTAINED TO THE ASSESSEE FIRM. 20. CONSIDERING THE ENTIRETY OF CIRCUMSTANCES, IN T HE ABSENCE OF ANY MATERIAL TO SUPPORT THE NATURE AND OWNERSHIP OF THE ENTRIES FOUND IN THE SEIZED DOCUMENT, NO ADDITION I S PERMISSIBLE IN THE HANDS OF THE ASSESSEE AS UNDISCL OSED INCOME BY MERELY ARITHMETICALLY TOTALING VARIOUS FI GURES JOTTED DOWN ON SUCH DOCUMENT. THUS, WE ARE INCLINED TO AGR EE WITH THE CONTENTIONS RAISED BY THE ASSESSEE THAT THE IMP UGNED ADDITION IS UNTENABLE. WE HOLD SO. 21. BEFORE PARTING, WE MAY REFER TO THE ARGUMENT TA KEN BY THE CIT(APPEALS) TO SUSTAIN THE IMPUGNED ADDITION. AS PER THE CIT(APPEALS), THOUGH DOCUMENT WAS NOT WRITTEN BY AN Y OF THE MEMBERS OF THE KHOSLA FAMILY, BUT ACCORDING TO HIM, BECAUSE OF THE PRESENCE OF WORDS KHOSLA SAHIB ON TOP OF THE DOCUMENT, IT HAS TO BE PRESUMED THAT THE DOCUMENT IS IN RESPECT OF TRANSACTIONS OF KHOSLA FAMILY. FOR THE SAID REASON , HE HAS UPHELD THE IMPUGNED ADDITION IN THE HANDS OF THE AS SESSEE FIRM. IN OUR CONSIDERED OPINION, THE CONCLUSION DRA WN BY THE CIT(APPEALS) IS IN VARIANCE WITH THE MATERIAL AND F ACTS ON RECORD. THERE IS NO JUSTIFICATION TO INFER THAT THE ENTRIES IN THE 20 IMPUGNED DOCUMENT REFLECT SALES EFFECTED BY THE ASS ESSEE FIRM AND THEREFORE, THE ADDITION IS UNSUSTAINABLE. EVEN IF THE PRESUMPTION OF THE CIT(A) THAT THE IMPUGNED DOCUMEN T IS IN RESPECT OF TRANSACTIONS OF KHOSLA FAMILY IS ACCEPTE D, YET IT IS NOT ENOUGH TO MAKE THE IMPUGNED ADDITION, SINCE THE RE IS NOTHING TO SUGGEST THAT THE ENTRIES CONTAINED IN TH E SEIZED DOCUMENT REFLECT SALES UNDERTAKEN BY THE ASSESSEE F IRM OUTSIDE THE BOOKS OF ACCOUNT. THIS ASPECT OF THE MATTER HA S BEEN OVERLOOKED BY THE CIT(APPEALS) AND THEREFORE, WE FI ND NO MERIT IN THE IMPUGNED CONCLUSION OF THE CIT(APPEALS). ACC ORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(APPEALS) AND DIRE CT THE ASSESSING OFFICER TO DELETE THE ADDITIONS OF RS.5,9 5,500/- AND RS.11,76,596/- MADE AS UNACCOUNTED SALE OF RICE AND BROKEN RICE RESPECTIVELY. THUS, ON GROUND NO.3, ASSESSEE S UCCEEDS. 22. THE FOURTH GROUND OF APPEAL RAISED BY THE ASSES SEE READS AS FOLLOWS:- 4. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (A) ERRED IN SUSTAINING THE ADDITION OF RS.34,500/- ON ACCOUNT OF ALLEGED UNDISCLOSED INVESTMENT IN THE PURCHASE OF SCOOTER IN THE NAME OF NATHI RAM. THE BRIEF FACTS RELATING TO THE SAID ADDITION ARE A S FOLLOWS. DOCUMENT NOS.40 TO 42 OF ANNEXURE A-26 SEIZED FROM THE BUSINESS PREMISES OF THE ASSESSEE FIRM AND DOCUMENT NOS.33 TO 35 OF ANNEXURE AA-9 SEIZED FROM THE RESIDENCE OF SHRI VED PARKASH KHOSLA, PARTNER OF ASSESSEE FIRM, RELATE TO THE PURCHASE OF A SCOOTER. IT WAS FOUND TO HAVE BEEN P URCHASED IN THE NAME OF ONE SHRI NATHI PRASAD, EMPLOYEE OF ASSE SSEE FIRM 21 ON 13.2.1998. THE ASSESSING OFFICER NOTICED IN THE ASSESSMENT ORDER THAT WHEN SHRI NATHI PRASAD WAS EX AMINED BY THE AUTHORIZED OFFICER ON 17.10.1998 IN THE COUR SE OF SEARCH, HE DENIED THE OWNERSHIP OF THE SCOOTER. TH EREFORE, THE ASSESSEE FIRM WAS REQUIRED TO EXPLAIN THE AFORESAID IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. 23. IN REPLY, THE ASSESSEE FURNISHED A CONFIRMATION FROM SHRI NATHI PRASAD STATING THAT THE STATEMENT GIVEN TO TH E AUTHORIZED OFFICER IN THE COURSE OF SEARCH WAS UNDER THREAT AN D PRESSURE. ON BEING ASKED TO PRODUCE SHRI NATHI PRASAD ALONGWI TH HIS DRIVING LICENCE FOR PERSONAL EXAMINATION, THE ASSES SEE FAILED TO PRODUCE THE SAID WITNESS BEFORE THE ASSESSING OFFIC ER. THE ASSESSING OFFICER FURTHER NOTED THAT THERE IS NO EX PLANATION REGARDING THE SOURCE OF FUNDS FOR PURCHASE OF SCOOT ER. ACCORDINGLY, THE ASSESSING OFFICER TREATED THE COST OF SCOOTER RS.34,500/- AS UN-DISCLOSED INVESTMENT MADE BY THE ASSESSEE FIRM IN BENAMI NAME AND ASSESSEE IT AS UN-DISCLOSED INCOME FOR THE ASSESSMENT YEAR 1998-99. 24. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (A), ASSESSEE SUBMITTED THAT THE SCOTER BELONGED TO SHRI NATHI PRASAD AND RELIED UPON THE CONFIRMATION FILED BEFOR E THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME-TAX (A) HAS UPHELD THE ACTION OF THE ASSESSING OFFICER FOR THE REASONS STATED IN THE ASSESSMENT ORDER. ACCORDING TO THE COMMISSIONER OF INCOME-TAX (A), THE INVESTIGATIONS AND MATERIAL ON RECORD SHOW THAT THE ASSESSEE HAD FAILE D TO ESTABLISH THAT THE SCOOTER BELONGED TO SHRI NATHI P RASAD AND, 22 THEREFORE, HE HAS SUSTAINED THE ADDITION. AGAINST SUCH ADDITION, ASSESSEE IS IN APPEAL BEFORE US. 25. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE HAS REITERATED SIMILAR STAND AS MANIFESTED IN THE ORDER S OF THE AUTHORITIES BELOW. 26. ON THE OTHER HAND, THE LEARNED D.R. HAS RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES AND HAS POINTED OUT THAT THE ADMISSION OF EMPLOYEE SHRI NATHI PRASAD IN THE COUR SE OF STATEMENT RECORDED AT THE TIME OF SEARCH CLEARLY ES TABLISHED THAT THE SCOOTER WAS PURCHASED BY THE ASSESSEE FIRM IN BENAMI NAME. THEREFORE, THE ASSESSING OFFICER AND THEREAF TER THE COMMISSIONER OF INCOME-TAX (A) WERE JUSTIFIED IN SU STAINING THE IMPUGNED ADDITION. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. CLEARLY, THE DOCUMENTS SEIZED INDICATE PURCHASE OF SCOOTER EFFECTED BY THE ASSESSEE FIRM IN THE NAME OF ONE OF THE EMPLOYEES SHRI NATHI PRASAD. THEREFORE, IT WAS IMP ERATIVE FOR THE ASSESSEE TO ESTABLISH THE SOURCE OF SUCH PURCHA SE. THE CLAIM OF THE ASSESSEE BEFORE THE ASSESSING OFFICER BASED ON A CONFIRMATION FROM THE EMPLOYEE IS CONTRARY TO THE S TATEMENT TENDERED BY THE SAID EMPLOYEE BEFORE THE AUTHORIZED OFFICER DURING THE COURSE OF SEARCH ON 17.10.1998. IN THE S TATEMENT RECORDED ON 17.10.1998, THE EMPLOYEE DENIED THE OWN ERSHIP OF SCOOTER. THE CONFIRMATION TO THE CONTRARY BY THE E MPLOYEE FILED BEFORE THE ASSESSING OFFICER WAS NOT FOLLOWED UP BY PRODUCING HIM FOR EXAMINATION, WHEN CALLED FOR BY THE ASSESSI NG OFFICER. IN THESE CIRCUMSTANCES, IN OUR VIEW, THE ASSESSING OFFICER 23 RIGHTLY CONCLUDED THAT IN THE ABSENCE OF ANY EXPLAN ATION REGARDING THE SOURCE OF FUNDS COMING FORTH FROM THE ASSESSEE, THE COST OF SCOOTER IS TO BE ASSESSED AS UNDISCLOSE D INCOME IN THE HANDS OF THE ASSESSEE. IN OUR VIEW, THE CIT(APP EALS) MADE NO MISTAKE IN SUSTAINING THE IMPUGNED ADDITION. HEN CE, ON GROUND NO.4, ASSESSEE FAILS. 28. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT (SS)A NO.32/CHANDI/2002 IS PARTLY ALLOWED. 29. NOW, WE MAY TAKE UP THE CROSS APPEAL OF THE REV ENUE VIDE ITSS/44/CHANDI/2002, WHICH IS ALSO DIRECTED AG AINST THE ORDER OF THE CIT(APPEALS) DATED 19.03.2001. 30. THE GROUNDS OF APPEAL RAISED BY THE REVENUE REA D AS UNDER : (I). THE LD. CIT(A) ERRED IN LAW/FACTS DELETING THE ADDITION OF RS. 83287/- AS THE STOCK WAS CALCULATED IN THE PRESENCE OF THE ASSESSEE. (II). THE LD. CIT(A) ERRED IN LAW/FACTS DELETING TH E ADDITION OF RS.50263/- OF UNACCOUNTED PURCHASE OF PADDY AS THE A.O. HAS TAKEN THE AMOUNT OF RS. 50263/- ONLY ONE TIME IN HIS ORDER. (III). THE LD. CIT(A) ERRED IN LAW/FACTS DELETING T HE ADDITION OF RS. 8,20,065/- ON ACCOUNT OF PURCHASE OF PADDY OUT OF BOOKS AS THE ASSESSEE HAS FAILED TO PRODUCED ANY SUPPORTING EVIDENCE. (IV). THE LD. CIT(A) ERRED IN LAW/FACTS DELETING TH E ADDITION OF RS. 36575/- ON ACCOUNT OF UNDISCLOSED INCOME ON THE SALE OF RICE BRAN. (V). THE LD. CIT(A) ERRED IN LAW/FACTS DELETING THE ADDITION OF RS. 27,500/-, AS THIS EXPENDITURE WAS REMAINED UNEXPLAINED ON THE PART OF THE ASSESSEE. 24 31. GROUND NO. (I) HAS ALREADY BEING DEALT BY US, W HILE CONSIDERING GROUND NO. 1 IN THE APPEAL OF THE ASSES SEE. WE PROCEED TO CONSIDER AND DISPOSE OFF THE REMAINING G ROUNDS OF APPEAL IN SERIATIM HEREINAFTER. 32. BY WAY OF GROUND NO. (II), THE DISPUTE PERTAINS TO AN ADDITION OF RS. 50,263/- ON THE GROUND THAT THE ASS ESSEE HAD PURCHASED 170 BAGS OF PADDY WEIGHING 60 KG EACH, FR OM M/S RAM SARUP PRAVEEN KUMAR OUTSIDE THE BOOKS OF ACCOUN T. THE CIT(A) HAS DELETED THE ADDITION BY ACCEPTING THE PL EA OF THE ASSESSEE THAT SUCH INVESTMENT IS PART OF THE INCOME SURRENDERED OF RS. 11,65,000/-, DETAILS OF WHICH HA VE BEEN NOTED BY THE CIT(A) IN PARA 5.5 OF THE IMPUGNED ORD ER. CONSIDERING THE FINDING OF THE CIT(A), WHICH HAS NO T BEEN ASSAILED ON THE BASIS OF ANY COGENT MATERIAL, WE FI ND NO MERIT IN THE PRESENT GROUND RAISED BY THE REVENUE, ACCORD INGLY GROUND NO. (II) IS DISMISSED. 33. BY WAY OF GROUND NO.(III), THE DISPUTE PERTAINS TO AN ADDITION OF RS.8,20,065/- MADE BY THE ASSESSING OFF ICER ON THE GROUND THAT THE ASSESSEE HAD PURCHASED PADDY OUTSID E THE BOOKS OF ACCOUNT. BRIEFLY STATED, THE FACTS IN THI S REGARD CAN BE UNDERSTOOD AS FOLLOWS. THIS ADDITION IS BASED O N A BUNDLE OF LOOSE PAPERS SEIZED DURING THE COURSE OF SEARCH WHICH HAVE BEEN TITLED AS ANNEXURE A-24. ACCORDING TO THE ASS ESSING OFFICER, THE SEIZED DOCUMENTS REFLECT PURCHASES OF PADDY ON DIFFERENT DATES FROM DIFFERENT COMMISSION AGENTS. T HE ENTRIES IN THE SEIZED DOCUMENTS WERE CONFRONTED TO THE ASSESSE E FIRM DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN RE PLY, 25 ASSESSEE ADMITTED THAT THE SEIZED DOCUMENTS WERE IN THE HANDWRITING OF ONE SHRI SUDESH JAIN, BROKER-CUM-AUC TIONEER AND BELONGED TO HIM. IT WAS ALSO ADMITTED BY THE A SSESSEE THAT THE ENTRIES IN THE SEIZED DOCUMENTS SHOWED PUR CHASES OF PADDY EFFECTED BY THE BROKER FOR THE ASSESSEE FIRM AS WELL AS FOR TWO OTHER CONCERNS, NAMELY M/S GANESHI RICE MIL LS AND M/S AMBALA RICE MILLS. IN THE BACKGROUND OF SUCH EXPLAN ATION, ASSESSING OFFICER VERIFIED THE ENTRIES OF PURCHASES RELATING TO THE ASSESSEE FIRM WITH RESPECT TO BOOKS OF ACCOUNT MAINTAINED. IN PARAS 7.2 TO 7.16, ASSESSING OFFICER NOTED VARIO US DISCREPANCIES AMOUNTING TO RS.8,20,065/-. ACCORDIN GLY, AN ADDITION OF RS.8,20,065/- WAS MADE AS UNDISCLOSED I NCOME ON ACCOUNT OF UNACCOUNTED PURCHASES FOR THE ASSESSMENT YEAR 1998-99 COMPRISED IN THE BLOCK PERIOD 1.4.1988 TO 7 .10.1998. 34. IN APPEAL BEFORE THE CIT(APPEALS), ASSESSEE CON TENDED THAT ADMITTEDLY THE DOCUMENT PERTAINED TO SHRI SUDE SH JAIN, AUCTIONEER-CUM-BROKER WHO HAD EFFECTED PURCHASES NO T ONLY ON BEHALF OF THE ASSESSEE BUT ALSO TWO OTHER CONCERNS. IT WAS POINTED OUT THAT THIS FACT WAS ADMITTED BY SHRI JAI N DURING HIS EXAMINATION BY THE ASSESSING OFFICER. UNDER THESE CIRCUMSTANCES, IT WAS POINTED OUT THAT THE ENTRIES IN THE SAID DOCUMENT PERTAINING TO THE ASSESSEE WERE DULY VERIF IED WITH BOOKS OF ACCOUNT DURING ASSESSMENT PROCEEDINGS, WHI LE ENTRIES WHICH DID NOT CARRY NAME OF ANY CONCERN, HAVE BEEN WRONGLY ATTRIBUTED TO THE ASSESSEE. IT WAS POINTED OUT THA T THERE WAS NO MATERIAL TO ESTABLISH THAT THE ENTRIES WHICH DID NOT CONTAIN THE NAME OF THE PURCHASER, WERE PURCHASES MADE BY T HE ASSESSEE FIRM. APART FROM THE AFORESAID, ASSESSEE D EALT WITH 15 26 ITEMS OF SUCH PURCHASES AND EXPLAINED THAT SUCH TRA NSACTIONS DID NOT PERTAIN TO THE ASSESSEE. SUBMISSIONS OF TH E ASSESSEE IN THIS REGARD HAVE BEEN REPRODUCED BY THE CIT(APPE ALS) IN PARA 6.2 OF HIS ORDER. AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE, CIT(APPEALS) CONCLUDED THAT THE ASSESSEE WAS ABLE TO BRING ON RECORD DOCUMENTARY EVIDENCE TO PROVE TH AT PURCHASES CORRESPONDING TO THE ADDITION MADE BY THE ASSESSING OFFICER WERE EFFECTED BY OTHER CONCERNS A ND NOT BY THE ASSESSEE FIRM. FOR THE SAID REASON, ADDITION WA S DELETED BY THE CIT(APPEALS), AGAINST WHICH REVENUE IS IN APPEA L BEFORE US. 35. BEFORE US, LEARNED CIT-DR HAS VEHEMENTLY ARGUED THAT THE CIT(A) HAS DELETED THE ADDITION BY CONSIDERING EXPLANATIONS WHICH WERE NOT PUT FORTH TO THE ASSESS ING OFFICER AND ACCORDINGLY THE ADDITION HAS BEEN WRONGLY DELET ED BY THE CIT(APPEALS). 36. IN REPLY, LEARNED COUNSEL FOR THE RESPONDENT AS SESSEE POINTED OUT THAT ASSESSEE HAD EXPLAINED BEFORE THE ASSESSING OFFICER THE RELEVANT ENTRIES. IT WAS SUBMITTED THA T IN THE COURSE OF VERIFICATION EXERCISE CARRIED OUT DURING ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER, AT NO STAGE IND ICATED THAT ANY ENTRY IN THE SEIZED DOCUMENT WAS LEFT OUT OR TH AT THERE WAS ANY DISCREPANCY OR FURTHER EXPLANATION REQUIRED FRO M THE ASSESSEE VIZ-A-VIZ ITS BOOKS OF ACCOUNT. UNDER THE SE CIRCUMSTANCES, THE ASSESSEE WAS REQUIRED TO BRING O UT NECESSARY EXPLANATIONS BEFORE THE CIT(APPEALS). IT IS FURTHER POINTED OUT THAT THERE WAS NO BASIS WITH THE ASSESS ING OFFICER 27 TO TREAT THE PURCHASES IN THE HANDS OF THE ASSESSEE WHERE THERE WAS NO DESCRIPTION OF THE PURCHASER FOUND IN THE SEIZED DOCUMENT, WHICH OSTENSIBLY PERTAINED TO THE BROKER. 37. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. AFTER HAVING PERUSED THE ORDERS OF THE LOWER AUTHORITIES, IN OUR CONSIDERED OPINION, THE CIT(APPEALS) MADE NO MISTAK E IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER , AS THE FOLLOWING DISCUSSION WOULD SHOW. IT IS QUITE CLEAR THAT THE SEIZED DOCUMENT A-24 BELONGED TO SHRI SUDESH JAIN, BROKER- CUM-AUCTIONEER, WHO MADE PURCHASES FROM COMMISSION AGENTS ON BEHALF OF THE ASSESSEE FIRM AND OTHER CONCERNS. IT ALSO TRANSPIRES FROM THE RECORD THAT SHRI SUDESH JAIN WA S EXAMINED BY THE ASSESSING OFFICER ON 25.09.2000 DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, WHO ADMITTED THE AFORESAID POSITION. THE ASSESSING OFFICER HAS ALSO ACCEPTED THE POSITI ON THAT THE ENTRIES FOUND IN THE SEIZED DOCUMENTS WERE MADE BY SHRI SUDESH JAIN, WHICH CONTAINED PURCHASES MADE BY HIM ON BEHALF OF THE OTHER CONCERNS INCLUDING THE ASSESSEE FIRM. THE ENTRIES CONTAINED IN THIS DOCUMENT SHOWING ASSESSEE FIRM AS PURCHASER, WERE DULY VERIFIED BY THE ASSESSING OFFI CER WITH THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND NO ADVERSE VIEW HAS BEEN DRAWN BY THE ASSESSING OFFICER. THE E NTRIES WHICH CONTAINED THE NAMES OF OTHER PURCHASERS HAVE ALSO BEEN LEFT OUT BY THE ASSESSING OFFICER. THE ENTRIES IN THE SAID DOCUMENT WHICH DID NOT CONTAIN THE NAME OF ANY PURC HASER, HAVE BEEN CONSIDERED BY THE ASSESSING OFFICER TO BE REFLECTING PURCHASES MADE BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT. IN THE ASSESSMENT ORDER, WE DO NOT FIND ANY REASON ADVANCED 28 BY THE ASSESSING OFFICER TO INFER THAT SUCH ENTRIES REFLECT PURCHASES EFFECTED BY THE ASSESSEE OUTSIDE THE BOOK S OF ACCOUNT. THERE IS NEITHER A REFERENCE TO ANY SUCH DEPOSITION BY THE BROKER NOR ANY OTHER MATERIAL HAS BEEN REFER RED BY THE ASSESSING OFFICER, TO SUPPORT HIS HYPOTHESIS THAT S UCH ENTRIES PERTAINED TO THE ASSESSEE. ON THIS BASIS ITSELF, W E FIND NO JUSTIFICATION FOR THE IMPUGNED ADDITION. EVEN OTHE RWISE, AS PER THE FACTUAL APPRAISAL MADE BY THE CIT(APPEALS), THE PURCHASES IN QUESTION DO NOT PERTAIN TO THE ASSESSEE FIRM. T HOUGH THE LEARNED CIT-DR MAY BE CORRECT IN SUBMITTING THAT SU CH EXPLANATION WAS NOT BEFORE THE ASSESSING OFFICER, B UT THE REASONS FOR THE SAME ARE NOT FAR TO SEEK. EVIDENTL Y, AFTER HAVING VERIFIED THE ENTRIES IN THE SEIZED DOCUMENT VIZ-A-VIZ THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FIRM, T HERE IS NOTHING TO SHOW THAT THE ASSESSING OFFICER SHOW-CA USED THE ASSESSEE TO EXPLAIN ANY FURTHER ENTRIES OF THE SEIZ ED DOCUMENT AND IN ANY CASE, THE DOCUMENT BELONGED TO SHRI SUDE SH JAIN, AND IT WAS HIS DUTY TO EXPLAIN THE CONTENTS OF THE SAME. THEREFORE, THE IMPUGNED ADDITION HAS BEEN MADE BY T HE ASSESSING OFFICER IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. FURTHER, IN RESPECT TO EACH OF THE IMPUGNE D ENTRIES, ASSESSEE EXPLAINED BEFORE THE CIT(APPEALS) THAT THE SAME COULD NOT BE ATTRIBUTED TO THE ASSESSEE. BEFORE US , THERE IS NO MATERIAL TO NEGATE THE FACTUAL FINDINGS ARRIVED AT BY THE CIT(APPEALS) IN THIS REGARD, THEREFORE THERE IS NO JUSTIFICATION TO INTERFERE WITH THE DECISION OF THE CIT(APPEALS). THEREFORE, CONSIDERING THE ENTIRETY OF CIRCUMSTANCES, WE FIND THAT THE CIT(APPEALS) MADE NO MISTAKE IN DELETING THE IMPUGN ED 29 ADDITION. ACCORDINGLY, THE GROUND NO. (III) RAISED BY THE REVENUE IS DISMISSED. 38. BY WAY OF GROUND NO. (IV), THE DISPUTE PERTAINS TO AN ADDITION OF RS. 36,575/- ON THE GROUND THAT THE ASS ESSEE HAD MADE UNACCOUNTED SALE OF 221 BAGS OF RICE BRAN TO M /S PARTAP EXTRACTIONS LTD. THE BRIEF FACT ARE THAT IN THE COU RSE OF SEARCH, THERE RECEIPTS DATED 04/10/98, 05/10/98 AND 06/10/9 8 ISSUED BY M/S PARTAP EXTRACTIONS LTD. WERE FOUND. THESE RECEI PTS SHOWED RICE BRAN RECEIVED BY THE SAID CONCERN FROM THE ASS ESSEE FIRM. THE SALE OF SUCH RICE BRAN WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT BY THE ASSESSEE TILL THE DATE OF SEARCH ON 07/10/98. ON BEING CONFRONTED DURING THE ASSESSMENT PROCEEDIN GS, ASSESSEE EXPLAINED THAT THE RELEVANT SALE WAS ACCOU NTED ON 21/10/98. AS PER THE ASSESSING OFFICER, BUT FOR THE SEARCH HAVING TAKEN PLACE ON 07/10/98, THE IMPUGNED SALE W OULD NOT HAVE BEEN DISCLOSED BY THE ASSESSEE AND THEREFORE T HE IMPUGNED SALE AMOUNTING TO RS. 36,575/- WAS ASSESSE D AS UNDISCLOSED INCOME FOR THE ASSESSMENT YEAR 1999-2 000. THE CIT(A) HAS SINCE DELETED THE ADDITION, AGAINST WHIC H REVENUE IS IN APPEAL BEFORE US. 39. BEFORE US, LD. CIT-DR CONTENDED THAT THE SAID S UM WAS RIGHTLY ASSESSED AS UNDISCLOSED INCOME, SINCE TILL THE DATE OF SEARCH THE SALE WAS NOT ACCOUNTED FOR IN THE ACCOUN T BOOKS, WHILE THE DELIVERY OF MATERIAL WAS ACCEPTED BY THE OTHER CONCERN. 40. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE CIT(A) HAS APPRECIATED THAT THE SALE BILL WAS TO BE PREPARED 30 ONLY AFTER THE LABORATORY REPORT REGARDING YIELD OF BRAN OIL, WHICH WAS AWAITED ON THE DATE OF SEARCH AND THEREFO RE THE SALE WAS ACCOUNTED FOR ON LATER DATE, ON RECEIPT OF THE LABORATORY REPORT. 41. WE HAVE CONSIDERED THE RIVAL SUBMISSION CAREFUL LY. IN THIS CASE, ON THE DATE OF SEARCH IT WAS FOUND THAT THE A SSESSEE HAD SUPPLIED MATERIAL TO A CONCERN, FOR WHICH NO SALE B ILL HAD BEEN RAISED. THE SALE BILL WAS RAISED ON A SUBSEQUENT D ATE. IT IS EXPLAINED BY THE ASSESSEE THAT SALE BILLS ARE NOT R AISED ON THE BASIS OF DELIVERY CHALLANS ONLY, BUT ARE RAISED AFT ER ASCERTAINING THE OIL CONTENT IN THE RICE BRAN SUPPL IED. THE ASSESSEE EXPLAINED BEFORE THE CIT(A), THAT THE GATE PASS/DELIVERY CHALLANS ISSUED BY THE ASSESSEE FIRM CONTAIN A NOTE IN THIS REGARD AND AS PER THIS PRACTICE THE SA LE BILL OF SUPPLIES MADE TO M/S PARTAP EXTRACTIONS LTD. OF 222 BAGS OF RICE BRAN BETWEEN 04/10/98 TO 06/10/98 WAS RAISED O N 21/10/98 AND THE SAME HAS BEEN ACCOUNTED FOR IN THE ACCOUNT BOOKS BY THE ASSESSEE AS WELL AS THE PURCHASER CONCERN, ACCO RDINGLY. IN OUR VIEW, THE BUSINESS PRACTICE EXPLAINED BY THE AS SESSEE HAS NOT BEEN FOUND TO BE NON-EXISTENT, IN MUCH AS, RELE VANT LABORATORY TEST REPORTS WERE ALSO BEFORE THE CIT(A) . NO MATERIAL HAS BEEN LED BY THE REVENUE TO NEGATE THE MATERIAL/EXPLANATION CONSIDERED BY THE CIT(A) TO DE LETE THE ADDITION. AS A RESULT, WE FIND NO MERIT IN GROUND N O. (IV) RAISED BY THE REVENUE CHALLENGING THE DELETION OF RS. 36,5 75/-. ACCORDINGLY, THE GROUND NO. (IV) RAISED BY THE REVE NUE IS DISMISSED. 31 42. BY WAY OF GROUND NO. (V), THE DISPUTE PERTAINS TO AN ADDITION OF RS. 27,000/- MADE BY THE ASSESSING OFFI CER ON ACCOUNT OF UNEXPLAINED EXPENDITURE TOWARDS CONTRIBU TION TO RICE MILLERS ASSOCIATION. THE ASSESSING OFFICER NO TICED A DOCUMENT SEIZED DURING SEARCH WHICH SHOWED THE DETA IL OF COLLECTIONS MADE BY RICE ASSOCIATION IN THE YEAR 19 96-97. AS PER THIS DOCUMENT, RS. 27,000/- WAS STATED TO HAVE BEEN COLLECTED FROM THE ASSESSEE FIRM, WHEREAS THERE WAS NO CORRESPONDING ENTRY OF SUCH PAYMENT IN THE ACCOUNT BOOKS MAINTAINED BY THE ASSESSEE FIRM. THEREFORE, THE ASS ESSING OFFICER MADE AN ADDITION OF RS. 27,000/- AS UNEXPLA INED EXPENDITURE. THE CIT(A) HAS SINCE DELETED THE ADDIT ION, AGAINST WHICH REVENUE IS IN APPEAL BEFORE US. 43. BEFORE US, LD. CIT-DR CONTENDED THAT THE SEIZED DOCUMENT REFLECTED INCURRING OF EXPENDITURE BY THE ASSESSEE, WHICH WAS NOT ENTERED IN THE BOOKS OF ACCOUNT AND T HEREFORE THE ADDITION WAS MAINTAINABLE IN THE HANDS OF THE A SSESSEE FIRM U/S 69C OF THE ACT. 44. ON THE OTHER HAND, LEARNED COUNSEL FOR THE RESP ONDENT ASSESSEE SUBMITTED THAT THE SEIZED DOCUMENT ONLY SH OWED A PROPOSAL OF THE ASSOCIATION TO COLLECT MONEY, BUT U LTIMATELY NO SUCH COLLECTION WAS MADE. FURTHER, THE DOCUMENT DID NOT BELONG TO THE ASSESSEE FIRM AND IT WAS MERELY A ROU GH CALCULATION LEFT BEHIND IN THE ASSESSEES PREMISES AND CANNOT BE CONSIDERED AS AUTHENTIC. 45. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. BEFORE AN ADDITION U/S 69C OF THE ACT CAN BE MADE F OR 32 UNEXPLAINED EXPENDITURE, IT HAS TO BE ESTABLISHED T HAT EXPENDITURE HAS BEEN INCURRED. IN THIS CASE, THE DO CUMENT IN QUESTION DOES NOT PROVE INCURRENCE OF EXPENDITURE B Y THE ASSESSEE. THE DOCUMENT IN QUESTION, A COPY OF WHICH IS PLACED AT PAGE 17 OF THE PAPER BOOK FILED BY THE REVENUE, IS A PLAIN PAPER AND IS UNSIGNED AND UNAUTHENTICATED ON BEHALF OF THE RICE ASSOCIATION AND THEREFORE IT DOES NOT ESTABLIS H INCURRENCE OF EXPENDITURE BY THE ASSESSEE. THERE IS NO CORROBO RATIVE EVIDENCE TO PROVE INCURRENCE OF EXPENDITURE BY THE ASSESSEE AND THEREFORE, IN OUR VIEW, THE CIT(A) RIGHTLY DELE TED THE IMPUGNED ADDITION. THE CONCLUSION OF THE CIT(A) IS HEREBY AFFIRMED AND GROUND NO. (V) RAISED BY THE REVENUE I S DISMISSED. 46. IN THE RESULT, APPEAL OF THE REVENUE IN IT(SS)A NO.44/CHANDI/2002 IS DISMISSED. 47. NOW, WE TAKE UP CROSS APPEALS IN ITSS/33/CHANDI/200 2 AND ITSS/43/CHANDI/2002 PREFERRED BY THE ASSESSEE A ND REVENUE RESPECTIVELY IN THE CASE OF M/S VED PARKASH PARDEEP KUMAR, WHICH ARE DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS) DATED 19.03.2002, WHICH IN TURN HAS AR ISEN FROM BLOCK ASSESSMENT FINALIZED BY THE ASSESSING OFFICER U/S 158BC OF THE ACT DATED 30.10.2000 PERTAINING TO THE BLOCK PERIOD 01.04.1988 TO 07.10.1988. THE ASSESSEE IS A PARTNER SHIP FIRM CONSTITUTED OF THREE PARTNERS, SHRI VED PARKASH KHO SLA, PRADEEP KHOSLA HUF AND SHRI LAVISH KHOSLA (MINOR) A ND IS ENGAGED IN THE BUSINESSES OF RUNNING A COLD STORE I N VILLAGE SARANGPUR AND COMMISSION AGENCY IN AMBALA CITY. 33 48. IN THE APPEAL OF THE ASSESSEE, THE FIRST GROU ND RAISED IS GENERAL IN NATURE AND THE SAME DOES NOT REQUIRE ANY ADJUDICATION AND IS ACCORDINGLY DISMISSED. 49. THE SECOND GROUND RAISED BY THE ASSESSEE READS AS UNDER : THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN RESTRICTING THE RELIEF TO RS.25, 670/- AS AGAINST THE CLAIM OF RS.1,01,170/- OUT OF A TOTA L ADDITION OF RS.5,57,048/-, ON ACCOUNT OF CONSTRUCTI ON OF COLD STORAGE. ON THIS ASPECT, ASSESSING OFFICER HAD MADE ADDITION S OF RS.5,57,048/- AND RS.77,890/- FOR THE ASSESSMENT YE AR 1998-99 AND 1999-2000 RESPECTIVELY. THE CIT(APPEALS) DELET ED A SUM OF RS.25,670/- OUT OF RS.5,57,048/- AND THE ENTIRE SUM OF RS.77,890/-. IN ITS APPEAL, ASSESSEE HAS CONTENDED THAT THE CIT(APPEALS) ERRED IN RESTRICTING THE RELIEF TO RS. 25,670/- AS AGAINST CLAIM OF RS.1,01,170/- OUT OF THE TOTAL ADD ITION OF RS.5,57,048/-. 50. THE REVENUE IN ITS CROSS APPEAL HAS CONTESTED THE RELIEFS OF RS.77,890/- AND RS.25,670/- ALLOWED BY T HE CIT(APPEALS) BY WAY OF GROUND NO.1 AS UNDER :- 1. IN DELETING THE ADDITION OF RS.25,670/- OUT OF RS.5,57,058/- AND RS.77,890/- ON ACCOUNT OF UNRECORDED EXPENSES ON CONSTRUCTION OF OLD STORAGE AS THE EXPLANATION OF THE ASSESSEE WAS REJECTED AT THE TIME OF ASSTT. BY THE AO IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE. SINCE, THE ABOVE RESPECTIVE GROUNDS RAISED BY THE ASSESSEE AS WELL AS THE REVENUE RELATE TO THE SAME CONTROVER SY, THE TWO GROUNDS ARE BEING TAKEN UP TOGETHER. 34 51. BRIEFLY STATED, THE DISPUTE IS ON ACCOUNT OF EXPENSES ON CONSTRUCTION OF COLD STORAGE WHICH WERE FOUND UNREC ORDED IN THE BOOKS OF ACCOUNT. IN THE COURSE OF SEARCH OPERA TION, CERTAIN DOCUMENTS WERE SEIZED WHICH SHOWED EXPENSES ON CONSTRUCTION OF COLD STORAGE, WHICH WERE NOT FOUND RECORDED IN THE REGULAR BOOKS OF ACCOUNT MAINTAINED BY THE ASSE SSEE. THE ASSESSING OFFICER COMPUTED SUCH EXPENSES AT RS.5,57 ,048/- AND RS.77,890/- FOR THE PERIOD RELEVANT TO ASSESSME NT YEAR 1998-99 AND 1999-2000 RESPECTIVELY. HE MADE ADDITI ONS IN RESPECT OF SUCH AMOUNTS IN THE RESPECTIVE ASSESSMEN T YEARS COMPRISED IN THE BLOCK PERIOD. THE CIT(APPEALS) HA S DELETED THE ADDITION OF RS.77,890/- ON THE GROUND THAT SUCH FUNDS WERE AVAILABLE OUT OF A SUM OF RS.11,65,000/- SURRENDERE D BY THE ASSESSEE. THE DETAILS OF SUCH SURRENDER HAVE BEEN ENUMERATED BY THE CIT(APPEALS) IN PARAS 5.2 TO 5.4 OF THE IMPUGNED ORDER. IN THIS CONNECTION, BEFORE US LEARN ED CIT-DR HAS NOT CONTROVERTED THE FACTUAL FINDING OF THE CIT (APPEALS) AND ACCORDINGLY, WE FIND NO REASONS TO INTERFERE WI TH THE DECISION OF THE CIT(APPEALS). 52. IN SO FAR AS THE ADDITION OF RS.5,57,048/- MA DE BY THE ASSESSING OFFICER IN RELATION TO ASSESSMENT YEAR 1 998-99 IS CONCERNED, ASSESSEE HAD CHALLENGED ONLY A SUM OF RS.1,01,170/- BEFORE THE CIT(APPEALS). AS PER ASSE SSEE, THE ASSESSING OFFICER MADE DOUBLE ADDITION TO THE TUNE OF RS.1,01,170/-. AS PER ASSESSEE, THE SEIZED DOCUMEN TS SHOWING EXPENSES ON CONSTRUCTION OF COLD STORAGE, I NCLUDED CERTAIN EXPENSES WHICH WERE ACCOUNTED FOR IN THE RE GULAR BOOKS OF ACCOUNT MAINTAINED. IT WAS CONTENDED THAT THE E XPENSES 35 WHICH WERE ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OU T OF RS.1,01,170/- WERE REQUIRED TO BE EXCLUDED FROM THE IMPUGNED ADDITION. THE CIT(APPEALS) EXAMINED THE CLAIM OF T HE ASSESSEE AND NOTED THAT AMOUNTS OF RS.7,470/-, RS.8 ,200/- AND RS.10,000/- TOTALING TO RS.25,670/- STOOD COUNTED T WICE BY THE ASSESSING OFFICER AND ACCORDINGLY, HE ALLOWED RELIE F TO THAT EXTENT. 53. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE H AS REFERRED TO PAGES 2 TO 4 OF THE PAPER BOOK TO POINT OUT THE WRITTEN SUBMISSIONS MADE BEFORE THE CIT(APPEALS) ON THIS AS PECT. ON THE OTHER HAND, LEARNED DR WHILE OPPOSING THE PLEA OF THE ASSESSEE HAS ASSAILED THE PARTIAL RELIEF ALLOWED BY THE CIT(APPEALS). 54. WE HAVE CONSIDERED RIVAL SUBMISSIONS ON THIS ASPECT AND FIND THAT THE CONCLUSION DRAWN BY THE CIT(APPEA LS) DOES NOT REQUIRE ANY INTERFERENCE. AS PER ASSESSEE, THE ASSESSING OFFICER WHILE WORKING OUT THE ADDITION, DID NOT EXC LUDE WAGES/SALARY PAID TO S/SHRI NARAIN, PARDEEP AND RAM KUMAR, WHICH WERE DEBITED IN THE BOOKS OF ACCOUNT. THOUGH , THIS PLEA HAS BEEN RAISED BY THE ASSESSEE BEFORE THE CIT(APPE ALS) AS ALSO BEFORE US, BUT THERE IS NO MATERIAL ON RECORD TO SUBSTANTIATE THAT THE IMPUGNED EXPENSES FOUND RECOR DED IN THE SEIZED DOCUMENT CORRESPOND TO THE EXPENSES ENTERED IN THE BOOKS OF ACCOUNT. THEREFORE, IN OUR VIEW, THE CONC LUSION OF THE CIT(APPEALS) IS FAIR AND PROPER AND IS HEREBY AFFIR MED. THE PARTIAL RELIEF ALLOWED BY THE CIT(APPEALS) OF RS.25 ,670/-IS ALSO PROPER IN AS MUCH AS THE FINDING IS THAT SUCH AMOUN T HAS BEEN 36 COUNTED TWICE BY THE ASSESSING OFFICER, AND SUCH FI NDING HAS NOT BEEN SHOWN BY THE REVENUE TO BE WRONG. ACCORDI NGLY, GROUND NO.1 IN THE RESPECTIVE APPEALS OF THE ASSESS EE AND THE REVENUE ARE DISMISSED. 55. THE THIRD GROUND RAISED BY THE ASSESSEE REA DS AS UNDER : THAT WITHOUT APPRECIATING THE FACTS AND FIGURES FURNISHED AND IN VIEW OF THE PROVISIONS OF SECTION 132(4A) THE LEARNED CIT(A) ERRED IN HOLDING THAT TH E APPELLANT HAS NOT BEEN ABLE TO EXPLAIN THE STOCK OF 1231 BAGS OF POTATO. THE DISPUTE IN THIS GROUND RELATES TO THE ACTION OF THE ASSESSING OFFICER IN HOLDING THAT 1231 BAGS OF POTA TOES VALUED AT RS.5,90,886/- BELONGED TO THE ASSESSEE AND THERE FORE, THE SAME WAS TREATED AS UNDISCLOSED INCOME OF THE ASSES SEE. ON THIS ASPECT, THE CIT(APPEALS) HAS REDUCED THE ADDIT ION TO RS.4,76,210/-, WHICH IS CONTESTED BY THE ASSESSEE B Y WAY OF THE ABOVE GROUND OF APPEAL. THE REVENUE, IN THE CR OSS APPEAL HAS CONTESTED THE RELIEF OF RS.1,14,670/- ALLOWED B Y THE CIT(APPEALS) BY WAY OF THE FOLLOWING GROUND NO.2 : 2. IN RESTRICTING THE ADDITION OF RS.4,76,210/- OUT OF RS.5,90,880/- ON ACCOUNT OF UNDISCLOSED INCOME IN THE PURCHASE OF 1231 BAGS OF POTATOES AS THE ADDITION WAS MADE BY THE AO AT THE MARKET RATE. SINCE THE RESPECTIVE GROUNDS RAISED BY THE ASSESSEE AS WELL AS THE REVENUE RELATE TO THE SAME CONTROVERSY, THE TWO CROSS GROUNDS ARE BEING TAKEN UP TOGETHER. THE DISPUTE I N BRIEF PERTAINS TO AN EXCESS STOCK OF POTATOES OF 1231 BAG S FOUND WITH THE ASSESSEE. AS PER THE STATEMENT OF ONE SHR I RAJ 37 KISHAN SHARMA, MUNSHI OF THE COLD STORAGE, THE STOC K BELONGED TO ONE SHRI SUBHASH CHAND OF VILLAGE THOL. FURTHER, THE SAID PERSON ADMITTED THAT THE SAID STOCK WAS NO T RECORDED IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER NOT ICED THAT THE SAID SHRI SUBHASH CHAND DID NOT ADMIT THE OWNER SHIP OF 1231 BAGS OF POTATOES. THE ASSESSING OFFICER FURTHE R NOTICED ON THE BASIS OF DOCUMENT NO.9 OF ANNEXURE A-10 SEIZ ED DURING THE COURSE OF SEARCH THAT THE ASSESSEE HAD ADVANCED LOANS TO SHRI SUBHASH CHAND ON VARIOUS DATES AMOUNTING TO RS.4,76,210/-. OUT OF SUCH LOAN, ASSESSEE HAD RECE IVED BACK 4,75,000/- DURING SEPTEMBER,1998. THE ASSESSING OF FICER VALUED SUCH STOCK AT RS.5,90,880/- AND TREATED IT A S UNDISCLOSED INCOME OF THE ASSESSEE. IN APPEAL BEFO RE THE CIT(APPEALS), ASSESSEE CONTENDED THAT THE LOANS GIV EN TO SHRI SUBHASH CHAND TO THE EXTENT OF RS.4,76,210/- WAS SU RRENDERED AND ALSO SUBMITTED THAT THE STOCK OF THE POTATOES I N QUESTION SHOULD BE TAKEN AS HAVING BEEN PURCHASED BY SHRI SU BHASH CHAND OUT OF THE LOAN GIVEN BY THE ASSESSEE. ASSES SEE ALSO CONTENDED BEFORE THE CIT(APPEALS) THAT THE DOCUMENT S SEIZED CONTAINED THE WORD SHRI S.C. WRITTEN ON THE TOP W HICH CLEARLY SHOWED THAT IT BELONGED TO SHRI SUBHASH CHAND AND T HEREFORE, THE SAID STOCK OF POTATOES COULD NOT BE ASSESSED IN THE HANDS OF THE ASSESSEE FIRM. THE ASSESSEE HAD ALSO CHALLE NGED THE VALUE OF POTATOES ADOPTED BY THE ASSESSING OFFICER AT RS.5,90,880/- WHICH, ACCORDING TO THE ASSESSEE WAS EXCESSIVE AND DID NOT CORRESPOND TO THE MARKET RATE OF POTATO ES AT THE TIME OF SEARCH. THE CIT(APPEALS) CONSIDERED THE SU BMISSIONS OF THE ASSESSEE AND HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE STOCK OF POTATOES TO THE EXTENT OF 1 231 BAGS AND 38 THEREFORE, THE ADDITION WAS UPHELD IN PRINCIPLE. S O HOWEVER, HE ADOPTED THE RATE OF RS.200/- PER BAG TO ESTIMATE TH E VALUE OF THE STOCK, AS AGAINST RS.480/- PER BAG CONSIDERED B Y THE ASSESSING OFFICER. THE VALUE, THUS CAME TO RS.2,46, 200/-. HOWEVER, THE CIT(APPEALS) FOUND THAT SUCH VALUE WAS MUCH LESS THAN THE LOAN ADMITTED TO HAVE BEEN ADVANCED T O SHRI SUBHASH CHAND AND ACCORDINGLY, THE ADDITION WAS RET AINED TO THE EXTENT OF LOAN, I.E. RS.4,76,210/-. 56. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE V EHEMENTLY ARGUED THAT SHRI RAJ KISHAN SHARMA, MUNSHI OF THE C OLD STORAGE CLEARLY SUBMITTED IN THE COURSE OF THE SEAR CH PROCEEDINGS ITSELF THAT THE STOCK OF POTATOES BELON GED TO SHRI SUBHASH CHAND. IT WAS POINTED OUT THAT THE SAID ST ATEMENT WAS CORRECT AND WAS SPONTANEOUSLY OFFERED AT THE TI ME OF SEARCH WHEREAS, THE ASSESSING OFFICER HAS RELIED UP ON A DENIAL OF SHRI SUBHASH CHAND, WHICH WAS OF A SUBSEQUENT DA TE. IT IS POINTED OUT THAT DENIAL OF SHRI SUBHASH CHAND IS NO T RELIABLE AS ADMITTEDLY, HE HAS BUSINESS DEALINGS WITH THE ASSES SEE FIRM. IN FACT, IT IS POINTED OUT THAT THERE IS NO EVIDENCE T HAT ASSESSEE WAS EFFECTING PURCHASES OF POTATOES. ASSESSEE WAS RUNNING COLD STORAGE AND IT WAS MERELY GIVING LOANS TO PERS ONS WHO IN- TURN PURCHASED POTATOES. THE LEARNED COUNSEL FURTH ER POINTED OUT THE UNRELIABILITY OF THE STATEMENT OF SHRI SUBH ASH CHAND BY ARGUING THAT THE SAID PERSON HAS DENIED EVEN LOAN T RANSACTIONS WITH THE ASSESSEE BUT THE ASSESSEE HAD SURRENDERED SUCH LOAN AMOUNT OF RS.4,76,210/-. SUCH DENIAL OF LOAN TRANSA CTION BY SHRI SUBHASH CHAND HAS NOT BEEN ACCEPTED BY THE ASS ESSING OFFICER BECAUSE HE HAS MADE AN ADDITION OF RS.44,55 9/- AS 39 INTEREST EARNED BY THE ASSESSEE ON LOANS GIVEN TO S HRI SUBHASH CHAND. 57. ON THE OTHER HAND, LEARNED DR HAS DEFENDED TH E ORDER OF THE ASSESSING OFFICER BY POINTING OUT THAT THE A SSESSEE HAD FAILED TO DISCHARGE ITS ONUS OF PROVING SATISFACTOR ILY THE STOCK OF 1231 BAGS OF POTATOES. THE LEARNED DR ALSO ASSA ILED THE PARTIAL RELIEF ALLOWED BY THE CIT(APPEALS) BY POINT ING OUT THAT THERE WAS NO BASIS FOR THE CIT(APPEALS) TO RESTRICT THE ADDITION TO THE EXTENT OF THE LOAN ADVANCED TO SHRI SUBHASH CHAND. 58. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CARE FULLY. IN THE CONTEXT OF 1231 BAGS OF POTATOES, IT IS CLEAR T HAT THE SAME WAS FOUND IN THE POSSESSION OF THE ASSESSEE. IT IS ALSO CLEAR FROM THE MATERIAL ON RECORD THAT THE EXPLANATION RE NDERED BY THE ASSESSEE THAT IT BELONGED TO SHRI SUBHASH CHAND HAS NOT STOOD THE TEST OF VERIFICATION IN AS MUCH AS SHRI S UBHASH CHAND DENIED OWNERSHIP OF THE STOCK. IN THESE CIRCUMSTAN CES, IN OUR VIEW THE ASSESSING OFFICER WAS JUSTIFIED IN PUTTING THE BURDEN ON THE ASSESSEE TO EXPLAIN THE SOURCE OF STOCK FOUN D WITH THE ASSESSEE FIRM. HOWEVER, WE FIND NO JUSTIFICATION WI TH THE CIT(APPEALS) TO HAVE RESTRICTED THE ADDITION TO RS. 4,76,210/-. THE ASSESSING OFFICER VALUED THE STOCK AT RS.480/- PER BAG WHICH ACCORDING TO HIM WAS THE MARKET RATE OF POTAT OES ON THE DATE OF SEARCH. THIS RATE WAS DISAPPROVED BY THE CI T(APPEALS) ON THE BASIS OF PUBLISHED RATES PRODUCED BY THE ASS ESSEE, WHICH SHOWED THAT A BAG OF POTATO WEIGHING 80 KG WA S PRICED BETWEEN RS.150/- TO RS.200/-. FOR THIS REASON, CIT (APPEALS) ADOPTED RATE OF RS.200/- PER BAG AND VALUED EXCESS STOCK AT 40 RS.2,46,200/-. THEREAFTER, THE CIT(APPEALS) NOTED THAT SUCH VALUE WAS LESS THAN THE LOAN ADMITTED TO HAVE BEEN ADVANCED TO SHRI SUBHASH CHAND OF RS.4,76,210/-. THERE IS NO JUSTIFICATION WITH THE CIT(APPEALS) TO SUSTAIN THE ADDITION AT RS.4,76,210/- AS AGAINST THE ACTUAL VALUE OF STOCK AT RS.2,46,200/-, ESPECIALLY THE LOAN OF RS4,76,210/- HAS BEEN SURRENDERED FOR INCOME SEPARATELY. CONSIDERING THE MATERIAL ON RECORD, WE THEREFORE, DEEM IT FIT AND PROPER TO HOLD THAT THE ASSESSEE HAS FAILED TO EXPLAIN SATISFACTORILY THE S TOCK OF 1231 BAGS OF POTATOES AND AN ADDITION TO THE EXTENT OF I TS VALUE AT RS.2,46,200/- IS MERITED. ACCORDINGLY, THE ORDER OF THE CIT(APPEALS) IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO RETAIN AN ADDITION OF RS.2,46,200/- AS AGAINST R S.5,90,880/- MADE BY HIM. THUS, ON GROUND NO.3, ASSESSEE PARTLY SUCCEEDS, WHEREAS GROUND NO.2 OF THE REVENUE IS DISMISSED. 59. THE FOURTH GROUND RAISED BY THE ASSESSEE READ S AS UNDER : THAT WITHOUT APPRECIATING THE FACTS AND PROVISIONS OF SECTION 132(4A), THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT 2427 BAGS OF POTATO BELONGED TO THE APPELLANT AND NOT TO SHRI SUBHASH CHAND. . ON THIS ASPECT, THE ASSESSING OFFICER MADE AN ADDIT ION OF RS.11,64,960/- ON ACCOUNT OF ALLEGED INVESTMENT IN 2427 POTATO BAGS. THE CIT(APPEALS) DELETED A SUM OF RS. 6,79,56 0/-AND THE BALANCE OF RS.4,85,400/- HAS BEEN SUSTAINED, WHICH IS CONTESTED BY THE ASSESSEE IN ITS APPEAL. THE REVENU E, IN CROSS APPEAL HAS CONTESTED THE RELIEF OF RS. 6,79,560/- A LLOWED BY THE CIT(APPEALS) BY WAY OF THE FOLLOWING GROUND NO.4 - 41 4. IN RESTRICTING THE ADDITION TO THE EXTENT OF RS.4,85,400/- OUT OF RS.11,64,960/- ON ACCOUNT O EXCESS STOCK OF 2427 POTATO BAGS AS THE ADDITION WA S MADE BY THE AO AT THE MARKET RATE. SINCE THE RESPECTIVE GROUNDS RAISED BY THE ASSESSE E AS WELL AS THE REVENUE RELATE TO THE SAME CONTROVERSY, THE TWO CROSS GROUNDS ARE BEING TAKEN UP TOGETHER. 60. THE DISPUTE, IN BRIEF, RELATES TO A DOCUMENT SEIZED DURING THE COURSE OF SEARCH OPERATION WHICH CONTAIN ED DETAILS OF SHIFTING AND STORING OF POTATO BAGS IN THE COLD STORAGE, WHICH WERE ENTERED IN LOT NUMBERS SK AND P. TOTAL PO TATO BAGS STORED AS PER SUCH LOTS WAS 2427. THE ASSESSING OF FICER REQUIRED THE ASSESSEE TO SHOW CAUSE WHY THE INVESTM ENT IN 2427 POTATO BAGS BE NOT CONSIDERED AS UNDISCLOSED I NCOME OF THE FIRM. IN REPLY, ASSESSEE SUBMITTED THAT THE DO CUMENT IN QUESTION WAS NOT BELONGING TO THE FIRM AND FURTHER, THAT THE ENTRIES REGARDING SHIFTING OF POTATO BAGS WITH LOT NUMBERS SK AND P RELATED TO 1231 BAGS OF SHRI SUBHASH THOL. IT WAS ALSO SUBMITTED THAT THE SAID DOCUMENT APPEARED TO BE AN ACCOUNT PREPARED BY SHRI SUBHASH CHAND THOL AND THEREFORE, THE SAME COULD NOT CONSTITUTE ANY UNDISCLOSED INCOME OF THE ASSESSEE FIRM. THE ASSESSING OFFICER REJECTED THE PLEA OF T HE ASSESSEE BY NOTICING THAT THE SAID DOCUMENT WAS FOUND IN THE POCKET OF SHRI PARDEEP KHOSLA AND IN THE ABSENCE OF ANY EXPLA NATION REGARDING THE STOCK SHOWN THEREIN, AN AMOUNT OF RS. 11,64,960/- BEING THE VALUE OF 2427 POTATO BAGS @ RS.480 PER BA G WAS ASSESSED AS UNDISCLOSED INCOME FOR THE ASSESSMENT Y EAR 1999- 2000 COMPRISED IN THE BLOCK PERIOD. 42 61. IN APPEAL, THE CIT(APPEALS) NOTED THAT SHRI S UBHASH CHAND THOL DID NOT ACCEPT THE OWNERSHIP OF 2427 BAG S OF POTATOES IN QUESTION AND THEREFORE, THE ONUS WAS ON THE ASSESSEE TO PROVE THAT SUCH STOCK ACTUALLY BELONGED TO THE OTHER PERSON. THE CIT(APPEALS) FURTHER REDUCED THE ADDITION TO RS.4,85,400/- BY VALUING THE COST OF 2427 BAGS @ RS .200/- PER BAG AS AGAINST RS.480/- PER BAG CONSIDERED BY THE A SSESSING OFFICER. 62. AGAINST THE AFORESAID, LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE DENIAL MADE BY SHRI SUBHASH CHAND THOL WAS SELF-SERVING AND FURTHER TH AT THE ASSESSING OFFICER HAS MERELY RELIED UPON A DOCUMENT TO INFER THAT ASSESSEE HAD INVESTED IN SUCH STOCKS WHEREAS, IN ACTUALITY, NO SUCH STOCK WAS FOUND AT THE TIME OF S EARCH OPERATION. 63. ON THE OTHER HAND, LEARNED DR CONTENDED THAT THE LOWER AUTHORITIES WERE JUSTIFIED IN CONCLUDING THAT THE O WNERSHIP OF 2427 BAGS OF POTATOES IN QUESTION VESTED WITH THE A SSESSEE. MOREOVER, ACCORDING TO HER, THE ASSESSING OFFICER W AS JUSTIFIED IN VALUING THE STOCK @ RS.480/- PER BAG IN TERMS OF THE MARKET VALUE OF POTATOES ON THE DATE OF SEARCH. 64. IN THIS CONNECTION, WE HAVE CONSIDERED THE R IVAL SUBMISSIONS CAREFULLY. THE PRIMARY DISPUTE ON THIS ISSUE RELATES TO THE OWNERSHIP OF STOCK FOUND NOTED AS PE R THE SEIZED DOCUMENT TITLED AS ANNEXURE A-14. THE EXPLANATION OF THE ASSESSEE WAS THAT THE SAME BELONGED TO ONE SHRI SUB HASH CHAND THOL AND FURTHER THAT SUCH DOCUMENT WAS INADV ERTENTLY 43 LEFT BY HIM IN THE PREMISES OF THE ASSESSEE WHICH G OT MIXED UP IN THE PAPERS. WE HAVE EXAMINED THIS ASPECT AND FI ND THAT THE ASSESSING OFFICER HAS REJECTED SUCH PLEA BY NOTICIN G THAT THE SAID DOCUMENT WAS FOUND IN THE POSSESSION OF SHRI P ARDEEP KHOSLA AND THEREFORE, IN OUR CONSIDERED OPINION, TH E BURDEN WAS ON THE ASSESSEE TO EXPLAIN SUCH DOCUMENT. FURT HERMORE, SHRI SUBHASH CHAND THOL HAS NOT ACCEPTED THE OWNERS HIP OF POTATOES AND THEREFORE, THE AUTHORITIES BELOW RIGHT LY REQUIRED THE ASSESSEE TO EXPLAIN THE SOURCE OF INVESTMENT IN SUCH STOCKS. THE ASSESSING OFFICER CONSIDERED THE ENTIRE STOCK OF 2427 BAGS OF POTATOES AS UNEXPLAINED AND VALUED THE SAME AT RS.11,64,960/- @ RS.480/- PER BAG. IN OUR CONSIDER ED OPINION, IN PRINCIPLE THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE IMPUGNED ADDITION. SO HOWEVER, THE VALUE OF STOCK A DOPTED BY HIM AT RS.480/- PER BAG, IS UNJUSTIFIED. ASSESSEE E XPLAINED THAT THE RATE OF POTATOES PER BAG WAS RS.200/- AT THE RE LEVANT POINT OF TIME, AND CIT(APPEALS) ACCORDINGLY, ADOPTED A R ATE OF RS.200/- PER BAG TO VALUE THE UNEXPLAINED STOCK OF 2427 BAGS AT RS.4,85,400/-. WE FIND NO REASONS TO INTERFERE WITH THE RELIEF ALLOWED BY THE CIT(APPEALS) WHICH IS FAIR AN D PROPER. ACCORDINGLY, GROUND NO.4 RAISED IN THE APPEAL OF TH E ASSESSEE AS WELL AS THAT OF THE REVENUE IS DISMISSED. 65. THE FIFTH GROUND RAISED BY THE ASSESSEE REA DS AS UNDER : THAT THE LEARNED CIT(APPEALS) WITHOUT APPRECIATING THE WRITTEN SUBMISSIONS AND PROVISIONS OF SECTION 132(4A) ERRED IN SUSTAINING AN ADDITION OF RS.4,50,000/- THEREBY INDIRECTLY UPHOLDING THAT 315 0 BAGS OF ONIONS BELONGED TO THE APPELLANT. 44 THE DISPUTE IN THIS GROUND RELATES TO AN ADDITION O F RS.22,88,250/- MADE BY THE ASSESSING OFFICER BY HOL DING THAT 3051 BAGS OF ONION BELONGED TO THE ASSESSEE, WHICH REMAIN UNEXPLAINED AND ACCORDINGLY IT WAS TREATED AS UNDIS CLOSED INCOME OF THE ASSESSEE. ON THIS ASPECT, THE CIT(APP EALS) HAS REDUCED THE ADDITION TO RS. 4,50,000/-WHICH IS CONT ESTED BY THE ASSESSEE BY WAY OF ABOVE GROUND OF APPEAL. THE REV ENUE IN ITS CROSS APPEAL HAS CONTESTED THE RELIEF OF RS.4,5 0,000/- ALLOWED BY THE CIT(APPEALS) BY WAY OF GROUND NO.5 S TATED BELOW : 5 IN RESTRICTING THE ADDITION TO THE EXTENT OF RS.4,50,000/- OUT OF RS.22,88,250/- ON ACCOUNT OF EXCESS STOCK OF 3051 ONION BAGS AS THE ADDITION WAS MADE BY THE A.O. AT THE MARKET RATE. 66. SINCE THE RESPECTIVE GROUNDS RAISED BY THE AS SESSEE AND THE REVENUE RELATE TO THE SAME CONTROVERSY, THE TWO CROSS GROUNDS ARE BEING TAKEN UP TOGETHER. 67. AS PER THE SEIZED DOCUMENT, ASSESSING OFFICER FOUND THAT ONION BAGS WERE STORED IN THE COLD STORAGE OF THE ASSESSEE AND THAT 3051 SUCH BAGS OF ONIONS WERE TAKEN OUT BY THE OWNERS BEFORE THE DATE OF SEARCH. HOWEVER, THE ASSE SSING OFFICER NOTICED THAT THE ASSESSEE FIRM DID NOT ENTE R SUCH STOCK IN THE STOCK REGISTER SEIZED AND THEREFORE, HE SHOW CAUSED THE ASSESSEE AS TO WHY THE INVESTMENT IN 3051 ONION BAG S @ RS.1500/-PER QTL. AMOUNTING TO RS.22,88,250/- BE NO T TREATED AS UNEXPLAINED INVESTMENT. 68. IN RESPONSE, ASSESSEE EXPLAINED THAT 3051 BAG S OF ONIONS WERE RECEIVED FROM ONE SHRI SUCHA SINGH FOR CHHATAI AND WERE KEPT IN VERANDA AND WERE RETURNED FROM THE RE ITSELF 45 AND NOT STORED IN THE COLD STORAGE, THEREFORE, THE SAME WERE NOT ENTERED IN THE STOCK REGISTER. OUT OF THIS STOC K, 21 KATTAS WERE RETAINED BY THE ASSESSEE FOR DOMESTIC USE. IT WAS ALSO EXPLAINED THAT NO AMOUNT WAS CHARGED FOR USE OF THE SPACE FROM SHRI SUCHA SINGH THUS, AS PER THE ASSESSEE, S UCH STOCK DID NOT BELONG TO IT AND OWNERSHIP OF THE SAME WAS OF SHRI SUCHA SINGH. THE ASSESSING OFFICER HAS STATED THAT SHRI SUCHA SINGH WAS SUMMONED U/S 131 OF THE ACT AND HIS STATEMENT WAS RECORDED ON 17.10.2000 WHEREIN HE DEN IED OWNERSHIP OF SUCH STOCK. THE ASSESSING OFFICER ALS O NOTICED THAT EVEN DURING EXAMINATION BY THE AUTHORIZED OFFI CER ON 11.12.1998, THE SAID PERSON HAD DENIED HAVING KEPT 3051 ONION BAGS IN THE COLD STORAGE OF ASSESSEE. THE ASSESSIN G OFFICER FURTHER NOTICED THAT SHRI SUCHA SINGH WAS CROSS-EXA MINED BY THE COUNSEL OF THE ASSESSEE DURING ASSESSMENT PROCE EDINGS. ON BOTH THESE OCCASIONS, SHRI SUCHA SINGH ADMITTED TO HAVE KEPT ONLY 300 ONION BAGS WITH THE ASSESSEE, WHICH W ERE LIFTED BY HIM IN TWO WEEKS TIME. THEREFORE, IN THE LIGHT OF THE EVIDENCE ON RECORD, ASSESSING OFFICER CONCLUDED THA T THE EXPLANATION FURNISHED BY THE ASSESSEE WITH REGARD T O 3051 BAGS OF ONION WAS INCORRECT AND HENCE REJECTED. HEN CE, INVESTMENT OF RS.22,88,250/-, BEING THE COST OF 305 1 ONION BAGS WAS ASSESSED AS UNDISCLOSED INCOME OF THE ASSE SSEE FIRM FOR THE ASSESSMENT YEAR 1999-2000 COMPRISED IN THE BLOCK PERIOD. 69. BEFORE THE CIT(APPEALS) ALSO, ASSESSEE CONTE NDED THAT THE SAID STOCK WAS NOT OWNED BY IT. THE PLEAS OF T HE ASSESSEE HAVE SINCE BEEN REJECTED BY THE CIT(APPEALS). HOWEV ER, 46 CIT(APPEALS) NOTICED THAT THE RATE ADOPTED BY THE A SSESSING OFFICER AT RS.1500 PER QTL. WAS ARBITRARY WHEREAS T HE RATE AT THE RELEVANT POINT OF TIME RANGED FROM RS.250/- TO RS.350/- PER QUINTAL. HE, THEREFORE, ADOPTED A RATE OF RS.300/- PER QTL. AND ESTIMATED THE COST OF 3051 BAGS OF ONION AT RS.4,50 ,000/- AND SUCH ADDITION HAS BEEN SUSTAINED OUT OF TOTAL ADDIT ION OF RS.22,88,250/- MADE BY THE ASSESSING OFFICER. 70. IN THE ABOVE BACKGROUND, THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE CIT(APPEALS) HA S NOT APPRECIATED THAT THE SAID STOCK DID NOT BELONG TO T HE ASSESSEE AND THAT THE DENIAL BY SHRI SUCHA SINGH WAS SELF-SE RVING. IT IS SUBMITTED THAT THE LOWER AUTHORITIES HAVE NOT EVEN GIVEN THE CREDIT FOR 300 BAGS OF ONION WHICH HAVE BEEN ADMITT ED BY SHRI SUCHA SINGH OF HAVING BEEN KEPT WITH THE ASSESSEE F IRM. 71. ON THE OTHER HAND, LEARNED CIT-DR HAS DEFEND ED THE ORDER OF THE ASSESSING OFFICER, AS ACCORDING TO HER , BURDEN WAS ON THE ASSESSEE TO PROVE THAT THE SAID STOCK WAS NO T OWNED BY IT. IN THIS CASE, THE RECORD CLEARLY SHOWS THAT TH E BURDEN CAST ON THE ASSESSEE HAS NOT BEEN DISCHARGED AND THEREFO RE, CIT(APPEALS) WAS WRONG IN ALLOWING EVEN THE PARTIAL RELIEF. 72. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CARE FULLY. IN OUR VIEW, HAVING REGARD TO THE FACTS AND MATERIAL O N RECORD, THE ASSESSING OFFICER WAS JUSTIFIED IN ASSESSING THE VA LUE OF 3051 BAGS OF ONION IN THE HANDS OF THE ASSESSEE FIRM. A SSESSEE EXPLAINED THAT THE SAID STOCK BELONGED TO ONE SHRI SUCHA SINGH, WHO DENIED THE AVERMENTS OF THE ASSESSEE. F ROM THE ASSESSMENT ORDER, IT APPEARS THAT EVEN DURING CROSS 47 EXAMINATION BY THE COUNSEL OF THE ASSESSEE, THE SAI D SHRI SUCHA SINGH DENIED THE OWNERSHIP OF 3051 BAGS OF ON IONS. INFACT, DURING CROSS EXAMINATION, HE ONLY ADMITTED HAVING KEPT 300 BAGS OF ONIONS WITH THE ASSESSEE. THEREFORE, T O ABOVE EXTENT, THE CREDIT IS TO BE ALLOWED TO THE ASSESSEE . IN SO FAR AS THE VALUATION OF THE STOCK IS CONCERNED, WE FIND TH AT THE ASSESSING OFFICER VALUED THE STOCK AT AN AVERAGE MA RKET RATE WHICH WAS COMPUTED AT RS.1500/- PER QUINTAL. THE CIT(APPEALS), ON THE OTHER HAND, HAS VALUED THE STO CK ON THE BASIS OF PUBLISHED RATES PRODUCED BY THE ASSESSEE CORRESPONDING TO THE DATES FOUND RECORDED IN THE SE IZED DOCUMENT. THE SEIZED DOCUMENT, A COPY OF WHICH HAS BEEN PLACED AT PAGE 87 OF THE PAPER BOOK, SHOWS THE TRAN SACTIONS DURING 27.05.1998 TO 05.06.1998. THE CIT(APPEALS) REFERS TO NEWSPAPER REPORT OF THE RELEVANT PERIOD, WHEREIN TH E RATE OF ONION HAS BEEN GIVEN AT RS.250/- TO 350/- PER QUINT AL. HE HAS ADOPTED A RATE OF 300/- PER QUINTAL TO ARRIVE AT TH E VALUE OF 3150 BAGS OF ONIONS, WHICH, IN OUR VIEW, IS FAIR AN D PROPER. THEREFORE, THE RATE ADOPTED BY THE CIT(APPEALS) IS HEREBY AFFIRMED. HOWEVER, THE QUANTITY OF UNEXPLAINED ONI ONS IS TO BE TAKEN AT 2850 BAGS AS AGAINST 3150 BAGS CONSIDERED BY THE AUTHORITIES BELOW IN VIEW OF THE ADMISSION BY SHRI SUCHA SINGH OF HAVING KEPT 300 BAGS WITH THE ASSESSEE. ACCORDI NGLY, ADDITION OF RS.3,60,000/- IS SUSTAINED AND THE ASSE SSING OFFICER IS DIRECTED TO DELETE THE BALANCE ADDITION OUT OF RS.22,88,250/-. ACCORDINGLY, GROUND NO.5 IN THE AP PEAL OF THE ASSESSEE IS PARTLY ALLOWED WHEREAS, GROUND NO.5 IN THE APPEAL OF THE REVENUE IS DISMISSED. 48 73. THE SIXTH GROUND RAISED BY THE ASSESSEE READS AS UNDER: THAT THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.2,18,443/- ON ACCOUNT OF ALLEGED INTEREST FROM S/SHRI JAGTAR SINGH ANIL KUMAR AND SUBHASH CHAND. ON THIS GROUND, BRIEF FACTS ARE THAT IN TERMS OF DO CUMENT NOS. 5, 6 & 9 OF AA-10 SEIZED FROM THE RESIDENCE OF SHRI VED PARKASH KHOSLA, IT WAS FOUND THAT CERTAIN INTEREST FROM S/SHRI SUBHASH CHAND, ANIL KUMAR AND JAGTAR SINGH WAS DUE AS ON 30.09.1998. THE ASSESSING OFFICER CALCULATED INTER EST UPTO THE DATE OF SEARCH AT RS.3,28,843/- AND REQUIRED THE AS SESSEE TO EXPLAIN AS TO WHY THE SAME NOT BE TREATED AS UNDISC LOSED INCOME ASSESSABLE IN THE HANDS OF THE ASSESSEE. AFT ER CONSIDERING THE EXPLANATIONS OF THE ASSESSEE, HE CO MPUTED UNDISCLOSED INCOME AS FOLLOWS : SHRI JAGTAR SINGH RS. 8,676/- SHRI ANILKUMAR RS.1,65,608/- SHRI SUBHASH CHAND RS. 44,559/- ----------------------- TOTAL RS.2,18,843/- ----------------------- THE ABOVE SUM OF RS.2,18,843/- HAS BEEN ASSESSED AS UNDISCLOSED INCOME ON ACCOUNT OF INTEREST UPTO 07.1 0.1998 ON LOANS GIVEN TO THE ABOVE PERSONS AS PER SEIZED DOCU MENT NOS. 5, 6 & 9 OF AA-10. 74. IN APPEAL BEFORE THE CIT(APPEALS), ASSESSEE D ID NOT CHALLENGE THE ADDITION OF RS.8676/- IN RESPECT OF S HRI JAGTAR SINGH, WHEREAS IN RESPECT OF SHRI ANIL KUMAR AND SH RI SUBHASH CHAND AMOUNTING TO RS.1,65,608/- AND RS.44,559/- RESPECTIVELY, IT WAS CHALLENGED BY SUBMITTING THAT NO SUCH 49 INTEREST WAS RECEIVED OR RECEIVABLE. IN SUPPORT, I T WAS POINTED OUT THAT THE STATEMENTS OF THE SAID PERSONS WERE RE CORDED, DURING THE COURSE OF WHICH BOTH PERSONS DENIED ANY LIABILITY TO PAY SUCH INTEREST TO THE ASSESSEE FIRM. THE CIT(AP PEALS), HOWEVER, HAS SUSTAINED ADDITION ON THE GROUND THAT THE INTEREST INCOME HAS BEEN ASSESSED ON THE BASIS OF SEIZED DOCUMENTS, WHICH CLEARLY SHOWED TRANSACTIONS OUTSID E THE BOOKS OF ACCOUNT. ACCORDINGLY, AN ADDITION OF RS.2 ,18,843/- HAS BEEN SUSTAINED, AGAINST WHICH, ASSESSEE IS IN A PPEAL BEFORE US. 75. BEFORE US, LEARNED COUNSEL HAS RELIED UPON TH E SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES, WHIC H HAVE ALREADY BEEN NOTED BY US IN THE EARLIER PARAGRAPH. ON THE OTHER HAND, LEARNED CIT-DR HAS DEFENDED THE ORDER O F THE LOWER AUTHORITIES BY PLACING RELIANCE ON THE SAME. 76. HAVING CONSIDERED THE RIVAL STANDS AND PERUS ING THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT THE C IT(APPEALS) MADE NO MISTAKE IN SUSTAINING THE ADDITION OF RS.2, 18,843/-. AS CORRECTLY POINTED OUT BY THE CIT(APPEALS), THE S EIZED DOCUMENTS CLEARLY SHOW INTEREST INCOME ACCRUING IN THE HANDS OF THE ASSESSEE FROM LOAN TRANSACTIONS CARRIED OUT OUTSIDE THE BOOKS OF ACCOUNT. THE DENIAL BY THE TWO BORROWERS NAMELY, S/SHRI ANIL KUMAR AND SUBHASH CHAND DOES NOT DISTRA CT FROM THE EVIDENCE SHOWING INTEREST INCOME ACCRUING TO TH E ASSESSEE OUTSIDE THE ACCOUNT BOOKS. ACCORDINGLY, WE UPHOLD THE SUSTENANCE OF ADDITION BY THE CIT(APPEALS), AND, AC CORDINGLY GROUND NO.6 RAISED BY THE ASSESSEE IS DISMISSED. 50 77. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GR OUND OF APPEAL WHICH READS AS UNDER : THAT THE LEARNED CIT(APPEALS) NOTWITHSTANDING THE DOCUMENTARY EVIDENCE ON RECORD THAT 315 BAGS OF POT ATO BELONGED TO SHRI ANIL KUMAR ALIAS TITU AND NOT THE ASSESSEE IGNORED ASSESSEE'S PLEA BEFORE HIM TAKEN A S PER GROUND NO.4. HE SIMPLY DECIDED THE SECOND LIMB OF THIS GROUND RELATING TO VALUATION OF THE STOCK UNDER REF ERENCE. THE DISPUTE IN THIS GROUND ARISES FROM AN ADDITION OF RS.15,19,200/- MADE BY THE ASSESSING OFFICER WITH R ESPECT TO 3165 BAGS OF POTATOES AND LOAN TRANSACTION IN RELATION T O ONE SHRI ANIL KUMAR. OUT OF THE TOTAL OF RS.15,19,200/-, ASSESSI NG OFFICER MADE AN ADDITION OF RS.9,00,000/- ON SUBSTANTIVE BASIS A S UNEXPLAINED LOAN HAVING BEEN ADVANCED BY THE ASSESSEE, FOR THE ASSESSMENT YEAR 1998-99 AND BALANCE OF RS.6,19,200/- WAS ASSES SED AS UNDISCLOSED INCOME FOR THE ASSESSMENT YEAR 1999-200 0 ON PROTECTIVE BASIS. ON THIS ASPECT, CIT(APPEALS) SUS TAINED THE ADDITION OF RS.9,00,000/- AND DELETED THE PROTECTIV E ADDITION OF THE ASSESSEE OF RS.6,19,200/-. THE REVENUE, IN ITS CRO SS APPEAL HAS CONTESTED THE RELIEF ALLOWED BY THE CIT(APPEALS) BY WAY OF FOLLOWING GROUND NO.3 :- IN RESTRICTING THE ADDITION OF RS.9,00,000/- OUT O F RS.15,19,200/- ON ACCOUNT EXCESS STOCK OF 3165 BAGS OF POTATOES AS THE ADDITION WAS MADE BY THE A. O. AT THE MARKET RATE. 78. SINCE THE RESPECTIVE GROUNDS RAISED BY THE ASSE SSEE AS WELL AS THE REVENUE RELATE TO THE SAME CONTROVERSY, THE TWO CROSS GROUNDS ARE BEING TAKEN UP TOGETHER. IN BRIEF, THE FACTS ARE THAT DURING THE COURSE OF SEARCH OPERATION, 3165 POTATO BAGS WERE FOUND IN THE COLD STORE AGAINST THE NAMES OF FOUR PERSONS , NAMELY S/SHRI 51 NAND LAL, GULSHAN, VARINDER AND DARSHAN. IT WAS FOU ND THAT THE SAID FOUR PERSONS WERE BENAMI OF ONE SHRI ANILKUMAR S/OSH MULAKH RAJ, WHO ADMITTED THIS FACT IN HIS DEPOSITION BEFOR E THE DDIT, AMBALA ON 10.11.1998. SHRI ANIL KUMAR ALSO FILED A N AFFIDAVIT CLAIMING OWNERSHIP OF 3150 POTATO BAGS AND THE STOC K WAS ALSO RELEASED TO HIM. IN ONE OF THE DOCUMENT SEIZED DURI NG THE SEARCH OPERATION, ACCOUNT OF SHRI ANIL KUMAR WAS NOTICED, WHEREBY IT WAS EVIDENT THAT THE ASSESSEE HAD ADVANCED A SUM OF RS .13,00,600/- ON VARIOUS DATES AND HAD ALSO RECEIVED BACK A SUM O F RS.4,00,000/-. OUT OF THE TOTAL AMOUNT OF RS.13,00, 600/-, RS.4,00,600/- WAS ADVANCED BY WAY OF BANK DRAFT AND THE BALANCE OF RS.9,00,000/- WAS ADVANCED TO IN CASH. THE ASSE SSEE AS WELL AS SHRI ANIL KUMAR ACCEPTED THE ASPECT OF THE LOAN OF RS.9,00,000/- HAVING BEEN TRANSACTED IN CASH OUTSIDE THE ACCOUNT BOOKS. IN THIS BACKGROUND, ASSESSING OFFICER VALUED 3165 POTATO BA GS AT RS.15,19,200/- BY ADOPTING A RATE OF RS.480/- PER B AG. RS.9,00,000/- ADVANCED OUTSIDE THE BOOKS OF ACCOUNT WAS ASSESSED BY THE ASSESSING OFFICER AS UNDISCLOSED INCOME, BEI NG UNEXPLAINED LOANS FOR THE ASSESSMENT YEAR 1998-99 WHILE THE BAL ANCE OF RS.6,19,200/- WAS ASSESSED ON PROTECTIVE BASIS IN R ELATION TO THE ASSESSMENT YEAR 1999-2000 COMPRISED IN THE BLOCK PE RIOD. 79. IN APPEAL BEFORE THE CIT(APPEALS), ASSESSEE CON TENDED THAT AS PER THE EVIDENCE ON RECORD, 3165 POTATO BAGS BEL ONGED TO SHRI ANIL KUMAR AND INVESTMENT THEREIN WAS ALSO MADE BY THE SAID PERSON AND THEREFORE, ITS VALUE COULD NOT BE ASSESS ED IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS. THE CIT(APPEAL S) DIRECTED ASSESSING OFFICER TO ADOPT THE RATE OF RS.200/- PER BAG FOR THE PURPOSES OF VALUING 3165 BAGS OF POTATOES, WHICH CA ME TO 52 RS.6,33,000/-. AS PER THE CIT(APPEALS), SAID AMOUN T WAS LOWER THAN THE AMOUNT OF LOAN ADVANCED BY THE ASSESSEE TO SHRI ANIL KUMAR AND THEREFORE, WHILE RETAINING ADDITION OF RS .9,00,000/- ON ACCOUNT OF LOAN ADVANCED OUTSIDE THE BOOKS OF ACCOU NT, HE DELETED THE PROTECTIVE ADDITION OF RS.6,19,200/- MADE IN TH E HANDS OF THE ASSESSEE. 80. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE CON TENDED THAT THE CIT(APPEALS) HAS MERELY DECIDED ONE LIMB OF THE DISPUTE RELATING TO VALUATION OF STOCK UNDER REFERENCE WHIL E HE HAS IGNORED THE PLEA OF THE ASSESSEE THAT THE DOCUMENTARY EVIDE NCE ON RECORD SHOWED THAT 3165 POTATO BAGS DID NOT BELONG TO THE ASSESSEE BUT IT BELONGED TO SHRI ANIL KUMAR. 81. ON THE OTHER HAND, LEARNED CIT-DR CONTENDED THA T THE CIT(APPEALS) ERRED IN RESTRICTING THE ADDITION TO R S.9,00,000/- OUT OF THE TOTAL ADDITION OF RS.15,19,200/- SINCE THE STOC K WAS VALUED BY THE ASSESSING OFFICER AT THE PREVAILING MARKET RATE . 82. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. BEFORE PROCEEDING TO ADJUDICATE ON THE MERITS OF THE RIVAL CONTENTIONS, IT WOULD BE APPROPRIATE TO STATE THAT THE ADMISSION OF ADDITIONAL GROUND OF APPEAL WAS SOUGHT TO BE JUSTIFIED ON THE GROUND THAT IT WAS OMITTED TO BE RAISED IN THE MEMO OF APPEAL BEIN G A BONAFIDE OVERSIGHT. THE LEARNED COUNSEL HAD POINTED OUT THA T THE ADDITIONAL GROUND DOES NOT REQUIRE ANY FRESH APPRECIATION OF F ACTS OTHER THAN THOSE ALREADY ON RECORD. IT IS CONTENDED THAT EVEN OTHERWISE, ASSESSEE IS COMPETENT TO AGITATE A POINT WHICH WAS DECIDED AGAINST HIM BY THE CIT(APPEALS) EVEN AS A RESPONDENT IN THE APPEAL OF THE REVENUE AND IN THIS REGARD, REFERENCE WAS MADE TO R ULE 27 OF THE 53 INCOME TAX APPELLATE TRIBUNAL RULES, 1963. IT WAS, THEREFORE SUBMITTED THAT THE ADDITIONAL GROUND OF APPEAL BE A DMITTED FOR ADJUDICATION. THE LEARNED CIT-DR, THOUGH OPPOSED T HE PRAYER FOR ADMISSION OF ADDITIONAL GROUND, BUT SHE HAS NOT SER IOUSLY DISPUTED THE CLAIM OF THE ASSESSEE THAT IT IS ENTITLED TO RA ISE SUCH GROUND EVEN AS A RESPONDENT IN THE APPEAL OF THE REVENUE O N THE STRENGTH OF RULE 27 OF THE APPELLATE TRIBUNAL RULES, 1963. 83. HAVING CONSIDERED THE RIVAL STANDS ON THIS ASPE CT, WE DEEM IT FIT AND PROPER TO ADMIT THE ADDITIONAL GROUND OF AP PEAL SINCE, IT CLEARLY ARISES FROM THE ORDER OF THE CIT(APPEALS). FOR THIS REASON, BOTH THE PARTIES WERE ALSO PERMITTED TO MAKE ARGUME NTS ON MERITS, WHICH WE HAVE NARRATED IN THE EARLIER PARAGRAPHS. 84. HAVING CONSIDERED RIVAL MERITS OF THE RIVAL SUB MISSIONS, WE FIND THAT THE DISPUTE ESSENTIALLY REVOLVES AROUND T HE STOCK OF 3165 POTATO BAGS AND THE SEIZED DOCUMENT SHOWING LOANS A DVANCED TO SHRI ANIL KUMAR OUTSIDE THE BOOKS OF ACCOUNT. IN TH E CONTEXT OF 3165 BAGS OF POTATOES, IT IS EVIDENT THAT SHRI ANIL KUMAR HAS OWNED UP THE SAID STOCK AND IN FACT, THE ASSESSING OFFICE R HAS NOT MADE A SUBSTANTIVE ADDITION, BUT ONLY ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE FIRM. THE CIT(APPEALS) IN PARA 7.2 OF THE IMPUGNED ORDER HAS NOTICED THAT THE OWNERSHIP OF 3165 BAGS W AS CLAIMED BY SHRI ANIL KUMAR BY WAY OF AN AFFIDAVIT AND ALSO IN THE STATEMENT RECORDED BY DDIT, AMBALA ON 10.11.1998 AND FURTHER THAT SUCH STOCK WAS RELEASED TO SHRI ANIL KUMAR BY DDIT, AMBA LA. UNDER THESE CIRCUMSTANCES, TO WHICH THERE IS NO CONTROVER TSION BY THE REVENUE, WE FIND NO ERROR IN THE APPROACH OF THE CI T(APPEALS) IN DELETING THE ADDITION MADE ON PROTECTIVE BASIS IN T HE HANDS OF THE ASSESSEE WITH RESPECT TO THE VALUE OF THE STOCK OF 3165 BAGS. IN 54 FACT, THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE IS MIS- CONCEIVED IN AS MUCH AS THERE IS NO ADDITION SUSTAI NED BY THE CIT(APPEALS) WITH RESPECT TO 3165 BAGS OF POTATOES, WHEREAS THE ADDITION SUSTAINED IS ONLY OF RS.9,00,000/- REPRESE NTING LOAN ADVANCED TO SHRI ANIL KUMAR OUTSIDE THE ACCOUNT BOO KS. IN THIS CONNECTION, THERE IS NO JUSTIFICATION TO DELETE THE SAID ADDITION BECAUSE THE ASPECT OF THE ASSESSEE HAVING ADVANCED SUCH LOAN OUTSIDE THE BOOKS OF ACCOUNT HAS BEEN ACCEPTED BY T HE ASSESSEE AS WELL AS SHRI ANIL KUMAR. THEREFORE, IN OUR VIEW, T HE CIT(APPEALS) MADE NO MISTAKE IN SUSTAINING THE ADDITION OF RS.9, 00,000/- ON SUBSTANTIVE BASIS IN THE HANDS OF THE ASSESSEE ON A CCOUNT OF UNEXPLAINED LOAN ADVANCED TO SHRI ANIL KUMAR IN THE ASSESSMENT YEAR 1998-99 COMPRISED IN THE BLOCK PERIOD. IN THE RESULT, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE AS WELL AS GROUND NO.3 RAISED BY THE REVENUE ARE DISMISSED. 85. RESULTANTLY, APPEAL OF THE ASSESSEE IN ITSS(A) NO.33/CHANDI/2002 IS PARTLY ALLOWED. 86. NOW, WE TAKE UP THE CROSS-APPEAL OF THE REVENUE IN ITSS(A) 43/CHD/2002. IN THIS APPEAL, GROUND NOS. 1 TO 5 HA VE ALREADY BEEN CONSIDERED WHILE CONSIDERING THE RESPECTIVE GROUNDS OF APPEAL RAISED IN THE APPEAL OF THE ASSESSEE, IN THE EARLIE R PARAGRAPHS. THE REMAINING GROUNDS ARE CONSIDERED AS FOLLOWS. 87. THE SIXTH GROUND RAISED BY THE REVENUE REA DS AS UNDER: 6. IN DIRECTING THE A.O. TAKE THE FIGURE IN HUNDRED INSTEAD OF LACS AND DELETE THE ADDITION TO THE TUNE OF RS.11,98,800/- 55 THE FACTS IN BRIEF ARE AS FOLLOWS. DOCUMENT NO. 1 O F ANNEXURE A- 15 WAS SEIZED FROM THE RESIDENCE OF SHRI PARDEEP KH OSLA WHICH HAD THE FOLLOWING ENTRIES. 11-86 UGAJAR SINGH 5-75 LACHI 13-00 TITU 1-50 B.L. 4-75 PAPPU THE ASSESSING OFFICER DECIPHERED THE AFORESAID FIGU RES AS REPRESENTING LACS. IN THE PRESENT GROUND THE ISSUE IS IN RELATION TO THE THREE ENTRIES AGAINST THE NAMES OF S/SHRI LA CHI, PAPPU AND B.L. WHICH HAVE BEEN CONSTRUED AS RS.5,75,000/- , RS.1,50,000/- AND RS.4,75,000/- RESPECTIVELY. AS PE R THE ASSESSING OFFICER, SUM OF RS.12,00,000/- REPRESENTE D BY THE THREE ENTRIES AFTER DECODING, REPRESENTS UNDISCLOSE D INCOME OF THE ASSESSEE-FIRM FOR THE ASSESSMENT YEAR 1999-2000 COMPRISED IN THE BLOCK PERIOD 01.04.1988 TO 07.10.1998. 88. WITH RESPECT TO THE AFORESAID, ASSESSEE CONT ENDED BEFORE THE CIT(A) THAT THE ENTRIES HAVE BEEN WRONGLY TAKEN AS LOAN TRANSACTIONS, AND WERE LABOUR CHARGES. IT WAS EXPL AINED THAT SHRI PRADEEP KHOSLA, AT THE TIME OF RECORDING OF HI S STATEMENT ON 27.10.1998 IN RESPONSE TO QUESTION NO. 7 STATED THAT THE SAID ENTRIES MAY BE LABOUR CHARGES IN RESPECT OF THE PER SONS NAMED IN THE SEIZED DOCUMENT. SECONDLY, IN SO FAR AS ENTR IES AGAINST THE NAMES OF TITTU AND UGAJAR SINGH WERE CONCERNED, THE SAME WERE ADMITTED TO BE ENTRIES OF LOANS OF RS.13,00,60 0/- AND RS.11,91,000/- RESPECTIVELY. THIRDLY, ASSESSEE GAVE CERTAIN EXAMPLES OUT OF THE SEIZED MATERIAL WHERE IT HAD AD OPTED THE FIGURES IN DECIMALS I.E. AMOUNT WRITTEN BY THE ASSE SSEE WAS 1/100 TH OF THE ACTUAL AMOUNT. THE ILLUSTRATIVE LIST OF SUC H ENTRIES 56 PROVIDED BY THE ASSESSEE HAVE BEEN REPRODUCED BY TH E CIT(A) IN PARA 10.3(III) OF HIS ORDER. FOURTHLY, ASSESSEE CONTENDED THAT DOCUMENT NO. 1 OF ANNEXURE A-15, WHICH CONTAINED TH E DISPUTED ENTRIES, WAS PART OF A DIARY IN WHICH ALL THE FIGUR ES HAVE BEEN WRITTEN IN DECIMALS, AND THE ENTRIES IN QUESTION SH OULD BE TAKEN AS BEING 1/100 TH OF THE ACTUAL AMOUNT MEANING THEREBY THAT THE TOTAL AMOUNT IN QUESTION IN RESPECT OF THE THREE PE RSONS SHOULD BE TAKEN AS RS.3696/- AND IT WAS FURTHER EXPLAINED THAT THE SAID FIGURE REPRESENTED LABOUR CHARGES RECOVERABLE FROM THE SAID PERSONS. THE CIT(A) HAS ACCEPTED THE SUBMISSIONS OF THE ASSESSEE BY MAKING THE FOLLOWING DISCUSSION : 10.4. I HAVE CAREFULLY APPLIED MY MIND TO THE STAT ED FACTS AND SUBMISSIONS OF LD. AR IN MY OPINION, THE ARGUMENTS ADDUCED ON BEHALF OF THE APPELLANT CANNOT BE BRUSHED ASIDE TO ME, IT APPEARS THAT PERSONS IN THE KHOSLA FAMILY ARE COMPULSIVELY WRITING EVEN TRIVIAL EXPENSES IN A CODED FORM WITHOUT THEIR BEING ANY REASON OR JUSTIFICATION FOR THE SAME. TO ELABORATE THIS ASPECT, I WOULD LIKE TO REFER TO THE STATEMENT OF S HRI PARDEEP KHOSLA RECORDED ON 27.10.1998 WHEREIN SHRI PARDEEP KHOSLA WAS SPECIFICALLY QUESTIONED REGARDIN G CERTAIN TRIVIAL EXPENSES, SOME OF THE INSTANCES BEI NG AS UNDER:- I) 6.00 ON ACCOUNT OF PETROL EXPENSES MOTOR CYCLE. THE ASSESSING OFFICER, RECORDING THE STATEMENT HAS DECIPHERED THE FIGURE IN QUESTION AS REPRESENTING RS.600/- (QUESTION NO. 19). II) 2.00 ON ACCOUNT OF T. BILL, STD. THE ASSESSING OFFICER, RECORDING THE STATEMENT HAS DECIPHERED THE FIGURE IN QUESTION AS REPRESENTING RS.200/- (QUESTION NO.21). III) 8.00 BAJRI. THE ASSESSING OFFICER, RECORDING THE STATEMENT HAS DECIPHERED THE FIGURE IN QUESTION AS REPRESENTING RS.800/- (QUESTION NO.26). 10.5 FROM THE ABOVE, IT IS EXPLICITLY CLEAR TH AT SHRI PARDEEP KHOSLA HAS BEEN WRITING EVEN TRIVIAL EXPENS ES ON ACCOUNT OF TELEPHONE BILL AND PETROL ETC. IN A C ODED FORM, WITHOUT THERE BEING ANY JUSTIFICATION OR NEED . NEEDLESS TO SAY THAT 6.00 OR 2.00 CAN NOT MEAN RS.6,00,000/- AND RS.2,00,000/- ON ACCOUNT OF PETRO L 57 EXPENSES AND TELEPHONE STD EXPENSES RESPECTIVELY. APPARENTLY, KHOSLAS ARE HABITUAL OF WRITING MOST O F THE FIGURES IN CODED FORM. KEEPING ALL THESE ASPECTS AS WELL AS OTHER SUBMISSIONS OF LD. AR IN MY MIND, IN MY OPINION, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DECIPHERING FIGURES AS REPRESENTING THE AMOUNT IN LACS WHILE HE HIMSELF HAS AT ALL OTHER PLACES DECIPHERED THE FIGURES AS REPRESENTING IN HUNDREDS. THE BALANCE OF CONVENIENCE IS OBVIOUSLY IN FAVOUR OF THE APPELLANT . THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. AGAINST THE AFORESAID DECISION, REVENUE IS IN APPEA L BEFORE US. BEFORE US, LD. CIT-DR HAS CONTENDED THAT THE ENTRIE S IN THE SEIZED DOCUMENTS HAVE BEEN RIGHTLY DECODED BY THE A SSESSING OFFICER AS REPRESENTING AMOUNT IN LACS. ACCORDING T O HER, OUT OF THE FIVE ENTRIES, TWO ENTRIES IN THE NAME OF S/SHRI UGAJAR SINGH AND TITTU ARE ADMITTEDLY LOAN TRANSACTIONS WHICH A RE IN LACS AND THEREFORE THE OTHER THREE ENTRIES AGAINST THE NAMES OF S/SHRI LACHI, B. L. AND PAPPU SHOULD ALSO BE UNDERSTOOD AS REPRESENTING LOAN TRANSACTIONS AND FIGURES IN LACS. IT IS ALSO POINTED OUT THAT THE ASSESSING OFFICER HAS OBSERVED IN PARA 9.2 OF THE ASSESSMENT ORDER THAT WHEN SHRI PARDEEP KHOS LA WAS CONFRONTED WITH THE DOCUMENT DURING HIS EXAMINATION ON 27.10.1998 BY THE AUTHORIZED OFFICER, HE STATED THA T HE DID NOT KNOW THE CONTEXT IN WHICH THESE ENTRIES WERE MADE, THOUGH HE ADMITTED THAT THE SAME WERE IN HIS HANDWRITING. IT IS FURTHER POINTED OUT THAT SOME LOANS FOUND RECORDED IN THE S EIZED DOCUMENTS HAVE ALSO BEEN SURRENDERED BY THE ASSESSE E AND THEREFORE IT COULD NOT BE SAID THAT THE IMPUGNED EN TRIES DO NOT REFLECT LOAN TRANSACTIONS. FURTHER, IT IS CONTENDED THAT THE PERSONS NAMED IN DOCUMENT NO. 1 OF ANNEXURE A-15 WE RE COMMISSION AGENTS AND ASSESSEE WAS FOUND TO HAVE AD VANCED LOANS TO COMMISSION AGENTS AS PER VARIOUS DOCUMENTS FOUND AND ADMITTED BY THE ASSESSEE. FURTHER, IN THIS CONTEXT, ATTENTION WAS 58 INVITED TO PAGE 113 OF THE PAPER-BOOK FILED BY THE ASSESSEE WHEREIN THE LOAN TRANSACTION WITH MR. LACHI HAS BEE N RECORDED. IT IS ALSO POINTED OUT THAT ASSESSEE HAD SURRENDERE D A LOAN OF RS.9,00,000/- ADVANCED TO MR. TITTU IN THE ASSESSME NT YEAR 1998-99 AND RS.4,10,000/- WAS SURRENDERED IN RESPEC T OF LOAN AND INTEREST ON ACCOUNT OF SHRI UGAJAR SINGH IN ASS ESSMENT YEAR 1999-2000 COMPRISED IN THE BLOCK PERIOD. THEREFORE, ACCORDING TO THE LD. CIT DR ON THE BASIS OF HUMAN PROBABILITI ES THE ENTRIES IN QUESTION WERE RIGHTLY DECODED BY THE ASS ESSING OFFICER AS REPRESENTING LOAN TRANSACTIONS AND THE F IGURES ARE IN LACS. 89. ON THE OTHER HAND, THE LD. COUNSEL FOR THE A SSESSEE POINTED OUT THAT THE CIT(A) WAS JUSTIFIED IN DISREG ARDING THE DECODING DONE BY THE ASSESSING OFFICER BECAUSE THE IMPUGNED ENTRIES RECORDED AGAINST THE NAMES OF S/SHRI LACHI, B. L. AND PAPPU WERE FOR LABOUR CHARGES AND NOT LOAN TRANSACT IONS. IT WAS POINTED OUT THAT THE LOAN TRANSACTIONS SURRENDERED BY THE ASSESSEE, WERE FOUND RECORDED IN THE SEIZED DOCUMEN TS IN COMPLETENESS AND NOT IN DECIMALS, AS IS THE CASE WI TH THE IMPUGNED ENTRIES. IT IS FURTHER POINTED OUT THAT IT IS WRONG TO SAY THAT SHRI PRADEEP KUMAR KHOSLA, WHEN CONFRONTED WIT H THE SAID DOCUMENT ON 27.10.1998 SHOWED IGNORANCE AS TO THE C ONTEXT IN WHICH THE IMPUGNED ENTRIES WERE WRITTEN BY HIM. IN THIS REGARD, A REFERENCE WAS MADE TO THE CONTENTS OF THE STATEME NT OF MR.PRADEEP KHOSLA RECORDED ON 27.10.1998, A COPY OF WHICH HAS BEEN PLACED ON RECORD BY THE LD. DEPARTMENTAL REPRE SENTATIVE. 59 90. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CA REFULLY. AS IS EVIDENT FROM THE AFORESAID, THE DISPUTE RELATES TO INTERPRETATION OF THE VALUES TO BE ACCORDED TO THE FIGURES FOUND W RITTEN IN SEIZED DOCUMENT NO. 1 OF ANNEXURE A-15 AGAINST THE NAMES OF S/SHRI LACHI, B.L. AND PAPPU. ADMITTEDLY, THE DOCUM ENT WAS FOUND FROM THE RESIDENCE OF SHRI PRADEEP KHOSLA WHO ADMITTED THAT THE SAME WAS IN HIS HANDWRITING. SHRI PRADEEP KHOSLA WAS EXAMINED IN THE CONTEXT OF THIS DOCUMENT BY THE AUT HORIZED OFFICER AT THE TIME OF SEARCH ON 27.10.1998. QUESTI ON NO. 7 WAS PUT TO HIM WITH REGARD TO THE AFORESAID ENTRIES IN THE SEIZED DOCUMENT. HE DEPOSED THAT THE ENTRIES MAY BE ON ACC OUNT OF LABOUR CHARGES AND APART THEREFROM HE HAD NO FURTHE R KNOWLEDGE OF THE SAME. HOWEVER, IN RELATION TO QUESTION NO. 8 WHEREIN HE WAS ASKED ABOUT THE ENTRY OF 13.00 AGAINST THE NAME OF TITTU, HE DEPOSED THAT THE SAME DID NOT REPRESENT LOAN TRANSA CTION. HE WAS FURTHER QUESTIONED ON THE ENTRIES IN RELATION T O S/SHRI TITTU AND UGAJAR SINGH BY WAY OF QUESTION NOS. 10 & 11. I T WAS PUT TO HIM THAT SHRI VED PARKASH KHOSLA HAD ADMITTED OF HA VING ADVANCED LOANS OF RS.11,96,000/- AND RS.13,00,000/- TO S/SHRI UGAJAR SINGH AND TITTU RESPECTIVELY AND THEREFORE H E WAS ASKED AS TO WHETHER THE ENTRIES IN QUESTION WERE LOAN ENT RIES. IT WAS DEPOSED BY HIM THAT HE HAD NO KNOWLEDGE OF THE LOANS ADVANCED, BUT CLEARLY HE DID NOT EXPLAIN THE ENTRIE S MADE IN THE SEIZED DOCUMENT. FROM THE DEPOSITION OF SHRI PRADEE P KHOSLA, IT IS EVIDENT THAT THE REPLIES WERE NOT FULLY CLEAR. T HE REPLIES FURNISHED DID NOT EXHIBIT COMPLETE KNOWLEDGE IN THE CONTEXT OF THE SEIZED DOCUMENTS. BE THAT AS IT MAY, IT HAS BEE N PUT-FORTH 60 BY HIM THAT THE ENTRIES IN QUESTION MAY BE ON ACCOU NT OF LABOUR CHARGES. IT IS ALSO EVIDENT THAT NO QUESTION WAS PU T TO HIM WITH REGARD TO THE VALUES TO BE ASSIGNED TO THE DECIMAL FIGURES RECORDED IN THE DOCUMENT. IT IS ONLY DURING ASSESSM ENT PROCEEDINGS THAT THE ASSESSING OFFICER PROCEEDED TO DECODE THE ENTRIES AS REPRESENTING FIGURES IN LACS. UNDER THES E CIRCUMSTANCES WHEN THE DEPARTMENT DID NOT CONFRONT THE ASSESSEE AT THE APPROPRIATE STAGE WHEN THE ASSESSEE WAS BEING QUESTIONED WITH RESPECT TO THE SEIZED DOCUMENT, SU BSEQUENTLY THE BURDEN WAS ON THE ASSESSING OFFICER TO SUPPORT HIS DECODING OF THE FIGURES BEING IN LACS. THERE IS NO CORROBORA TING EVIDENCE WITH THE ASSESSING OFFICER TO INFER THAT THE FIGURE S HAVE BEEN WRITTEN IN LACS. ON THE CONTRARY, CIT(A) HAS BROUGH T OUT VARIOUS INSTANCES IN THE STATEMENT OF SHRI PARDEEP KHOSLA W HEREIN EVEN TRIVIAL EXPENSES WRITTEN IN DECIMAL FIGURES WERE IN TERPRETED AS BEING IN HUNDREDS AND NOT IN LACS AND SUCH A POSITI ON HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. THEREFORE, CONSI DERING THE OVERALL CIRCUMSTANCES, WE ARE INCLINED TO UPHOLD TH E INTERPRETATION PLACED BY THE CIT(A) IN PREFERENCE T O THAT OF THE ASSESSING OFFICER. THUS, ON GROUND NO. 6 REVENUE HAS TO FAIL. 91. THE SEVENTH GROUND RAISED BY THE REVENUE READ S AS UNDER: 7. IN DIRECTING THE A.O. ON THE ABOVE GROUND TO DELETE THE ADDITION OF RS.16,78,320/- MADE ON ACCOUNT OF LOANS IN THE FACE OF RESULT OF POST SEARCH ENQUIRIES. 61 IN THIS GROUND, DISPUTE RELATES TO AN ADDITION OF R S.16,80,000/- MADE BY THE ASSESSING OFFICER ON THE BASIS OF DOCUM ENT NO.82 OF ANNEXURE A-09 SEIZED DURING THE COURSE OF SEARCH. THE ASSESSING OFFICER NOTICED CERTAIN ENTRIES IN THE SEIZED DOCUM ENT WHICH CONTAINED THE NAMES AND FIGURES IN DECIMALS. THE D ETAIL OF THE ENTRIES IS NOTED BY THE ASSESSING OFFICER IN PARA 1 0 OF THE ASSESSMENT ORDER. IN PARA 10.1 OF THE ASSESSMENT O RDER, ASSESSING OFFICER HAS IDENTIFIED THE PARTICULARS OF THE PERSONS WHOSE NAMES APPEAR IN THE SEIZED DOCUMENT. HE CONS IDERED THE NOTINGS IN THE SEIZED DOCUMENT AS REFLECTING ADVANC ES MADE BY THE ASSESSEE TO ARHATIYAS WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNT. AFTER CONSIDERING THE DETAIL OF TRANSACTI ONS RECORDED IN THE DOCUMENT, AN ADDITION OF RS.16,80,000/- WAS MAD E BY THE ASSESSING OFFICER REPRESENTING UNDISCLOSED INCOME F OR THE ASSESSMENT YEAR 1999-2000. THE CIT(APPEALS) HAS SI NCE DELETED THE ADDITION TO THE EXTENT OF RS.16,78,320/- BY HOL DING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DECIPHERING THE FIGURES IN THE SEIZED DOCUMENT AS REPRESENTING THE AMOUNT IN LACS , WHICH ACCORDING TO HIM REPRESENTED FIGURES IN HUNDREDS. AGAINST SUCH A DECISION OF THE CIT(APPEALS), REVENUE IS IN APPEAL BEFORE US. 92. BEFORE US, LEARNED CIT-DR HAS SUBMITTED THAT T HE CIT(APPEALS) ERRED IN DISREGARDING THE STAND OF THE ASSESSING OFFICER THAT THE IMPUGNED TRANSACTIONS REPRESENTED THE AMOUNT IN LACS. IT WAS POINTED OUT THAT THE SAID DOCUMENT WAS CONFRONTED TO SHRI RAKESH KHOSLA AT THE TIME OF THE SEARCH OPERAT ION AND HE HAS ADMITTED THAT THE DOCUMENT IS IN HIS HANDWRITING. THE LEARNED CIT- DR HAS REFERRED TO PARAGRAPH NOS.11.2 AND 11.3 OF T HE ORDER OF THE 62 CIT(APPEALS) TO POINT OUT THAT THE ADDITION HAS BEE N DELETED ON A WRONG COMMENTS. 93. ON THE OTHER HAND, LEARNED COUNSEL FOR THE RESP ONDENT ASSESSEE HAS DEFENDED THE ACTION OF THE CIT(APPEALS ) BY POINTING OUT THAT THE ISSUE STANDS ON SIMILAR FOOTI NG AS REFLECTED IN GROUND NO.6 RAISED BY THE REVENUE. 94. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. ON THIS ASPECT, SOME PERTINENT FACTS WHICH ARE RELEVANT TO DECIDE THE CONTROVERSY ARE AS FOLLOWS. THAT THE DOCUMENT IN Q UESTION WAS SEIZED FROM THE RESIDENCE OF SHRI RAKESH KHOSLA WHO ADMITTED THAT THE ENTRIES ARE IN HIS HAND-WRITING. THE ASSESSING OFFICER HAS CATEGORICALLY ESTABLISHED THE IDENTITY OF THE PERSO NS WHOSE NAMES WERE FOUND RECORDED IN THE SEIZED DOCUMENT. AS PER THE ASSESSING OFFICER, SHRI VED PARKASH KHOSLA ADMITTED OF HAVING GIVEN ADVANCES IN CASH AND OUTSIDE THE BOOKS OF ACCOUNT T O COMMISSION AGENTS. THE PERSONS SO IDENTIFIED ARE STATED TO BE COMMISSION AGENTS AND AGAINST THEIR NAMES, AMOUNT OF LOANS HAV E BEEN WRITTEN IN THE SEIZED DOCUMENT IN DECIMAL FIGURES AND DECIM ALS HAVE BEEN TAKEN TO BE IN LACS BY THE ASSESSING OFFICER. IN THIS BACKGROUND, THE CIT(APPEALS) HAS SCALED DOWN THE ADDITION BY TR EATING THE FIGURES IN HUNDREDS. WITHOUT OPINING ON THE MERI TS OF THE INFERENCE DRAWN BY THE CIT(APPEALS), IT IS SEEN THA T THERE IS NO FINDING BY THE CIT(APPEALS) WITH RESPECT TO THE NAT URE OF ENTRIES MADE THEREIN. IN FACT, WE FIND THAT THE ORDER OF T HE CIT(APPEALS) CONTAINS A SERIOUS INFIRMITY IN AS MUCH AS HE HAS N OT EVEN STATED THE SUBMISSIONS OR PLEAS RAISED BY THE ASSESSEE. T HOUGH, IN PARA 11.2 OF HIS ORDER, THE CIT(APPEALS) REFERS TO THE ARGUMENTS ADDUCED ON BEHALF OF THE APPELLANT, YET, THERE IS NO MENTION OF 63 SUCH ARGUMENTS IN THE IMPUGNED ORDER. MOREOVER, NO NE OF THE REASONINGS DELIBERATED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAVE BEEN ADDRESSED BY THE CIT(APPEALS) BEFOR E RESTRICTING THE ADDITION TO RS. 1680/- INSTEAD OF RS.16,80,000/ -. QUITE CLEARLY, THE ORDER OF THE CIT(APPEALS) IS UN-SUSTAINABLE AS THE DISPUTE HAS NOT BEEN ADDRESSED AND ADJUDICATED IN AN APPROPRIAT E MANNER. THEREFORE, WITHOUT OPINING ON THE MERITS OF THE DIS PUTE, WE SET ASIDE THE ORDER OF THE CIT(APPEALS) AND RESTORE THI S GROUND BACK TO HIS FILE TO BE ADJUDICATED AFRESH AFTER ALLOWING TH E ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD, IN ACCORDANC E WITH LAW. THUS, ON GROUND NO.7, REVENUE SUCCEEDS. 95. THE EIGHTH GROUND RAISED BY THE REVENUE REA DS AS UNDER: 8. IN DELETING THE ADDITION OF RS.4,48,873/- A S THE FACT THAT THIS AMOUNT WAS SHOWN IN THE RETURN OF INCOME IS NOT VERIFIABLE FROM THE DETAILS FILED BY THE ASSESSEE. THE DISPUTE IN THIS GROUND RELATES TO AN ADDITION O F RS.4,48,873/- MADE BY THE ASSESSING OFFICER ON THE BASIS OF DOCUM ENT NO. 4 OF ANNEXURE A-15. THE SAID DOCUMENT CONTAINED ENTRIES IN RESPECT OF ADVANCES TO SHRI A. K. KHANNA. ON THE BASIS OF THE SEIZED DOCUMENT THE LOAN OF RS.3,53,364/-, INTEREST OF RS. 50,000/- AND RENT OF RS.45,007/- WAS ASSESSED AS UNDISCLOSED INC OME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 1998-99. BEFORE TH E CIT(A) ASSESSEE EXPLAINED THAT IT HAD OFFERED FOR TAX UNDI SCLOSED INCOME OF RS.13,77,000/- IN THE RETURN OF INCOME. OUT OF T HE SAID AMOUNT, A SUM OF RS.12,60,465/- WAS RELATABLE UPTO 31.12.19 97 AND THE AMOUNT OF RS.4,48,873/- STANDS INCLUDED IN THE SAID AMOUNT THEREFORE THE ASSESSING OFFICER WAS NOT JUSTIFIED I N MAKING THE IMPUGNED ADDITION TWICE. THE CIT(A) NOTICED THAT TH E DETAIL OF 64 INCOME OFFERED FOR TAXATION IN THE ASSESSMENT YEAR 1998-99 WAS AS UNDER: 1. CASH RETURNED AND RECEIVED BACK 12644 65.00 UPTO 31.12.1997 AS PER ANNEXURE A. 2. AMOUNT SURRENDERED IN THE HANDS 112 535.00 OF TITU AND SUBHASH THOL, EXCESS AMOUNT TOTAL AMOUNT SURRENDERED IN THE 1377 000.00 NAMES OF TITU AND SUBHASH THOL IN F.Y. 1997-98 3. F. Y. 98099 ADVANCE PAID TO JAGIR SINGH 29024 1.00 INTEREST RECEIVED FROM JAGIR SINGH 118495.00 4100000.00 GRAND TOTAL 1787000.00 AGAINST THE AFORESAID, REVENUE IS IN APPEAL BEFORE US. AS PER THE LD. CIT-DR THE SURRENDER OF INCOME BY WAY OF LO ANS AND INTEREST THEREON BY THE ASSESSEE CANNOT BE CORRELAT ED WITH THE IMPUGNED ADDITION BECAUSE NO CASH FLOW STATEMENT WA S FURNISHED BEFORE THE ASSESSING OFFICER TO VERIFY WH ETHER THE IMPUGNED ADDITION COULD BE SET-OFF AGAINST THE INCO ME SURRENDERED IN THE ASSESSMENT YEAR 1998-99. 96. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE CIT(A) HAS VERIFIED THE CONTENTI ON OF THE ASSESSEE, AS IS EVIDENT FROM THE FINDING RECORDED B Y IN PARA 12.5 OF THE IMPUGNED ORDER. 97. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. IT IS QUITE CLEAR FROM THE ORDER OF THE CIT(A) THAT ASSES SEE HAD SURRENDERED CERTAIN INCOME BY DECLARING THE SAME IN THE RETURN OF INCOME FILED IN FORM NO.2B, IN RESPONSE TO NOTIC E ISSUED U/S 158BC OF THE ACT. THE UTILIZATION OF SUCH SURRENDER ED INCOME HAS ALSO BEEN EXPLAINED BY THE ASSESSEE WHICH HAS B EEN NOTED 65 BY THE CIT(A) IN PARA 12.4 OF THE IMPUGNED ORDER. EVIDENTLY, THE TOTAL UNDISCLOSED INCOME OFFERED FOR TAXATION IS RS .17,87,000/- AS DETAILED IN THE EARLIER PARAGRAPH, WHICH INCLUDE D A SUM OF RS.12,64,465/- REPRESENTING CASH RETURNED AND RECEI VED BACK UPTO 31.12.1997. THE UTILIZATION OF RS.12,64,465/- HAS BEEN EXPLAINED BY THE ASSESSEE IN THE FOLLOWING MANNER A S NOTED BY THE CIT(APPEALS) IN PARA 12.4 OF HIS ORDER :- 1. SH. ASHOK KHANNA 3,53,365.00 LOAN 50,500.00 INTEREST 45,008.00 RENT 2. SH. PAPPUR KHANNA 1,50,000.00 LOAN 20,300.00 INTEREST 34,856.00 RENT 3. SHUGAN CHAND 45,000.00 4. LACHHI 2,06,000.00 5. LACHHI MARU 20,000.00 6. KISHAN LAL 50,000.00 7. SUBHASH THOL 50,000.00 8. ROMESH 27,000.00 9. NARESH SAHA 1,24,693.00 10. DARSHAN LAL 32,500.00 11. RENT RECEIVED AS PER 51,243.00 D. NO. 11 OF ANNEXURE A-18 FROM RAMESH TOTAL 12,64,465.00 OSTENSIBLY, IT IS EVIDENT FROM ABOVE THAT THE AMOUN T OF RS.4,48,873/- REPRESENTING AMOUNT RECEIVED FROM SHR I ASHOK KHANNA HAS BEEN OFFERED FOR TAXATION AS UNDISCLOSED INCOME FOR THE ASSESSMENT YEAR 1998-99 COMPRISED IN THE BLOCK PERIOD 01.04.1988 TO 07.10.1998. IN THE ABSENCE OF ANY COG ENT MATERIAL TO NEGATE THE FINDING OF THE CIT(A) BASED ON THE AB OVE NOTED POSITION, WE FIND NO REASONS TO INTERFERE WITH THE ACTION OF THE CIT(A). ACCORDINGLY, THE GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 66 98. THE NINTH GROUND RAISED BY THE REVENUE READS AS UNDER:- IN DELETION OF RS.2,05,331/- AS THE FACT THIS AMO UNT WAS SHOWN IN RETURN OF INCOME IS NOT VERIFIABLE FROM TH E DETAILS FILED BY THE ASSESSEE. THE FACTS RELEVANT TO THE ABOVE GROUND ARE AS FOLLO WS. ON THE BASIS OF A SEIZED DOCUMENT NO. 9 OF ANNEXURE A-16, ASSESSING OFFICER NOTED CERTAIN ENTRIES REGARDING ADVANCES PA ID TO SHRI PAPU KHANNA OF RS.1,50,000/-, RS.20,300/- AS INTERE ST THEREON AND RS.81,356/- AS RENT ON ACCOUNT OF STORAGE OF PO TATOES BAGS IN THE COLD STORE. BEFORE THE ASSESSING OFFICER, AS SESSEES EXPLANATION WAS THAT THE ADVANCE OF RS.1,50,000/- A ND INTEREST THEREON OF RS.20,300/- WAS ALREADY RETURNED BY THE ASSESSEE AS UNDISCLOSED INCOME IN FORM NO. 2B FILED AND THER EFORE NO SEPARATE ADDITION WAS REQUIRED. THE ASSESSING OFFIC ER DID NOT ACCEPT THE SAID PLEA, AS ACCORDING TO HIM, THE DETA IL OF UNDISCLOSED INCOME DECLARED IN FORM NO. 2B WAS NOT FURNISHED BY THE ASSESSEE AND THEREFORE SUCH PLEA WAS UNVERIF IABLE. HOWEVER, OUT OF THE RENT OF RS.81,356/-, A SUM OF R S.46,500/- WAS FOUND RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND THEREFORE ADDITION OF ONLY RS.34,856/- WAS MADE ON ACCOUNT OF RENT NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT. IN THIS MANNER, A TOTAL ADDITION OF RS.2,05,331/- (I.E. RS. 1,50,000/- + RS.20,300/- + RS.34,856/-) WAS MADE AS UNDISCLOSED INCOME RELATING TO THE ASSESSMENT YEAR 1998-99 COMPRISED I N THE BLOCK PERIOD. 99. IN APPEAL BEFORE THE CIT(A), ASSESSEE REITERA TED ITS STAND THAT THE SAID AMOUNT STOOD DISCLOSED IN THE R ETURN FILED IN FORM NO. 2B. THE CIT(A) CONSIDERED THE DETAILS OF I NCOME 67 DISCLOSED BY THE ASSESSEE IN THE RETURN FILED IN FO RM NO. 2B AND UPHELD THE SUBMISSIONS OF THE ASSESSEE. AGAINST SUCH AN ACTION OF THE CIT(A), REVENUE IS IN APPEAL BEFORE U S. 100. BEFORE US, LD. CIT-DR REITERATED THE SAME ARGUMENT AS TAKEN WITH RESPECT TO GROUND NO. 8 DEALT WITH BY US IN THE EARLIER PARAGRAPHS. AS PER LD. CIT-DR, ASSESSING OF FICER WAS JUSTIFIED IN MAKING THE IMPUGNED ADDITION, BECAUSE IT WAS NOT VERIFIABLE THAT THE SAID SUM WAS DECLARED IN THE RE TURN OF INCOME, AS PER THE DETAILS FILED BY THE ASSESSEE BE FORE THE ASSESSING OFFICER. ON THE OTHER HAND, LD. COUNSEL F OR THE ASSESSEE SUBMITTED THAT THE CONTENTION OF THE ASSES SEE HAS BEEN VERIFIED BY THE CIT(A) ON THE BASIS OF THE DET AILS NOTED BY THE CIT(A) IN PARAS 12.3 AND 12.4 OF THE IMPUGNED O RDER. 101. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS C AREFULLY. IN THIS CASE, ASSESSEE HAD FILED A RETURN OF INCOME ON 07.02.2000 IN RESPONSE TO A NOTICE ISSUED UNDER SECTION 158BC OF THE ACT DECLARING UNDISCLOSED INCOME OF THE BLOCK PERIOD OF RS.17,87,000/-. THE DETAIL OF SUCH AMOUNT HAS BEEN NOTICED BY THE CIT(A) IN PARA 12.3 OF THE ORDER AND WHICH HAS ALSO BEEN CONSIDERED BY HIM WHILE DISPOSING OFF GROUND NO. 8 ABOVE. SIMILARLY, THE UTILIZATION OF THE INCOME SO SURREND ERED HAS ALSO BEEN EXAMINED BY THE CIT(A) AS PER DETAILS REPRODUC ED BY HIM IN PARA 12.4 OF HIS ORDER. ON THE BASIS OF THE AFOR ESAID DETAILS IT IS CLEAR THAT THE AMOUNTS IN QUESTION PERTAINING TO SHRI PAPU KHANNA HAS BEEN OFFERED BY THE ASSESSEE FOR TAXATIO N IN THE RETURN FILED IN FORM NO. 2B AND THEREFORE THE CIT(A ) RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. OSTENSIBLY, THE ACTION OF THE CIT(A) IS JUSTIFIED SINCE IT SEEK S TO OBVIATE THE 68 DOUBLE ADDITION. THOUGH, THE REVENUE HAS CHALLENGED THE DELETION BY SAYING THAT THE PLEA WAS NOT VERIFIABLE ON THE BASIS OF THE DETAILS BEFORE THE ASSESSING OFFICER, HOWEVE R THE FACTUAL MATRIX CONSIDERED BY THE CIT(A) ON THE BASIS OF THE MATERIAL BEFORE HIM, HAS NOT BEEN SHOWN TO BE WRONG. THEREFO RE, IN THE ABSENCE OF ANY MATERIAL TO CONTROVERT THE FACTUAL F INDINGS OF THE CIT(A), WE FIND NO REASONS TO INTERFERE WITH THE AC TION OF THE CIT(A). ACCORDINGLY, THE GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 102. THE TENTH GROUND RAISED BY THE REVENUE READS AS UNDER: 10. IN DELETING THE ADDITION OF RS.5,89,193/- ON ACCOUNT OF REPAYMENT OF MONEY BY THE SEVERAL PERSONS BY WAY OF RENT OF COLD STORAGE AND INTEREST AS THE FACT THIS AMOUNT WAS SHOWN IN RETURN OF INCOME IS ALSO NOT VERIFIABLE FROM THE DETAILS FILED BY THE ASSESSEE. BRIEFLY STATED, AN ADDITION OF RS.5,89,193/- WAS MA DE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED UNACCOUNTED RENT AND INTEREST ON THE BASIS OF DOCUMENT NOS. 5 & 6 OF ANN EXURE A-16 SEIZED DURING THE COURSE OF SEARCH, AS PER THE DISC USSION IN PARAS 13.1 TO 13.2 OF THE ASSESSMENT ORDER. THE CIT (A) HAS DELETED THE ADDITION FOR THE SAME REASONS AS DEALT WITH IN GROUND NOS. 8 & 9 ABOVE. AS PER THE CIT(A) THE SAID AMOUNT STANDS COVERED IN THE INCOME SURRENDERED BY THE ASS ESSEE IN FORM NO.2B. 103. ON THIS ASPECT THE RIVAL STANDS REMAIN THE S AME AS NOTED BY US IN GROUNDS NOS. 8 & 9 ABOVE. FOR THE REASONS ASCRIBED FOR AFFIRMING THE ORDER OF THE CIT(A) IN GROUND NOS . 8 & 9 ABOVE, ON THIS GROUND ALSO THE ORDER OF THE CIT(A) IS LIABLE TO 69 BE AFFIRMED. HOWEVER, IT IS NOTICED THAT THE CIT(A) DELETED THE ENTIRE ADDITION OF RS.5,89,193/- MADE BY THE ASSESS ING OFFICER EVEN THOUGH THE PLEA OF THE ASSESSEE, AS NOTED IN P ARA 14.2 OF THE IMPUGNED ORDER, WAS THAT ONLY A SUM OF RS.5,74, 993/- WAS ALREADY SHOWN IN THE RETURN OF INCOME. THUS, THE OR DER OF THE CIT(A) IS MODIFIED TO THIS EXTENT AND THE ASSESSING OFFICER IS DIRECTED TO DELETE AN AMOUNT OF RS.5,74,993/- INSTE AD OF RS.5,89,193/- DELETED BY THE CIT(A). THUS, FOR STAT ISTICAL PURPOSES, THE GROUND RAISED BY THE REVENUE IS PARTL Y ALLOWED. 104. THE ELEVENTH GROUND RAISED BY THE REVENUE R EADS AS UNDER:- 11. IN DELETING THE ADDITION OF RS.1,13,410/- O UT OF ADDITION OF RS.3,14,410/- MADE BY THE A.O. ON ACCOUNT OF CASH RECEIVED FROM SH. V. P. KHOSLA AND SH. PARDEEP KHOSLA AS SUBMISSION MADE BY THE ASSESSEE WERE ACCEPTED AT THE TIME OF ASSESSMENT. IN THIS GROUND, THE REVENUE HAS CHALLENGED THE ACTI ON OF THE CIT(APPEALS) IN DELETING ADDITION OF RS.1,13,410/- OUT OF THE TOTAL ADDITION OF RS.3,14,410/- MADE BY THE ASSESSI NG OFFICER. AS PER THE DISCUSSION IN THE ASSESSMENT ORDER, THE ADDITION OF RS.3,14,410/- WAS BASED ON DOCUMENT NO.17 OF ANNEXU RE A-15 AND DOCUMENT NO.6 OF ANNEXURE A-16 WHICH WERE SEIZE D FROM THE RESIDENCE OF SHRI PARDEEP KHOSLA. ON THE BASIS OF DOCUMENT NO.17 OF ANNEXURE A-15, UNDISCLOSED INCOME OF RS.1,52,600/- HAS BEEN ASSESSED FOR ASSESSMENT YEAR 1998-99 ON ACCOUNT OF UNACCOUNTED CASH RECEIPTS AS PER ENTR IES FOUND IN THE SEIZED DOCUMENT. ON THE BASIS OF DOCUMENT N O.6 OF ANNEXURE A-16, UNDISCLOSED INCOME OF RS.1,61,810/- FOR THE ASSESSMENT YEAR 1998-99 HAS BEEN MADE AS UNEXPLAINE D CASH 70 RECEIPT FOUND RECORDED IN THE SEIZED DOCUMENT. THE CIT(APPEALS) DELETED THE ADDITION BY MAKING THE FOL LOWING DISCUSSION IN PARA 16.3 OF HIS ORDER : I HAVE CAREFULLY APPLIED MY MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE REGARDING THE IMPUGNED ADDITION WHICH TOTALS AT RS.3,14,410/-. IT IS SEEN THAT THE ADDITION OF RS.5,57,048/- HAS BEEN MADE AS UNEXPLAINED INVESTMENT IN THE CONSTRUCTION OF COLD STORE DURING THE ASSESSMENT YEAR 1998-99. EVEN IF IT IS PRESUMED THAT VERSION OF THE ASSESSING OFFICER I S CORRECT AND THE APPELLANT HAS RECEIVED RENTAL INCOM E OUTSIDE BOOKS OF ACCOUNT, THEN THESE RECEIPTS WILL COVER UNEXPLAINED INVESTMENT IN THE CONSTRUCTION OF COLD STORE. IT IS WORTHWHILE TO NOTE THAT THE IMPU GNED ADDITION MADE BY THE ASSESSING OFFICER IS LESS THAN THE ADDITION MADE IN THE CONSTRUCTION OF COLD STORE WHI CH MEANS THAT ANY INCOME ARISING TO THE APPELLANT OUTS IDE BOOKS OF ACCOUNT, AUTOMATICALLY STANDS ADJUSTED AGAINST UNEXPLAINED INVESTMENT IN THE CONSTRUCTION OF COLD STORE. IN VIEW OF THIS POSITION, THE IMPUGNED ADDITION OF RS.1,13,410/- IS HEREBY DELETED. BEFORE US, RIVAL COUNSELS HAVE ADVANCED ARGUMENTS I N SUPPORT OF THEIR RESPECTIVE STANDS, WHICH REMAIN THE SAME A S MANIFESTED IN THE ORDERS OF THE AUTHORITIES BELOW. IN TERMS OF THE FINDING OF THE CIT(APPEALS), IT IS NOTICED THAT HE HAS ALLOWED THE SET-OFF OF UNACCOUNTED CASH FOUND RECOR DED IN THE IMPUGNED DOCUMENTS AGAINST THE ADDITION MADE ON ACC OUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF COLD STOR AGE DURING THE ASSESSMENT YEAR 1998-99. THE CIT(APPEALS) HAD S USTAINED AN ADDITION OFRS.5,31,378/- ON ACCOUNT OF UNEXPLAIN ED INVESTMENT IN THE CONSTRUCTION OF COLD STORAGE DURI NG THE ASSESSMENT YEAR 1998-99 WHICH HAS ALSO BEEN UPHELD BY US IN PARA 54 OF THE ORDER. THE REASONING EXTENDED BY TH E CIT(APPEALS) IN OUR VIEW, IS FAIR AND PROPER AND IT HAS NOT BEEN SHOWN TO BE UNREASONABLE IN ANY MANNER. THEREFORE, WE AFFIRM THE ORDER OF THE CIT(APPEALS) ON THIS GROUND. ACCO RDINGLY, THE REVENUE FAILS ON THIS GROUND. 71 105. THE TWELFTH GROUND RAISED BY THE REVENUE READS AS UNDER:- 12. IN DELETING THE ADDITION OF RS.2,74,450/- ON ACCOUNT OF UNACCOUNTED EXPENSES/RECEIPTS AS THE ASSESSEE CO ULD THE EXPLAIN THE ENTRIES ON THE BASIS OF WHICH ADDIT ION WAS MADE. THIS GROUND RELATES TO AN ADDITION OF RS.2,74,450/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED EXPENSE S. THIS ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE B ASIS OF LOOSE PAPERS IN ANNEXURE A-22 SEIZED FROM THE PREMI SES OF M/S KHOSLA COLD STORAGE. AS PER THE ASSESSING OFFICER, SOME OF THE DOCUMENTS IN THIS ANNEXURE WERE IN RESPECT OF EXPEN SES INCURRED ON VARIOUS DATES, WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNT. ACCORDINGLY, AN AMOUNT OF RS.1,8 2,050/- AND RS.92,400/- WAS DETERMINED AS EXPENSES MADE OUT OF UNDISCLOSED INCOME AND ACCORDINGLY, ADDITION WAS MA DE IN RESPECT OF ASSESSMENT YEARS 1999-2000 AND 1998-99 RESPECTIVELY. 106. IN APPEAL, ASSESSEE CONTENDED THAT THE AMOUNT OF RS.1,82,050/- IN THE ASSESSMENT YEAR 1999-2000 ON A CCOUNT OF UNACCOUNTED EXPENDITURE ON CONSTRUCTION OF COLD STO RAGE BUILDING WAS ALREADY DECLARED IN THE INCOME OF RS.4 ,60,000/- SURRENDERED. THE CIT(APPEALS) NOTICED THAT THE ASS ESSEE HAD SURRENDERED INCOME TO THE EXTENT OF RS.1,87,757/- A S AGAINST A FIGURE OF RS.1,82,050/- ADOPTED BY THE ASSESSING OF FICER IN THE RETURN OF INCOME FILED IN FORM NO. 2-B. THE CIT(AP PEALS), WHILE DELETING THE ADDITION OF RS.182,050/- REFERRE D TO THE DETAIL OF RS.4,60,000/- AS NOTED BY HIM WHILE DISPO SING OF 72 ANOTHER GROUND OF APPEAL BEFORE HIM. WITH REGARD T O THE BALANCE OF RS.92,400/-, THE ASSESSEE EXPLAINED THAT THE SAID EXPENDITURE WAS IN RELATION TO A COST OF 84000 BRIC KS PURCHASED AT RS.1100/- PER THOUSAND, WHICH WAS DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND IN SUPPORT, RELEVANT COPY OF L EDGER ACCOUNT WAS FURNISHED. CONSIDERING THE SAID SUBMIS SIONS, CIT(APPEALS) DELETED THE ADDITION OF RS.92,400/- AL SO. IN THIS BACKGROUND, THE REVENUE IS IN APPEAL BEFORE US. 107. ON THIS ASPECT, LEARNED CIT-DR HAS MERELY RE LIED UPON THE DISCUSSION IN THE ASSESSMENT ORDER, WHEREAS THE LEARNED COUNSEL FOR THE RESPONDENT ASSESSEE HAS DEFENDED TH E ORDER OF THE CIT(APPEALS) BY PLACING RELIANCE ON THE SAME. 108. WE HAVE PERUSED THE ORDERS OF THE LOWER AU THORITIES AND CONSIDERED THE RIVAL SUBMISSIONS ON THIS ASPECT AND FIND NO COGENT REASONS TO INTERFERE WITH THE FINDINGS OF TH E CIT(APPEALS), WHICH ARE BASED ON RELEVANT MATERIAL. IN FACT, THE REVENUE HAS NOT ASSIGNED ANY REASONS TO SHOW TH AT THE CIT(APPEALS) MADE ANY MISTAKE IN DELETING THE AFORE SAID ADDITIONS FOR THE REASONS STATED IN THE IMPUGNED OR DER. ACCORDINGLY, THE GROUND OF APPEAL RAISED BY THE REV ENUE IS DISMISSED. 109. GROUND NO. 13 RAISED BY THE REVENUE READS A S UNDER: 13. IN DELETING THE ADDITION OF RS.5000/- AND RS.1,88,091/- AND ALLOWING PARTLY RELIEF OF RS.4600/- ON ACCOUNT OF EXPENSES MET OUT OF INCOME OR RECEIPTS NOT ACCOUNTED FOR IN THE BOOKS OF A/CS AS THE FACT THIS AMOUNT WAS SHOWN IN RETURN 73 OF INCOME IS ALSO NOT VERIFIABLE FROM THE DETAILS FILED BY THE ASSESSEE. THE DISPUTE IN THIS GROUND RELATES TO AN ADDITION M ADE BY THE ASSESSING OFFICER BY RELYING ON ANNEXURE A-22 SEIZE D FROM M/S KHOSLA COLD STORAGE. AS PER THE ASSESSING OFFICER, THE SAID ANNEXURE CONTAINED 65 PAGES AND THE ACCOUNTANT OF T HE ASSESSEE-FIRM SHRI RAJ KISHAN SHARMA IN PRESENCE OF SHRI RAJESH KHOSLA, DURING THE COURSE OF HIS EXAMINATION ON 03.10.2000, ADMITTED THAT THE DOCUMENTS IN THIS ANN EXURE ARE IN RESPECT OF EXPENSES INCURRED ON THE VARIOUS DATES O UTSIDE THE ACCOUNT BOOKS. ACCORDINGLY, ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF UNACCOUNTED EXPENSES IN THREE ASSESSMENT YEARS COMPRISED IN THE BLOCK PERIOD AS UNDER: ASSESSMENT YEAR 1997-98 RS. 5,000/- ASSESSMENT YEAR 1998-99 RS. 176,174/- ASSESSMENT YEAR 1999-2000 RS.1,8 8,091/- 110. IN APPEAL BEFORE THE CIT(A), ASSESSEE CHALL ENGED THE AFORESAID ADDITIONS. THE CIT(A) RETAINED ADDITION O F RS.1,71,574/- OUT OF RS.1,76,174/- AND DELETED THE BALANCE OF RS.1,88,091/- AND RS.5000/-. BEFORE US, REVENUE HAS CHALLENGED THE ADDITIONS DELETED BY THE CIT(A). 111. WE HAVE PERUSED THE RESPECTIVE ORDERS OF THE AUTHORITIES BELOW. THE CIT(A) HAS DELETED THE ADDITION BY ACCEP TING THE FOLLOWING EXPLANATION RENDERED BY THE ASSESSEE: AS REGARDS ADDITION OF RS.1,88,091/- IN THE ASSTT. YEAR 1999-2000 THE APPELLANT HAD ALREADY TAKEN INTO ACCO UNT AN AMOUNT OF RS.1,94,321/- AS PER THE SAID ANNEXURE A- 14 AND A-18 AS PER DETAILS ENCLOSED AS ANNEXURE-37. THIS EXPENDITURE WAS MET OUT OF THE FUNDS AVAILABLE FROM LOANS/ADVANCES MADE AND RECEIVED BACK AS 74 DISCUSSED SUPRA. THE FIGURE OF RS.1,94,321/- STANDS INCLUDED IN 4,60,000/-. IN THE LIGHT OF THESE FACTS NO SEPARATE ADDITION IS CALLED FOR. ACCORDINGLY THE AD DITION OF RS.1,88,091/- DESERVES TO BE DELETED. FOR THE ADDITION OF RS.5000/- MADE ON THE BASIS OF D. NO.3 OF ANN. A-18 (COPY ENCLOSED AS ANNEXURE 38) IT IS SUBMITTED THAT THE SAID DOCUMENT DOES NOT BELONG TO THE APPELLANT FIRM. THE PRINTED MATERIAL THEREON I. E. OIL SEALS AND RUBBER PARTS SHOWS THAT IT RELATES TO TRU CK, AS OIL SEALS AND RUBBER PARTS ARE NOT USED BY THE APPELLANT. TRUCK IS OWNED BY SHRI PARDEEP KHOSLA IN HIS INDIVIDUAL CAPACITY AND HE HAS BEEN RETURNING INCOM E THEREFROM IN ACCORDANCE WITH THE PROVISIONS OF SECT ION 44AE. THE RETURNED INCOME HAS BEEN ACCEPTED IN ALL THE RELEVANT YEARS. IN VIEW OF THESE FACTS NO ADDITION IS CALLED FOR EITHER IN THE CASE OF THE APPELLANT OR S H. PARDEEP KHOSLA. IT IS THEREFORE, REQUESTED THAT THE ADDITION OF RS.5000/- MAY KINDLY BE DELETED. ON THE BASIS OF THE AFORESAID, IT IS EVIDENT THAT T HERE IS NO JUSTIFICATION TO SUSTAIN ADDITIONS OF RS.1,88,091/- AND RS.5000/- SINCE THE SAME HAVE ALREADY BEEN OFFERED FOR TAX IN THE RESPECTIVE HANDS. THERE IS NO MATERIAL TO NEGATE T HE FINDINGS OF THE CIT(APPEALS) IN THIS REGARD. EVEN THE SCALING D OWN OF ADDITION OF RS.1,76,174/- TO RS. 1,71,574/- IS FAIR AND PROPER IN VIEW OF THE FOLLOWING EXPLANATION RENDERED BY THE A SSESSEE BEFORE THE CIT(A): IN THE ASSTT. YEAR 1998-99 AN ADDITION OF RS.1,76,174/- HAS BEEN MADE DETAILS OF WHICH ARE GIVEN AT PAGES 33-34 OF THE ASSTT. ORDER IN PARAGRA PH 17. IT IS SUBMITTED THAT THE TOTAL EXPENDITURE AS P ER D. NO. 7 OF ANNX. A-14(COPY ENCLOSED) WORKS OUT TO RS.77,400/- AND NOT RS.82,000/- ADOPTED BY THE LD. ASSESSING OFFICER. THUS THERE IS EXCESS ADDITION OF RS.4,600/-. ALTHOUGH, THE REVENUE HAS PREFERRED TO RAISE THE AB OVE GROUND OF APPEAL, BUT NO COGENT MATERIAL HAS BEEN BROUGHT ON RECORD BEFORE US, TO DISLODGE THE REASONING ADOPTED BY THE CIT(APPEALS) TO DELETE THE ADDITIONS. ACCORDINGLY, GROUND NO. 13 RAISED BY THE REVENUE IS DISMISSED. 75 112. THE LAST GROUND RAISED BY THE REVENUE READS AS UNDE R: 14. IN DELETING THE ADDITION OF RS.46,860/- ON ACCOUNT OF UNEXPLAINED RENT RECEIPTS FROM COLD STOR AGE AS THE EXPLANATION OF THE ASSESSEE IS NOT SUPPORTED BY DOCUMENTARY EVIDENCE. IN THIS GROUND THE DISPUTE PERTAINS TO AN ADDITION OF RS.46,860/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOU NTED RENT RECEIPTS FROM THE BUSINESS OF COLD STORAGE. THIS AD DITION WAS BASED ON DOCUMENT NO. 22 OF ANNEXURE A-27 SEIZED FR OM M/S KHOSLA ICE & GENERAL MILLS AND DOCUMENT NO. 35 OF A NNEXURE A- 26 SEIZED FROM THE RESIDENCE OF SHRI PARDEEP KHOSLA . THE ASSESSING OFFICER NOTICED THAT AS PER DOCUMENT NO. 22 OF ANNEXURE A-27, 36608 POTATO BAGS WERE STORED DURING THE FINANCIAL YEAR 1996-97. AS PER DOCUMENT NO. 35 OF A NNEXURE A- 26, IT SHOWED 38703 BAGS WERE STORED. AS PER THE LE DGER OF THE ASSESSEE-FIRM, IT WAS FOUND THAT RENT OF ONLY 33164 BAGS WAS RECORDED. THUS, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY RENT IN RESPECT OF 5539 BAGS (I.E . 38703-33164) BE NOT BE TREATED AS UNDISCLOSED INCOM E. ASSESSEE EXPLAINED THAT AS PER DOCUMENT NO. 35 OF A NNEXURE A- 26, ACTUALLY 33940 BAGS WERE STORED AND NOT 38703, AS NOTED BY THE ASSESSING OFFICER BECAUSE WITH RESPECT TO THE B ALANCE OF 4758 BAGS, ONLY LABOUR CHARGES WERE RECOVERED AND N OT STORAGE CHARGES. AS PER ASSESSEE'S CALCULATION, THERE WAS A DIFFERENCE OF 781 BAGS BETWEEN THE RENT ACCOUNTED FOR IN THE B OOKS OF ACCOUNT AND THE NUMBER OF BAGS FOUND STORED AS PER DOCUMENT 35 OF ANNEXURE A-26. THE DIFFERENCE OF 781 BAGS WAS EXPLAINED AS UNCLAIMED POTATOES WHICH HAD TO BE THROWN OUT TO CLEAR THE SPACE AS SUCH STOCK HAD ROTTEN. ASSESSING OFFICER A CCEPTED THE 76 CONTENTION OF THE ASSESSEE THAT THE DIFFERENCE WAS ONLY OF 781 BAGS, BUT IN ABSENCE OF ANY EVIDENCE OF UNCLAIMED S TOCK, HE TREATED THE RENT OF 781 BAGS @ 60 PER BAG AMOUNTING TO RS.46,860/- AS UNDISCLOSED INCOME OF THE ASSESSEE F OR THE ASSESSMENT YEAR 1997-98 COMPRISED IN THE BLOCK PERI OD. THE CIT(A) HAS DELETED THE ADDITION BY ACCEPTING THE PL EA OF THE ASSESSEE THAT SUCH STOCK WAS UNCLAIMED AND NO RENT WAS CHARGED. 113. BEFORE US, LD. CIT DR SUBMITTED THAT THE EX PLANATION OF THE ASSESSEE HAS BEEN ACCEPTED BY THE CIT(A) WITHOU T ANY DOCUMENTARY SUPPORT AND THEREFORE THE ADDITION HAS BEEN WRONGLY DELETED. 114. ON THE OTHER HAND, LD. COUNSEL FOR THE RESPO NDENT- ASSESSEE HAS RELIED UPON THE ORDER OF THE CIT(A) IN SUPPORT OF THE CASE OF THE ASSESSEE. 115. HAVING CONSIDERED THE RIVAL SUBMISSION, IN OUR VIEW, THE ASSESSING OFFICER IS JUSTIFIED IN MAKING THE IMPUGN ED ADDITION BECAUSE THERE IS NO MATERIAL ON RECORD TO SUPPORT T HE PLEA THAT NO RENT WAS RECOVERED FOR 781 BAGS AND INSTEAD SUCH STOCK REMAINED UNCLAIMED. INFACT, THE EVIDENCE FOUND DURI NG SEARCH, REFLECTED UNACCOUNTED STORAGE OF POTATO BAGS AND TH ERE IS NO EVIDENCE TO SUGGEST THAT THE SAME WERE UNCLAIMED OR THE RENT WAS NOT RECEIVED FOR SUCH STOCK. FURTHER, THERE IS NO DETAIL FURNISHED BY THE ASSESSEE TO SHOW THAT THE DAMAGED STOCK BELONGED TO A PARTICULAR CONCERN. WE THEREFORE SET- ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE ADDITION MADE B Y THE ASSESSING OFFICER. THUS, ON THIS GROUND REVENUE SUC CEEDS. 77 116. RESULTANTLY, APPEAL OF THE REVENUE IN IT(SS )A. NO. 43/CHANDI/2002 IS PARTLY ALLOWED. 117. NOW, WE TAKE UP APPEAL OF THE ASSESSEE VIDE IT(SS)A. NO.38/CHANDI/2002 IN THE CASE OF SMT.BHARTI KHOSLA WHICH IS DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS) DATE D 19.03.2002, WHICH IN TURN ARISES FROM AN ORDER PASS ED BY THE ASSESSING OFFICER UNDER SECTION 158BC OF THE ACT DA TED 30.10.2000 FOR THE BLOCK PERIOD 01.04.1988 TO 07.10 .1998. 118. BRIEFLY STATED, THE FACTS ARE THAT SUBSEQUE NT TO A SEARCH ACTION U/S 132(1) OF THE ACT ON THE ASSESSEE ON 07. 10.1998, SHE FILED A RETURN OF INCOME DISCLOSING UNDISCLOSED INCOME AT RS.2,18,000/- FOR THE ASSESSMENT YEARS 1993-94 (RS. 50,000/-), ASSESSMENT YEAR 1997-98 (RS.1,28,000/-) AND ASSESSM ENT YEAR 1999-2000 (RS.40,000/-) COMPRISED IN THE BLOCK PERI OD 01.04.1988 TO 07.10.1998. THE ASSESSING OFFICER, F INALLY ASSESSED THE UNDISCLOSED INCOME FOR THE BLOCK PERIO D, IN AN ASSESSMENT FINALIZED U/S 158BC ON 20.10.2000, AT RS.3,53,625/-. THE CIT(APPEALS) HAS ALLOWED PA RTIAL RELIEF, AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US O N THE FOLLOWING TWO GROUNDS OF APPEAL : 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRED IN RETAINING AN ADDITION OF RS.1,00,000/- OUT OF THE TOTAL ADDITION OF 78 RS.1,30,625/- ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN JEWELLERY. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.5000/- MADE ON ESTIMATE BASIS BY THE LEARNED ASSESSING OFFICER ON ACCOUNT OF ALLEGED COST OF ARRANGING THE GIFT. IN THE FIRST GROUND, THE DISPUTE RELATES TO AN ADDI TION OF RS.1,00,000/- SUSTAINED BY THE CIT(APPEALS) ON ACCO UNT OF UNEXPLAINED INVESTMENT IN JEWELLERY. IN BRIEF, THE FACTS ARE, THAT AT THE TIME OF SEARCH U/S 132(1) OF THE ACT, JEWELL ERY OF 1381.960 GRAMS WAS FOUND WITH THE ASSESSEE. OUT OF ABOVE, ASSESSING OFFICER CONSIDERED 894.380 GRAMS OF JEWEL LERY AS EXPLAINED AND THE BALANCE OF 487.580 GRAMS WAS CONS IDERED AS UNEXPLAINED IN THE HANDS OF THE ASSESSEE. THE ASSES SING OFFICER PUT THE VALUE OF THIS UNEXPLAINED JEWELLERY @ RS.3500/- PER 10 GRAMS, WHICH CAME TO RS.1,70,625/-. SINCE TH E ASSESSEE HAD DISCLOSED A SUM OF RS.40,000/- ON ACCOUNT OF JE WELLERY IN THE RETURN OF INCOME FILED IN FORM NO. 2B, THE BALA NCE OF RS.1,30,625/- WAS ASSESSED AS UNDISCLOSED INCOME FO R THE ASSESSMENT YEAR 1999-2000 COMPRISED IN THE BLOCK PE RIOD. 119. THE CIT(APPEALS) HAS SINCE ALLOWED PARTIAL R ELIEF. ACCORDING TO THE CIT(APPEALS), AFTER TAKING INTO AC COUNT JEWELLERY ATTRIBUTED TO THE HUSBAND AND SON OF THE ASSESSEE, ONLY 400 GRAMS OF JEWELLERY BE TAKEN AS UNEXPLAINED . HE, THEREFORE, VALUED 400 GRAMS OF JEWELLERY @ RS.3500/ - PER 10 GRAMS AT RS.1,40,000/- AND AFTER REDUCING RS.40,000 /- DECLARED BY THE ASSESSEE, THE BALANCE OF RS.1,00,000/- HAS B EEN ASSESSED AS UNDISCLOSED INCOME. 79 120. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT CIT(APPEALS) WAS NOT JUSTIFIED IN ATTRIBUTING TO THE HUSBAND AND SON OF THE ASSESSEE ONLY JEWELLERY TO THE EXTEN T OF 87.580 GRAMS. IT IS CONTENDED THAT THE ENTIRE JEWELLERY C ONSIDERED AS UNEXPLAINED COULD BE ATTRIBUTABLE TO THE HUSBAND AN D SON OF THE ASSESSEE AND THEREFORE, NO ADDITION WAS MAINTAI NABLE. 121. ON THE OTHER HAND, LEARNED DR HAS RELIED UPO N THE ORDERS OF THE AUTHORITIES BELOW. 122. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CA REFULLY. WE FIND NO REASONS TO INTERFERE WITH THE ORDER OF THE CIT(APPEALS) AS NO COGENT REASON HAS BEEN ADVANCED BY THE APPELL ANT BEFORE US. ACCORDINGLY, ON GROUND NO.1, ASSESSEE F AILS. 123. IN GROUND NO.2, ISSUE RELATES TO ADDITION OF RS.5000/- MADE BY THE ASSESSING OFFICER AS COST OF GIFT OBTAI NED BY THE ASSESSEE FROM ONE SHRI SWARNA. THE GIFT IN QUESTIO N OF RS.1,28,000/- WAS SURRENDERED BY THE ASSESSEE IN TH E RETURN OF INCOME FILED. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE MUST HAVE SPENT CERTAIN AMOUNT OVER AND ABOVE, THE VALUE OF GIFT TO OBTAIN THE SAME CLANDESTINELY. THE CIT(APP EALS) HAS ALSO UPHELD THE ADDITION OF RS.5000/- ON THIS COUNT . 124. FROM THE ORDERS OF THE LOWER AUTHORITIES, W E FIND, THERE IS NO IOTA OF EVIDENCE TO SHOW THAT SUCH EXPENDITUR E HAS BEEN INCURRED BY THE ASSESSEE EVEN IF THE ASSESSEE HAS ADMITTED THAT THE GIFT WAS BOGUS. IN AN ASSESSMENT UNDER CH APTER XIV-B OF THE ACT, INCOME IS LIABLE TO BE ASSESSED ONLY ON THE BASIS OF EVIDENCE AND NOT ON MERE SURMISES. THEREFORE, THE IMPUGNED 80 ADDITION COULD NOT BE MADE IN THE HANDS OF THE ASSE SSEE IN THE ABSENCE OF ANY EVIDENCE. ACCORDINGLY, THE SAME IS HEREBY DELETED. 125. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITSS/38/CHD/2002 IS PARTLY ALLOWED. 126. NOW, WE TAKE UP THE APPEAL IN IT/SS/39/CHAN DI/2002 IN THE CASE OF MRS. PREM LATA KHOSLA WHICH IS DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS) DATED 19.03.2002, WHICH I N TURN HAS ARISEN FROM BLOCK ASSESSMENT FINALIZED BY THE ASSES SING OFFICER UNDER SECTION 158BC OF THE ACT DATED 30.10.2000 PER TAINING TO THE BLOCK PERIOD 01.04.1988 TO 07.10.1988. THE GROU NDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER :- 1. THAT THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) U/S 250(6) IS CONTRARY TO LAW AND FACTS. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING AN ADDITION OF RS.53,319/- OUT OF TOTAL ADDITION OF RS.1,05,819/- ON ACCOUNT OF ALLEG ED UNEXPLAINED INVESTMENT IN JEWELLERY. 127. THE FIRST GROUND RAISED IS GENERAL IN NATU RE AND THE SAME DOES NOT REQUIRE ANY ADJUDICATION AND IS ACCOR DINGLY DISMISSED. 128. THE SECOND GROUND RELATES TO AN ADDITION O F RS.53,319/- SUSTAINED BY THE CIT(A) AS UNEXPLAINED INVESTMENT I N JEWELLERY. IN THIS REGARD, BRIEF FACTS ARE THAT DURING THE COU RSE OF SEARCH, JEWELLERY TO THE EXTENT OF RS.1777.340 GMS. WAS FOU ND AT THE RESIDENCE AS WELL AS IN THE LOCKER OF THE ASSESSEE. OUT OF THIS, ASSESSING OFFICER TREATED 1475 GMS. OF JEWELLERY AS EXPLAINED 81 AND THE BALANCE JEWELLERY OF 302.340 GMS. VALUED AT RS.1,05,819/-, WAS TREATED AS UNEXPLAINED AND ASSES SED AS UNDISCLOSED INCOME. 129. BEFORE THE CIT(A), ASSESSEE SUBMITTED THAT THE JEWELLERY CONSIDERED EXPLAINED IN THE HANDS OF MRS. MEENA KHO SLA AT 700 GMS. IS INCORRECT BECAUSE SHE HAD STATED THAT 60 TO LAS OF JEWELLERY WAS AVAILABLE WITH HER AND IN THAT LIGHT, THE WEIGHT OF JEWELLERY BELONGING TO HER BE TAKEN AT 877 GMS. INS TEAD OF 700 GMS. CONSIDERED BY THE ASSESSING OFFICER. THE CIT(A ) GAVE THE BENEFIT OF 70 GMS. ON THIS COUNT. FURTHER, WITH REG ARD TO 50 TOLAS OF JEWELLERY IN THE HANDS OF THE ASSESSEE, IT WAS E XPLAINED THAT THE EQUIVALENT WEIGHT IN GMS. IS 580 GMS. AND NOT 5 00 GMS., AS CONSIDERED BY THE ASSESSING OFFICER. THIS PLEA HAS ALSO BEEN ACCEPTED BY THE CIT(A). ACCORDINGLY, BENEFIT OF 150 GMS. OF JEWELLERY WAS ALLOWED AND THE BALANCE OF 152.340 GM S. WAS CONSIDERED AS UNEXPLAINED. 130. NOT BEING SATISFIED WITH THE ORDER OF THE C IT(A), ASSESSEE IS IN APPEAL BEFORE US. AFTER HEARING THE PARTIES, WE FIND NO FRESH ARGUMENTS EXCEPT THOSE CONSIDERED BY THE AUTHORITIES BELOW. THE APPELLANT HAS NOT BROUGHT O UT ANY COGENT MATERIAL OR EVIDENCE TO NEGATE THE IMPUGNED ORDER O F THE CIT(A). THE ONLY PLEA RAISED IS THAT THE ASSESSEE I S A WEALTH TAX PAYEE. THE AFORESAID DOES NOT ESTABLISH THE SOURCES OF JEWELLERY OF 152.340 GMS. CONSIDERED UNEXPLAINED BY THE CIT(A ), ESPECIALLY WHEN THERE IS NO DETAIL ON RECORD REGARD ING THE JEWELLERY DECLARED IN THE WEALTH TAX PROCEEDINGS. A CCORDINGLY, THE ORDER OF THE CIT(A) IS HEREBY SUSTAINED AND THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 82 131. RESULTANTLY, THE APPEAL OF THE ASSESSEE IN IT( SS)A 39/CHANDI/2002 IS HEREBY DISMISSED. 132. NOW WE TAKE UP APPEAL IN ITSS 50/CHD/2002 IN THE CASE OF SHRI RAKESH KHOSLA, HUF. THIS APPEAL OF THE REV ENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS) DATE D 19.03.2002 WHICH IN-TURN HAS ARISEN FROM AN ORDER P ASSED BY THE ASSESSING OFFICER U/S 158BC OF THE ACT DATED 30 .10.2000 FOR THE BLOCK PERIOD 01.04.1988 TO 07.10.1998. THE SOLITARY GROUND RAISED BY THE REVENUE READS AS UNDER : THE LEARNED CIT(APPEALS) ERRED IN LAW/IN FACTS IN DELETING THE ADDITION OF RS.55,000/- AND RS.2,10,00 0/- ON ACCOUNT OF GIFT GIVEN BY AN NRI NOT HAVING ANY RELATIONSHIP WITH THE ASSESSEE WHICH WAS ADDED RELYING ON THE JUDGEMENT OF THE HON'BLE P&H HIGH COURT IN THE CASE OF SHRI LAL CHAND KALRA V IT REPORTED IN 22 CTR (P&H) 135. IN THIS CASE, AFTER AN ACTION U/S 132(1) OF THE ACT AGAINST THE ASSESSEE ON 07.10.1998, NOTICE U/S 158BC OF THE ACT WAS ISSUED, IN RESPONSE TO WHICH ASSESSEE FILED A RETUR N OF INCOME DECLARING UNDISCLOSED INCOME AT RS.1,70,000/-. IN AN ASSESSMENT FINALIZED U/S 158BC ON 30.10.2000, THE T OTAL UNDISCLOSED INCOME FOR THE BLOCK PERIOD WAS DETERMI NED AT RS.4,41,500/-. THE ADDITIONS MADE IN ASSESSMENT WE RE CARRIED IN APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS ) ALLOWED PARTIAL RELIEF, AGAINST WHICH REVENUE IS IN APPEAL BEFORE US. 133. THE DISPUTE ESSENTIALLY PERTAINS TO GIFTS RE CEIVED BY THE ASSESSEE WHICH HAVE BEEN CONSIDERED AS UNEXPLAINED. THE FIRST ISSUE IS WITH REGARD TO AN ADDITION OF RS.55, 000/- WHICH COMPRISES OF TWO PORTIONS, VIZ, RS.50,000/- REPRESE NTING A GIFT FROM ONE SHRI CHARNAMAT SINGH AND RS.5,000/- BEING THE 83 ESTIMATED COST OF ARRANGING THIS GIFT OF RS.50,000/ -. THE SECOND ISSUE IS WITH REGARD TO THE ADDITION OF RS.2 ,10,000/- WHICH COMPRISES OF TWO PORTIONS, VIZ, RS.2,00,000/- REPRESENTING A GIFT FROM ONE MR.DHARAMPAL AND RS.10 ,000/- AS ESTIMATED COST OF ARRANGING THE GIFT OF RS.2,00,000 /-. 134. IN THE ASSESSMENT ORDER, ASSESSING OFFICER OBSERVES THAT DOCUMENT NO.11 OF ANNEXURE A-14 SEIZED DURING THE COURSE OF SEARCH IS A COPY OF DEMAND DRAFT REPRESEN TING GIFT RECEIVED BY THE ASSESSEE FROM SHRI CHARANAMAT SINGH . DEMAND DRAFT IS DATED 18.04.1994 AND HAS BEEN ISSUE D BY THE DONOR FROM HIS NRE ACCOUNT MAINTAINED WITH STATE BA NK OF PATIALA, PHILLAUR BRANCH. THE ASSESSING OFFICER HA S TREATED THE GIFT AS UNEXPLAINED AS ACCORDING TO HIM, THE ASSESS EE COULD NOT ESTABLISH THE IDENTITY OR CAPACITY OF THE DONOR TO ADVANCE GIFT AND ALSO THE OCCASION FOR THE GIFT, SINCE THE DONOR AND THE DONEE ARE STRANGERS TO EACH OTHER. FOR THE ABOVE RE ASON, GIFT OF RS.50,000/- HAS BEEN ADDED AS ASSESSEE'S UNDISCL OSED INCOME AND A FURTHER ADDITION OF RS.5,000/- HAS ALS O BEEN MADE AS PAYMENT OF COMMISSION FOR OBTAINING THE SAID GIF T, THUS, THE TOTAL ADDITION OF RS.55,000/-. THE CIT(APPEALS) HA S SINCE DELETED THE IMPUGNED ADDITION. 135. BEFORE US, LEARNED DR VEHEMENTLY ARGUED THAT THE ASSESSING OFFICER HAS ESTABLISHED THAT THE DONOR AN D DONEE WERE STRANGERS AND FURTHER THAT THE DONOR DID NOT H AVE THE FINANCIAL CAPACITY TO GIVE THE GIFT. THE LEARNED D R HAS REFERRED TO THE INVESTIGATIONS CARRIED OUT BY THE ASSESSING OFFICER. ACCORDING TO HER, THE ASSESSING OFFICER OBTAINED A COPY OF THE 84 BANK ACCOUNT OF THE DONOR AND STATEMENT OF SHRI KAS HMIRA SINGH, A COUSIN OF THE DONOR WAS ALSO RECORDED TO A SCERTAIN THE FACTS. ON THE BASIS OF SUCH EXERCISE, IT WAS FOUND THAT THE DONOR SHRI CHARANAMAT SINGH HAD NO FINANCIAL CAPACI TY TO GIVE GIFT TO ANY PERSON AND IN THIS CASE, ASSESSEE DID N OT HAVE FAMILY OR SOCIAL RELATIONS WITH THE DONOR AND UNDER THESE CIRCUMSTANCES, THE AMOUNT OF GIFT WAS TREATED AS UN EXPLAINED. IN THE COURSE OF HER SUBMISSIONS, LEARNED CIT-DR HA S RELIED UPON THE JUDGEMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SUBHASH CHANDER SEKHRI V DCIT, 290 ITR 300. 136. ON THE OTHER HAND, LEARNED COUNSEL FOR THE R ESPONDENT ASSESSEE VEHEMENTLY ARGUED AND SUPPORTED THE CONCLU SION DRAWN BY THE CIT(APPEALS). IT HAS BEEN CONTENDED B Y THE LEARNED COUNSEL THAT IN THE COURSE OF SEARCH, NO EV IDENCE HAS BEEN FOUND TO SHOW INGENUINITY OF THE GIFT AND THER EFORE, THE ADDITION HAS BEEN MADE ON MERE CONJECTURES AND SURM ISES. HE POINTED OUT THAT THE GIFT OF RS.50,000/- HAS BEEN D ECLARED BY THE ASSESSEE HUF IN ITS BALANCE SHEET FOR THE YEAR ENDING 31.3.1995 AND THEREFORE, THE SAME COULD NOT FORM A PART OF THE UNDISCLOSED INCOME WITHIN THE MEANING OF CHAPTER XI V-B OF THE ACT. IN SUPPORT, RELIANCE HAS BEEN PLACED ON THE F OLLOWING DECISIONS : I) CIT V VINOD DANCHAND GHODAWAT 247 ITR 448 (BOM) II) BHAGWATI PRASAD KEDIA V CIT, 248 ITR 562 (CAL) III) CIT V VIKRAM A.DOSHI 256 ITR 129 (BOM.) 137. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAR EFULLY. THE FIRST AND THE FOREMOST ISSUE TO BE ADDRESSED IN THIS DISPUTE 85 RELATES TO THE UNDISCLOSED INCOME, THAT IS LIABLE T O BE CONSIDERED FOR THE PURPOSE OF CHAPTER XIV-B OF THE ACT. IN THIS CONNECTION, A BRIEF REFERENCE TO THE SCHEME OF THE BLOCK ASSESSMENT ENVISAGED IN CHAPTER XIV-B OF THE ACT IS RELEVANT. CHAPTER XIV-B OF THE ACT LAYS DOWN THE PROCEDURE FO R BLOCK ASSESSMENT PROCEEDINGS AND IS INTENDED TO OPERATE SIMULTANEOUSLY WITH THE NORMAL SCHEME OF ASSESSMENT LAID DOWN IN CHAPTER XIV OF THE ACT. IT IS QUITE WELL S ETTLED THAT BOTH THE ASSESSMENT SCHEMES ARE INDEPENDENT OF EACH OTHER. THEY ARE NOT MUTUALLY EXCLUSIVE IN AS MUCH AS A BLO CK ASSESSMENT UNDER CHAPTER XIV-B IS NOT INTENDED TO B E A SUBSTITUTE FOR A REGULAR ASSESSMENT, SINCE IT IS IN TENDED TO ASSESS ONLY UNDISCLOSED INCOME. SECTION 158BB OF TH E ACT CLEARLY SHOWS THAT UNDISCLOSED INCOME HAS TO BE COM PUTED ON THE BASIS OF THE EVIDENCE FOUND AS A RESULT OF SEAR CH OR OTHER DOCUMENTS AND MATERIALS OR INFORMATION AVAILABLE WI TH THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE. THE CENTRAL THEME OF SECTION 158BB IS THAT THE UNDISCLOSED INCO ME OF THE BLOCK PERIOD IS TO BE COMPUTED WITH REFERENCE TO TH E MATERIAL OR EVIDENCE AVAILABLE WITH THE ASSESSING OFFICER, WHIC H IS RELATABLE TO THE EVIDENCE FOUND AS A RESULT OF SEAR CH. IN OTHER WORDS, ANY MATERIAL OR INFORMATION WHICH MIGHT BE A VAILABLE WITH THE ASSESSING OFFICER BUT WHICH IS NOT FOUND A S A RESULT OF SEARCH OR IS NOT RELATABLE TO AN EVIDENCE FOUND AS A RESULT OF SEARCH, CANNOT FORM THE BASIS FOR COMPUTATION OF UN DISCLOSED INCOME. SIMILARLY, THE DEFINITION OF UNDISCLOSED INCOME IN SECTION 158B(B) REVEALS THAT IF ANY ASSET OR ANY IN COME AS RECORDED IN THE BOOKS OF ACCOUNT OR DOCUMENT, HAS B EEN DISCLOSED OR HAVE BEEN INTENDED TO BE DISCLOSED TO THE INCOME 86 TAX AUTHORITIES, THE SAME WOULD BE OUTSIDE THE PALE OF UNDISCLOSED INCOME FOR THE PURPOSES OF CHAPTER XI V-B OF THE ACT. IN THE CASE OF VIKRAM A.DOSHI (SUPRA), UNDISC LOSED INCOME WAS COMPUTED BY THE ASSESSING OFFICER ON THE BASIS OF CERTAIN TRANSACTIONS. IT WAS FOUND THAT SUCH TRANS ACTIONS WERE DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME, WHICH WAS A SUBJECT MATTER OF REGULAR ASSESSMENT. THEREFORE, I T WAS HELD THAT SUCH TRANSACTIONS, WHICH WERE DISCLOSED IN REG ULAR RETURNS, OUGHT TO HAVE BEEN ASSESSED IN THE REGULAR ASSESSME NT AND NOT IN A BLOCK ASSESSMENT UNDER CHAPTER XIV-B OF TH E ACT. 138. IN THE CASE OF VINOD DANCHAND GHODAWAT (SUPR A) DURING SEARCH IT WAS FOUND THAT THE ASSESSEE HAD CONSTRUCT ED A BUNGALOW ON WHICH AN EXPENSE OF RS.4.16 LACS WAS IN CURRED. THE ASSESSING OFFICER, THEREAFTER REFERRED THE MATT ER TO THE DEPARTMENT VALUER, WHO VALUED THE PROPERTY AT RS.6. 66 LACS AND ACCORDINGLY, THE DIFFERENCE WAS ADDED TO THE IN COME OF THE ASSESSEE AS UNDISCLOSED INCOME UNDER CHAPTER XIV-B OF THE ACT. SIMILARLY, VALUE OF GOLD AND SILVER ARTICLES A ND JEWELLERY WAS ALSO ADDED IN THE HANDS OF THE ASSESSEE AS UNDI SCLOSED INCOME, WHICH WERE FOUND TO HAVE BEEN DISCLOSED IN THE REGULAR WEALTH TAX RETURNS, FILED BY THE ASSESSEE. ON BOTH THE ASPECTS, AS PER THE HON'BLE BOMBAY HIGH COURT, THE PROVISIONS OF CHAPTER XIB-B HAD NO APPLICATION. 139. IN THE ABOVE BACKGROUND, COMING BACK TO THE FACTS OF THE PRESENT DISPUTE, IT IS CLEAR THAT THE GIFT OF R S.50,000/- RECEIVED BY THE ASSESSEE FROM MR.CHARANAMAT SINGH W AS DISCLOSED TO THE DEPARTMENT BY THE ASSESSEE HUF. T HE SAID 87 GIFT HAS ALSO BEEN REFLECTED IN THE BALANCE SHEET O F THE ASSESSEE, HUF AS ON 31.3.1995, A COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK AT PAGE 9. FURTHERMORE, A SSESSEE HAS FURNISHED A QUESTIONNAIRE DATED 05.10.2000 ISSU ED BY THE ASSESSING OFFICER WHEREIN IN PARA 3, IT IS NOTED TH AT THE ASSESSMENT RECORD OF THE ASSESSEE HUF FOR THE ASSES SMENT YEAR 1995-96 REVEALS A CREDIT IN THE ASSESSEE HUFS ACCOUNT OF RS.50,000/-. AS PER THE ASSESSEE, THE REFERENCE TO THE CREDIT OF RS.50,000/- IS THE GIFT IN QUESTION WHICH HAS BE EN DISCLOSED IN THE BALANCE SHEET FILED ALONGWITH THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1995-96. 140. APART THEREFROM, WE HAVE CAREFULLY PERUSED THE BLOCK ASSESSMENT ORDER DATED 30.10.2000 AND ALSO THE PAPE R BOOK FILED BY THE REVENUE. IN THIS PAPER BOOK, REVENUE HAS PLACED COPIES OF THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH WITH REGARD TO THE GIFTS IN QUESTION. THE DOCUMENT S ARE PHOTOCOPIES OF THE DEMAND DRAFT BY WAY OF WHICH THE GIFTS HAVE BEEN RECEIVED BY THE ASSESSEE. NO OTHER DOCUMENT O R EVIDENCE IS CLAIMED TO HAVE BEEN FOUND DURING THE C OURSE OF SEARCH. IN FACT, IT IS ONLY THE ENQUIRIES MADE BY THE DEPARTMENT SUBSEQUENT TO THE SEARCH WHICH HAS FORME D THE BASIS FOR HOLDING THAT THE GIFT IN QUESTION IS UNEX PLAINED. THUS, IN THE COURSE OF SEARCH, THERE IS NO EVIDENCE FOUND WHICH PROVES THE FALSITY OF THE GIFT. AT THIS STAGE, WE MAY REFER TO THE FOLLOWING CONCLUSIONS DRAWN BY THE ASSESSING OFFICE R IN PARA 5.4(III) WHICH READS AS UNDER : 5.4(III) THE EXPLANATION GIVE, THEREFORE, IS REJEC TED. THERE IS NO LOVE AND AFFECTION BETWEEN THE DONOR AN D 88 THE DONEE. THEY ARE STRANGERS TO EACH OTHER. THE HON'BLE PUNJAB & HARYANA HIGH COURTS DECISION IN LAL CHAND KALRA V CIT REPORTED IN 22 CTR (P&H) 135 IS APPLICABLE. THE AMOUNT OFRS.50,000/- IS TREATED AS ASSESSEE'S UNDISCLOSED INCOME PAID IN CASH TO THE ALLEGED DONOR FOR OBTAINING THE DRAFT. IN ADDI TION, A SUM OF RS.5000/- IS ALSO ESTIMATED TO HAVE COST T O THE ASSESSEE BY WAY OF COMMISSION FOR OBTAINING THE DRAFT. THE TOTAL UNDISCLOSED INCOME ON THIS ACCOUN T IS DETERMINED AT RS.55,000/-. THE ALLEGED GIFT OF RS.40,000/- FROM THE ABOVE ACCOUNT TO MRS.MEENA KHOSLA HAS ALSO BEEN TREATED AS HER UNDISCLOSED INCOME IN HER OWN CASE U/S 158BD OF THE ACT. THE AFORESAID REVEALS THAT THE CHARGE MADE AGAINST THE ASSESSEE IS THAT RS.50,000/- IS TREATED AS ASSESSEE 'S UNDISCLOSED INCOME BECAUSE THE SAID AMOUNT HAS BEEN PAID IN CASH TO THE ALLEGED DONOR FOR OBTAINING THE DRAFT. IN OUR VIEW, THERE IS NO EVIDENCE FOUND AS A RESULT OF A SEARCH TO PROVE THAT ANY CASH WAS PAID BY THE ASSESSEE TO THE DONOR FOR OBTAINING THE IMPUGNED GIFT. NOTABLY, THE ONLY EVIDENCE WHIC H IS REFERRED TO, IN THE ASSESSMENT ORDER IS A COPY OF THE DEMAND DRAFT EVIDENCING RECEIPT OF MONEY FROM THE DONOR. THERE IS NO EVIDENCE TO SUPPORT THE PLEA OF THE ASSESSING OFFIC ER THAT ASSESSEE HAD PAID CASH TO THE ALLEGED DONOR FOR OBT AINING THE IMPUGNED GIFT. THEREFORE, HAVING REGARD TO THE PROV ISIONS OF SECTION 158BB OF THE ACT, THE SAID AMOUNT OF GIFT C OULD NOT BE MADE A SUBJECT MATTER OF COMPUTATION OF UNDISCLOSED INCOME. AT THIS POINT, WE MAY ALSO ADDRESS THE ARGUMENT SET UP BY THE LEARNED CIT-DR THAT THE PROVISIONS OF SECTION 158BB ALSO INVEST THE ASSESSING OFFICER WITH POWER TO COMPUTE UNDISCLOSED INCOME ON THE BASIS OF THE DOCUMENTS, MATERIALS OR INFORMATION WHICH ARE AVAILABLE WITH HIM. ACCORDING TO HER, IN THIS CASE THE ENQUIRIES MADE WITH REGARD TO THE BANK ACCOUNT OF T HE DONOR AND ALSO FROM A FAMILY MEMBER OF THE DONOR CLEARLY ESTABLISH THE INGENUINITY OF THE GIFT IN QUESTION. IN OUR VI EW, THE 89 ARGUMENT OF THE LEARNED CIT-DR IS MISPLACED AS FOLL OWING DISCUSSION WOULD SHOW. SECTION 158BB OF THE ACT AS INSERTED INITIALLY, PRESCRIBED FOR COMPUTATION OF UNDISCLOSE D INCOME ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH O R REQUISITION OF BOOKS OF ACCOUNT OR DOCUMENT AND SUCH OTHER MATE RIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFF ICER. THE SAID EXPRESSION WAS AMENDED BY FINANCE ACT 2002 WIT H RETROSPECTIVE EFFECT FROM 01.07.1995 TO READ .. IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT, ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFF ICER AND RELATABLE TO SUCH EVIDENCE.. . THE DIFFERENCE IN THE TWO EXPRESSIONS IS EVIDENT. INITIALLY, THE UNDISCLOSED INCOME WAS TO BE COMPUTED ON THE BASIS OF THE EVIDENCE FOUND A S A RESULT OF SEARCH AND SUCH OTHER INFORMATION OR MATERIAL WH ICH MAY BE AVAILABLE WITH THE ASSESSING OFFICER. NOTABLY, AFT ER THE AMENDMENT, THE OTHER MATERIAL OR INFORMATION AVAILA BLE WITH THE ASSESSING OFFICER IS FURTHER QUALIFIED IN AS MUCH A S THE SAME CAN BE MADE THE BASIS TO COMPUTE UNDISCLOSED INCOME ONLY IN CASE IT IS RELATABLE TO SUCH EVIDENCE. PERTINENTLY THE EXPRESSION SUCH EVIDENCE, REFERS TO THE EVIDENCE WHICH HAS BEEN FOUND AS A RESULT OF SEARCH. IN OTHER WORDS, A SSESSING OFFICER IS PERMITTED TO COLLECT FURTHER MATERIAL AN D INFORMATION AFTER THE SEARCH ALSO, IN ORDER TO COMPUTE UNDISCLO SED INCOME, BUT THE SAME CAN BE USED TO COMPUTE UNDISCLOSED INC OME, ONLY IF IT IS RELATABLE TO THE EVIDENCE FOUND AS A RESUL T OF THE SEARCH. WHILE LEARNED CIT-DR IS CORRECT IN SAYING THAT THE POST-SEARCH ENQUIRIES ARE RELEVANT, SO HOWEVER, THEY CAN FORM T HE BASIS TO 90 COMPUTE UNDISCLOSED INCOME ONLY IF THEY ARE RELATAB LE TO THE EVIDENCE FOUND AS A RESULT OF THE SEARCH. AS NOTED EARLIER, IN THIS CASE, THERE IS NO EVIDENCE FOUND AS A RESULT O F SEARCH WHICH SHOWED THAT THE GIFTS WERE INGENUINE IN AS MU CH AS THE ONLY MATERIAL AND EVIDENCE FOUND AND EXHIBITED BY T HE ASSESSING OFFICER IS THE COPIES OF DEMAND DRAFTS BY WAY OF WHICH THE ASSESSEE HAD RECEIVED THE GIFTS. THERE IS NO EVIDENCE FOUND IN SEARCH THAT THE ASSESSEE HAD PAID CASH IN LIEU OF THE IMPUGNED GIFT. THEREFORE, THE RESULT OF POST-SEARCH ENQUIRIES DONE CANNOT BE MADE A BASIS TO COMPUTE UNDISCLOSED INCOME UNDER CHAPTER XIV-B IN THIS CA SE, BECAUSE IN THE ABSENCE OF ANY INCRIMINATING EVIDENC E FOUND DURING SEARCH, THE POST-SEARCH ENQUIRIES CANNOT BE SAID TO BE RELATABLE TO SUCH EVIDENCE; WITHIN THE MEANING OF SECTION 158BB OF THE ACT, WITHOUT OPINING ON THE MERITS OF THE CLAIM OF THE ASSESSING OFFICER THAT GIFTS ARE INGENUINE, WE HOLD THAT IT WAS IMPERMISSIBLE FOR HIM TO MAKE SUCH AN ADDITION IN THE HANDS OF THE ASSESSEE IN VIEW OF THE RESTRICTIVE PR OVISIONS OF SECTION 158BB READ WITH SECTION 158B(B) OF THE ACT. CERTAINLY, THE VERIFICATION EXERCISE CARRIED OUT BY THE ASSESS ING OFFICER CAN BE A SUBJECT MATTER OF REGULAR ASSESSMENT. SO HOWEVER, THE SAME CANNOT FORM THE BASIS FOR MAKING ADDITION IN TERMS OF SECTION XIV-B OF THE ACT, IN VIEW OF OUR AFORESAID DISCUSSION. THEREFORE, IN CONCLUSION, WE HOLD THAT THE ASSESSIN G OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.50,000/- AS UNDISCLOSED INCOME ON ACCOUNT OF GIFT CLAIMED TO HA VE BEEN 91 RECEIVED FROM MR.CHARANAMAT SINGH. SINCE THE AMOUNT OF RS.50,000/- HAS BEEN DELETED, THERE IS NO JUSTIFICA TION TO SUSTAIN THE ADDITION OF RS.5,000/- ESTIMATED TO BE COST OF COMMISSION FOR OBTAINING THE GIFT. THERE IS NO EVI DENCE THAT THE ASSESSEE HAS INCURRED SUCH EXPENDITURE, AND ACC ORDINGLY THE ENTIRE ADDITION OF RS.55,000/- IS DIRECTED TO B E DELETED. 141. IT WAS A COMMON POINT BETWEEN THE PARTIES T HAT THE FACTS AND CIRCUMSTANCES IN RELATION TO THE ADDITION OF RS.2,10,000/-, WHICH REPRESENTS GIFT FROM SHRI DHAR AMPAL ARE IDENTICAL TO THE GIFT RECEIVED FROM SHRI CHARANAMAT SINGH. ACCORDINGLY, OUR DECISION IN THE AFORESAID PARAGRAP HS SQUARELY APPLIES TO THE ADDITION OF RS.2,10,000/- MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF GIFT FROM SHRI DHARAMPAL. 142. IN CONCLUSION, WE UPHOLD THE ULTIMATE CONC LUSION DRAWN BY THE CIT(APPEALS) IN DELETING THE IMPUGNED ADDITI ONS, ALBEIT ON A DIFFERENT GROUND. 143. IN THE RESULT, THE APPEAL OF THE REVENUE I N ITSS 50/CHD/2002 IN THE CASE OF SHRI RAKESH KHOSLA, HUF IS DISMISSED. 144. IN THE FINAL ANALYSIS, THE CAPTIONED APP EALS ARE DISPOSED OFF AS FOLLOWS : I) ASSESSEE'S APPEAL IN IT(SS)A NO.32/CHANDI2002 I S PARTLY ALLOWED. II) REVENUES APPEAL IN IT(SS)A NO.44/CHANDI/2002 IS DISMISSED. 92 III) ASSESSEE'S APPEAL IN IT(SS)A NO.33/CHANDI2002 IS PARTLY ALLOWED. IV) REVENUES APPEAL IN IT(SS)A NO.43/CHANDI/2002 IS PARTLY ALLOWED. IV) ASSESSEE'S APPEAL IN IT(SS)A NO.38/CHANDI2002 IS PARTLY ALLOWED. V) ASSESSEES APPEAL IN IT(SS)A NO.39/CHANDI2002 I S DISMISSED. VI) REVENUES APPEAL IN IT(SS)A NO.50/CHANDI2002 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.09.2010. SD/- SD/- (SUSHMA CHOWLA) ( G.S.PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 09 TH SEPT.,2010. POONAM COPY TO : THE APPELLANT/THE RESPONDENT/THE CIT (A)/ THE CIT/THE DR.