ACIT, Chandigarh V. Sh. K.K. Jerath, Chandigarh

ITSSA 74/CHANDI/2004

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0716 (ITAT-CHANDIGARH)
• Duration Of Justice: 16 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-05-2021
• Assessment Year: misc
• Appeal Filed On: 05-11-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C CHANDRAKANTA
• Keywords: Unexplained investment; Unexplained expenditure; Capital asset; Gift; Search and seizure; Document seized; Principle of natural justice; Opportunity of cross examination; Source of fund; Deemed to accrue or arise in india; Question of law; Cost of acquisition; Block assessment; Onus to prove; Documents seized; Capital Gains
• Section: 143(1); 250; 274; 208; 192; 64; 55A; 158BC; 43; 48; 73; 72; 13; 119; 22; 131; 69; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH ( VIRTUAL COURT) .., !' .. , # $% BEFORE: SHRI. N.K.SAINI, VP & SHRI , R.L. NEGI, JM ITSS/74/CHD/2004 BLOCK PERIOD 01/04/1987 TO 20/11/1997 THE ACIT CIRCLE 1(1), CHANDIGARH SHRI K.K. JERATH H.NO. 2200, SECTOR 15-C CHANDIGARH PAN NO: APPELLANT RESPONDENT ASSESSEE BY : SHRI SUDHIR SEHGAL, ADVOCATE REVENUE BY : SMT. C. CHANDRAKANTA, CIT ! '# DATE OF HEARING : 12/05/2021 $%&'()# DATE OF PRONOUNCEMENT : 08/07/2021 $&/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORD ER OF LD. CIT(A), PATIALA DT. 20/08/2004. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LEARNED C.I.T.(APPEALS) IN APPEAL NO. 395A/99-00 VIDE ORDER DATED 20.08.2004 HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER AS UNDER: I) RS. 23,11,447/- ON ACCOUNT OF UNEXPLAINED DEPOS ITS MADE IN THE BANKS IN THE NAME OF MEMBERS OF FAMILY. II) RS. 2,23,200/- ON ACCOUNT OF UNEXPLAINED INVES TMENT IN FDRS IN THE NAME OF SMT. SAVITA JERATH, WIFE OF THE ASSESSEE. III) RS. 30,507/- ON ACCOUNT OF UNEXPLAINED INVEST MENT IN FDRS IN THE NAME OF ASHUTOSH JERATH, SON OF THE ASSESSEE. IV) RS. 6,20,000/- ON ACCOUNT OF UNEXPLAINED CASH SEIZED DURING THE COURSE OF SEARCH, FROM THE BEDROOM OF THE ASSESSEE. V) RS. 5,00,000/- ON ACCOUNT OF UNEXPLAINED CASH S EIZED FROM THE BANK LOCKERS IN THE JOINT NAME OF THE ASSESSEE AND HIS W IFE, SMT. SAVITA JERATH. 2 2. THE CIT(A) HAS ALSO ERRED IN DELETING THE ADDITI ONS MADE BY THE ASSESSING OFFICER AS UNDER: I) RS. 6,35,000/- ON ACCOUNT OF UNACCOUNTED INVESTM ENT IN PURCHASE OF JEWELERY. II) RS. 1,28,169/- ON ACCOUNT OF UNEXPLAINED INVEST MENT IN PURCHASE OF SILVER ITEMS. III) RS. 5,88,240/- ON ACCOUNT OF RENT RECEIVED BY THE ASSESSEE CLAIMED HUF PROPERTY. IV) RS. 70,19,011/- ON ACCOUNT OF UNEXPLAINED INVES TMENT IN VARIOUS IMMOVABLE PROPERTIES. V) RS. 2,88,085/- ON ACCOUNT OF CAPITAL GAINS ON SA LE OF PLOT IN GURGAON IN THE NAME OF SMT. SAVITA JERATH WIFE OF THE ASSESSEE. VI) RS. 1,50,000/- ON ACCOUNT OF NRI GIFT RECEIVED FROM SH. P.K. SHARMA, ONE OF THE FRIEND. VII) RS. 41,987/- ON ACCOUNT OF UNEXPLAINED TRAVELI NG EXPENSES BY SMT. SAVITA JERATH, WIFE OF THE ASSESSEE. VIII) RS. 37,699/- ON ACCOUNT OF UNEXPLAINED INVEST MENT FOR PURCHASE OF CERTAIN MATERIALS TO BE SENT TO AN ASHRAM IN MATHURA. IX) RS. 1,00,015/- ON ACCOUNT OF UNEXPLAINED INVEST MENT IN MOVEABLE PROPERTY. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE APPELLANT CRAVES TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 3. VIDE GROUND NO. 1(I) THE GRIEVANCE OF THE DEPART MENT RELATES TO THE DELETION OF ADDITION OF RS 23,11,447/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED DEPOSITS IN THE BANKS IN THE NAME OF FA MILY MEMBERS OF THE ASSESSEE. 4. FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE RESIDENCE OF THE ASSESSEE ON 20/11/1997 UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERR ED TO AS ACT). A SEARCH WAS ALSO CONDUCTED SIMULTANEOUSLY AT THE PREMISES OF SH RI SUNIL KALIA AND SHRI SURESH SHARMA (ALLEGED LIAISON AGENT) UNDER SECTION 132(1) OF THE ACT. THE DETAIL OF THE FAMILY MEMBERS OF THE ASSESSEE IS AS UNDER: 3 I) SH. K.K. JERATH, THE ASSESSEE II) MS. SAVITA JERATH, WIFE III) MR. KAPIL JERATH, SON IV) MR. AASHUTOSH, SON V) MS. VANDITA JERATH, DAUGHTER VI) MS. AMOLAK RAM JERATH, FATHER VII) SH. S.K. JERATH, BROTHER VIII) SH. B.K. KHANNA, FATHER-IN-LAW 4.1 DURING THE COURSE OF SEARCH CERTAIN INCRIMINATI NG MATERIAL WAS FOUND AND SEIZED. THE SEARCH COMMENCED ON 20/11/1997 AT 8.10 A.M. AT RESIDENTIAL HOUSE NO. 8, SECTOR-7A CHANDIGARH AND CLOSED ON 21/11/199 7 AT 1.00 A.M. DURING THE COURSE OF SEARCH, STATEMENTS OF SHRI K.K. JERATH, M RS. SAVITA JERATH AND MR. KAPIL JERATH WERE RECORDED. FOLLOWING ITEMS WERE FOUND AN D SEIZED: I) BOOKS OF ACCOUNTS AND DOCUMENTS AS PER ANNEXURE A TO THE RELEVANT PANCHNAMA. II) CASH AMOUNTING TO RS. 6,27,522/- WAS FOUND OUT OF WHICH RS. 6 LACS WAS SEIZED AS PER ANNEXURE O TO THE RELEVANT PANCHNAMA . III) KEY NO. 185 OF LOCKER NO. 97 IN THE JOINT NAME OF SH. K.K. JERATH AND MRS. SAVITA JERATH, SECTOR 14, CHANDIGARH IV) BOOKS OF ACCOUNTS AND DOCUMENTS AS PER ANNEXURE -1 TO THE RELEVANT PANCHNAMA WHICH WERE NOT SEIZED. APART FROM THE ABOVE, FOLLOWING VALUABLE ARTICLES W ERE FOUND AND SEIZED. I) DIAMONDS & PEARLS 36,438/- II) SILVER 18309 900 1,28,169/- III) GOLD 989-200 3,78,056/- TOTAL 5,42,663/- 4.2 A SEARCH WAS ALSO CONDUCTED AT THE PREMISES OF M/S VRINDAVAN ELECTRICALS, 93, PHASE-II, PANCHKULA, A PARTNERSHIP CONCERN OF SHRI KAPIL DEV JERATH AS WELL AS AT H.NO. 2200 SECTOR 15-C/II FLOO R, CHANDIGARH. SEARCH WAS ALSO CONDUCTED AT LOCKER NO. 197, STATE BANK OF INDIA SE CTOR-14, CHANDIGARH FROM 4 WHERE 1048.100 GMS GOLD JEWELLERY AND 976.600 GMS S ILVER WERE FOUND. SEARCH WAS ALSO CONDUCTED AT THE OFFICE PREMISES OF THE AS SESSEE BEING CHIEF ENGINEER CUM SECRETARY, UT CHANDIGARH ON 22/11/1997 FROM WHE RE CERTAIN DOCUMENTS WERE FOUND AND SEIZED. ANOTHER SEARCH WAS CONDUCTED ON 27/11/1997 AT LOCKER NO. 1027, TIME BANK SECTOR-8, CHANDIGARH FRO M WHERE CASH AMOUNTING TO RS. 5,00,000/- WAS FOUND AND SEIZED. AGAIN THE S EARCH WAS CONDUCTED ON 03/12/1997 AT LOCKER NO. 37 IN CENTRAL BANK OF INDI A, SECTOR-15, PANCHKULA FROM WHERE FOLLOWING ARTICLES WERE FOUND AND SEIZED: I) 2 KARAS 42.800 GM. II) 1 SET 4 PC. WITH MONGA AND MOTI 46.200 GM III) 1 SET 4 PC WITH THREAD AND MEENA 54.500 GM 4.3 SEARCH WAS ALSO CONDUCTED AT LOCKER NO. 239 STA TE BANK OF PATIALA, SECTOR 7, CHANDIGARH AND LOCKER NO. 94 STATE BANK O F PATIALA, SECTOR-35, CHANDIGARH. BUT THOSE LOCKERS WERE FOUND EMPTY. THE A.O. MADE THE FOLLOWING ADDITIONS ON ACCOUNT OF UNDISCLOSED INCOME FOR THE BLOCK PERIOD: SL. NO. NATURE OF ADDITIONS PAGE NO. OF IMPUGNED ASSESSMENT ORDER AMOUNT 1 CASH AT THE HOUSE AND LOCKER PAGE 22 11,22,000/- 2 JEWELLERY PAGE 38-42 6,35,100/- 3 SILVER PAGE 44-45 1,28,169 4 RENT (HUF) PAGE 46 5,88,240/- 5 IMMOVABLE PROPERTY PAGE 15-20, 435-68 70,19,011/- 6 CAPITAL GAINS PAGE 68-70 2,88,085/- 7 CASH SH. P.K. SHARMA PAGE 71-77 1,50,000/- 8 SINGAPORE TRIP PAGE 74 35,000/- 9 TRAVELLING PAGE 79 41,987/- 10 MATHURA INVESTMENT PAGE 85 37,699/- 11 CREDIT IN BANK ACCOUNT PAGE 90-99 23,11,447/- 12 FDR (SAVITA JERATH) PAGE 97 2,23,200/- 13 FDR (ASHOTOSH) PAGE 98 30,507/- 14 MOVABLE ITEMS PAGE 87-89 1,00,015/- 15 UNUSED ITEMS PAGE 89 80,850/- 16 BANK INTEREST PAGE 101 22,000/- 17 HOUSE HOLD EXPENSES PAGE 98-100 8,92,000/- 5 4.4 THE A.O. MADE THE ADDITION OF RS. 23,11,447/- O N ACCOUNT OF CREDITS IN VARIOUS BANK ACCOUNTS PERTAINING TO THE FAMILY MEMB ERS OF THE ASSESSEE. THE DEPOSITS IN THE VARIOUS BANK ACCOUNTS WERE AS UNDER : 6 4.5 THE A.O. CONSIDERED THE AFORESAID DEPOSITS AS I NCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES AND OBSERVED THAT THE ASSE SSEE WAS TRYING TO JUSTIFY THAT HE HAD NOTHING TO DO WITH THE ACTIVITY OF HIS FAMILY MEMBERS. ACCORDING TO THE A.O, THE ASSESSEE WAS PERSONALLY INVOLVED IN TH E VARIOUS TRANSACTIONS. HE THEREFORE REJECTED THE SUBMISSIONS OF THE ASSESSEE AND MADE THE ADDITIONS IN HIS HANDS. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: DURING THE COURSE OF SEARCH AND POST SEARCH ENQUI RIES, DETAILS OF THE VARIOUS BANK ACCOUNTS WERE COLLECTED BY THE ASSESSING OFFIC ER. THE EXPLANATION WITH REGARD TO THE ENTRIES IN THE BANK ACCOUNTS HAVE BEE N BRUSHED ASIDE IN A SUMMARY MANNER AND THE TOTAL DEPOSITS IN THE BANK A CCOUNTS OF THE ASSESSEE, HIS WIFE SMT. SAVITA JERATH, AND HIS SON SH. KAPIL DEV JERATH AND HIS FATHER-IN-LAW SH. B. K. KHANNA HAVE BEEN ADDED U/S 69 OF THE INCOME TAX ACT, 1961. I ENCLOSE HEREWITH THE CASH FLOW STATEMENTS OF THE ASSESSEE A S WELL AS THE FAMILY MEMBERS ALONG WITH THE PHOTOCOPY OF THE BANK ACCOUNTS DULY EXPLAINING THE NATURE OF DEBIT AND CREDIT ENTRIES EVIDENCE OF CREDIT ENTRIES IN THE BANK ACCOUNTS ARE ALSO ENCLOSED. A PERUSAL OF THE SAME WILL SHOW THAT THER E IS NOT EVEN A SINGLE ENTRY IN THE BANK ACCOUNTS OF ANY OF THE FAMILY MEMBERS WHIC H IS UNEXPLAINED. THE ADDITION BEING BASED ON SURMISES AND CONJECTURES, D ESERVES TO BE DELETED. 7 5.1 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE DELETED THE ADDITION BY OBSERVING IN PARA 17.2 OF THE IMPUG NED ORDER AS UNDER: 17.2- I HAVE GONE THROUGH THE ARGUMENTS OF THE LEA RNED COUNSEL FOR APPELLANT AS WELL AS THE CONTENTS OF THE RELEVANT PORTION OF THE ASSESSMENT ORDER ON THIS ISSUE STARTING ON PAGE 90 OF THE SAID ASSESSMENT OR DER. THE LD. ASSESSING OFFICER HAS NOT BROUGHT TO POINT OUT ANY OF THE BANK ACCOUN T TO BE UNDISCLOSED BANK ACCOUNT. THE DISCUSSION AND ACTION OF THE LD. A.O. S UGGEST THAT HE HAD MADE SCRUTINY OF THE BANK ACCOUNTS GATHERED DURING THE P OST SEARCH ENQUIRIES. HE HAD NOT MENTIONED ANY OF THE SPECIFIC INCRIMINATING DOC UMENTS SEIZED DURING THE SEARCH AND SEIZURE OPERATION SUGGESTING THAT THERE IS ANY BANK ACCOUNT UNDISCLOSED TO THE DEPARTMENT OR ANY ENTRY IS UNEXP LAINED WITH RESPECT TO THE SOURCES OR RESOURCES OF HIS INCOME/FUNDS. THUS, IN VIEW OF THE DECISION OF HON'BLE DELHI HIGH COURT AS WELL AS HON'BLE MADHYA PRADESH HIGH COURT DISCUSSED EARLIER IN THIS ORDER, I AM OF THE OPINION THAT SUCH ACTION CANNOT BE UPHELD AS ASSESSMENT PROVISIONS U/S 158BC ARE NOT SUBSTITUTE FOR THE NOR MAL ASSESSMENT PROCEDURE UNDER SECTION 143(3). THUS, THE SAME IS DELETED. (RELIEF:- RS. 23,11,447/-) 6. NOW THE DEPARTMENT IS IN APPEAL. 7. THE LD. CIT DR STRONGLY SUPPORTED THE ORDER OF T HE AO AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER. IT WAS F URTHER SUBMITTED THAT DURING THE SEARCH AND POST SEARCH ENQUIRIES, IT WAS GATHER ED THAT THE ASSESSEE AND OTHER FAMILY MEMBERS WERE HAVING A NUMBER OF BANK A CCOUNTS WHICH CONTAINED NUMBER OF TRANSACTIONS IN CASH AND THE AN ALYSIS OF THE VARIOUS BANK ACCOUNT MAINTAINED BY THE FAMILY MEMBERS OF THE ASS ESSEE NAMELY SMT. SAVITAJERATH, SHRI KAPIL JERATH AND SHRI B.K. KHANN A AND SMT. SHANTA KHANNA REVEALED HEAVY CASH DEPOSITS WHICH DID NOT COMMENSU RATE WITH THE SOURCES OF THEIR INCOME AND THE STATEMENTS OF VARIOUS PERSONS AS DISCUSSED BY THE AO IN THE ASSESSMENT ORDER WHICH PROVED THAT AT EVERY STA GE THE ASSESSEE WAS PERSONALLY INVOLVED IN VARIOUS TRANSACTIONS. HOWEVE R HE TRIED TO JUSTIFY THAT HE HAD NOTHING TO DO WITH THE ACTIVITY OF HIS FAMILY M EMBERS. THEREFORE THE ADDITION MADE BY THE AO AFTER PROPER INVESTIGATION OF THE CA SE AND AFTER RECORDING THE STATEMENT OF VARIOUS PERSONS WAS WRONGLY DELETED BY THE LD. CIT(A). 8 8. IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT THE DEPOSITS WERE THERE IN THE BANK ACCOUNT OF THE FAMI LY MEMBERS OF THE ASSESSEE WHO WERE SEPARATELY ASSESSED. MOST OF THE DEPOSITS WERE MADE THROUGH CHEQUES AND THERE WAS NO ENTRY FROM THE ACCOUNT OF THE ASSESSEE TO THE ACCOUNT OF SHRI B.K. KHANNA AND VICE VERSA. ALL THE DEPOSITS WERE EXPLAINED BY SMT. SAVITA JERATH TO THE ADIT VIDE HER LETTER DT. 29/12/1997 AND ALSO BY SHRI KAPIL JERATH, IN HIS BANK ACCOUNTS. THEREFORE THE ADDITIO N MADE IN THE HANDS OF THE ASSESSEE WAS NOT JUSTIFIED WHEN THE ASSESSEE HAD NO CONNECTION WITH ANY OF THE DEPOSIT IN THE BANK ACCOUNT OF THE FAMILY MEMBERS. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE, NOTHING IS BROUGHT ON RECORD THAT ANY INCRIMINATING MATERIAL WAS FOUND DU RING THE COURSE OF SEARCH. THE IMPUGNED ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE BY CONSIDERING THE CREDITS IN THE BANK ACCOUNT OF THE FAMILY MEMBE RS BUT THESE BANK ACCOUNTS FOR WHICH ADDITION HAD BEEN MADE IN THE HANDS OF TH E ASSESSEE DID NOT RELATE TO THE ASSESSEE. THE BANK ACCOUNTS WERE MAINTAINED BY THE INDIVIDUAL FAMILY MEMBERS NAMELY SHRI B.K. KHANNA & SMT. SHANTA KHANN A WHO WERE PERMANENTLY RESIDING AT FEROZEPUR AND CARRYING ON THEIR INDEPENDENT BUSINESS WHICH HAS NOTHING TO DO WITH THE ASSESSEE. NONE OF THEIR BANK ACCOUNT WAS FOUND TO BE UNDISCLOSED BANK ACCOUNT. SHRI B.K. KHA NNA HAD RECORDED ALL HIS BANK TRANSACTIONS IN HIS CASH BOOK FURNISHED TO THE DEPARTMENT WHEREIN THE SOURCE OF DEPOSIT HAD BEEN DISCLOSED. THE AO WAS THEREFORE NOT JUSTIFIED IN TREATING THE DEPOSITS MADE BY SHRI B.K. KHANNA IN H IS ACCOUNT DULY REFLECTED IN HIS CASH BOOK AS THE UNDISCLOSED INCOME OF THE ASSE SSEE. SIMILARLY, SMT. SAVITA JERATH HAS EXPLAINED HER DEPOSITS THROUGH HER LETTE R DT. 29/12/1997 PLACED AS PAGE 464-475 OF THE PAPER BOOK (PART II) AND ALSO I N HER SEIZED DIARY PLACED AT PAGE 423 TO 436 PAPER BOOK (PART1) KAPIL JERATH SON OF THE ASSESSEE HAS ALSO EXPLAINED ALL HIS DEPOSITS IN HIS SEIZED HAND WRITT EN NOTE. THEREFORE, THE ADDITION 9 IF ANY, WAS TO BE MADE WITH RESPECT TO THESE DEPOSI TS, IT HAS TO BE IN THE HANDS OF THE FAMILY MEMBERS WHO WERE ASSESSED TO TAX SEPA RATELY AND NOT IN THE HANDS OF THE ASSESSEE. WE, THEREFORE CONSIDERING TH E TOTALITY OF THE FACTS, DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS GIVEN BY THE LD. CIT(A) ON THIS ISSUE. 10. GROUND NO. 1(II) OF THE DEPARTMENTAL APPEAL REL ATES TO THE DELETION OF ADDITION OF RS. 2,23,200/- MADE BY THE A.O ON ACCOU NT OF UNEXPLAINED INVESTMENT IN FDRS IN THE NAME OF SMT. SAVITA JERAT H W/O THE ASSESSEE. 11. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE TH AT THE AO MADE THIS ADDITION BY OBSERVING THAT THE ASSESSEE CLAIMED THAT THE FDR IN THE NAME OF SMT. SAVITA JERATH HAS BEEN MADE OUT OF THE WITHDRAWAL FROM HER BANK ACCOUNT, HOWEVER THERE WAS NO DEBIT ENTRY IN THE BANK ACCOUNT NO. 28 37 MAINTAINED WITH STATE BANK OF PATIALA(SBOP) HIGH COURT BRANCH, CHANDIGARH BY SMT. SAVITA JERATH. THEREFORE THE EXPLANATION OF THE ASSESSEE WAS MISLE ADING. ACCORDINGLY THE ADDITION OF RS. 2,23,200/- WAS MADE IN THE HANDS OF THE ASSESSEE. 12. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: SUBSEQUENTLY TO SEARCH ENQUIRIES MADE FROM STATE BANK OF PATIALA, HIGH COURT BRANCH, CHANDIGARH IT WAS REVEALED THAT THERE WAS A FDR OF RS. 2,23,200/- IN THE NAME OF SMT. SAVITA JERATH WHICH WAS BEING TREATED AS UNEXPLAINE D. THE FDR WAS OBTAINED OUT OF THE PROCEEDS OF EARLIER FDR OF RS.3,00,000/-. THE FACTS ARE THAT THE ASSESSEE'S WIFE OBTAINED AN FDR OF RS.3,00,000/- ON 29 TH MAY, 1995 OUT OF THE SALE PROCEEDS OF PLOT AT GURG AON. THE FDR MATURED AND AN AMOUNT OF RS.3,34,386/- WAS RECEIVED . OUT OF THE ABOVE A SUM OF RS.1,34,386/- WAS CREDITED TO HER SAVING BANK ACCOU NT WITH STATE BANK OF PATIALA, HIGH COURT BRANCH, CHANDIGARH AND A FRESH FDR FOR RS.2,0 0,000/- WAS OBTAINED ON 17 TH JUNE, 1996 WITH THE MATURITY VALUE OF THE SAME ON 29 TH MAY, 1997 AT RS.2,23,200/-. SINCE THE FDR WAS OBTAINED OUT OF THE MATURITY OF AN EARLIER FDR OUT OF KNOWN SOURCES OF INCOME, NO ADDITION IS CALLED FOR. THE SAME DESERVES TO BE DEL ETED.' 12.1 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO N OF THE ASSESSEE DELETED THE IMPUGNED ADDITION BY OBSERVING AS UNDER: I HAVE GONE THROUGH THE CONTENTS OF THE IMPUGNED ASSESSMENT ORDER AND THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE APPELLANT. THE LD. ASSESSING OFFICER HAS NOT POINTED OUT ANY EVIDENCE GATHERED DURING THE SE ARCH AND SEIZURE OPERATION 10 THAT COULD SUGGEST THE AMOUNT AND THESE FDRS IN THE NAME OF MRS. SAVITA JERATH TO THE TUNE OF RS.2,23,200 /- WERE PURCHASED OUT OF THE FUNDS OF SH. K. K. JERATH THAT ARE UNEXPLAINED. IN ABSENCE OF SUCH AN EVIDENC E FOUND DURING THE SEARCH AND SEIZURE OPERATION, THE RELEVANT LAW DOES NOT AL LOW TO JUSTIFY THE ADDITION OF RS.2,23,200/-. THEREFORE, THE ADDITION TO THE TUNE OF RS.2,23,200/- IS DELETED. 13. NOW THE DEPARTMENT IS IN APPEAL. 14. THE LD. CIT DR REITERATED THE OBSERVATIONS MADE BY THE AO AND STRONGLY SUPPORTED THE ASSESSMENT ORDER AND FURTHER SUBMITTE D THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE AFTER P ROPER INVESTIGATION BY THE AO. IT WAS FURTHER STATED THAT THE ASSESSEE SUBMITTED T O THE AO THAT THE FDR WAS FUNDED FROM THE BANK ACCOUNT NO. 2837 MAINTAINED WI TH SBOP, HIGH COURT BRANCH, CHANDIGARH BY SMT. SAVITA JERATH. HOWEVER I N THE SAID ACCOUNT NO DEBIT ENTRY AMOUNTING TO RS. 2,23,200/- WAS FOUND, THEREFORE THE DECISION OF THE LD. CIT(A) IS NOT ACCEPTABLE PARTICULARLY WHEN THE AO MADE THE ADDITION AFTER MAKING NECESSARY ENQUIRIES AND PROPER INVESTIGATION . 15. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT THE FDR FOR WHICH THE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE DID NOT RELATE TO THE ASSESEE AT ALL AS THE FDR WAS IN THE NAME OF SMT. SAVITA JERATH AND NOTHING WAS BROUGHT ON RECORD TO SUBSTANTIATE THAT THE SAID FDR WAS PURCHASED FROM UNDISCLOSED MONEY OF THE ASSESSEE. IT WAS STAT ED THAT SMT. SAVITA JERATH EXPLAINED THE SOURCE OF THE SAID FDR TO THE AO VIDE HER LETTER DT. 29/12/1997 COPY OF WHICH IS PLACED AT PAGE NO. 464 TO 475 REL EVANT PAGE NO. 474 OF THE ASSESSES PAPER BOOK (PART1). IT WAS FURTHER SUBMITT ED THAT SMT. SAVITA JERATH IS AN INDEPENDENT ASSESSEE THEREFORE NO ADDITION COULD HA VE BEEN MADE IN THE HANDS OF THE ASSESSEE. 16. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE IT IS AN ADMITTED FACT THAT THE IMPUGNED FDR WAS IN THE NAME OF SMT. SAVITA JER ATH WHO IS AN INDEPENDENT 11 ASSESSEE, SHE EXPLAINED THE SOURCE FOR MAKING THAT FDR TO THE AO VIDE HER LETTER DT. 29/12/1997 AND NOTHING IS BROUGHT ON RECORD THA T THE UNDISCLOSED MONEY BELONGING TO THE ASSESSEE WAS UTILIZED IN MAKING TH AT FDR. WE THEREFORE ARE OF THE VIEW THAT THE LD. CIT RIGHTLY DELETED THE SAID ADDITION. 17. THE NEXT ISSUE VIDE GROUND NO. 1(III) RELATES T O THE DELETION OF ADDITION OF RS. 30,507/- MADE BY THE AO ON ACCOUNT OF UNEXPLAIN ED INVESTMENT IN FDR IN THE NAME OF SHRI ASHUTOSH JERATH S/O OF THE ASSESSE E. 18. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE TH AT THE AO MADE THIS ADDITION BY OBSERVING THAT SHRI ASHUTOSH WAS A STUDENT IN T HE YEAR 1997 AND FINANCIALLY DEPENDENT ON THE ASSESSEE, THEREFORE THE INVESTMENT OF RS. 30,507/- IN THE F.D.R IN THE NAME OF SON OF THE ASSESSEE WAS TREATED AS A N UNEXPLAINED FROM THE DEEMED INCOME OF THE ASSESSEE UNDER SECTION 69 OF T HE ACT. 19. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: 'THE ABOVE FDR OF RS.30,000/- WAS OBTAINED FROM A D EMAND DRAFT SENT BY SH. B. K .KHANNA FROM HIS BANK ACCOUNT WITH ORIENTAL BANK OF COMMECE, FEROZEPUR ACCOUNT NO. 5813 IN THE NAME OF. SH.ASHUTOSH JERATH , S/O SH. K.K. JERATH. PHOTOCOPY OF THE BANK ACCOUNT ALONG WITH THE CASH F LOW STATEMENT OF SH. B. K. KHANNA IS ENCLOSED WHICH CLARIFIES THE SOURCES OF I NVESTMENT IN FDR. THE ADDITION BEING OUT OF KNOWN SOURCES OF THE INCOME, DESERVES TO BE DELETED.' 19.1 LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE DELETED THE ADDITION BY OBSERVING IN PARA 19.2 OF THE IMPUGNED ORDER AS UNDER: I HAVE GONE THROUGH THE CONTENTS OF THE IMPUGNED AS SESSMENT ORDER AND THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE APPELLANT. THE LD. ASSESSING OFFICER HAS NOT POINTED OUT ANY EVIDENCE GATHERED DURING THE SE ARCH AND SEIZURE OPERATION THAT COULD SUGGEST THE AMOUNT AND THESE FDRS IN THE NAME OF MRS. ASHUTOSH JERATH TO THE TUNE OF RS.30, 507/- WERE PURCHASED O UT OF THE FUNDS OF SH. K. K. JERATH THAT ARE UNEXPLAINED. IN ABSENCE OF SUCH AN EVIDENCE FOUND DURING THE SEARCH AND SEIZURE OPERATION, THE RELEVANT LAW DOES NOT ALLOW TO JUSTIFY THE ADDITION OF RS. 30, 507/-. THEREFORE, THE ADDITION TO THE TUNE OF RS.30, 507/- IS DELETED. (RELIEF:- RS. 30,507/-) 12 20. NOW THE DEPARTMENT IS IN APPEAL. 21. THE LD. DR SUBMITTED THAT THE ABOVE FDR AMOUNTI NG TO RS. 30,507/- WAS OBTAINED FROM DEMAND DRAFT SENT BY SHRI B.K. KHANNA FROM HIS BANK ACCOUNT WITH ORIENTAL BANK OF COMMERCE (OBC) FEROZEPUR IN T HE NAME OF MR. ASHUTOSH S/O SHRI K.K. JERATH (ASSESSEE) AND NO PLAUSIBLE EX PLANATION WAS FURNISHED, THEREFORE, THE SAME WAS TREATED AS UNACCOUNTED INCO ME OF THE ASSESSEE BY THE AO. 22. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT THE AO HAD NOT BROUGHT ANY EVIDENCE ON RECORD WHICH COU LD PROVE THAT THE ANY UNDISCLOSED INCOME OF THE ASSESSEE WAS USED FOR MAK ING THE INVESTMENT IN FDRS. IT WAS FURTHER SUBMITTED THAT SHRI B.K. KHANNA MATE RNAL GRANDFATHER OF MR. ASHUTOSH SENT HIM RS. 30,000/- [ FIGURE WAS RS. 305 07/- AFTER ADDING THE INTEREST) THROUGH THE BANK DRAFT FROM HIS BANK ACCOUNT MAINTA INED AT OBC, FEROZEPUR AND THAT THE CONFIRMATION ABOUT THE SAME WAS AVAILA BLE IN THE SEIZED DOCUMENTS PLACED AT PAGE NO. 448 OF PAPER BOOK (PAR T-II)WHICH IS THE COPY OF A LETTER FROM SHRI B.K.KHANNA SENT ON 21/03/1997 AN D THE SAID AMOUNT WAS ALSO DULY FORMING PART OF THE CASH BOOK OF SHRI B.K.KHAN NA WHICH WAS GIVEN TO THE AO ON 10/01/1998, THEREFORE THE ARBITRARY ADDITION MADE BY THE AO IN THE HANDS OF THE ASSESSEE WAS RIGHTLY DELETED. 23. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES, IT APPEARS THAT THE AMOUNT IN QUESTION WAS GIVEN TO MR. ASHUTOSH BY HIS MATERNAL GRANDFATHER SHRI B.K.KHANNA, THIS FACT WAS CONFIRMED BY SHRI B.K.KHA NNA VIDE LETTER DT. 21/03/1997 AND THE ENTRY EXISTED IN HIS PERSONAL CASH BOOK. TH EREFORE, THE SAID AMOUNT WAS WRONGLY ADDED IN THE HANDS OF THE ASESSEE AND THE L D. CIT(A) RIGHTLY DELETED THE SAME. WE, DO NOT SEE ANY MERIT IN THIS GROUND O F THE DEPARTMENTAL APPEAL. 24. THE NEXT ISSUE VIDE GROUND NO. 1(IV) & (V) RELA TES TO THE DELETION OF ADDITION OF RS. 6,20,000/- ON ACCOUNT OF UNEXPLAINE D CASH SEIZED DURING THE 13 COURSE OF SEARCH FROM THE BEDROOM OF THE ASSESSEE A ND RS. 5,00,000/- ON ACCOUNT OF UNEXPLAINED CASH SEIZED FROM THE LOCKER IN THE NAME OF THE ASSESSEE AND HIS WIFE SMT. SAVITA JERATH. 25. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE TH AT THE AO OBSERVED THAT CASH OF RS. 6,29,000/- WAS FOUND FROM THE BEDROOM OF SHR I K.K. JERATH THE ASSESSEE AND WHEN ASKED ABOUT THE SOURCE, SHRI KAPIL JERATH S/O OF THE ASSESSEE STATED THAT HIS ALMIRAH WAS NOT HAVING PROPER LOCK, HE THE REFORE KEPT THE CASH IN THE ALMIRAH IN THE BEDROOM OF HIS PARENTS. IT WAS ALSO STATED THAT HE WAS DOING BUSINESS IN THE NAME OF M/S VRINDAWAN ELECTRICALS AND ALL THE RECEIPTS OF JOB WORK WERE ON CASH BASIS. SHRI KAPIL JERATH ALSO FUR NISHED THE DETAILS OF THE JOB WORK TO THE AO FOR DIFFERENT MONTHS WHICH HAS BEEN MENTIONED AT PAGE NO. 26 AND 27 OF THE ASSESSMENT ORDER BUT THE AO DID NOT F IND MERIT IN THE AFORESAID EXPLANATION BY OBSERVING THAT IN THE BOOKS OF ACCOU NTS PRODUCED ON 25/11/1997 , THE CASH IN HAND WAS ONLY RS. 1,78,000/- AND THAT SHRI KAPIL JERATH DID NOT KNOW THE NAME OR TELEPHONE OF ANY PARTY TO WHOM HE HAS MADE SALE OR FOR WHOM HE HAD DONE ANY JOB WORK. 25.1 THE A.O ALSO OBSERVED THAT THE NAME WRITTEN ON THE BILLS DID NOT CONTAIN THE ADDRESSES. HE THEREFORE TREATED THE CASH OF RS. 6,29,522/- FOUND FROM THE BED ROOM OF THE ASSESSEE AS BELONGING TO HIM. HOWEV ER, THE A.O. TREATED THE SUM OF RS. 6,00,000/- AS AN UNEXPLAINED INCOME OF T HE ASSESSEE. 25.2 ANOTHER AMOUNT OF RS. 5,00,000/- IN CASH WAS F OUND FROM THE LOCKER IN THE JOINT NAME OF THE ASSESEE AND HIS WIFE. THE ENTIRE AMOUNT WAS IN NEW CURRENCY NOTES OF RS. 500 DENOMINATION. SMT SAVITA JERATH EX PLAINED THAT THIS CASH BELONGED TO HER FATHER SHRI B.K.KHANNA WHO HAD GIVE N IT TO HER FROM THE SALE PROCEEDS OF A PLOT SOLD IN GURGAON, STATEMENT OF SH RI B.K.KHANNA WAS RECORDED ON 10/01/1998. IN THE SAID STATEMENT HE EXPLAINED T HAT HE HAD PURCHASED ONE PLOT AT GURGAON IN THE YEAR 1989-90. 14 25.3 HE FURTHER SUBMITTED THAT HE HAD SOLD THE PLOT AND HAD TAKEN AN ADVANCE OF RS. 7,50,000/- FOR THIS PLOT FROM ONE SH RI ARUN GUPTA S/O SHRI VIDYA SAGAR GUPTA R/O SECTOR 46A CHANDIGARH. SHRI KHANNA FURTHER SUBMITTED THAT IT WAS AGREED THAT THE PLOT WOULD BE SOLD FOR A SUM OF RS. 12,90,000/-. WHEN HIS ATTENTION WAS DRAWN TO THE FACT THAT IN THE RECORD OF HUDA, THE PLOT HAD BEEN TRANSFERRED IN THE NAME OF HIS GRANDDAUGHTER MISS V ANDITA THEN HE STATED THAT SINCE HE WAS REAL OWNER OF THE PLOT BEFORE HE GAVE TO HIS GRANDDAUGHTER, SO HE HAD A RIGHT TO SELL THE PLOT, COPY OF THE AGREEMENT DT. 24/09/1997 BETWEEN SHRI B.K.KHANNA AND SMT. VANDITA ON ONE SIDE AND SHRI AR UN GUPTA ON THE OTHER SIDE WAS FURNISHED. IN THE SAID AGREEMENT, SHRI B.K.KHAN NA AND SMT. VANDITA JERATH ACKNOWLEDGED THE RECEIPT OF RS. 7,50,000/- IN CASH FROM SHRI ARUN GUPTA FOR THE SALE OF RESIDENTIAL PLOT NO. 654 SECTOR-23 URBAN ES TATE, GURGAON. ON THE BASIS OF THE SAID RECEIPT IT WAS EXPLAINED THAT THE AMOUNT O F RS. 5,00,000/- WAS KEPT IN THE LOCKER OF THE ASSESSEE AND HIS WIFE SMT. SAVITA JERATH. IN SUPPORT OF THE ABOVE CONTENTION SHRI B.K.KHANNA FURNISHED THE COPY OF CASH BOOK WHICH HE CLAIMED THAT IT HAD BEEN MAINTAINED REGULARLY. HOWE VER THE AO DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND WAS OF THE VIEW THAT THE CASH FOUND IN THE LOCKER WAS NOT BELONGING TO SHRI B.K.KHANNA AND IT WAS UNACCOUNTED MONEY OF THE ASSESSEE, ACCORDINGLY THE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE. 26. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: 'DURING THE COURSE OF SEARCH AND SEIZURE CASH OF RS . 6,29,000/- FOUND AT THE RESIDENTIAL PREMISES OF THE ASSESSEE AND HIS FAMILY MEMBERS AT HOUSE NO. 8, SECTOR 7, CHANDIGARH. A SUM OF RS.5,00,000/- WAS AL SO FOUND IN LOCKER NO. 1027 MAINTAINED AT THE TIMES BANK, CHANDIGARH. THUS, CAS H TOTALLING RS.11,29,000/- WAS FOUND DURING THE COURSE OF SEARCH. THE ASSESSING OF FICER HAS MADE THE ADDITION ON ACCOUNT OF UNACCOUNTED CASH ON THE FOLLOWING GRO UNDS:- A)DISBELIEF OF CASH OF RS.5,75,000/- BELONGING TO M /S.VRINDAVAN ELECTRICALS ON THE GROUND THAT THE FIRM DID NOT HAVE THE REQUISITE CAS H IN HAND IN THE BOOKS. B)DISBELIEF OF RS.44,703/- LYING AS IMPREST WITH TH E PARTNER OF M/S. VRINDAVAN EELCTRICALS. SH. KAPIL DEV JERATH. 15 C)DISBELIEF OF RS. 10,000/- AS CASH FOR MEETING PE RSONAL EXPENSES OF THE ASSESSEE AND HIS FAMILY. WHILE FRAMING THE ASSESSMENT THE ASSESSING OFFICER HAS REJECTED THE CONTENTION OF THE ASSESSEE THAT A SUM OF RS.6,19,000/-BELONGED TO M/S. VRINDAVAN ELECTRICALS ON THE GROUND THAT THE FIRM DID NOT HAVE THE CASH IN T HE BOOKS NOR ANY CONSTRUCTIVE JOB WORK WAS DONE BY THE FIRM TO JUSTIFY THE EXISTE NCE OF CASH RECEIPTS. THIS CONTENTION OF THE ASSESSING OFFICER IS TOTALLY INCO RRECT. THE ASSESSING OFFICER HAS DISCUSSED IN DETAIL THE REASONS AT PAGE 21 TO 27 OF THE ASSESSMENT ORDER. M/S.VRINDAVAN WAS A PARTNERSHIP CONCERN OF SH. KAPI L DEV JERATH AND SH.B. K. KHANNA AND IS ASSESSED TO INCOME TAX INDEPENDENTLY TILL DATE. PROPER BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED AND WERE PRODUCED BEF ORE THE ASSESSING OFFICER AS WELL AS THE ADIT. CASH IN HAND IS IN EXI STENCE AS ON DATE OF SEARCH. THE ASSESSING OFFICER IS NOT EMPOWERED TO FIND DEFECTS IN THE SYSTEM ON WORKING OF ANY BUSINESS. JOB WORK IS DONE AND PROPER RECEIPTS HAVE BEEN ISSUED. IT DOES NOT MATTER WHETHER THE SAME HAVE BEEN RECEIVED BY CHEQU E OR BY CASH. THE ASSESSING OFFICER CANNOT COMPEL THE ASSESSEE TO DO BUSINESS IN A FASHION IN WHICH HE DESIRES. IT IS OPEN FOR A BUSINESSMAN TO CONDUCT HIS AFFAIRS IN A MANNER BEST SUITED TO THE INTERESTS OF HIS BUSINESS. THE ASSESS EE'S SON, LIKE AN HONEST TAX-PAYER CONDUCTED HIS BUSINESS IN A FAIR MANNER AND NO DEFECTS IN THE BOO KS OF ACCOUNTS HAVE BEEN POINTED OUT. THE CASH IN HAND IN THE BOOK S OF M/S. VRINDAWAN ELECTRICALS COMPRISE AS UNDER:- (A) CASH IN HAND AS ON 10-11-97 1,76,908/- (B) CAPITAL INTRODUCED BY SH. B. K. KHANNA 2,00,000/- ON 16-11-97 (C) RETURN OF ADVANCE GIVEN FOR PURCHASE OF MARUTI ESTEEM CAR FROM TEXCON ENGGS ON 10-11-97 AND 13-11-97 2,00,000/- (D) JOB WORK RECEIPTS IN CASH (11-11-97 TO 17-11-97 ) 50.515/- 6,27,423/- LESS: AMOUNT DEPOSITED IN BANK 25000 PERSONAL WITHDRAWAL BY SH.KAPIL DEV JERATH 20000 ADVANCE TO CUSTOMERS ON 12-11-97 9000 54.000/- 5,73,423/- ADD:- KAPIL DEV JERATH (IMPREST) 44.703/- 6,18,126/- PHOTOCOPIES OF CASH BOOK OF M/S. VRINDAVAN ELECTRIC ALS IS ENCLOSED WHEREIN THE RESPECTIVE ENTRIES ARE APPEARING AND A PERUSAL OF T HE SAME WILL REVEAL THAT THE ASSESSEE HAD 'CASH IN HAND' IN THE BOOKS AS ON THE DATE OF SEARCH. THE ADDITION OF RS. 6,20,000/- DESERVES TO BE DELETED IN THE HAN DS OF THE ASSESSEE. SH. K. K. JERATH ON SUBSTANTIVE BASIS AND ALSO IN THE HANDS O F M/S.VRINDAVAN ELECTRICALS ON PROTECTIVE BASIS AS SOURCE OF CASH STANDS EXPLAINED . REGARDING CASH OF RS. 5,00,000/- FOUND IN THE LOCKER NO. 1027 WITH TIMES BANK, CHANDIGARH, THE ASSESSING OFFICER HAS REJECTED THE PLEA OF THE ASSESSEE ON TH E GROUND THAT THE CURRENCY NOTES OF RS.500 DENOMINATION WERE NEW AND THAT SH. B. K. KHANNA COULD NOT HAVE 16 GIVEN THE ABOVE AMOUNT OF HIS DAUGHTER FOR THE MARR IAGE OF HIS GRAND-DAUGHTER AS THE SAME WAS RECORDED IN HIS CASH BOOK ON 26 TH OCTOBER, 1997 WHEREAS THE LOCKER WAS LAST OPERATED ON 20 TH OCTOBER, 1997 BY SMT.SAVITA JERATH. AN ADVANCE OF RS.7.5 LACS WAS RECEIVED IN CASH BY SH. B. K. KH ANNA, THE ASSESSE'S FATHER-IN-LAW FROM SH.ARUN GUPTA WHO HAD CONFIRMED THE SAME FROM SALE OF PLOT NO.654, SECTOR 23-A, GURGAON ON 24 TH SEPTEMBER, 1997. IT IS STATED THAT THE AMOUNT WAS GIVEN BY SH.B. K. KHANNA, ASSESSEE'S FATHER-IN-LAW AT CHANDIGARH ON 20-10-97 WHILE HE ENTERED THE SAME IN HIS CASH BOOK ON REACH ING FEROZEPUR ON 26-10-97 WHERE HE WAS PERMANENTLY LIVING. IT WOULD BE SIGNIF ICANT TO NOTE THAT THERE IS NO ENTRY IN HIS CASH BOOK FROM 20-10-97 TO 26-10-97. S H. B. K. KHANNA HAD INFACT ADVANCED THE AMOUNT TO SMT. SAVITA JERATH HIS DAUGH TER ON 20 TH OCTOBER, 1997 AND ONLY A RECORDING IN HIS CASH BOOK WAS MADE ON 2 6 TH OCTOBER, 1997. IT WILL BE PERTINENT TO MENTION THAT THE CASH WAS AVAILABLE WI TH SH. B .K. KHANNA IN HIS CASH BOOKS RIGHT FROM 24 TH SEPTEMBER, 1997. NO UNFAIR MEANS HAVE BEEN USED BY HIM TO INTRODUCE CASH IN HIS CASH BOOK TO JUSTIFY THE A MOUNT GIVEN TO HIS DAUGHTER. THE AGREEMENT FOR THE SALE OF PLOT NO.654 SECTOR 23 -A, GURGAON BETWEEN SH. B. K. KHANNA AND SH.ARUN GUPTA AND FOR RECEIPT OF CASH AD VANCE OF RS.7.5 LACS ON 24 TH SEPTEMBER, 1997 IS ENCLOSED. HENCE, THE THEORY PROP OUNDED BY THE ASSESSING OFFICER AND THE ADIT IS BASELESS AND ILLOGICAL. THE ADDITION DESERVES TO BE DELETED IN THE HANDS OF THE ASSESSEE, SH. K. K. JERATH ON S UBSTANTIVE BASIS AS THE SOURCE OF CASH STANDS EXPLAINED AND ON PROTECTIVE BASIS IN TH E HANDS OF SMT. SAVITA JERATH AND SH. B. K. KHANNA.' 26.1 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE DELETED THE ADDITION BY OBSERVING IN PARA 7.2 TO 7.5 OF THE IMPUGNED ORDER AS UNDER: 7.2- I HAVE GONE THROUGH THE ARGUMENTS OF THE LD. A R. FOR THE APPELLANT AND THE CONTENTS OF THE IMPUGNED ASSESSMENT ORDER. THE APPELLANT BREAKS UP THE TOTAL ADDITION OF RS. 11,20,000/- INTO TWO PARTS. O NE PART CONSISTS OF RS.6,20,000/- AND THE OTHER PART OF RS.5,00,000/- FOUND FROM THE LOCKER NO. 1027 WITH TIME BANK, CHANDIGARH. THE FIRST PART OF RS.6,20,000/- HAS BEE N EXPLAINED WITH REFERENCE TO CASH BOOK OF M/S.VRINDAWAN ELECTRICALS, THE FIRM HA VING PARTNER S/SH. KAPIL DEV JERATH AND B. K. KHANNA. I FIND THAT THE LD. ASSESS ING OFFICER HAS NOT HELD THE EXPLANATION TO BE AFTER THOUGHT AND IN CONTRADICTIO N WITH THE STATEMENTS OF SH.KAPIL DEV JERATH AT THE TIME OF SEARCH AND SEIZU RE OPERATION. THUS IT BECOMES UNDISPUTED FACT THAT SH.KAPIL DEV JERATH OWNED ABOU T RS.5,75,000/- TO BELONG TO M/S.VRINDAWAN ELECTRICALS FROM AB INITIO WHICH IS E VIDENT FROM THE ASSESSMENT ORDER ITSELF. THE RELEVANT PORTION OF THE ASSESSMEN T ORDER IS REPRODUCED HEREUNDER FOR THE PURPOSE OF CLARITY :- 'DURING THE SEARCH, SH JERATH WAS ASKED TO EXPLAIN THE SOURCE OF THE CASH FOUND IN HIS BED ROOM. HE EXPLAINED THAT THE CASH BELONGS TO M/S. VRINDAVAN ELECTRICALS, THE BUSINESS CONCERN OF HIS SON KAPIL JERATH. SH. K APIL JERATH WAS ASKED TO EXPLAIN THE SOURCE OF THE CASH. HE STATED THAT RS.5,75,000/ - WAS THE RECEIPT FORM THE SALES AND THE JOB WORK. THE BOOKS OF ACCOUNTS WERE NOT FO UND DURING THE SEARCH AND THEY WERE PRODUCED ONLY ON 23-11-97 SUBSEQUENTLY SH OWING CASH IN HAND OF RS. 1,76,908/-. IT WAS NOTICED THAT BOOKS WERE NOT WRIT TEN TILL DATE. THE CASH BOOK WAS WRITTEN ONLY UPTO 10-11-97. THE CASH IN HAND AS ON 10-11-97 WAS SHOWN AT RS. 1,76,908/-. THE SALES WERE RECORDED UTP 17-11-97 SH . KAPIL JERATH STATED THAT THERE WEE NO SALES AFTER 17-11-97 AND AS SUCH BOOKS OF AC COUNTS CAN BE CONSIDERED 17 COMPLETE AND NO ENTRIES WERE OMITTED TO BE RECORDED IN THESE BOOKS. SH. KAPIL WAS CONFRONTED WITH HIS STATEMENT TAKEN DURING THE SEARCH WHEREIN HE ADMITTED THAT CASH OF RS.5,75,000/- BELONGS TO HIS CONCERN M /S.VRINDAVAN ELECTRICALS BUT EVEN AS PER THE CASH BOOK OF THAT CONCERN, THE CASH AVAILABLE ON THE DAY OF SEARCH COULD BE AT MOST RS. 1,76,908/-. HE EXPLAINE D THAT ON 20-11-97 HE WAS TOTALLY CONFUSED AND DISTURBED AND IN UTTER TURMOIL AND CONFUSION HE MUST HAVE TOLD THIS. DURING THE ASSESSMENT PROCEEDINGS SH. K. K JERATH VIDE LETTER DATED 20- 08-99 HAS SUBMITTED THAT CERTIFIED COPY OF TRIAL BA LANCE OF M/S. VRINDAVAN ELECTRICALS AS ON 18-11-97 SHOWING CASH IN HAND AT RS.5,73,423.97/-. THE EXAMINATION OF THE TRIAL BALANCE PREPARED FROM THE BOOKS OF ACCOUNTS PRODUCED AFTER THE DATE OF THE SEARCH CONTAINS TWO MAJOR ENT RIES ON ACCOUNT OF INTRODUCTION OF CAPITAL OF RS.2,00,000/- BY SH. B. K. KHANNA AND RETURN OF ADVANCE O RS.2,00,000/- FROM M/S.TEXCON ENERGIES. SH. KAPI L DEV JERATH VIDE LETTER DATED 5- 11-99 SUBMITTED THAT ADVANCE OF RS.2,00,000/- WAS GIVEN TO M/S. TEXCON ENERGIES FOR THE ESTEEM CAR. THIS AGREEMENT WAS TERMINATED O N 8-10-97. IT IS WORTH MENTIONING HERE THAT DUHNG THE STATEMENT U/S. 132(4 ) OF THE INCOME TAX ACT, 1961, SH. KAPIL DEV JERATH HAS NOT MENTIONED THE RE CEIPT OF CASH OF RS.2,00,000/- FROM SH.B. K .KHANNA AND RETURN OF ADVANCE OF RS.2, 00,000/- FOR THE PURCHASE OF THE CAR. THE PERUSAL OF BANK STATEMENT OF ACCOUNT N O.5682 IN THE NAME OF KAPIL DEV JERATH SHOWS DEBIT ENTRY OF RS.15,000/- IN FAVO UR OF M/S. TEXCON ENERGIES ON 8- 10-97 SH. KAPIL DEV JERATH HAS NOT MENTIONED ABOUT THE PAYMENT OF RS. 15,000/-. IT SHOWS THAT THE ALLEGED ADVANCE OF RS.2,00,000/- AS CLAIMED IS CLEARLY AN AFTER THOUGHT AND OTHERWISE IT IS HIGHLY IMPROBABLE THAT OUT OF TOTAL CASH OF RS. 6,29,000/-, THE MAJOR RECEIPT OF RS. 4,00,000/-WAS NOT IN HIS KNOWLEDGE. IT SO HAPPENED THAT SH. K. K. JERATH WAS ASKED TO EXPLAIN THE CASH FOUND DURING THE SEARCH AND HE EXPLAINED THAT IT BELONGS TO HIS SON KAPIL AND SH. KAPIL JERATH WHEN ASKED TO EXPLAIN THE CASH, SUBMITTED THAT THE CASH BELONGS TO M/S. VRINDAVAN ELECTRICALS. NO FURTHER EXPLANATION WAS OFFERED BY HIM. THE BOOKS OF ACCOUNTS OF THE CONCERN WERE NOT FOUND DURING THE SEARCH AND TH E SAME WERE PRODUCED ONLY ON 23-11-97, THEREFORE, IT IS CLEAR THAT THE B OOKS OF ACCOUNTS WERE PRODUCED AFTER CARRYING OUT THE NECESSARY ENTRIES, THEREFORE , THE COPY OF TRIAL BALANCE SUBMITTED ON 20-8-99 HAS NO RELEVANCE. A CURSORY EXAMINATION OF THE BOOKS OF ACCOUNTS OF M /S. VRINDAVAN ELECTRICALS PRODUCED FOR THE EXAMINATION CREATED DOUBT ABOUT TH EIR AUTHENTICITY. IT WAS NOTICED THAT WHILE THE RECEIPTS ON ACCOUNT OF JOB W ORK FOR THE PERIOD FROM 1-4-97 TO 25-10-97 AMOUNTED TO RS. 1,55,427/-, THE JOB WOR K RECEIPT FOR A WORKING PERIOD OF LESS THAN 15 DAYS AMOUNTED TO RS.2,78,408/-. IF A CONCERN HAD DONE JOB WORK OF LITTLE OVER RS. 1,50,000/- IN ALMOST 7 MONTHS, IT I S HIGHLY IMPROBABLE THAT IT COULD DO JOB WORK OF MORE THAN RS.2,78,000/- IN A MERE 2 WEE KS TIME, THEREFORE, THIS ISSUE WAS EXAMINED IN DETAIL.' 7.3- FROM THE ABOVE NARRATION IN THE ASSESSMENT ORD ER, IT IS FOUND THAT SH.KAPIL DEV JERATH OR OTHER PARTNERS OF M/S.VRINDA WAN ELECTRICALS HAS NOT REFUTED AND DENIED THE EARLIER STATEMENT OF ABOUT RS.5,75,0 00/- TO BELONG TO SH.KAPIL DEV JERATH VIS-A-VIS M/S.VRINDAWAN ELECTRICALS. THE LD. ASSESSING OFFICER HAS TRIED TO PROVE THAT SH.KAPIL DEV JERATH COULD NOT EXPLAIN AN D SUBSTANTIATE HIS STATEMENT ABOUT THE CASH TO BELONG TO M/S.VRINDAWAN ELECTRICA LS BUT THE FACT REMAINS THAT IT IS ADMITTED BY SH. KAPIL DEV JERATH WHO IS A SEPARA TE AND DISTINCT ASSESSEE FROM SH. K. K. JERATH. IF SH .KAPIL DEV JERATH, IS TREAT ED FOR ACADEMIC PURPOSES, & NOT BEING ABLE TO EXPLAIN IT, THIS WOULD HAVE BEEN CONS IDERED BY THE LD. ASSESSING OFFICER IN THE HANDS OF SH.KAPIL DEV JERATH. AS FAR AS SH. K. K. JERATH IS CONCERNED ATLEAST ABOUT RS.5,75,000/- IS EXPLAINED IN HIS HAN DS AS SOON AS IT IS OWNED BY A 18 DISTINCT AND SEPARATE ASSESSEE, WHO IS LIVING WITH THE APPELLANT. HAD SH.KAPIL DEV JERATH NOT HONOURED HIS STATEMENT TO OWN ABOUT RS.5 ,75,000/- AND DISOWNED THE AMOUNT, IT COULD HAVE BEEN TREATED UNEXPLAINED IN T HE HANDS OF THE APPELLANT. IN MY OPINION, THE AMOUNT TO THE EXTENT OF RS.6,18, 126/- AS DETAILED BY THE LD. COUNSEL ABOVE IS EXPLAINED IN THE HANDS OF THE APPE LLANT AS ANOTHER ASSESSEE SH.KAPIL DEV JERATH HAS CATEGORICALLY STATED AT THE TIME OF SEARCH ITSELF THAT ABOUT RS.5,75,000/- BELONG TO M/S.VRINDAWAN ELECTRICALS A ND AS SINCE HIS ALMIRAH WAS NOT HAVING PROPER LOCK, HE KEPT HIS CASH AT DIFFERENT P LACES SUCH AS PARENTS BEDROOM AS MENTIONED ON PAGE 24 OF THE ASSESSMENT ORDER ITS ELF. 7.4- REGARDING CASH OF RS.5,00,000/- FOUND IN LOCKE R NO. 1027 WITH TIMES BANK, CHANDIGARH. IT IS OBSERVED THAT LOCKER HOLDER MRS. SAVITA JERATH EXPLAINED THAT THIS CASH WAS BELONGING TO HER FATHER SH B. K .KHANNA, W HO HAD GIVEN IT TO HER. SH. B. K. KHANNA FATHER OF MRS. SAVITA JERATH HAD ALREADY RATIFIED THE STATEMENT OF MRS. SAVITA JERATH AS EVIDENT FROM THE NARRATION ON PAGE 31 OF THE IMPUGNED ASSESSMENT ORDER ITSELF. THE RELEVANT PORTION OF TH E IMPUGNED ASSESSMENT ORDER IS REPRODUCED FOR THE PURPOSE OF CLARITY :- 'IN REPLY TO Q. NO. 85 HE STATED THAT THE AMOUNT WH ICH HE HAD RECEIVED FROM SH.ARUN GUPTA CONSISTED OF 2-3 PACKETS OF RS.500 NO TES AND THERE WERE SOME PACKETS OF RS. 100 NOTES IN THE AMOUNT WHICH HE HAD RECEIVED. HE FURTHER STATED THAT OUT OF THE AMOUNT RECEIVED HE GAVERS.5 LAKHS T O HIS DAUGHTER MRS. SAVITA JERATH TO BE KEPT IN HER LOCKER FOR THE MARRIAGE OF VANDITA JERATH. HE FURTH ER STATED THAT HE HAD ADVISED MRS. SAVITA JERATH TO KE EP CASH IN LOCKER TO BE UTILIZED FOR THE MARRIAGE OF HER DAUGHTER VANDITA JERATH. HE WAS VERY POSITIVE THAT THERE WERE NO NEW NOTES IN THE CASH WHICH HE HAD HANDED O VER TO HIS DAUGHTER. 7.5 THUS, IT IS UNDISPUTED FACT THAT SH.B. K. KHANN A HAS OWNED THE AMOUNT OF RS.5 LACS AS PER HIS STATEMENT AND NEVER REFUTED OR BACK ED OUT FROM HIS STATEMENT. IF THE LD. ASSESSING OFFICER WAS DOUBTFUL ABOUT CREDITW ORTHINESS OF SH. B.K .KHANNA, HE COULD HAVE CONSIDERED IT IN THE HANDS OF SH. B. K. KHANNA AND NOT IN THE HANDS OF THE APPELLANT SH. K.K. JERATH OR MRS. SAVITA JER ATH. NEITHER SH. K. K JERATH NOR MRS. SAVITA JERATH HAS CLAIMED THAT THE SAME CURREN CY THAT WAS PROVIDED BY SH. B. K. KHANNA WAS KEPT IN THE LOCKER. BUT THEY HAVE EXPLAINED THAT THE AMOUNT GIVEN BY SH. B. K. KHANNA WAS PUT IN INTO THE LOCKE R. IF THERE ARE MISSING LINKS OF EXCHANGE OF OLD CURRENCY WITH NEW ONE, IT HARDLY LE ADS TO THE FACT THAT THE AMOUNT WAS NOT PROVIDED BY SH. B. K. KHANNA AND FUR THER MORE THAT THE AMOUNT REPRESENTED UNDISCLOSED INCOME OF THE APPELLANT SH. K. K. JERATH OR MRS. SAVITA JERATH. I AM OF THE CONSIDERED OPINION THAT SINCE S H. B. K. KHANNA IS A SEPARATE AND DISTINCT ASSESSEE AND HAD OWNED THE AMOUNT AND HAD NEVER REFUTED HIS PASSING ON THE MONEY TO DAUGHTER MRS SAVITA JERATH TO THE TUNE OF RS.5 LACS, THE AVAILABILITY OF RS.5 LACS IS EXPLAINED IN THE HANDS OF THE APPELLANT AND COULD NOT HAVE BEEN CONSIDERED TO BE THE UNDISCLOSED INCOME O F THE APPELLANT. THUS, IN VIEW OF THE ABOVE, I DO NOT FIND ANY JUSTIFICATION OF TREATING THE CASH TO THE TUNE OF RS.11,20,000/- TO REPRESENT THE UNDISCLOSED INCO ME OF THE APPELLANT FOR ASSESSMENT YEAR 1997-98 INCLUDED IN THE BLOCK PERIO D. THEREFORE, THE SAME IS DELETED. 27. NOW THE DEPARTMENT IS IN APPEAL. 19 28. THE LD. DR REITERATED THE OBSERVATION MADE BY T HE AO AND STRONGLY SUPPORTED THE ASSESSMENT ORDER AND ALSO FURNISHED A WRITTEN SUBMISSION WHICH READS AS UNDER: CASH FOUND IN BEDROOM OF SH. JERATH THE LD. CIT(A) HAS DELETED THE ADDITION HOLDING THA T THE AMOUNT TO THE EXTENT OF RS.6,18,126/- AS DETAILED BY THE ASSESSEE COUNSEL I S EXPLAINED IN THE HANDS OF THE ASSESSEE AS ANOTHER ASSESSEE SH. KAPIL JERATH (SON OF SH. K. K. JERATH) HAS CATEGORICALLY STATED AT THE TIME OF SEARCH ITSELF THAT RS.5,75,000/- BELONGED T O M/S VRINDAVAN ELECTRICALS AND SINCE THE ALMIRAH WAS NOT HAVING PROPER LOCK HE KEPT HIS CASH AT DIFFERENT PLACES SUCH AS PARENTS BEDROOM. THE DECISION OF THE LD. CIT(A) IN RESPECT IS NOT AC CEPTABLE AS THE BOOKS OF ACCOUNTS WERE NOT FOUND DURING SEARCH AND THEY WERE PRODUCED ONLY ON 23.11.1997. THE CASH.IN HAND AS ON THE DATE UPTO WHICH THE BOOKS WERE WRITTEN I.E. 10.11.1997 (COPY ENCLOSED AS ANNEXURE 'AL)', WAS SHOWN AT RS. 1,76,908/-. THE MAJOR RECEIPTS AFT ER THIS DATE WERE AS FOLLOWS : 1) RS. 2 LAKH ON 16.11.1997 ON ACCOUNT OF CAPITAL I NTRODUCED BY SH. B.K. KHANNA ' (FATHER IN LAW OF SH. K.K. JERATH) 2) RS. 2 LAKH ON 10.11.1997 & 13.11.1997 ON ACCOUNT RE TURN OF ADVANCE FOR PURCHASE MARUTI ESTEEM CASE FROM TEXON EGGS. 3) A HIGH FIGURE OF JOB WORK RECEIPTS OF RS. 2,78,408/ - IN LESS THAN 15 DAYS (25.10.1997 TO 12.11.1997) WHEREAS THE JOB WORK RECEIPTS FOR THE P ERIOD 01.04.1997 TO 25.10.1997 AMOUNTED TO RS.1,55,427/- ONLY. THE CASH RECEIPTS AS QUOTED ABOVE CLEARLY SHOW THAT THE BOOKS OF ACCOUNTS WERE FABRICATED AND WERE PRODUCED ONLY AFTER CARRYING OU T THE NECESSARY ENTRIES. FURTHER, SH. KAPIL DEV JERATH DID NOT MENTION THE ABOVE MAJOR RECEIPT OF R S. 4 LAKH DURING SEARCH. IN VIEW OF THE FACTS MENTIONED ABOVE, IT IS EVIDENT THAT TH E ASSESSEE TRIED TO UNSCRUPULOUSLY MANIPULATE THE FACTS OF THE CASE. CASH OF RS.5 LACS FROM LOCKER THE AO MADE THE ADDITION OF THIS AMOUNT HOLDING THA T CASH OF RS.5 LAKH FOUND DURING THE SEARCH FROM THE LOCKER NO. 1027 (LIST OF ITEMS RETRIEVED FROM LOCKER ENCLOSED AS ANNEXURE 'A2') IN THE JOINT NAME OF SH. KK JERATH AND HIS WIFE SAV ITA JERATH WAS A PART OF THE UNEXPLAINED INCOME OF SH. KK JERATH. THE LD. CIT(A) HAS DELETED THIS ADDITION AFTER HOLD ING THAT THE AVAILABILITY OF RS.5 LAKH IS EXPLAINED IN THE HANDS OF ASSESSEE AS SH. B .K. KHANNA (FATHER IN LAW OF SH. K.K. JERATH) WHO IS A SEPARATE AND DISTINCT ASSESSEE HAD OWNED THE AMOUNT AND HAD NEVER REFUTED HIS PASSING ON THE MONEY TO DAUGHTER MRS. S AVITA JERATH TO THE TUNE OF RS. 5 LAKH. THE ENTRY IN THE LEDGER MAINTAINED BY SH. B.K. KHANNA ALSO CONFIRMS THAT CASH OF RS.7.50 LAKH WAS GIVEN TO SMT. SAVITA JERATH ON 26.10.1997. THE LOCKER BEFORE BEING SEARCHED BY THE DEPARTMENT WAS LAST OPERATED ON 20.10.1997 BY S MT. SAVITA JERATH. THEREFORE, IF THE CASH WAS, IN FACT GIVEN TO SMT. SAVITA JERATH ON 26 .10.1997 THERE WAS NO WAY SHE COULD HAVE PUT THE MONEY IN THE LOCKER ON 20.10.1997 THE DATE ON WHICH THE LAST OPERATION OF THE LOCKER WAS MADE. IN VIEW OF THE ABOVE FACTS, THE LD CIT(A) IS NOT JU STIFIED IN ACCEPTING THE EXPLANATION AGAINST THE CASH FOUND DURING THE SEARC H OPERATION. 20 29. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT THE CASH AMOUNTING TO RS. 6,29,000/- FOUND AT THE RESID ENCE OF THE ASSESSEE BELONGED TO THE FIRM M/S VRINDAWAN ELECTRICALS PART NERSHIP FIRM IN WHICH SHRI KAPIL JERATH WAS A PARTNER WHOSE STATEMENT WAS RECO RDED ON THE SAME DATE WHEREIN HE STATED IN REPLY TO QUESTION NO. 15 THAT CASH BELONGED TO HIS FIRM AND THAT THE CASH OF RS. 6,00,000/- WAS HANDED OVER TO THE SEARCH PARTY BY HIM IN HIS CAPACITY AS PARTNER OF M/S VRINDAWAN ELECTRICALS, A REFERENCE WAS MADE TO PAGE NO. 72 OF THE ASSESSEES PAPER BOOK (PART1). I T WAS STATED THAT SHRI KAPIL JERATH AGAIN CONFIRMED ON 05/02/1992 IN REPLY TO TH E QUESTION NO. 92 ASKED BY THE A.O., REFERENCE WAS MADE TO PAGE NO. 71 OF THE ANNEXURE TO A.OS ORDER. IT WAS FURTHER STATED THAT SHRI KAPIL JERATH VIDE HIS LETTER DT. 10/06/1999 AGAIN CONFIRMED TO THE A.O. A REFERENCE WAS MADE TO PAGE NO. 95 OF THE ASSESSEES PAPER BOOK (PART1). IT WAS ACCORDINGLY SUBMITTED TH AT ONUS CAST UPON THE ASSESSEE WAS DISCHARGED TO EXPLAIN THE CASH OF RS. 6,29,000/- FOUND AT THE RESIDENCE AND THE SAID CASH BELONGED TO THE PARTNER SHIP FIRM M/S VRINDAWAN ELECTRICALS. IT WAS STATED THAT WORKING OF THE CASH IN HAND IN THE BOOKS OF SAID FIRM HAS BEEN REPRODUCED AT PAGE NO. 9 OF THE IMPUG NED ORDER. 29.1 IT WAS FURTHER STATED THAT CASH DID NOT BELONG TO THE ASSESSEE AT ALL BUT TO HIS SON WHO HAD BEEN CARRYING ON AN INDEPENDENT BUS INESS AND GAVE THE DUE EXPLANATION TO THE A.O. AS WELL AS TO THE ADI, THER EFORE THE FINDINGS OF THE LD. CIT(A) DESERVES TO BE SUSTAINED. 29.2 AS REGARDS TO THE AMOUNT OF RS. 5,00,000/- FOU ND IN THE LOCKER, IT WAS STATED THAT THE LOCKER FROM WHICH THE SAID AMOUNT W AS FOUND WAS OPERATED BY SMT. SAVITA JERATH (BEING FIRST HOLDER) W/O THE ASS ESSEE IN THE PRESENCE OF ADIT ON 27/11/1997 AND HER STATEMENT WAS RECORDED IMMEDI ATELY THEREAFTER, IN THE SAID STATEMENT SHE INFORMED THE ADIT THAT RS. 5,00, 000/- BELONGED TO HER FATHER, WHO GAVE IT TO HER TO BE KEPT IN THE LOCKER AND TO BE USED FOR SOLEMNIZING THE MARRIAGE OF VANDITA JERATH GRANDDAUGHTER OF SHRI B. K. KHANNA AND THAT THE 21 AMOUNT WAS PLACED IN THE LOCKER BY SMT. SAVITA JERA TH ON 20/10/1997. IT WAS STATED THAT SHRI B.K. KHANNA HAD ENTERED THE AMOUNT IN HIS CASH BOOK, AND THAT STATEMENT OF SHRI B.K. KHANNA WAS RECORDED BY THE A DI ON OATH ON 10/01/1998 AT FEROZEPUR WHEREIN HE CONFIRMED THE SAME TO THE A DIT IN REPLY TO QUESTION NO. 86, COPY OF WHICH IS PLACED AT PAGE NO. 43 OF THE A NNEXURE TO A.O.S ORDER. 29.3 IT WAS SUBMITTED THAT SHRI B.K. KHANNA CONFIRM ED TO THE A.O. VIDE LETTER DT. 01/10/1999, COPY OF WHICH IS PLACED AT PAGE NO. 192 OF PAPER BOOK (PART III) OF THE ASSESSEE WHEREIN COMPLETE USE OF RS. 5,00,000/- WAS EXPLAINED BY HIM AND THAT THE A.O. VERIFIED THE SOURCE OF SHRI B.K. KHAN NA IN DEPTH AND NOTHING ADVERSE HAD BEEN FOUND. IT WAS FURTHER SUBMITTED TH AT THE SOURCE OF THE AMOUNT IN QUESTION WAS VERIFIED FROM SHRI ARUN GUPTA WHO P URCHASED THE PLOT AND CONFIRMED IN HIS STATEMENT ON 13/04/1998, COPY OF W HICH IS PLACED AT PAGE NO. 135 OF THE ASSESSEES PAPER BOOK(PART1)AND EVEN THE BANK ACCOUNT STATEMENT OF SHRI ARUN GUPTA, OBTAINED UNDER RTI CONFIRMED TH E ABOVE FACT. THEREFORE THE ADDITION WAS RIGHTLY DELETED BY THE LD. CIT(A). 30. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE IT IS NOTICED THAT THE SUM OF RS. 6,20,000/- FOUND IN THE BEDROOM OF THE ASSESSEE WAS CONSIDERED TO BE HIS UNDISCLOSED INCOME. HOWEVER THE EXPLANATION WAS GIV EN TO THE A.O. THAT THE SAID AMOUNT WAS KEPT BY SHRI KAPIL JERATH S/O THE A SSESSEE FOR THE REASON THAT THE ALMIRAH IN HIS ROOM DID NOT HAVE PROPER LOCK. T HE STATEMENT OF SHRI KAPIL JERATH WAS RECORDED AT THE TIME OF SEARCH BY ADI ON 20/11/1997 WHEREIN WHILE REPLYING TO QUESTION NO. 15 HE STATED THAT THE CASH BELONGED TO HIM AND HE WAS THE PARTNER IN THE FIRM M/S VRINDAWAN ELECTRICALS. THE CASH BOOK AND LEDGER OF THE SAID FIRM WAS HANDED OVER ON 24/11/1997. AGAIN THE STATEMENT OF SHRI KAPIL JERATH WAS RECORDED ON 03/02/1998 WHEREIN HE GAVE T HE EXPLANATION FOR THE CASH IN HAND. IT WAS SUBMITTED THAT THE FIRM M/S VR INDAWAN ELECTRICALS WAS DOING JOB WORK ON THE BASIS OF RECEIPT IN CASH, THE SAID CASH WAS HANDED OVER TO THE SEARCH PARTY BY SHRI KAPIL JERATH IN HIS CAPACITY A S PARTNER OF M/S VRINDAWAN 22 ELECTRICALS THEREFORE CONSIDERING THE TOTALITY OF T HE FACT AND IN THE ABSENCE OF ANY MATERIAL ON RECORD TO SUBSTANTIATE THAT THE CAS H FOUND IN THE BEDROOM OF THE ASSESSEE BELONGED TO HIM AND NOT TO HIS SON SHR I KAPIL JERATH. THEREFORE, THE ADDITION MADE BY THE A.O. WAS RIGHTLY DELETED BY TH E LD. CIT(A). WE DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS GIV EN BY THE LD. CIT(A) ON THIS ISSUE. 30.1 AS REGARDS TO THE ANOTHER ADDITION OF RS. 5,00 ,000/- THE EXPLANATION GIVEN WAS THAT THE SAID AMOUNT WAS KEPT BY SMT. SAVITA JE RATH IN HER LOCKER WHICH WAS IN THE JOINT NAME WITH ASSESSEE, THE SAID LOCKER WA S OPERATED BY HER. IN THE PRESENT CASE, SMT. SAVITA JERATH EXPLAINED THAT THE AMOUNT WAS GIVEN TO HER BY HER FATHER SHRI B.K. KHANNA WHO RECEIVED THE SUM OF RS. 7,50,000/- IN CASH ON 24/09/1997 AS AN ADVANCE CONSIDERATION IN LIEU OF T HE PLOT SOLD BY HIM TO ONE SHRI ARUN GUPTA WHOSE STATEMENT WAS ALSO RECORDED W HEREIN HE CONFIRMED THAT HE HAD GIVEN ADVANCE TO SHRI B.K. KHANNA. THE SAID FACT WAS VERIFIABLE FROM THE BANK STATEMENT OF SHRI ARUN GUPTA WHO PURCHASED THE PLOT FROM SHRI B.K. KHANNA, AND HIS STATEMENT WAS RECORDED ON 13/04/199 8 WHICH IS PLACED AT PAGE NO. 135 OF THE PAPER BOOK (PART1) OF THE ASSE SSEE. SHRI B.K. KHANNA ALSO CONFIRMED TO THE A.O. VIDE HIS LETTER DT. 01/10/199 9 WHEREIN COMPLETE SOURCE OF RS. 5,00,000/- WAS EXPLAINED BY HIM, THEREFORE IT C ANNOT BE SAID THAT THE AMOUNT OF RS. 5,00,000/- FOUND IN THE LOCKER JOINTLY HELD BY SMT. SAVITA JERATH AND THE ASSESSEE BELONGED TO THE ASSESSEE. THEREFORE, THE S AID ADDITION WAS ALSO RIGHTLY DELETED BY THE LD. CIT(A). WE DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS GIVEN BY THE LD. CIT(A) ON THIS ISSUE. 31. THE NEXT ISSUE VIDE GROUND NO. 2(I) RELATES TO THE DELETION OF ADDITION OF RS. 6,35,100/- MADE BY THE A.O. ON ACCOUNT OF UNACCOUNT ED INVESTMENT IN THE PURCHASE OF JEWELLERY. 32. THE FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE A.O. MADE THE SAID ADDITION BY OBSERVING THAT THE DURING THE COURSE OF SEARCH, BILLS FOR THE PURCHASE 23 OF JEWELLERY WERE SEIZED FROM THE RESIDENCE OF THE ASSESSEE. THOSE BILLS WERE IN THE NAME OF SMT. SAVITA JERATH, SHRI AASHUTOSH AND SMT SHANTA KHANNA. THE JEWELLERY FOUND FROM THE RESIDENCE AND LOCKER OF SH RI K.K. JERATH AND SMT. SAVITA JERATH WAS AS UNDER: 32.1 THE A.O. ASKED THE SOURCE OF THE JEWELLERY. SM T. SAVITA JERATH EXPLAINED VIDE LETTER DT. 05/01/1998 THE SOURCE OF THE JEWELL ERY AS UNDER: 32.2 THE A.O. HOWEVER DID NOT FIND MERIT IN THE EXP LANATION OF THE ASSESSEE BY OBSERVING THAT SMT. SAVITA JERATH RESORTED TO DIFFE RENT STAND TO EXPLAIN JEWELLERY 24 AND DURING THE COURSE OF SEARCH SHE NEVER DISCLOSED THAT ANY JEWELLERY BELONGING TO HER BROTHER-IN-LAW, BROTHER AND FATHER WAS LYING WITH HER, IT WAS ONLY WHEN SHE WAS UNABLE TO EXPLAIN THE SOURCE OR J EWELLERY FOUND THAT SHE IN HER LETTER DT. 05/01/1998 TOOK THE PLEA THAT HER FA THER AND BROTHER-IN-LAW HAD BEEN RESIDING IN THE BORDER TOWN AND HER BROTHER WA S SETTLED IN CANADA SO SHE HAS KEPT THEIR JEWELLERY IN HER LOCKER WITHOUT THE KNOWLEDGE OF HER HUSBAND. THE A.O. HAS MADE THE ADDITION OF RS. 6,35,100/- BY OBS ERVING AS UNDER: THE PLEA OF SMT. SAVITA JERATH THAT SHE DID NOT.SHA RE WITH SH. K.K. JERATH THE KNOWLEDGE OF JEWELLERY GIFTED BY HER FATHER AND OF THE JEWELLERY KEPT BY HER IN LOCKERS, IS NOT ACCEPTABLE, SH. K,K. JERATH HAS TAK EN AN AFFIDAVIT FROM HIS FATHER IN LAW IN 1989 FOR THE JEWELLERY GIFTED BY HIM TO SMT. SAVITA JERATH. THIS AFFIDAVIT FINDS MENTION AT PAGE 33 IN ANNEXURE A1. IN HIS STATEMENT SH. K.K. JERATH SUBMITTED THAT HE HAD TAKEN THIS AFFIDAVIT FROM HIS FATHER IN LAW AS CERTAIN PEOPLE HAD FILED COMPLAINTS AGAINST HIM IN HIS DEPARTMENT. IF SH. B. K.KHANNA HAD REALLY GIFTED THE JEWELLERY TO SMT. SAVITA JERATH, THEN IT IS UNLIKEL Y THAT EVEN HE WOULD HAVE HIDDEN THIS FACT FROM SH. K.K. JERATH, ESPECIALLY WHEN THE PURPOSE OF GIVING AN AFFIDAVIT WAS TO GUARD AND PROTECT INTERESTS OF SH. K.K. JERA TH AS CERTAIN COMPLAINTS HAD BEEN FILED AGAINST HIM.. II ) SHE DID NOT DISCLOSE HER LOCKER IN CENTRAL B ANK OF INDIA INSPITE OF SPECIFIC QUESTIONING. III ) SHE HAS NEVER FILED ANY WEALTH TAX RETURN SH OWING THIS JEWELLERY AND NO RETURN OF GIFT TAX WAS FILED BY HER PARENTS. IV) SH. K.K. JERATH HAD ONLY DECLARED 50 TOLAS OF J EWELLERY IN HIS MOVABLE PROPERTY RETURNS FILED WITH HIS DEPARTMENT. FROM THE OFFICE OF SH. K.K. JERATH, MOVABLE PROPERTY RETURN FOR THE YEAR 1983 WAS ALSO FOUND, W HEREIN HE HAD SHOWN ONLY 50 TOLAS OF JEWELLERY IN THE NAME OF HIS WIFE (RECEIVE D AT THE TIME OF HER MARRIAGE IN 1971) AND 10 TOLAS OF GOLD IN HIS NAME RECEIVED AT THE TIME OF MARRIAGE. HE HAS NOT DISCLOSED ANY OTHER GIFTS IN CASH OR IN THE FOR M OF JEWELLERY AND THE PURCHASE OF JEWELLERY IN HIS MOVABLE PROPERTY RETURNS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE QU ESTIONNAIRE DATED 16.1.99 SH. K.K. JERATH WAS ASKED TO SUBMIT THE SOU RCE OF ACQUISITION OF JEWELLERY WORTH RS. 9,92,820/-. SH. K.K.JERATH VIDE LETTER DA TED 20.8.99 SUBMITTED AT THE RECEIPT COUNTER EXPLAINED IN PARA 12 AS UNDER :- ...... 'THE DETAIL OF JEWELLERY HAS BEEN FURNISHED IN ENTIRETY BY SMT. SAVITA JERATH TO THE AD1. SHE MAY BE ADDRESSED ON THE SUBJECT FOR FURTHER INQUIRI ES.' IN VIEW OF THE FACTS DISCUSSED ABOVE, IT IS APPAREN T THAT THE JEWELLERY HAS BEEN PURCHASED BY THE ASSESSEE FROM HIS UNDISCLOSED INCO ME. SH. JERATH IN HIS MPRS HAS SHOWN 600 GMS OF JEWELLERY INCLUDING HIS OWN JEWELL ERY OF 100 GMS. AS SUCH THE BALANCE 1460 GMS OF JEWELLERY REMAINS UNEXPLAINED. IN THE ABSENCE OF ANV EXPLANATION THE INVESTMENT IN JEWELLERY IS TREATED AS UNEXPLAINED AND CONSIDERED 25 AS DEEMED INCOME OF SH. K.K.JERATH U/S 69 OF THE IN COME TAX ACT, 1961 FOR THE FINANCIAL YEAR 1997-98. THE DETAILED WORKING OF THE VALUE OF JEWELLERY IS AS UNDER:- THE TOTAL JEWELLERY FOUND = 2060 GMS. LESS JEWELLERY SHOWN IN THE MOVABLE PROPERTY RETURN S = 600GMS. UNEXPLAINED JEWELLERY = 1460 GMS. JEWELLERY IS VALUED @ RS 435 PER GRAM = 6,35,100 33. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R TO THE LD. CIT(A) AND SUBMITTED AS UNDER: 'DURING THE COURSE OF SEARCH, GOLD JEWELLERY, SILVE R AND CERTAIN ORNAMENTAL STONES WERE FOUND AT THE RESIDENTIAL PREMISES AND LOCKERS MAINTAINED BY THE ASSESSEE AND HIS WIFE. TOTAL JEWELLERY FOUND AT THE TIME OF SEARCH WAS AS UNDER:- ADDRESS JEWELLERY SILVER PRECIOUS STONES (RS.) TOTA L (RS) HOUSE NO. 8, SECTOR 7, CHD 941.98 GMS RS. 3,78,056 18.3 KG 1,28,169 36,438/- 5,42,663/- LOCKER NO. 194 SBI, SECTOR-14, CHD 976.60 GMS RS. 3,95,542/ NIL NIL 3,95,542/- LOCKER NO.37 CENTRAL BANK OF INDIA, SECTOR 15, PKL 135 GM RS.54,615 NIL NIL 54,615/- 9,92,820/- THE TOTAL JEWELLERY FOUND DURING THE COURSE OF SEAR CH WAS 2060 GRAMS. THE ASSESSING OFFICER HAS ALLOWED CREDIT OF 600 GRAMS O N ACCOUNT OF JEWELLERY SHOWN BY THE ASSESSEE BELONGING TO HIS WIFE AND HIMSELF I N THE MOVABLE PROPERTY RETURNS FILED WITH THE GOVERNMENT AND HAS TREATED THE BALAN CE JEWELLERY OF 1460 GRAMS AS UNEXPLAINED AND THEREBY MAKING AN ADDITION OF RS . 6,35,100/- IT WAS STATED BY SMT. SAVITA JERATH BEFORE THE ASSESSING OFFICER TIM E AND AGAIN THAT THE JEWELLERY OF 2060 GRAMS COMPRISED AS UNDER :- MARRIAGE 1971 (PARENTS AND IN-LAWS, DISCLOSED TO G OVT.) 65 TOLAS JEWELLERY FORSAFE CUSTODY, SH. B.K. KHANNA, FATHER 17 TOLAS JEWELLERY OF SMT. SHANTA KHANNA, DECLARED UNDER VDI S 20 TOLAS JEWELLERY FOR SAFE CUSTODY, SH. SURESH KHANNA, BROT HER 50 TOLAS JEWELLERY FOR SAFE CUSTODY, SH. SURENDER JERATH, 50 TOLAS BORTHER IN LAW JEWELLERY PURCHASED IN F.Y. 1996-97 4 TOLAS 206 TOLAS FROM THE ABOVE, IT IS CLEAR THAT JEWELLERY WAS ACQU IRED BY THE ASSESSEE'S WIFE AT THE TIME OF HER MARRIAGE, DIFFERENT OCCASIONS IN HE R LIFE SPAN OF 25 YEARS OF MARRIAGE, JEWELLERY KEPT FOR SAFE CUSTODY BY THE MO THER OF MRS. SAVITA JERATH, HER BROTHER-IN-LAW AND HER SISTER-IN-LAWS AND FATHER DU E TO THE FACT THAT THEY WERE LIVING IN BORDER AREAS AND THE JEWELLEY OWNED BY TH E FAMILY MEMBERS WAS KEPT AT CHANDIGARH ON ACCOUNT OF DISTURBED CONDITIONS AND T ENSION IN THE BORDER DISTRICTS. THIS ASPECT HAD BEEN BROUGHT TO THE NOTI CE OF THE ADIT IMMEDIATELY AFTER 26 THE DATE OF SEARCH. THE LETTERS ADDRESSED TO ADIT ( INV.) BY THESE PERSON CLAIMING THE JEWELLERY BELONGING TO THEM ARE ATTACHED. BESID ES THE ABOVE, MRS. SAVITA JERATH'S MOTHER HAD ALSO DECLARED JEWELLERY WEIGHIN G 20 TOLAS UNDER VDIS 1997, FOR WHICH NECESSARY EVIDENCE WAS ENCLOSED. THE ASSE SSEE HAD DISCLOSED 65 TOTALS OF JEWELLERY IN HIS IPR STATEMENT TO THE GOVERNMENT AND NOT 60 TOTALS AS STATED BY THE ASSESSING OFFICER. THUS THE SOURCES OF JEWELLERY STANDS EXPLAINED AND THERE IS NO DISCREPANCY IN THE SAME. THE SUBSTANTIVE ADDITIO N IN THE CASE OF THE ASSESSEE SHOULD BE DELETED AS WELL AS THE PROTECTIVE ADDITIO N MADE IN THE HANDS OF THE ASSESSEE'S WIFE SHOULD ALSO BE DELETED. 33.1 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE DELETED THE ADDITION BY OBSERVING IN PARA 8.2 AND 8.3 OF TH E IMPUGNED ORDER AS UNDER: 8.2- I HAVE GONE THROUGH THE ARGUMENTS OF THE LEARN ED COUNSEL AS WELL AS THE CONTENTS OF THE IMPUGNED ASSESSMENT ORDER. IT IS SE EN THAT THE LD. ASSESSING OFFICER NEITHER HAS GIVEN THE FULL BENEFIT OF DISCLO SURES OF 65 TOLAS JEWELLERY AS DECLARED IN THE APPELLANT'S IPR STATEMENT NOR HIS M OTHER-IN-LAW'S DECLARATION UNDER VDIS, 1997 OF 20 TOLAS OF JEWELLERY. MOREOVER , THE LD. ASSESSING OFFICER HAD ALSO NOT GIVEN ANY THOUGHT TO THIS FACT THAT TITLE OF THE JEWELLERY ALWAYS REMAINS WITH THE LADIES AND NOT WITH THEIR HUSBANDS, AS PER LAW LAID DOWN BY HON'BLE SUPREME COURT (155 ITR 190) AND HON'BLE KARNATAKA H IGH COURT (240 ITR 727). THE HON'BLE SUPREME COURT HAS OVER-RULED THE FINDINGS O F THE HON'BLE PUNJAB & HARYANA HIGH COURT WHILE GIVING THE VERDICT IN FAVO UR OF THE LADIES. EVEN THE HUSBAND CAN BE SUED FOR HIS DISHONESTY ABOUT THE TI TLE OF JEWELLERY, THE STRIDHAN. RELEVANT PORTION OF THE DECISION SUPRA IS REPRODUCE D HERE UNDER FOR THE PURPOSE OF CLARITY :- 'WE ARE CLEARLY OF THE OPINION THAT THE MERE FACTUM OF THE HUSBAND AND WIFE LIVING TOGETHER DOES NOT ENTITLE EITHER OF THEM TO COMMIT A BREACH OF CRIMINAL LAW AND IF ONE DOES, THEN HE/SHE WILL BE LIABLE FOR ALL THE CONSEQUENCES OF SUCH BREACH. CRIMINAL LAW AND MATRIMONIAL HOME ARE NOT S TRANGERS. CRIMES COMMITTED IN MATRIMONIAL HOME ARE AS MUCH PUNISHABLE AS ANYWH ERE ELSE. IN THE CASE OF STRIDHAN PROPERTY ALSO, THE TITLE OF WHICH ALWAYS R EMAINS WITH THE WIFE THOUGH POSSESSION OF THE SAME MAY SOMETIMES BE WITH THE HU SBAND OR OTHER MEMBERS OF HIS FAMILY, IF THE HUSBAND OR ANY OTHER MEMBER OF H IS FAMILY COMMITS SUCH AN OFFENCE, THEY WILL BE LIABLE TO PUNISHMENT FOR THE OFFENCE OF CRIMINAL BREACH OF TRUST UNDER SS. 405 AND 406, IPC. AFTER ALL, HOW COULD ANY REASONABLE PERSON EXPECT A NEWLY MARRIED WOMAN LIVING IN THE SAME HOUSE AND UNDER THE SAME ROOF TO KEEP H ER PERSONAL PROPERTY OR BELONGINGS LIKE JEWELLERY, CLOTHING, ETC., UNDER HE R OWN LOCK AND KEY, THUS SHOWING A SPIRIT OF DISTRUST TO THE HUSBAND AT THE VERY BEH EST. WE ARE SURPRISED HOW COULD THE HIGH COURT PERMIT THE HUSBAND TO CAST HIS COVET OUS EYES ON THE ABSOLUTE AND PERSONAL PROPERTY OF HIS WIFE MERELY BECAUSE IT IS KEPT IN HIS CUSTODY, THEREBY REDUCING THE CUSTODY TO A LEGAL FARCE. ON THE OTHER HAND, IT SEEMS TO US THAT EVEN IF THE PERSONAL PROPERTY OF THE WIFE IS JOINTL Y KEPT, IT WOULD BE DEEMED TO BE EXPRESSLY OR IMPLIEDLY KEPT IN THE CUSTODY OF THE H USBAND AND IF HE DISHONESTLY MISAPPROPRIATES OR REFUSES TO RETURN THE SAME, HE I S CERTAINLY GUILTY OF CRIMINAL BREACH OF TRUST, AND THERE CAN BE NO ESCAPE FROM TH IS LEGAL CONSEQUENCE. THE OBSERVATIONS OF THE HIGH COURT AT OTHER PLACES REGA RDING THE INAPPLICABILITY OF S. 406 DO NOT APPEAL TO US AND ARE IN FACT NOT IN CONS ONANCE WITH THE SPIRIT AND 27 TREND OF THE CRIMINAL LAW. THERE ARE A LARGE NUMBER OF CASES WHERE CRIMINAL LAW AND CIVIL LAW CAN RUN SIDE BY SIDE. THE TWO REMEDIE S ARE NOT MUTUALLY EXCLUSIVE BUT CLEARLY CO-EXTENSIVE AND ESSENTIALLY DIFFER IN THEIR CONTENT AND CONSEQUENCE. THE OBJECT OF THE CRIMINAL LAW IS TO PUNISH AN OFFE NDER WHO COMMITS AN OFFENCE AGAINST A PERSON, PROPERTY OR THE STATE FOR WHICH T HE ACCUSED, ON PROOF OF THE OFFENCE, IS DEPRIVED OF HIS LIBERTY AND IN SOME CAS ES EVEN HIS LIFE. THIS DOES NOT, HOWEVER, AFFECT THE CIVIL REMEDIES AT ALL FOR SUING THE WRONGDOES. IN CASES LIKE ARSON, ACCIDENTS, ETC. IT IS AN ANATHEMA TO SUPPOSE THAT WHEN A CIVIL REMEDY IS AVAILABLE, A CRIMINAL PROSECUTION IS COMPLETELY BAR RED. THE TWO TYPES OF ACTIONS ARE QUITE DIFFERENT IN CONTENT, SCOPE AND IMPORT. I T IS NOT AT ALL INTELLIGIBLE TO US TO TAKE THE STAND THAT IF THE HUSBAND DISHONESTLY MISA PPROPRIATES THE STRIDHAN PROPERTY OF HIS WIFE, THOUGH KEPT IN HIS CUSTODY, T HAT WOULD BAR PROSECUTION UNDER S. 406, IPC, OR RENDER THE INGRIDIENTS OF S. 405, I PC, NUGATORY OR ABORTIVE. TO SAY THAT BECAUSE THE STRIDHAN OF A MARRIED WOMAN IS KEPT IN THE CUSTODY OF HER HUSBAND, NO ACTION AGAINST HIM CAN BE TAKEN AS NO OFFENCE IS COMMITTED IS TO OVERRIDE AND DISTORT THE REAL INTENT OF THE LAW.' 8.3- THUS, IN VIEW OF THE ABOVE AS WELL AS THE DECI SIONS OF THE HON'BLE ALLAHABAD HIGH COURT REPORTED IN 263 ITR 119 AND AL SO LOOKING TO THE STATUS OF THE FAMILY AND INVOLVEMENT OF MORE THAN ONE LADY, 206 T OLAS IN ACCORDANCE WITH CBDT INSTRUCTIONS, I AM OF THE OPINION THAT THE SAI D JEWELLERY COULD HAVE BEEN TREATED BY THE LD. ASSESSING OFFICER AS EXPLAINED. N EVERTHELESS, THERE IS NO QUESTION OF THIS JEWELLERY TO REPRESENT THE INVESTM ENT BY WAY OF UNDISCLOSED INCOME IN THE HANDS OF THE APPELLANT SH. K. K. JERA TH. THUS, THE ADDITION OF RS.6,35,100/- IN THE HANDS OF THE APPELLANT IS DELE TED. ( RELIEF:-RS. 6,35,100/-) 34. NOW THE DEPARTMENT IS IN APPEAL. 35. THE LD. CIT DR STRONGLY SUPPORTED THE ASSESSMEN T ORDER PASSED BY THE LD. CIT(A) AND ALSO SUBMITTED WRITTEN SUBMISSION WHICH READ AS UNDER: DURING THE COURSE OF SEARCH TOTAL JEWELLERY FOUND F ROM DIFFERENT LOCKERS WAS TO THE TUNE OF 2060 GRAMS VALUING AT RS.9,92,820/-. THE AO ALLOWED CREDIT OF 600 GMS. ON ACCOUNT OF JEWELLERY SHOWN BY THE ASSESSEE BELONGIN G TO HIS WIFE AND HIMSELF IN THE MOVABLE PROPERTY RETURNS FILED WITH THE GOVT, A ND TREATED THE BALANCE JEWELLERY OF 1460/- GMS AS UNEXPLAINED AND THEREBY MAKING AN ADDITION OF RS.6,35,000/-. THE LD.CIT(A) HAS DELETED THIS ADDITION WITH THE OB SERVATION THAT THE AO HAS NOT GIVEN THE BENEFIT OF DISCLOSURE OF 65 TOLAS JEWELLE RY AS DECLARED IN THE ASSESSEE'S IPR STATEMENT NOR HIS MOTHER-IN-LAW'S DECLARATION U NDER VDIS, 1997 OF 20 TOLAS OF JEWELLERY. THE LD. CIT(A) FURTHER OBSERVED THAT THE AO HAD NOT GIVEN ANY THOUGHT TO THIS FACT THAT TITLE OF THE JEWELLERY ALWAYS REM AINS WITH THE LADIES AND NOT WITH THE HUSBANDS AS PER LAW LAID DOWN BY THE HON HIE SU PREME COURT (155 ITR 190) AND E KARNATAKA HIGH COURT (240ITR 727). THE LD. CIT(A) ALSO RELIED UPON THE E ALLAHABAD HIGH COURT JUDGMENT REPORTED IN 263 ITR 1 19. THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT T HE AO HAD DULY ALLOWED THE BENEFIT OF 600 GM OF JEWELLERY ON' THE BASIS OF IPR OF THE ASSESSEE. IN RESPECT OF JEWELLERY WEIGHING 20 TOLAS DECLARED UNDER VDIS IT IS STATED THAT THE SAME WAS 28 SURRENDERED UNDER VDIS SUBSEQUENT TO SEARCH. IN RESPECT OF REMAINING JEWELLERY NO SATISFACTORY EXPLANATION WAS GIVEN BY THE ASSESS EE. SMT. SAVITA JERATH RESORTED TO DIFFERENT STEPS TO E XPLAIN THE JEWELLERY BEFORE THE AO VIDE HER LETTER DATED 05.01.1998, SHE STATED THA T HER HUSBAND WAS ONLY AWARE OF THE GOLD ITEMS GIVEN BY HER PARENTS AT THE TIME OF MARRIAGE IN 1971. SHE STATED THAT 'THE ITEMS OF GOLD WHICH WERE GIVEN BY HER FAT HER AT THE TIME OF MARRIAGE OF MY BROTHERS AND BIRTH OF MY CHILDREN WAS SECRETLY K EPT BY ME IN THE HOUSE AND I NEVER SHARED THIS INFORMATION WITH MY HUSBAND.' FURTHER, DURING THE COURSE OF SEARCH, SHE NEVER DIS CLOSED THAT ANY JEWELLERY BELONGING TO HER BROTHER IN LAW, BROTHER AND FATHER IN LAW IS LYING WITH HER. IT WAS ONLY WHEN SHE WAS UNABLE TO EXPLAIN THE SOURCES OF JEWELLERY FOUND SHE LOOK THE PLEA THAT HER FATHER AND HER BROTHER IN LAW HAVE BE EN RESIDING IN THE BORDER TOWN AND HER BROTHER IS SETTLED IN CANADA AND SO SHE HAD KEPT THEIR JEWELLERY IN HER LOCKERS. THE PLEA OF SMT. SAVITA JERATH THAT SHE DID NOT SHA RE WITH SH. K. K. JERATH WITHOUT THE KNOWLEDGE OF JEWELLERY GIFTED BY HER FATHER AND OF THE JEWELRY KEPT BY HER ON LOCKERS IS NOT ACCEPTABLE AS SH. K.K. JERATH HAD TA KEN AN AFFIDAVIT FROM HIS FATHER IN LAW IN 1989 FOR THE JEWELLERY GIFTED BY HIM TO S MT. SAVITA JERATH (AFFIDAVIT ENCLOSED AS ANNEXURE A3) IN VIEW OF THE FACT THAT CERTAIN PEOPLE HAD FILED COMPLAINTS AGAINST HIM IN HIS DEPARTMENT. THEREFORE , THE PURPOSE OF THE AFFIDAVIT WAS TO GUARD AND PROTECT INTERESTS OF SH. K.K. JERA TH, HENCE, IT IS HIGHLY UNLIKELY THAT SH. B.K. KHANNA WOULD HAVE HIDDEN THE FACT OF THE GIFTED JEWELLERY FROM SH. K.K. JERATH AS IT WOULD HAVE ITSELF DEFEATED THE PU RPOSE OF THE AFFIDAVIT. 36. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT THE JEWELLERY FOUND DURING THE COURSE OF SEARCH WAS DUL Y EXPLAINED AT THE TIME OF SEARCH AS WELL AS IN THE ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED THAT SINCE THE CUSTODY ON ACCOUNT OF JEWELLERY WAS KEPT BY SMT. SA VITA JERATH W/O THE ASSESSEE WHO RENDERED A COMPLETE ACCOUNT OF JEWELLE RY TO THE ADIT THROUGH HER LETTER DT. 05/01/1998, COPY OF WHICH IS PLACED AT PAGE NO. 180 TO 188 (RELEVANT PAGE 181-182) OF THE ASSESSEES PAPER BOO K(PART1). IT WAS FURTHER SUBMITTED THAT SHRI B.K. KHANNA, FATHER-IN-LAW OF T HE ASSESSEE HAD GIVEN AN AFFIDAVIT ON 26/01/1989 REGARDING THE GOLD / SILVER ITEMS GIFTED BY HIM AT THE TIME OF HER MARRIAGE, COPY OF WHICH IS PLACED AT PAGE NO . 159 OF THE ASSESSEES PAPER BOOK(PART1). IT WAS FURTHER SUBMITTED THAT TH E ASSESSEE HAD DECLARED IN THE ANNUAL PROPERTY RETURN AS WELL AS RETURN OF ASS ETS AND LIABILITIES FOR THE YEAR ENDING ON DECEMBER 1983, 65 TOLAS OF GOLD ITEMS COP Y OF WHICH IS PLACED AT 29 PAGE NO. 168 OF THE ASSESSEES PAPER BOOK (PART1). IT WAS FURTHER STATED THAT CERTAIN ITEMS PURCHASED BY SMT SHANTA KHANNA, MOTHE R-IN-LAW OF THE ASSESSEE AND FOUND DURING THE COURSE OF SEARCH WERE DECLARED BY HER IN VDIS SCHEME OF THE INCOME TAX DEPARTMENT COPY OF WHICH IS PLACED A T PAGE NO. 215 TO 220 OF THE ASSESSEES PAPER BOOK(PART1). 36.1 IT WAS FURTHER STATED THAT SHRI SURINDER KUMAR JERATH BROTHER OF THE ASSESSEE CONFIRMED VIDE LETTER DT. 31/12/1997 ADDRESSED TO T HE ADIT THAT SOME OF THE JEWELLERY FOUND IN THE LOCKER / RESIDENCE OF THE AS SESSEE BELONGED TO HIM, A SIMILAR LETTER DT. 02/01/1998 ADDRESSED TO ADIT WAS WRITTEN BY SMT. PRABHA BHALLA COPY OF THE SAID LETTER IS PLACED AT PAGE NO. 178, 179 OF THE ASSESSEES PAPER BOOK(PART1). IT WAS ALSO STATED THAT SHRI B.K. KHAN NA EXPLAINED THE JEWELLERY BELONGING TO HIM WHICH WAS FOUND AT THE RESIDENCE / LOCKER OF SMT. SAVITA JERATH VIDE LETTER DT. 31/12/1997 COPY OF WHICH IS PLACED AT PAGE NO. 176, 177 OF THE ASSESSEES PAPER BOOK(PART1). 36.2 IT WAS STATED THAT SHRI B.K. KHANNA, SHRI SURI NDER KUMAR JERATH DULY STATED IN THEIR RESPECTIVE LETTERS THAT THEIR JEWELLERY HA D BEEN KEPT WITH SMT SAVITA FOR SAFE CUSTODY AS THEY WERE LIVING IN THE BORDER AREA S AND AT THAT TIME PUNJAB WAS A DISTURBED STATE DUE TO THE SEVERAL TERRORIST ACTI VITIES. IT WAS SUBMITTED THAT THE ASSESSEE WAS MARRIED FOR MORE THAN 26 YEARS AS ON T HE DATE OF THE SEARCH, THE JEWELLERY FOUND FROM THE RESIDENCE AND LOCKER WOULD ALSO COMPRISE THE STREEDHAN AND ONLY THE ASSESSEES OWNERSHIP WAS CON FINED TO 65 TOLAS OF GOLD WHICH WAS DECLARED BY HIM IN THE RETURN OF ASSETS / LIABILITIES. IT WAS FURTHER SUBMITTED THAT SINCE THE ASSESSEE EXPLAINED THE SOU RCE OF ACQUIRING THE JEWELLERY, THE ARBITRARY ADDITION MADE BY THE A.O. WAS RIGHTLY DELETED BY THE LD. CIT(A). THE RELIANCE WAS PLACED ON THE FOLLOWING CA SE LAWS: I) JUDGMENT OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF ASHOK CHADHA VS. ITO REPORTED IN 14TAXMANN.COM 57 (DELHI) II) HON'BLE DELHI HIGH COURT DECISION IN THE CASE OF SU SHILA DEVI VS. CIT IN WPC NO. 7620 OF 2011 DATED 21.10.2016. 30 III) ITAT, DELHI TRIBUNAL, IN THE CASE OF SUNEELA SONI V S. DCIT IN ITA NO. 5259/DEL/2007 DATED 16.03.2018 IV) SH. VIBHU AGGARWAL VS. DCIT IN ITA NO. 1540/DEL/201 5 DATED 04.05.2018 (AS REPORTED IN 93 TAXMANN.COM 275 (DEL BENCH) V) RADHA MITTAL VS. DCIT IN ITA NO. 2810/DEL/2016 ORDE R DATED 09.07.2018 (DEL BENCH) 37. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. AS REGARDS TO THE ISSUE UNDER CONSIDERATION, IT IS NOTICED THAT THE CUSTODY AND ACCOUNT OF THE JEWE LLERY UNDER CONSIDERATION WAS KEPT BY THE WIFE OF THE ASSESSEE SMT. SAVITA JE RATH WHO FURNISHED THE COMPLETE ACCOUNT OF JWELLERY TO ADIT VIDE HER LETTE R DT. 05/01/1998 COPY OF WHICH IS PLACED AT PAGE NO. 180 OF THE ASSESSEES P APER BOOK(PART1). IN THE SAID LETTER ITEM WISE DETAILS CITING VARIOUS FUNCTIONS / CEREMONIES WHEN SHE RECEIVED THE GOLD ITEMS FROM HER PARENTS AND THE RELATIVES H AD BEEN MENTIONED. 37.1 AS REGARDS TO THE JEWELLERY ITEMS BELONGING TO SHRI B.K. KHANNA FATHER-IN- LAW OF THE ASSESSEE, IT IS NOTICED THAT HE HAD GIVE N AN AFFIDAVIT DATED 26/01/1989 COPY OF WHICH IS PLACED AT PAGE NO. 159 OF THE ASSESSEES PAPER BOOK(PART1), THE DETAILS OF THE JEWELLERY WHICH WAS GIVEN BY HIM TO HIS DAUGHTER SMT. SAVITA JERATH W/O OF THE ASSESSEE HAD BEEN GIV EN. THE ASSESSEE HAD DISCLOSED 65 TOLAS OF GOLD ITEMS IN HIS RETURN OF A SSETS AND LIABILITIES FOR THE YEAR ENDING DECEMBER 1983 AND THE SAME WAS ALSO DECLARED IN HIS ANNUAL PROPERTY RETURN, DETAILS OF WHICH IS PLACED AT PAGE NO. 168 OF THE ASSESSEES PAPER BOOK (PART1). IN THE PRESENT CASE SHRI SURINDER JERATH B ROTHER OF THE ASSESSEE AND SMT. PRABHA BHALLA SISTER OF THE ASSESSEE FURNISHED THE LETTER DT. 31/12/1997 AND 02/01/1998 RESPECTIVELY COPIES OF WHICH ARE PLACED AT PAGE NO. 178 AND 179 OF THE ASSESSES PAPER BOOK(PART1), THOSE LETTERS WERE ADDRESSED TO ADIT AND DETAILS OF THE JEWELLERY KEPT WITH SMT. SAVITA JERA TH HAD BEEN MENTIONED IN THE SAID LETTER. A SIMILAR LETTER DT. 31/12/1997 HAD BE EN WRITTEN BY SHRI B.K. KHANNA, FATHER-IN-LAW OF THE ASSESSEE TO THE ADIT COPY OF W HICH IS PLACED AT PAGE O. 176 31 AND 177 OF THE ASSESSES PAPER BOOK(PART1). IN THE AFORESAID LETTERS, THEY HAVE MENTIONED THAT JEWELLERY WAS KEPT WITH SMT. SAVITA JERATH FOR SAFE CUSTODY. SIMILARLY SMT. SHANTA KHANNA MOTHER- IN- LAW OF THE ASSESSEE HAD KEPT SOME JEWELLERY WITH HER DAUGHTER SMT. SAVITA JERATH AND CLAIMED THAT THE SAID JWELLERY WAS DECLARED IN VDIS SCHEME OF THE DEPARTMENT, THE DOCUMENTS PERTAINING TO WHICH ARE PLACED AT PAGE NO. 215 TO 220 OF THE ASSE SSEES PAPER BOOK(PART1). ACCORDINGLY, IT WAS CLAIMED THAT ONLY 65 TOLAS OF J EWELLERY WAS BELONGING TO THE ASSESSEE, AND THE REMAINING JEWELLERY WAS EXPLAINED BY WIFE SMT. SAVITA JERATH, FATHER-IN-LAW SHRI. B.K. KHANNA, MOTHER-IN-LAW SMT. SHANTA KHANNA, BROTHER SHRI SURINDER JERATH AND SISTER SMT. PRABHA BHALLA. THE DEPARTMENT DID NOT BRING ANY MATERIAL ON RECORD TO SUBSTANTIATE THAT THE JEWELLE RY CLAIMED TO BE BELONGING TO THE RELATIVES AND WIFE OF THE ASSESSEE WAS NOT THE IR JWELLERY OR IT WAS ACQUIRED BY THE ASSESSEE. THEREFORE, CONSIDERING THE TOTALITY O F THE FACTS WE ARE OF THE VIEW THAT THE IMPUGNED ADDITION WAS RIGHTLY DELETED BY T HE LD. CIT(A), WE DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS GIV EN BY THE LD. CIT(A) ON THIS ISSUE. 38. THE NEXT ISSUE VIDE GROUND NO. 2(II) RELATES TO THE DELETION OF ADDITION OF RS. 1,28,169/- MADE BY THE AO ON ACCOUNT OF UNEXPLA INED INVESTMENT IN PURCHASE OF SILVER ITEMS. 39. FACTS RELATING TO THIS ISSUE IN BRIEF ARE THAT DURING THE COURSE OF SEARCH 19.8 KG OF SILVER WAS FOUND FROM THE RESIDENCE OF THE AS SESSEE AND ITS SOURCE OF ACQUISITION WAS EXPLAINED BY SMT. SAVITA JERAH WIFE OF THE ASSESSEE, IN HER LETTER DT. 05/01/1998 AT THE TIME OF MARRIAGE FROM PARENTS 1000 GM AT THE TIME OF MARRIAGE FROM PARENTS-IN-LAW 500 GM AT THE TIME OF BIRTH OF ELDEST SON FROM PARENTS 500 GM AT THE TIME OF BIRTH OF ELDEST SON, FROM PARENTS-IN -LAW 1000 GM GIFTS ON DIFFERENT OCCASIONS OF MARRIAGE/MUNDANE 2000 GM CEREMONY FROM 1971-84 SILVER ITEMS PURCHASED OUT OF SAVINGS FROM MUSIC TU ITIONS 4000 GM SILVER PLATE MEMENTOES 800 GM SILVER BELONGING TO HER PARENTS IN LAW AT HER HOUSE 7000 GM 32 SILVER ITEMS BELONGING TO HER PARENTS-IN-LAW LYING IN HER HOUSE 3000 39.1 THE AO HOWEVER DID NOT FIND MERIT IN THE EXPLA NATION GIVEN BY THE ASSESSEES WIFE AND TREATED THE SILVER ITEMS WORTH RS. 1,28,169/- (19.8 KG)AS UNEXPLAINED INVESTMENT AND DEEMED INCOME OF THE ASS ESSEE UNDER SECTION 69 OF THE ACT. ACCORDINGLY THE ADDITION OF RS. 1,28,16 9/- WAS MADE. 40. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R TO THE LD. CIT(A) AND SUBMITTED AS UNDER: 'DURING THE COURSE OF SEARCH SILVER WEIGHING 18.3 K ILOGRAMS IN VARIOUS FORMS FORMS WAS FOUND. THE ASSESSING OFFICER HAS TREATED THE SAM E AS UNACCOUNTED AND MADE THE IMPUGNED ADDITION WITHOUT ANY BASIS. IT IS STATED THAT SILVER FOUND DURING THE COURSE OF SEARCH COMPRISED AS UNDER :- (A) SILVER BELONGING TO MRS. SHANTA KHANNA, MOTHER OF M RS. SAVITA JERATH 8 KGS. (B) SILVER BELONGING TO ASSESSEE AND HIS WIFE ACQUIRED AT THE TIME OF MARRIAGE AND ON VARIOUS OCCASIONS SUBSEQUENTLY 7. 3 KGS (C) DIWALI GIFTS AND CHIEF GUESTS MOMENTOS PRESENTED T O THE ASSESSEE ON VARIOUS FUNCTIONS. 3.00 KGS TOTAL 18.3 KGS THE POSSESSION OF SILVER COMPRISING OF UTENSILS, GL ASSES, TEA SETS, TRAYS, SILVER COINS ETC. ARE QUITE COMMON IN A CUSTOMARY HINDU FAMILY A ND THE SOURCES OF ACQUISITION OF THE SAME ARE LINKED TO MARRIAGES, CH ILD BIRTH, MUNDAN CEREMONIES, GIFTS ON OCCASIONS LIKE DIWALI ETC. EVEN IN THE ANNUAL PROPERTY RETURN FOR MOVABLE ITEM S FILED WITH THE GOVERNMENT, SILVER ITEMS HAVE BEEN DECLARED. HENCE, POSSESSION OF SILVER ITEMS TO THE TUNE OF 18.3 KGS NEEDS NO FURTHER EXPLANATION AND THE SAME DESERVES TO BE DELETED ON SUBSTANTIVE AS WELL AS PROTECTIVE BASIS.' 40.1 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE DELETED THE ADDITION BY OBSERVING IN PARA NO. 9.2 OF THE IM PUGNED ORDER AS UNDER: 9.2- I HAVE GONE THROUGH THE ARGUMENTS OF THE LEARN ED A. R. FOR THE APPELLANT AND THE CONTENTS OF THE IMPUGNED ASSESSMENT ORDER. I AM UNABLE TO CONCUR WITH THE VIEWS OF THE LD. ASSESSING OFFICER THAT RS.1,28, 169/, THE POSSIBLE INVESTMENT OR THE COST OF SILVER ITEMS DISCUSSED BY HIM IN HIS AS SESSMENT ORDER STARTING AT PAGE 44-45 REPRESENTS UNDISCLOSED INCOME OF THE APPELLAN T. EVEN THE ASSESSING OFFICER WAS OF THE OPINION THAT SOME DOCUMENTS SEIZED FROM APPELLANT'S RESIDENCE EXPLAINS PARTLY THE SILVER FOUND FROM THE RESIDENCE OF SH. K. K. JERATH. HOWEVER, THE 33 ASSESSING OFFICER HAS NOT MADE OUT HIS CASE THAT TH E SAID DOCUMENT REPRESENTS THE EXPENDITURE OF RS.47,000/- MADE BY SH. K. K.JERATH. I HAVE NO DOUBT ABOUT IT THAT AN OFFICER OF THE LEVEL OF THE CHIEF ENGINEER WHO W AS EX OFFICIO SECRETARY TO THE U.T. ADMINISTATION WOULD INCUR ANY EXPENDITURE IN P URCHASING THE MEMENTOS OR OTHER SILVER ITEMS MENTIONED BY THE LD. ASSESSING OF FICER. IT IS CUSTOMARY TO RECEIVE DURING HIS SERVICE TENURE, THE SILVER AND OTHER MEM ENTOS WHETHER ENGRAVED OR NOT IN THE HONOUR OF THE APPELLANT. ESPECIALLY WHEN NO PURCHASE VOUCHERS INDICATING THE AMOUNT OF PURCHASES OR INVESTMENT, UNDISCLOSED TO THE DEPARTMENT WITH RESPECT TO ANY OF THE SILVER ITEM IS SEIZED OR FOUN D DURING THE COURSE OF SEARCH AND SEIZURE OPERATION. THE SAID ADDITION IS NOT JUSTIFI ED. THEREFORE THE ADDITION OF RS. 1,28,169/- IS DELETED, ALSO KEEPING IN VIEW THE LEG AL POSITION NARRATED ABOVE IN THE CASE OF JEWELLERY ALONG WITH THE DISCUSSION IN THIS PARAGRAPH. 41. NOW THE DEPARTMENT IS IN APPEAL. 42. THE LD. CIT DR REITERATED THE OBSERVATIONS MADE BY THE AO AND STRONGLY SUPPORTED THE ASSESSMENT ORDER. IT WAS FURTHER SUBM ITTED THAT THE MOVEABLE PROPERTY RETURNS OF THE ASSESSEE DID NOT SHOW ANY S ILVER ITEMS AND THE EXPLANATION OF SMT. SAVITA JERATH THAT SHE HAD PURC HASED SILVER ITEMS OUT OF HER INCOME FROM MUSIC TUITION COULD NOT BE PROVED, THER EFORE THE ADDITION WAS RIGHTLY MADE BY THE AO AND THE LD. CIT(A) WAS NOT J USTIFIED IN DELETING THE SAME. 43. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT THE POSSESSION OF THE SILVER ITEMS WAS EXPLAINED TO THE ADIT BY SMT. SAVITA JERTAH VIDE HER LETTER DT. 05/01/1998 COPY OF WHICH IS PLA CED AT PAGE NO. 180 OF THE ASSESSEES PAPER BOOK(PART1) AND SOME OF THE SILVER ITEMS WERE COVERED IN THE AFFIDAVIT OF SHRI B.K. KHANNA WHICH WAS A SEIZED DO CUMENT PLACED AT PAGE 159 OF THE ASSESSEES PAPER BOOK(PART1), SOME OF THE IT EMS HAD BEEN KEPT BY SHRI B.K. KHANNA AND SMT. PRABHA BHALLA AS THEY WERE RES IDING IN BORDER AREAS, REFERENCE WAS MADE TO PAGE NO. 176 AND 179 OF THE A SSESSES PAPER BOOK(PART1). IT WAS SUBMITTED THAT THE LD. CIT(A) R IGHTLY DELETED THE ADDITION MADE BY THE AO. 44. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE THE CONTENTION OF THE LD. CIT DR THAT THE SILVER ITEMS DID NOT FIND PLACE IN THE ANNUAL PROPERTY RETURN OF THE 34 ASSESSEE, THEREFORE, THE ADDITION WAS RIGHTLY MADE, HAS NO FORCE SINCE THE ASSESSEE NEVER CLAIMED THAT THESE SILVER ITEMS BELO NGED TO HIM RATHER IT WAS THE CLAIM OF SMT. SAVITA JERATH W/O THE ASSESSEE THAT T HESE SILVER ITEMS BELONGED TO HER WHICH WERE EXPLAINED TO THE ADIT VIDE LETTER DT . 05/01/1998. MOREOVER SHRI B.K. KHANNA AND SMT. PRABHA BHALLA ALSO STATED IN T HEIR LETTER WRITTEN TO THE ADIT THAT SOME OF THE SILVER ITEMS WERE KEPT BY THEM WIT H SMT. SAVITA JERATH FOR SAFE CUSTODY BECAUSE THEY WERE LIVING IN BORDER AREAS. W E, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AND THE EXPLANATION GIVEN BY SMT. SAVITA JERATH TO THE AUTHORITIES BELOW, ARE OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN MAKING THE IMPUGNED ADDITION FOR THE REASON THAT THE SILVER IT EMS AMOUNTING TO RS. 1,28,169/- WEIGHING 19.8 KG BELONGED TO SMT. SAVITA JERATH AND NOT TO THE ASSESSEE. THEREFORE, THE LD. CIT(A) RIGHTLY DELETED THE SAME. ACCORDINGLY WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTA L APPEAL. 45. NEXT ISSUE VIDE GROUND NO. 2(III)RELATES TO THE DELETION OF ADDITION OF RS. 5,88,240/- MADE BY THE AO ON ACCOUNT OF RENT RECEIV ED FOR HUF. 46. FACTS OF THE CASE RELATED TO THIS ISSUE IN BRIE F ARE THAT THE AO NOTICED FROM THE DETAILS OF THE IMMOVABLE PROPERTY FURNISHED BY THE ASSESSEE THAT IN COLUMN NO. 3 IN THE RETURN FOR THE YEAR 1992 IT WAS MENTIO NED NA, HOWEVER IN THE IMMOVABLE PROPERTY RETURN FOR THE YEAR 1994 TO 1996 IT HAD MENTIONED HUF, WHICH SHOWS THAT THOUGH THE PROPERTY WAS SELF OWNED BUT IT WAS SHOWN IN THE NAME OF HUF AFTER 1992. HE ALSO OBSERVED THAT THE H OUSE WAS CONSTRUCTED AFTER TAKING LOAN FROM CHANDIGARH ADMINISTRATION AND INFO RMATION IN THIS REGARD WAS SUPPLIED TO THE GOVERNMENT. IT WAS STATED THAT A LO AN OF RS. 70,000/- WAS SANCTIONED BY CHIEF ENGINEER, U.T. CHANDIGARH. THE DETAILS OF THE LOAN TAKEN BY THE ASSESSEE FOR THE CONSTRUCTION OF THE HOUSE WAS AS UNDER: A) LOAN FROM MRS. SARSVATI WADHWA 1093,SEC 23,CHD( JUNE 1978) RS. 11,000 B) GPF ADVANCE (SEPTEMBER 1982) RS. 5,000 C) MRS. CHIBBER(JUNE 1978) RS. 3500 35 46.1 THE AO OBSERVED THAT THE RENT RECEIPT FROM THE HOUSE HAD BEEN DEPOSITED IN ACCOUNT NO. 3487 WITH SBOP AND THE ASS ESSEE HAD MADE FDR IN HIS NAME FROM THIS ACCOUNT ON 16/12/1992. HE ALSO OBSER VED THAT RENT DEED WAS EXECUTED BY THE ASSESSEE HIMSELF AS EXCLUSIVE AND L AWFUL OWNER OF THE HOUSE AND THAT THE REPAYMENT OF LOAN WAS BEING MADE BY TH E ASSESSEE HIMSELF WHICH SHOWS THAT THE ASSESSEE CONSTRUCTED PROPERTY HIMSEL F AFTER TAKING LOAN FROM HIS OFFICE AND FROM HIS RELATIVES, THE INSTALLMENTS OF THE LOAN WAS PAID BY HIM AND THE ACCOUNT IN WHICH HE WAS DEPOSITING THE RENT WAS NOT DIFFERENT IN ANY WAY FROM HIS OTHER BANK ACCOUNTS, SINCE FROM THIS BANK ACCOUNT HE HAD NOT ONLY MADE FDR IN HIS NAME BUT ALSO HAD GIVEN LOAN TO HIS SON AND WIFE. 46.2 THE AO DID NOT ACCEPT THIS CONTENTION OF THE A SSESSEE THAT SINCE 1979 RENTAL INCOME OF THIS HOUSE WAS BEING SHOWN IN RETU RN OF THE HUF. THE A.O. MENTIONED THAT IT WAS NOT CLEAR AS TO WHETHER FATHE R OF THE ASSESSEE HAD ANY HUF AND IF SO WHAT WERE THE PROPERTIES HELD BY THE HUF AND WHEN THE PARTITION FULL AND PARTIAL TOOKPLACE. THEREFORE, INCOME FROM HOUSE NO. 2220, SECTOR-15C, CHANDIGARH WAS ASSESSED IN THE HANDS OF THE ASSESSE E. 47. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: 'THE ASSESSING OFFICER HAS ALLEGED THAT THE RENT RE CEIVED BY THE APPELLANT AS KARTA OF HUF IS UNDISCLOSED ON THE PLEA THAT THE HUF IS N OT ASSESSED TO INCOME TAX. THIS OBSERVATION OF THE ASSESSING OFFICER IS INCORRECT, ILL-FOUNDED AND ILLEGAL. RENT IN QUESTION RELATES TO PROPERTY NO.2200, SECTOR 15-C, CHANDIGARH, WHICH IS A 10 MARLA HOUSE. THE SAME WAS ACQUIRED BY THE ASSESSEE IN 1977-78. THE RETURNS OF THE HUF HAVE BEEN FILED AND ASSESSED BY THE INCOME TAX DEPARTMENT AND PHOTOCOPIES OF THE COMPUTATION AND ACKNOWLEDGEMENT IS ENCLOSED. THE SAME ARE SELF EXPLANATORY. I ENCLOSE HEREWITH THE CASH F LOW STATEMENT OF THE HUF TO DEMONSTRATE AS TO HOW THE RENT RECEIVED BY THE HUF HAS BEEN UTILIZED. THE HUF HAS BEEN ASSESSED BY THE INCOME TAX DEPARTMENT FOR THE PAST MANY YEARS AND REFUNDS HAVE BEEN ISSUED WHERE DUE. THE ADDITION OF RS.5,88,240/- ON ACCOUNT OF RENT IN THE HANDS OF THE ASSESSEE IN HIS INDIVIDUAL CAPACITY THEREFORE, DOES NOT AHSE AND DESERVE TO BE DELETED.' 47.2 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS DELETED THE ADDITION BY OBSERVING AS UNDER: 36 I HAVE GONE THROUGH THE ARGUMENTS OF THE LEARNED CO UNSEL FOR THE APPELLANT AS WELL AS THE CONTENTS OF THE IMPUGNED ASSESSMENT ORD ER. AS THE LD. ASSESSING OFFICER HAS IGNORED THE FACT THAT THE SAID RENT HAS ALREADY BEEN SHOWN BY THE HUF IN THEIR RETURNS FOR RESPECTIVE ASSESSMENT YEARS & HAS MADE SUCH AN ADDI TION IN THE HANDS OF THE APPELLANT. SINCE THE RENT HAS ALREADY BEEN SHOWN IN THE HANDS OF THE HUF AND THE SAME HAD BEEN ASSESSED AND ATTAINED FINALITY IN THE HANDS OF THE HUF, IT WAS NOT OPEN FOR THE ASSESSING OFFICER TO CHANGE HIS OP INION AND TAXED THE SAME INCOME IN THE INDIVIDUAL HANDS UNLESS AND OTHERWISE THE RENTAL INCOME THAT HAS ALREADY BEEN ASSESSED IN THE HANDS OF THE HUF WAS R EVIEWED, MODIFIED OR CANCELLED BY THE SUPERIOR AUTHORITY. THE RENTAL AGR EEMENT IS NOT A CONCLUSIVE PROOF THAT THE PROPERTY BELONGS TO THE INDIVIDUAL I NSTEAD OF HUF SIMPLY BECAUSE THE KARTA WHILE ENTERING THE RENT AGREEMENT HAS NOT MENTIONED HIS STATUS AS KARTA OF THE SAID HUF WHEREAS THE AGREEMENT IS CATEGORICA LLY FOR THE SAME PROPERTY WHICH HAS BEEN DISCLOSED IN THE HUF RETURNS. THUS, TO AVOID DOUBLE TAXATION OF THE SAME INCOME, THIS ADDITION CAN NOT BE SUSTAINED AS NO DOUBLE TAXATION IS PERMITTED UNDER THE INCOME TAX ACT RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: JAIN BROTHERS & ANOTHER VS. UNION OF INDIA, 77 ITR 107 (SC) LALJI HARI DASS VS. ITO AND ANOTHER, 43 ITR 387 (SC) CIT VS. KHALID MOHDI AND OTHERS, 165 ITR 685 (ANDHRA ) GOURANGA LAL CHATTERJEE AND OTHERS VS. ITO & ORS. 167 CTR 108 (CAL) 48. NOW THE DEPARTMENT IS IN APPEAL. 49. THE LD. CIT DR REITERATED THE OBSERVATIONS MADE BY THE AO AND STRONGLY SUPPORTED THE ASSESSMENT ORDER. HE ALSO FURNISHED T HE WRITTEN SUBMISSION WHICH READS AS UNDER: THE AO MADE ADDITION OF RS.5,88,240/- ON ACCOUNT OF RENT OF HUF HOLDING THAT SH. K.K. JERATH HAD CONSTRUCTED THE PROPERTY HIMSEL F AFTER TAKING LOANS FROM HIS OFFICE AND FROM HIS FRIENDS AND RELATIVES. THE INST ALLMENTS OF THE LOANS TAKEN BY SH. JERATH ARE BEING PAID BY HIM. THE ACCOUNT IN WHICH HE IS DEPOSITING THE RENT IS NOT DIFFERENT IN ANY WAY FROM HIS OTHER BANK ACCOUN TS, SINCE FROM HIS BANK ACCOUNT HE HAS NOT ONLY MADE FDR IN HIS NAME BUT AL SO HAD GIVEN LOANS TO HIS SON AS HAS BEEN GIVEN FROM HIS OTHER BANK ACCOUNT C -187. IN ALL RESPECT SH. JERATH WHO IS THE EXCLUSIVE OWNER OF THIS PROPERTY AS HAD RIGHTLY BEEN MENTIONED IN THE RENT DEEDS EXECUTED BY HIM. THE FATHER OF THE ASSES SEE HAS ALSO CONFIRMED DURING HIS STATEMENT THAT THE HOUSE IN QUESTION WAS BUILT BY HIS SON K.K. JERATH AND HE HAD NO KNOWLEDGE ABOUT THE SOURCE FROM WHICH KK JER ATH HAD CONSTRUCTED THIS HOUSE. THE IMMOVABLE PROPERTY RETURNS, RENT DEEDS A ND BANK ACCOUNT OF SH. KK 37 JERATH IN HIS OFFICE ALSO GIVE CREDENCE TO THE STAT EMENT OF HIS FATHER. FROM THIS IT PROVES THAT THE SAID PROPERTY WAS CONSTRUCTED BY SH . KK JERATH HIMSELF. THE LD CIT(A) HAS DELETED THE ADDITIONS WITH THE OB SERVATIONS THAT THE RENTAL INCOME HAS ALREADY BEEN ASSESSED IN THE HAND S OF HUF AND THE RENT AGREEMENT IS NOT A CONCLUSIVE PROOF THAT THE PROPER TY BELONGS TO THE INDIVIDUALS INSTEAD OF HUF SIMPLY BECAUSE THE KARTA WHILE ENTER ING THE RENT AGREEMENT HAS NOT MENTIONED HIS STATUS AS KARTA OF THE SAID HUF. IT HAS FURTHER BEEN OBSERVED THAT TO AVOID DOUBLE TAXATION OF THE SAME INCOME, T HIS ADDITION CANNOT BE SUSTAINED. THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADD ITION BECAUSE OF THE FACT THAT THE PROPERTY WAS CONSTRUCTED BY SH. K.K. JERAT H HIMSELF AND HE WAS THE ACTUAL OWNER OF THE PROPERTY AS RIGHTLY HELD BY THE AO. 50. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE ASSESSEE HIMSELF DURING THE RECORDING OF HIS STATEM ENT STATED THAT HE HAD RENTAL INCOME FROM HOUSE NO. 2220, SECTOR-15C, CHANDIGARH IN HIS HUF CAPACITY WHICH HAD SEPARATE BANK ACCOUNT AND WAS ON RENT AT THAT T IME. THE SAID STATEMENT WAS GIVEN IN RESPONSE TO THE QUESTION NO. 97 DURING THE COURSE OF SEARCH ON 20/11/1997. IT WAS FURTHER STATED THAT THE ASSESSEE DULY EXPLAINED THAT THE PROPERTY WAS IN THE NAME OF HUF AND THE RENTAL INCO ME FROM THE SAID PROPERTY WAS DULY SHOWN IN THE RETURN OF HUF AND THAT THERE WERE SEVERAL DOCUMENTS FOUND DURING THE COURSE OF SEARCH PROVING THE EXIST ENCE OF HUF. HE ALSO FILED THE RETURN OF ASSETS AND LIABILITIES FOR THE PERIOD END ING ON 31/12/1983 SHOWING HOUSE AS HUF PROPERTY, COPY OF WHICH IS PLACED AT PAGE NO . 160 TO 167 OF THE ASSESSEES PAPER BOOK(PART1). IT WAS FURTHER STATED THAT THE SEIZED PERSONAL DIARY CLEARLY STATED THE EXACT DATE OF RECEIPT OF THE AMO UNT AND ITS DEPOSIT IN THE HUF BANK ACCOUNT, REFERENCE WAS MADE TO PAGE NO. 274 TO 344 OF THE ASSESSEES PAPER BOOK. IT WAS FURTHER STATED THAT AS THE RENT WAS ALSO SHOWN IN THE RETURN OF INCOME OF THE HUF WHICH WAS ACCEPTED BY THE DEPARTM ENT, THEREFORE THE ADDITION MADE SEPARATELY IN THE HANDS OF THE ASSESS EE FOR THE SAME INCOME WOULD BE DOUBLE TAXATION WHICH IS NOT PERMISSIBLE. 51. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE THIS CONTENTION OF THE 38 ASSESSEE THAT THE INCOME FROM THE PROPERTY WAS REGU LARLY SHOWN IN THE HANDS OF HUF WAS NOT REBUTTED. WHEN THE INCOME HAD ALREADY BEEN ACCEPTED IN THE HUF RETURNS FILED BY THE ASSESSEE, THE ADDITION OF THE SAME INCOME IN THE HANDS OF THE ASSESSEE IN INDIVIDUAL CAPACITY WOULD AMOUNT TO DOUBLE TAXATION WHICH IS NOT PERMISSIBLE. IN THE INSTANT CASE, THE ASSESSEE EXPLAINED THAT HUF WAS IN EXISTENCE SINCE 1983, AND THE ASSESSEE HAD DECLARED THE SAID PROPERTY IN HIS RETURN FOR IMMOVABLE PROPERTY FURNISHED TO THE DEPA RTMENT AS HUF PROPERTY, THEREFORE THE AO WRONGLY TREATED THE RENTAL INCOME IN THE INDIVIDUAL HANDS OF THE ASSESSEE. THE RENTAL INCOME WAS DECLARED YEAR T O YEAR AND SHOWN IN THE RETURN OF INCOME OF THE HUF WHICH WAS ACCEPTED BY T HE DEPARTMENT YEAR TO YEAR. COPY OF THE RETURN FILED BY THE HUF FROM A.Y 1986-87 TO 1998-99 HAD BEEN PLACED AT PAGE NO. 1 TO 93 OF PAPER BOOK (PART III) OF THE ASSESSEE AND ALSO THE SEIZED PERSONAL DIARY, COPY OF WHICH IS PLACED AT P AGE NO. 274 TO 344 OF THE PAPER BOOK(PART1) CLEARLY REVEALED THE EXACT DATE O F RECEIPT OF THE AMOUNT WHICH WAS DEPOSITED IN SEPARATE HUF BANK ACCOUNT. T HE RETURN OF THE ASSETS AND LIABILITIES FOR THE YEAR ENDING ON 1983 FURNISH ED BY THE ASSESSEE TO THE DEPARTMENT ALSO DEPICTED THAT THE INFORMATION RELAT ING TO HUF HAD BEEN INTIMATED TO THE DEPARTMENT AS EARLY AS 1983, SO IT CANNOT BE AN AFTERTHOUGHT. THEREFORE, WE ARE OF THE VIEW THAT THE LD. CIT(A) R IGHTLY DELETED THE IMPUGNED ADDITION. WE DO NOT SEE ANY VALID GROUND TO INTERF ERE WITH THE FINDINGS GIVEN BY THE LD. CIT(A) ON THIS ISSUE. 52. VIDE GROUND NO.2(IV)THE GRIEVANCE OF THE DEPART MENT RELATES TO THE DELETION OF ADDITION OF RS. 70,19,011/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED INVESTMENT IN VARIOUS IMMOVABLE PROPERT IES. 53. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE TH AT THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE FOLLOWING P ROPERTIES WERE FOUND IN THE NAME OF THE ASSESSEE AND HIS FAMILY MEMBERS: 39 53.1 THE HOUSE NO. 2220 WAS CLAIMED TO BE PROPERTY OF THE HUF AND VIDE LETTER DT. 12/08/1999 THE ASSESSEE EXPLAINED THAT THE HOUS E BELONGED TO THE HUF WHICH IS ASSESSED REGULARLY AND TAX HAD BEEN PAID. THE ASSESSEE ALSO GAVE THE DETAILS, HOW THE HOUSE WAS CONSTRUCTED WHICH WAS PU RCHASED IN 1978 IN AUCTION, CONSTRUCTION OF THE GROUND FLOOR HAD BEEN COMPLETED IN YEAR 1978-79 AND GIVEN ON RENT IN THE YEAR 1979. THE A.O. OBSERV ED THAT THE ASSESSEE HAD CONSTRUCTED THE ABOVE HOUSE PROPERTY HIMSELF AFTER TAKING LOAN FROM HIS OFFICE, FRIENDS AND RELATIVES. THE INSTALLMENTS OF THE LOAN WERE PAID BY THE ASSESSEE. RENT DEED WAS ALSO EXECUTED BY THE ASSESSEE HIMSELF AND THAT IN THE IMMOVABLE PROPERTY RETURN FILED BY THE ASSESSEE UPT O 1993, THE ASSESSEE ADMITTED THAT HE WAS THE OWNER OF THIS HOUSE. HOWEV ER IN THE RETURN OF IMMOVABLE PROPERTY FOR THE YEAR 1994, IT WAS STATED THAT THIS PROPERTY WAS IN THE NAME OF HUF. THE A.O. TREATED THE SAID PROPERTY OF THE ASSESSEE. 53.2 THE A.O. ALSO OBSERVED THAT SHRI B.K. KHANNA F ATHER-IN-LAW OF THE ASSESSEE GIFTED THE PLOT OF 350 SQ. YRDS IN GURGAON TO SMT. VANDITA JERATH IN 1993. THE SAID PLOT WAS PURCHASED IN 1989 AND WHEN SHRI B.K. KHANN A WAS ASKED ABOUT THE SOURCE FROM WHICH THE SAID PLOT WAS PURCHASED, HE S TATED THAT THE MONEY WAS WITHDRAWN FROM THE BANK BUT HE DID NOT REMEMBER WHE THER THE MONEY WAS PAID IN CASH. 53.3 THE A.O. OBSERVED THAT THE AFORESAID PLOT WAS TRANSFERRED IN THE NAME OF MS. VANDITA JERATH IN 1993 WITHOUT FILING ANY RETUR N OF GIFT TAX AND WHEN IT WAS 40 SOLD, THE MONEY WAS ALLEGEDLY TO BE GIVEN TO SMT. S AVITA JERATH AND THE EXPENSES FOR NON CONSTRUCTION ON THE PLOT AS PRESCR IBED BY HUDA WAS PAID BY SHRI SUNIL KALIA ONE OF THE LIAISON AGENT ON THE SP ECIFIC INSTRUCTION OF SHRI K. K. JERATH (THE ASSESSEE) WHICH SHOWS THAT THOUGH THE P LOT WAS PURCHASED IN THE NAME OF SHRI B.K. KHANNA BUT THE ACTUAL BENEFICIARY WAS THE FAMILY OF SHRI K.K. JERATH, THE ASSESSEE. 53.4 THE A.O. ALSO OBSERVED THAT PLOT NO. 93, INDUS TRIAL AREA II, PANCHKULA WAS PURCHASED IN THE NAMES OF SHRI KAPIL JERATH S/O OF THE ASSESSEE AND SHRI B.K. KHANNA FATHER-IN-LAW OF THE ASSESSEE. THE SAID PLOT WAS PURCHASED AS PER AGREEMENT DT. 12/10/1995 FROM ONE SHRI NRAAYAN DAS, GPF HOLDER OF SHRI GAGANDEEP SINGH. THE A.O. WAS OF THE VIEW THAT IN T HE FINANCIAL YEAR 1995-96, SHRI KAPIL JERATH WAS NOT DOING ANY WORK SO THERE W AS NO SOURCE OF INCOME AND SIMILARLY SHRI B.K.K. KHANNA HAD NO CAPACITY TO INV EST IN THE PLOT. HE THEREFORE TREATED THE SAID PROPERTY AS PURCHASED BY THE ASSES SEE FROM UNDISCLOSED SOURCES. HE ALSO OBSERVED THAT THE SELLER OF THE PL OT ADMITTED HAVING SOLD THE INDUSTRIAL PLOT FOR RS. 8,00,000 OUT OF WHICH RS. 5 ,50,000/- WAS RECEIVED IN CASH (RS. 1,50,000 BY SHRI NARAYAN DAS AND RS. 4,00,000/- BY HIS SISTER-IN-LAW). BOTH THE SELLERS HAD GIVEN THE DETAILS IN RESPECT OF UTILIZA TION OF THE CONSIDERATION THUS RECEIVED, THEREFORE THE REAL CONSIDERATION FOR THE SAID PLOT WAS RS. 8,00,000/-. THE A.O. CONCLUDED THAT THE ASSESSEE WAS THE REAL OWNER OF THE SAID PLOT PURCHASED FOR A SUM OF RS. 8,00,000/-, THE SAID AMOUNT WAS TR EATED AS UNEXPLAINED AND DEEMED INCOME OF THE ASSESSEE UNDER SECTION 69 OF T HE ACT. 53.5 THE A.O. IN THE ASSESSMENT ORDER MENTIONED THA T SMT. SAVITA JERATH HAD PURCHASED 8 KANAL AND 6 MARLAS OF LAND FROM SARV SH RI AVTAR SINGH, BANT SINGH AND HARZINDER SINGH. TO VERIFY THE TRUE CONSIDERATI ON, THE STATEMENT OF SHRI AVTAR SINGH WAS RECORDED ON 25/11/1997. IN THE SAID STATE MENT IT WAS STATED THAT THE DEAL WAS FINALIZED BETWEEN SHRI BANT SINGH, SHRI HA RZINDER SINGH (OTHER CO-OWNER) AND SHRI SWARAN SINGH WHO ADMITTED THAT HE DID NOT KNOW THE EXACT CONSIDERATION AT WHICH THIS DEAL WAS FINALIZED. 41 53.6 THE A.O ALSO MENTIONED THAT SHRI AVTAR SINGH C ONCEDED THAT IN 1994 HSIDC HAD ACQUIRED 8 ACRES OF LAND BELONGING TO HIM @ 2.42 LACS PER ACRE AND IN 1993 HE HAD SOLD ONE ACRE OF LAND TO SHRI SUCHHA SINGH @ 2.50 LACS PER ACRE. SHRI AVTAR SINGH CONFIRMED THAT THE PREVAILING MARK ET RATE IN THIS AREA WAS RS. 4 TO RS. 8 LACS PER ACRE. THE A.O. OBSERVE4D THAT SMT . SAVITA JERATH, IN HER STATEMENT RECORDED ON 02/02/1998 STATED THAT SHE HA D DIRECTLY FINALIZED THE DEAL WITH SHRI SWARAN SINGH AND SHRI SUNIL SHARMA H ELPED IN THE TRANSFER OF THE LAND. THE A.O. HELD THAT THE EVIDENCE GATHERED DURI NG THE ENQUIRY CONFIRMED THAT THOUGH THE LAND WAS PURCHASED IN THE NAME OF S MT SAVITA JERATH BUT AT EVERY STAGE LIKE ENGAGING THE PROPERTY DEALERS, SEL ECTING THE LAND, BARGAINING THE PRICE, PAYMENT TO THE SELLER AND THE PROPERTY D EALERS, THE DEAL WAS DONE BY SHRI K.K. JERATH (THE ASSESSEE) HIMSELF AND THOUGH THE TOTAL REGISTRATION OF LAND WAS DONE FOR RS. 4,42,000/- BUT THE TOTAL INVESTMEN T IN THIS PROPERTY WAS RS. 34 LACS WHICH HAD BEEN PAID BY THE ASSESSEE HIMSELF. A CCORDING TO HIM SMT. SAVITA JERATH WAS NOT HAVING ANY APPARENT SOURCE OF INCOME . HE THEREFORE TREATED THE INVESTMENT OF RS. 34 LACS AS UNEXPLAINED AND CONSID ERED THE SAME AS DEEMED INCOME OF THE ASSESSEE. 53.7 THE A.O. ASKED THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS ABOUT SOURCE OF INVESTMENT IN THE HOUSE NO. 1659, S EC-4 PANCHKULA, THE ASSESSEE REPLIED THAT THE SAID HOUSE WAS OWNED BY S MT. SAVITA JERATH WHO PURCHASED THE SAME FROM HER INDEPENDENT INCOME. WHE N CONFRONTED SMT. SAVITA JERATH CONFIRMED THAT THIS HOUSE WAS PURCHAS ED BY HER FOR RS. 2 LACS FROM SHRI G.S. BAJWA. TO ASCERTAIN THE TRUE COST OF THE HOUSE, THE A.O. EXAMINED SHRI G.S. BAJWA UNDER SECTION 131 OF THE ACT ON 02/02/19 98, HE STATED THAT SHRI SUNIL SHARMA HAD QUOTED A PRICE OF RS. 26,00,000/- FOR TH IS PROPERTY AND THAT RS. 24,00,000/- WAS GIVEN IN CASH BY SHRI SUNIL SHARMA AND THAT THE DRAFT OF RS. 2,00,000/- HAD BEEN GIVEN AND STAMP PAPER FOR RS. 1 ,32,740/- WERE PURCHASED. THE A.O. OBSERVED THAT SHRI G.S. BAJWA GAVE THE DET AILS HOW HE INVESTED THE AMOUNT FOR CONSTRUCTION OF A RESIDENTIAL HOUSE IN R ANDHIR SINGH NAGAR, 42 LUDHIANA. HE PURCHASED THE PLOT FOR RS. 10,00,000 A ND SPENT RS. 6,00,000/- ON ITS CONSTRUCTION, RS. 1,00,000/-WAS DEPOSITED IN DIFFER ENT BANK, RS. 3,00,000/- WERE SPENT ON THE MARRIAGE OF HIS DAUGHTER DR. HARJIT KA UR, RS. 1,00,000/- WAS USED FOR HOUSE HOLD AND RS. 3,00,000/- WAS LYING AS CASH WIT H HIM. 53.8 THE A.O. OBSERVED THAT WHILE COL BAJWA, HIS SO N DR. MANJIT BAJWA AND THE PROPERTY DEALER SHRI SUNIL SHARMA HAD VERY CATEGORI CALLY STATED THAT THE CONSIDERATION FOR THE TRANSFER OF THE PLOT WAS HIGH LY UNDER STATED IN THE SALE DEED AND THAT THE ASSESSEE AND HIS WIFE SMT. SAVITA JERATH HAD STATED THAT THE PROPERTY IN QUESTION WAS INFACT PURCHASED FOR THE C ONSIDERATION STATED IN THE DOCUMENTS. HOWEVER, THE A.O. CONSIDERED THE TOTAL I NVESTMENTS IN THE SAID PROPERTY AT RS. 27,32,740/- AND TREATED THE SAME AS DEEMED INCOME OF THE ASSESSEE UNDER SECTION 69 OF THE ACT. 53.9 AS REGARDS TO THE PLOT NO. 654, SECTOR 23A, GU RGAON IN THE NAME OF MS. VANDITA JERATH D/O THE ASSESSEE, THE A.O. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS ASKED THE ASSESSEE TO SUBMIT THE SOURCE OF ACQUISITION OF THIS PLOT. IN RESPONSE THE ASSESSEE SUBMITTED AS UNDER: 'THE PLOT NO. 654 SECTOR 23-A, GURGAON BELONGED TO SH. B.K.KHANNA AND WAS PURCHASED BY HIM FROM HIS RESOURCES. LATER HE GOT I T TRANSFERRED IN THE NAME OF HIS GRANDDAUGHTER VANDITA JERATH WITHOUT ANY CONSIDERAT ION AND KEPT THE PAPERS WITH HIM. IT WAS HIS BENAMI PROPERTY. THIS HAS BEEN ADMITTED BY HIM DURING THE COURSE OF HIS STATEMENT RECORDED ON OATH BY THE ADI AT FEROZEPUR. SH. B.K.KHANNA BEING THE REAL OWNER OF THIS PROPERTY SOLD IT LATER TO ONE SH. ARUN GUPTA, RESIDENT OFH.NO. 449, SECTOR 46-A, CHANDIGARH. THE DETAILS O F SALE MAY BE OBTAINED FROM SH. B.K.KHANNA. ' 53.10 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSE SSEE, THE A.O. OBSERVED THAT THE REPLY SUBMITTED BY THE ASSESSEE WAS EVASIVE AND HE WAS TRYING TO AVOID THE REAL ISSUE. THE A.O. OBSERVED THAT THE ENQUIRIES FR OM HUDA, GURGAON REVEALED THAT THIS PLOT WAS ALLOTTED IN THE NAME OF SHRI S.P . KARWAL AND ON 22/06/1989 IT HAD BEEN REGISTERED IN THE NAME OF SHRI B.K. KHANNA WHO TRANSFERRED THE SAME TO MISS VANDITA JERATH VIDE ESTATE OFFICE ORDER NO. 970 DT. 12/06/1993 AND IN THE 43 TRANSFER PAPERS IT WAS MENTIONED THAT IT WAS A FAMI LY TRANSFER. THE POSSESSION CERTIFICATE OF THE PLOT WAS ISSUED BY HUDA IN THE N AME OF VANDITA JERATH ON 20/01/1998. ACCORDING TO THE A.O. SHRI B.K. KHANNA COULD NOT EXPLAIN THE SOURCE FROM WHICH HE HAD ACQUIRED THIS PLOT. HE ALSO OBSER VED THAT SHRI B.K. KHANNA VIDE LETTER DT. 05/10/1999 SUBMITTED THAT THE PLOT IN GURGAON WAS PURCHASED BY HIM AFTER SALE OF HIS CAR FOR RS. 60,000/-. THE A.O . ALSO OBSERVED THAT FOR PAYMENT OF TWO INSTALLMENT OF RS. 13,671/- ON 09/08/1991 AN D RS. 12,600/- ON 22/11/1993, THERE WERE NO CORRESPONDING WITHDRAWAL IN THE BANK ACCOUNT OF SMT. SAVITA JERATH. THUS THERE WAS DISCREPANCY IN THE PURCHASE OF PLOT AT GURGAON SOLD BY SMT. SAVITA JERATH. THE A.O. CONSIDERED THE SAID AM OUNT AS UNEXPLAINED INVESTMENT BY THE ASSESSEE AND ADDED THE SAME IN HI S HANDS. THE A.O. ALSO TREATED RS. 60,000/- CLAIMED TO BE INVESTED BY SHRI B.K. KHANNA FOR PURCHASE OF PLOT NO. 654, SECTOR 23A, GURGAON IN THE NAME OF MI SS. VANDITA JERATH AS UNEXPLAINED INVESTMENT BY THE ASSESSEE. ACCORDINGLY ADDITION OF RS. 70,19,011/- WAS MADE (RS. 8,00,000/-, RS. 34,00,000/-, RS. 27,3 2,740/-, RS. 60,000/-, RS. 13,671/- AND RS. 12,600). 54. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: 'SUBSEQUENT TO SEARCH, THE ADIT AS WELL AS THE ASSE SSING OFFICER MADE ADDITIONS OF RS.70,19,011/- ON ACCOUNT OF UNACCOUNTED INVESTMENT IN VARIOUS IMMOVABLE PROPERTIES AT PANCHKULA AND KHANGESRA (PANCHKULA). THE SAME ARE DISCUSSED HEREUNDER:-(A)INVESTMENT IN THE PURCHASE OF PLOT NO .93, INDL. AREA, PHASE-LL, PANCHKULA:- THIS PLOT WAS JOINTLY PURCHASED BY SH. KAPIL DEV JE RATH, THE ASSESSEE'S SON AND HIS FATHER-IN-LAW SH. B. K. KHANNA. THE PLOT WAS PURCHA SED AND SUBSEQUENTLY TRANSFERRED TO THE FIRM M/S. VRINDAWAN ELECTRICALS. THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PURCHASE OF THE PLOT HAS BEEN MADE IN THE HANDS OF THE ASSESSEE. THE PLOT WAS PURCHASED FOR A SUM O F RS.2,50,000/- AS PER THE AGREEMENT TO SELL DATED 12 TH OCTOBER, 1995 FROM ONE SH. NARAYAN DASS, GPA HOLDER OF SH.GAGANDEEP SINGH. STATEMENT OF SH. NARA YAN DASS AND ONE SH. SUKET KAMBOJ WERE OBTAINED AT THE BACK OF THE ASSESSEE WH EREIN THEY WERE FORCED TO STATE HAVING SOLD THE PLOT FOR RS.8 LACS. STATEMENT S OF VARIOUS PROPERTY DEALERS INVOLVED IN THE DEAL WAS ALSO OBTAINED AT THE BACK OF THE ASSESSEE, WITH REGARD TO THE MARKET VALUE OF THE PLOT AT THAT TIME. NO EV IDENCE OR INCRIMINATING DOCUMENT WAS FOUND DURING THE COURSE OF SEARCH TO S HOW THE PROPERTY HAVING 44 BEEN PURCHASED AT A HIGHER VALUE OR THE AGREEMENT T O SELL HAVING BEEN RECOVERED FROM THE POSSESSION OF THE SELLERS TO JUS TIFY THE TRANSACTION OF THE PROPERTY AT A FIGURE HIGHER THAN THE DECLARATION AS PER THE AGREEMENT TO SELL. EVEN THE HUD A HAS ISSUED RE-ALLOTMENT LETTER IN TH E NAME OF SH. BAL KRISHAN KHANNA AND SH. KAPIL JERATH ON THE BASIS OF THE AGR EEMENT TO SELL AND OTHER RELEVANT DOCUMENTS. EVIDENCE OF THE SAME IS ENCLOSE D. THE PLOT IN QUESTION IS AN INDUSTRIAL PLOT. THE HON'BLE SUPREME COURT IN THE C ASE OF K. P. VARGHESE VS. ITO ERNAKULAM & OTHERS REPORTED IN 131 ITR 597, HAS HELD THAT THE ASSESSEE MUST BE SHOWN TO HAVE RECEIVED MORE THAN WHAT IS DECLARED O R DISCUSSED BY HIM AS CONSIDERATION. THE DIFFERENCE BETWEEN THE MARKET VA LUE AND THE CONSIDERATION RECEIPT IS NOT SUFFICIENT. AS FAR AS THE BURDEN OF PROOF IS CONCERNED THE SAME IS ON THE DEPARTMENT. THUS, THE HON'BLE SUPREME COURT IN ITS WISDOM HA HELD THAT THE VALUE FOR PURPOSE OF THE INCOME TAX ACT WOULD NOT B E THE VALUE FOR STAMP DUTY BUT AS PER THE ACTUAL AGREEMENT TO SELL'. THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF DIN ESH KUAMR MITTAL VS. ITO REPORTED IN 193 ITR 700 HAS GONE TO THE EXTENT OF H OLDING THAT THERE IS NO RULE OF LAW TO THE EFFECT THAT THE VALUE DETERMINED FOR THE PURPOSE OF STAMP DUTY IS THE ACTUAL CONSIDERATION PASSING BETWEEN THE PARTIES TO A SALE. THE ACTUAL CONSIDERATION MAY BE MORE OR MAY BE LESS. WHAT IS T HE ACTUAL CONSIDERATION THAT IS PASSED BETWEEN THE PARTIES IS A QUESTION OF FACT . IT IS WORTHWHILE TO MENTION THAT THE ASSESSMENT OF ACTUAL MARKET VALUE OF THE PROPER TY DEPENDS UPON VARIOUS FACTORS SUCH AS ANNUAL RENTAL, DISPUTE, LOCATION ET C. ONLY A LOGICAL WAY OF ASSESSMENT OF STAMP DUTY SHOULD BE BASED UPON THE A MOUNT ACTUALLY SETTLED BETWEEN THE SELLER AND THE PURCHASER. IN A LANDMARK JUDGEMENT THE APEX COURT OF THE COUNTRY ACCEPTED A WRITTEN PETITION OF MOHA BIR SINGH & OTHERS SCC (1996) 1 609 DECLARING THE GUIDELINES AND INSTRUCTIONS ISS UED BY THE DISTRICT COLLECTORS ABOUT FIXING THE MINIMUM PRICE OF AGRICULTURE/URBAN PROPERTY FOR REGISTRATION PURPOSE AS ILLEGAL AND ULTRAVIRES OF SECTION 47A(1) OF THE INDIAN STAMP ACT, 1899. A STATEMENT OF SELLERS OF THE PROPERTY THAT HE RECE IVED CONSIDERATION MORE THAN THAT WHAT WAS DECLARED IN THE REGISTERED DEED IS NO T TENABLE IN VIEW OF THE PROVISIONS OF SECTION 91 AND 92 OF THE INDIAN EVIDE NCE ACT, 1872 WHICH PROVIDE THAT NO ORAL EVIDENCE IS ADMISSIBLE TO COUNTER A LE GALLY EXECUTED REGISTERED DOCUMENT HAS FURTHER AVERRED THAT STATEMENT OF THE SELLERS OF THE PROPERTY WERE OBTAINED AT THE BACK OF THE ASSESSEE. THE ASSESSEE WAS NEVER GIVEN AN OPPORTUNITY TO CROSS-EXAMINE THEM AND AS SUCH THE L AW LAID DOWN BY THE HON'BLE SUPREME COURT THAT UNLESS EVIDENCE OF A PERSON IS T ESTED ON THE TOUCHSTONE OF CROSS-EXAMINATION THE SAME IS NOT ADMISSIBLE, WAS I GNORED. IN VIEW OF THE CLEAR PROPOSITION OF LAW THE STATEMENTS OBTAINED BY THE I NCOME TAX DEPARTMENT UNDER COERCION REGARDING RECEIPT OF A HIGHER AMOUNT FROM THE SELLERS OF THE PROPERTY WHO WERE SIGNATORY TO THE REGISTERED SALE DEED AND HAD RECEIVED THE CONSIDERATION AMOUNT IN THE PRESENCE OF A SUB-REGIS TRAR ARE NOT TENABLE. RELIANCE IS PLACED ON THE DECISION OF THE HON'BLE I T AT, CHANDIGARH BENCH, CHANDIGARH IN THE CASE OF SMT. VEENA SYAL VS. ACIT 70 ITD 62 WHEREIN IT HAS BEEN HELD THAT ADDITION OF ANY PREMIUM PAID IN PURCHASE OF PROPERTY, CANNOT BE MADE WITHOUT CONTROVERTING ASSESSEE'S EXPLANATION AND WITHOUT SPECIFICALLY CONFRONTING ASSESSEE WITH FURTHER INFORMATION/ FACT S FOUND BY ASSESSING OFFICER. THE HON'BLE PUNJAB, HARYANA HIGH COURT IN THE CASE OF CIT VS. NITIN KUMAR 248 ITR 478 HAS HELD THAT NO RELIANCE CAN BE PLACED ON THE ENTRIES IN THE DIARIES OF THE PROPERTY DEALER REGARDING HIGHER AMOUNT PAID FOR PU RCHASE OF PROPERTY OVER AND 45 ABOVE THE REGISTERED DEED VALUE. ADDITIONS MADE U/S .69 WERE ORDERED TO BE DELETED. IN VIEW OF THE ABOVE SINCE NO EVIDENCE OF ANY ON MO NEY HAVING BEING PASSED FOR PURCHASE OF PROPERTY NO.93, INDL. AREA, PHASE-I , PANCHKULA HAS BEEN FOUND OR BROUGHT ON RECORD OTHER THAN SIMPLE RECORDING THE S TATEMENTS THAT ALSO UNDER DURESS AND THE VALUE OF THE PROPERTY PURCHASED HAVI NG BEING ACCEPTED BY THE HUDA AUTHORITIES, NO ADDITION IS CALLED FOR. (B)AGRICULTURAL LAND AT KHANGESRA (PANCHKULA): THE LAND AT VILLAGE KHANGESRA DISTT. PANCHKULA WAS PURCHASED SMT. SAVITA JERATH FROM THE FOLLOWING PERSONS: NAME OF THE HOLDER AREA OF LAND REGISTRATION VALU E SH. SWARN SINGH 6 ACRES RS. 3,50,000 SMT. JASPAL KAUR & OTHERS 5 KANALS RS. 40,000 SHRI AVTAR SINGH & OTEHRS 8 KANALS 6 MARLAS RS. 52,0 00 EXPENSES INCURRED RS. 40,000 TOTAL RS. 4,82,000 THE SOURCE OF THE SAME ARE AS UNDER: WITHDRAWAL FROM BANK ACCOUNT NO. 2837 WITH STATE BANK OF PATIALA, HIGH COURT BRANCH RS. 1,00, 000 LOAN FROM HUF RS. 100,000 LOAN FROM SH. B. K. KHANNA A/C NO. 7632 WITH CORPORATION BANK RS. 2,40,000 OUT OF DIARY AND TUITION INCOME RS. 42,000 TOTAL RS. 4,82,000 SUBSEQUENT TO SEARCH, THE ADIT RECORDED THE STATEME NT OF SH.SWRAN SINGH FROM WHOM 6 ACRES OF LAND WAS PURCHASED. HE WAS THREATEN ED AND FORCED TO MAKE THE CONFESSION OF HAVING SOLD LAND AT RS. 19,00,000 /-. HIS STATEMENT WAS OBTAINED AT THE BACK OF THE ASSESSEE'S WIFE MRS. SAVITA JERA TH AND NO OPPORTUNITY TO CROSS- EXAMINE HIM WAS GRANTED. HENCE, NO RELIANCE ON THE STATEMENT OF SH.SWRAN SINGH CAN BE PLACED. MOREOVER, SH.SWRAN SINGH, VIDE LETTER DATED 17-12-1997 WRITTEN TO THE ADIT STATED THAT THE INCOME TAX DEPA RTMENT HAS FORCED HIM TO MAKE A CONFESSION OF HIGHER VALUE IN THE PURCHASE O F LAND WHEREAS THE EXACT PRICE WAS RS.3,50,000/-. 5 KANALS OF LAND WAS PURCHASED FROM SMT. JASPAL KAU R FOR RS.40,000/- AND 8 KANALS AND 6 MARLAS OF LAND WAS PURCHASED FROM SH.AVTAR SI NGH AND OTHERS FOR RS.52,000/- STATEMENT OF SMT. JASPAL KAUR WAS RECOR DED AT THE BACK OF THE 46 ASSESSEE WHEREIN A FIGURE OF RS.2,50,000/- WAS OBTA INED FROM HER FOR SALE OF LAND MEASURING 5 KANALS AT VILLAGE KHANGESRA NO OTHER EV IDENCE BESIDES HER FORCED CONFESSION HAS BEEN BROUGHT ON RECORD TO JUSTIFY TH E VALUE OF LAND PURCHASED. SMT. JASPAL KAUR UNDER PRESSURE FROM THE INCOME TAX DEPARTMENT HAD STATED THAT THE LAND WAS SOLD AT RS.2,50,000/- BUT LATER IN HER LETTER TO THE ADIT DATED 19-12- 1997, THEY DENIED HAVING RECEIVED MORE THAN THE AMO UNT AS PER THE SALE DEED DULY REGISTERED WITH SUB-REGISTRAR, PANCHKULA. SHE HAD POINTED OUT THAT HER STATEMENT WAS TAKEN UNDER DURESS. SH.AVTAR SINGH HA S DENIED HAVING RECEIVED ANY AMOUNT OVER AND ABOVE THE SALE DEED FIGURE. INS TANCE, OF SIMILAR LAND SOLD IN THE AREA IS ENCLOSED. AS STATED EARLIER, RELYING ON THE JUDGEMENT OF THE APEX COURT OF THE HON'BE HIGH COURT NO ADDITION ON ACCOUNT OF ANY UNDISCLOSED INV ESTMENT IN THE PURCHASE OF LAND AT VILLAGE KHANGESRA IS CALLED FOR. (C)INVESTMENT IN PROPERTY NO. 1659, SECTOR 4, PANCH KULA : THE PROPERTY IN QUESTION WAS PURCHASED FROM SH. G. S. BAJWA ON JANUARY 9, 1997. THE PROPERTY IN QUESTION WAS A 1 KANAL PLOT AT SECT OR 4, PANCHKULA. THE BUILT UP AREA OF THE PLOT WAS 10% AS PER THE STATUTORY GOVER NMENT REQUIREMENT TO AVOID PENALTY FOR NON-CONSTRUCTION. THE STATEMENT OF SH. G. S. BAJWA, SELLER WAS RECORDED AT THE BACK OF THE ASSESSEE WHEREIN HE WAS FORCED TO QUOTE THE FIGURE OF RS. 26,00,000/- AS THE SALE VALUE. THE PROPERTY WAS REGISTERED FOR RS.2,00,000/- AS PE R THE REGISTERED SALE DEED. THE SAME WAS PURCHASED BY ASSESSEE'S WIFE, SMT. SAVITA JERATH OUT OF WITHDRAWAL FROM BANK ACCOUNT NO.2837 MAINTAINED WITH STATE BAN K OF PATIALA, HIGH COURT BRANCH, CHANDIGARH. THE LOCATION OF THE PLOT IN QUE STION WAS BAD AS THE SAME WAS NEXT TO A GANDA NALLA, AND WAS ALSO ENCROACHED UPON BY SOME SLUM DWELLERS AND RICKSHAW WALLAS AND HENCE THE VALUE OF THE PROPERTY WAS SLIGHTLY LOWER AS COMPARED TO OTHER PLOTS IN THE VICINITY. THE ASSESSEE WAS NOT GIVEN OPPORTUNITY TO CROSS-EXA MINE THE SELLER FOR REASONS BEST KNOWN TO THE DEPARTMENT. SINCE NO OTHER EVIDEN CE OTHER THAN THE TAINTED TESTIMONY OF THE SELLER HAS BEEN BROUGHT ON RECORD, NO RELIANCE ON THE SAME CAN BE PLACED. IT WILL NOT BE OUT OF PLACE TO MENTION T HAT NO INCRIMINATING DOCUMENT OR OTHER EVIDENCE WAS FOUND DURING THE COURSE OF SE ARCH AT THE PREMISES OF THE ASSESSEE NOR ANY EVIDENCE OF HIGHER AMOUNT HAVING B EING PAID HAS BEEN BROUGHT ON RECORD BY THE SELLER OF THE PROPERTY OR THE AGENT TO JUSTIFY THEIR ACTION. IT IS WELL KNOWN THAT THE INCOME TAX DEPARTMENT HAS LOT OF POWERS TO SCARE AND THREATEN ANY PERSON AND MAKE HIM SIGN ON ANY VALUE. RELIANCE IS PLACED ON THE JUDGEMENTS OF THE HON'BLE SUPREME COURT AND VARIOUS HIGH COURTS CITED SUPRA. THE PLOTS IN THE VICINITY, HAVE BEEN SOLD AT MORE O R LESS IDENTICAL AMOUNTS AS COMPARED TO THE PROPERTY PURCHASED BY SMT. SAVITA J ERATH. HENCE, ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASE OF PR OPERTIES IS UNJUSTIFIED, ILLEGAL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND D ESERVES TO BE DELETED. 54.1 THE LD . CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE A SSESSEE DELETED THE ADDITION BY OBSERVING IN PARA 11.2 TO 11.4 OF T HE IMPUGNED ORDER WHICH READ ASUNDER: 47 11.2- I HAVE GONE THROUGH THE CONTENTS OF THE IMPUG NED ASSESSMENT ORDER AS WELL AS THE ARGUMENTS OF THE LEARNED COUNSEL FOR TH E APPELLANT. THE LD. ASSESSING OFFICER HAS DISCUSSED THIS ISSUE AND THE ADDITION ON PAGE 15-20 AND 45-68 OF THE IMPUGNED ASSESSMENT ORDER. I FIND THAT NO INCRIMINA TING DOCUMENTS PERTAINING TO INVESTMENT IN IMMOVABLE PROPERTIES FOUND DURING THE SEARCH AND SEIZURE OPERATION AND THE ADDITIONS ARE NOT BASED ON SUCH A N EVIDENCE FOUND DURING THE SEARCH AND SEIZURE OPERATION. THE ASSESSMENT FO R THE BLOCK PERIOD IS COMPLETED UNDER SECTION 158BC ONLY AND THESE SPECIA L PROVISIONS ENVISAGE THE DETERMINATION OF TOTAL UNDISCLOSED INCOME BASED ON THE MATERIAL GATHERED OR EVIDENCES COLLECTED DURING THE SEARCH AND SEIZURE O PERATION WITH RESPECT TO THE CORRESPONDING UNDISCLOSED INCOME. THESE PROVISIONS ARE NOT SUBSTITUTE FOR THE REGULAR ASSESSMENTS AS DECIDED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAVI KANT JAIN, 250 ITR 145. THE RELEVANT PORTI ON OF THE JUDGEMENT IS REPRODUCED HERE-UNDER FOR THE PURPOSES OF CLARITY : - 'THE SPECIAL PROCEDURE OF CHAPTER XIV-B IS INTENDED TO PROVIDE A MODE OF ASSESSMENT OF UNDISCLOSED INCOME, WHICH HAS BEEN DE TECTED AS A RESULT OF SEARCH. AS THE STATUTORY PROVISIONS GO TO SHOW, IT IS NOT INTENDED TO BE A SUBSTITUTE FOR REGULAR ASSESSMENT. ITS SCOPE AND AMBIT IS LIMI TED IN THAT SENSE TO MATERIALS UNEARTHED DURING SEARCH. IT IS IN ADDITION TO THE REGULAR ASSESSMENT ALREAD Y DONE OR TO BE DONE. THE ASSESSMENT FOR THE BLOCK PERIOD CAN ONLY BE DONE ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REGUISIT ION OF BOOKS OF ACCOUNT OR DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION A S ARE AVAILABLE WITH THE ASSESSING OFFICER. EVIDENCE FOUND AS A RESULT OF SEA RCH IS CLEARLY RELATABLE TO SECTIONS 132 AND132A.' 11.3- FURTHER MORE, POST SEARCH ENQUIRIES HAVE ALSO NOT BROUGHT ANY DEFINITE EVIDENCE TO SUGGEST THAT A DEFINITE AMOUNT HAS BEEN PASSED, HANDS IN CONSEQUENCE TO SOME UNDERHAND DEALING WITH RESPECT TO THE TRANSACTION PERTAINING TO SAID PROPERTIES DISCUSSED BY THE ID. ASSESSING OFFICER. THESE SPECIAL PROVISIONS FOR BLOCK ASSESSMENT HAVE BEEN EXAMINED BY THE HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. KHUSHLAL CHAND NIRMAL KUMAR REPORTED IN 263 ITR 77 WITH RESPECT TO THE ADDITION ON ACCOU NT OF UNEXPLAINED EXPENSES IN THE CONSTRUCTION OF RESIDENTIAL BUNGALOW. THE RELEV ANT PORTION OF THE SAID DECISION IS REPRODUCED HERE UNDER FOR THE PURPOSES OF CLARIT Y :- 'BEFORE WE REFER TO THE CIRCULAR OF THE CENTRAL BOA RD OF DIRECT TAXES, WE WOULD LIKE TO REFER TO THE CITATIONS MADE AT THE BAR. IN THE C ASE OF C.T. LAXMANDAS [1994] 208 ITR 859 THE LEARNED SINGLE JUDGE OF THE MADRAS HIGH COURT EXPRESSED THE VIEW THAT THE INCOME-TAX OFFICER HAS POWER TO DETERMINE THE MA RKET VALUE OF A CAPITAL ASSET UNDER SECTION 55A OF THE ACT. IN THE CASE OF WILLIAM DE NORONHA [1997] 227 ITR 27 A DIVISION BENCH OF THE ALLAHABAD HIGH COURT DEALT WITH CERTAIN ASPECTS IN RELATION TO THE WEALTH-TAX ACT. ON A PERUSAL OF THE AFORESAID JUDGMENTS WE ARE OF THE CONSIDERED VIEW, THE SAME HAVE NO APPLICABILITY TO THE PRESENT CASE. AT THIS JUNCTURE, WE MAY REFER WITH PROFIT TO THE DECISION RENDERED IN THE CASE OF VINOD DANCHAND GHODAWAT [2001] 247 ITR 448 (BOM). IN THE SAID CASE THE BOMBAY HIGH COURT WAS DIRECTLY IN SEISIN OF THE ISSUE IN QUESTI ON. QUESTION NO. 3 WHICH WAS FRAMED IN THAT CASE READ AS UNDER: 'QUESTION NO. 3 : WHETHER IN LAW, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DELETING THE AD DITION OFRS. 2,49,350 MADE ON ACCOUNT OF UNEXPLAINED EXPENSES IN THE CONSTRUCTION OF THE RESIDENTIAL BUNGALOW AT JAYSINGH WHEN THE SAME WAS PROPERLY MADE BY THE ASSESSING OFFICER. 48 WHILE DEALING WITH SAID QUESTION THE VIEW WAS EXPRE SSED AS UNDER: 'THE SAID QUESTION REFERS TO AN ADDITION OF RS. 2,4 9,350 MADE ON ACCOUNT OF UNEXPLAINED EXPENSES IN THE CONSTRUCTION OF A RESID ENTIAL BUNGALOW BY THE ASSESSEE. HERE ALSO, CHAPTER XIV-B HAS NO APPLICATI ON. THE TRIBUNAL, RIGHTLY, FOUND THAT THE ADDITION IS MADE ON THE BASIS OF THE REPOR T OF THE DEPARTMENTAL VALUER. ACCORDING TO THE ASSESSING OFFICER, DURING THE SEARC H, IT WAS FOUND THAT THE ASSESSEE HAD CONSTRUCTED A BUNGALOW. IT WAS FOUND T HAT THE ASSESSEE HAD INCURRED EXPENSES OF RS. 4.16 LAKHS. THE ASSESSING OFFICER, THEREAFTER, REFERRED THE MATTER TO THE DEPARTMENTAL VALUER, WHO VALUED THE P ROPERTY AT RS. 6.66 LAKHS AND, ACCORDINGLY, THE DIFFERENCE HAS BEEN ADDED TO THE INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME. THE ABOVE BASIS CLEARLY SHOW S THAT THE DEPARTMENT HAS NOT UNDERSTOOD THE SCOPE OF CHAPTER XIV-B OF THE IN COME-TAX ACT. BY NO STRETCH OF IMAGINATION, THE IMPUGNED ADDITION FELL WITHIN T HE CHAPTER XIV-B. THERE WOULD BE NO FINALITY, IF THE DEPARTMENT IS PERMITTED TO A DD BACK TO THE INCOME OF THE ASSESSEE ON THE BASIS OF THE DEPARTMENTAL VALUER'S REPORT OBTAINED SUBSEQUENT TO THE ORDER OF THE REGULAR ASSESSMENT. HENCE, THE TRI BUNAL WAS RIGHT IN DELETING THE SAID ADDITION. ACCORDINGLY, QUESTION NO. 3 IS ANSWE RED IN THE AFFIRMATIVE, I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT.' IF THE PROVISION OF SECTION 158BB IS READ IN PROPER PERSPECTIVE, WE ARE INCLINED TO RESPECTFULLY AGREE WITH THE VIEW EXPRESSED BY THE B OMBAY HIGH COURT. QUITE APART FROM THE ABOVE, THE CENTRAL BOARD OF DIRECT T AXES CIRCULAR WHICH HAS BEEN REFERRED TO ABOVE IN PARAGRAPH 61.3.2 HAS LAID DOWN AS UNDER: '61.3.2. THE FINANCE ACT, 2002, HAS AMENDED SECTION 158BB TO CLARIFY THAT THE BLOCK ASSESSMENT OF UNDISCLOSED INCOME IS TO BE BAS ED ON THE EVIDENCE FOUND IN THE SEARCH AND MATERIAL OR INFORMATION GATHERED IN POST-SEARCH INQUIRIES MADE ON THE BASIS OF EVIDENCE FOUND IN THE SEARCH.' WE HAVE REFERRED TO THE AFORESAID CLARIFICATION FOR THE SIMPLE REASON, MR. ARYA SUBMITTED THAT THE AMENDMENT WAS EFFECTED TO SECTIO N 158BB IN THE YEAR 2002 WITH EFFECT FROM JULY 1, 1995, AND THE AMENDMENT WO ULD BE APPLICABLE TO THE PRESENT CASE AS BLOCK PERIOD COVERS TEN YEARS COMME NCING 1986 TO 1996. ON A PERUSAL OF THE UNAMENDED AND AMENDED PROVISIONS AND THE CENTRAL BOARD OF DIRECT TAXES CIRCULAR, WE ARE OF THE CONSIDERED VIE W THAT THERE HAS BEEN NO SPECIFIC EFFECT AS FAR AS THIS FACET IS CONCERNED. EMPHASIS HAS BEEN GIVEN ON THE FACT THAT EVIDENCE MUST HAVE BEEN FOUND DURING THE SEARCH AND ONLY THEREAFTER THE QUESTION OF GATHERING ANY MATERIAL INFORMATION WOULD ARISE BASED ON THE SEARCH INQUIRY. IT IS NOT DISPUTED AT THE BAR, THAT DURING THE SEARCH IN THE PREMISES OF THE ASSESSEE NOTHING WAS FOUND WITH REGARD TO TH E INVESTMENT IN THE HOUSE. HOWEVER, IT IS CONTENDED BY MR. ARYA THAT THE VALUA TION REPORT OF THE DEPARTMENTAL VALUATION OFFICER WAS OBTAINED AND WAS CONFRONTED TO THE ASSESSEE BUT HE WAS NOT ABLE TO GIVE ANY EXPLANATIO N AND, THEREFORE, IT SHOULD BE ACCEPTED AS EVIDENCE. WE ARE AFRAID, THE AFORESAID SUBMISSION DOES NOT COMMEND ACCEPTANCE IN VIEW OF THE STATUTORY PROVISI ONS AND THE LAW LAID DOWN IN THE CASE OF VINOD DANCHAND GHODAWAT [2001] 247IT R 448 (BOM) WITH WHICH WE HAVE RESPECTFULLY AGREED. IN VIEW OF THE AFORESAID, WE DO NOT FIND ANY SUBSTANTIAL QUESTION OF LAW INVOLVED IN THIS APPEAL.' 49 11.4- IN VIEW OF THE ABOVE, THE ADDITION TO THE TUN E OF RS.70,19,011/- IS FOUND NOT JUSTIFIED & RELATABLE TO ANY EVIDENCE COLLECTED/GAT HERED DURING SEARCH AND SEIZURE OPERATION AND THIS CANNOT BE UPHELD. HENCE, IT IS DELETED. (RELIEF;- RS. 70,19,011/-) 55. NOW THE DEPARTMENT IS IN APPEAL. 56. THE LD. CIT DR REITERATED THE OBSERVATIONS MADE BY THE A.O. AND FURTHER SUBMITTED THAT THE LD. CIT(A) HAD DELETED THE IMPUG NED ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN IMMOVABLE PROPERTY WIT H THE FINDINGS THAT NO INCRIMINATING DOCUMENTS PERTAINING TO INVESTMENT IN IMMOVABLE PROPERTY WAS FOUND DURING THE SEARCH AND THE ADDITIONS WERE NOT BASED ON SUCH EVIDENCE FOUND DURING THE SEARCH AND SEIZURE OPERATION. THE LD. CIT DR POINTED OUT THAT IT WAS OBSERVED BY THE LD. CIT(A) THAT THE ASSESSMENT FOR THE BLOCK PERIOD WAS COMPLETED UNDER SECTION 158 BC OF THE ACT ONLY AND THESE SPECIAL PROVISIONS ENVISAGE THE DETERMINATION OF TOTAL UNDISCLOSED INC OME BASED ON THE MATERIAL GATHERED OR EVIDENCES COLLECTED DURING THE SEARCH W ITH RESPECT TO THE CORRESPONDING UNDISCLOSED INCOME. THE LD. CIT DR SU BMITTED THAT THE LD. CIT(A) OBSERVED THAT THE POST SEARCH ENQUIRIES HAD ALSO NO T BROUGHT ANY DEFINITE EVIDENCE TO SUGGEST THAT THE DEFINITE AMOUNT HAD BE EN PASSED, HANDS IN CONSEQUENCE TO SOME UNDERHAND DEALING WITH RESPECT TO THE TRANSACTION PERTAINING TO THE SAID PROPERTIES. THE LD. CITDR SU BMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ABOVE ADDITIONS AS TH E A.O. HAD MADE THOSE ADDITIONS AFTER MAKING PROPER INVESTIGATION OF THE CASE, MAKING NECESSARY ENQUIRIES AND CONFRONTING THE ASSESSEE WITH THE DIS CREPANCIES NOTICED, THEREFORE IT COULD NOT BE SAID THAT THE FINDINGS WERE LACONIC OR DID NOT HAVE THE SUPPORT OF THE EVIDENCE. IT WAS STATED THAT INITIAL BURDEN LIE S ON THE ASSESSEE TO OFFER THE EXPLANATION IN RESPECT OF THE CONCERNED INVESTMENT. THEREFORE IT WAS THE DUTY OF THE ASSESSEE TO OFFER THE RELEVANT EXPLANATION WITH SUITABLE PROOF AS REGARDS TO THE INVESTMENT IN QUESTION. 56.1 THE LD. CIT DR SUBMITTED THAT THE VARIOUS INVE STMENTS IN JEWELLERY AS WELL AS IMMOVABLE PROPERTIES HAD BEEN CLAIMED TO BE MADE BY SHRI B.K. KHANNA 50 (FATHER-IN-LAW OF THE ASSESSEE). IT WAS STATED THAT THE FOLLOWING FACTS WILL THROW SOME LIGHT ON THE CREDIT WORTHINESS OF SHRI B.K. KH ANNA: 1) HE WAS WORKING AS A LIQUOR CONTRACTOR SINCE 1986-87 AND WAS DRAWING A SALARY OF RS. 30,000/- TO 40,000/- PER YEAR. 2) B.K KHANNA ALSO HAD INCOME FROM SATLUJ COLD STORAGE FIRM. AS PER THE DATA OF THE PERSONAL CASH BOOK, THERE WAS AN AVERAGE LOSS O F RS. 15,439/- PER YEAR FOR A PERIOD OF F.Y. 1988-89 TO F.Y. 1996-97. 3) SH. B.K KHANNA HAD NEGATIVE CASH BALANCE FOR MOST O F THE TIMES AND 90 TOLAS OF GOLD JEWELLERY WAS SOLD BY HIM DURING THESE YEAR S. 4) SH. B.K. KHANNA HAD TAKEN CASH LOANS IN LAKHS FROM VARIOUS PERSONS ON DIFFERENT DATES AND A LITTLE OF THESE LOANS WAS REP AID IN CASH. THE SAFE INFERENCE CAN BE DRAWN THAT SH. B.K. KHANNA HAD NO CREDIT WOR THINESS. 5) FURTHER, FOR MOST OF THE INVESTMENTS, SH. B.K. KHAN NA COULD NOT REMEMBER SOURCE OF INVESTMENT AND THE MODE OF PAYMENT. 56.2 THE LD. CIT DR SUBMITTED THAT THE ADDITION MAD E BY THE A.O. AFTER PROPER ENQUIRIES ON THE BASIS OF THE DOCUMENTS FOUND DURIN G THE COURSE OF SEARCH WAS WRONGLY DELETED BY THE LD. CIT(A) WITHOUT ANY BASIS , THEREFORE, THE SAME MAY BE RESTORED. 57. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S TRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). THE LD. C OUNSEL FOR THE ASSESSEE AGAINST THE SUBMISSIONS OF THE LD. DR MADE THE FOLL OWING COMMENTS ON THE CREDIT WORTHINESS OF SHRI B.K. KHANNA: I. COMMENTS ON CREDITWORTHINESS OF B K KHANNA (PG. 8 OF AO'S SUBMISSIONS DT. 31.10.2019) A FEW COMMENTS HAVE BEEN MADE REGARDING THE CREDITW ORTHINESS OF B K KHANNA. THESE ARE ANSWERED SERIAL WISE AS UNDER: I) B K KHANNA WAS A BUSINESSMAN WITH RICH BACKGROUN D AS REVEALED BY HIS BUSINESS ACTIVITIES. II) HE WAS PARTNER OF M/S HAVELLI RAM BAL KRISHAN K HANNA, GOVERNMENT CONTRACTOR AS WELL AS L-L LICENSEE. THE DISSOLUTION DEED (PARTNERSHIP DEED COULD 51 NOT BE TRACED) IS PLACED AT P- 240, PB-LLL. THIS FA CT HAD BEEN BROUGHT IN THE NOTICE OF ADI THROUGH LETTER DATED 16.02.1998 (PG. 371, PB -I). THE NOTICE FROM INCOME TAX DEPTT FOR THE ADVANCE TAX PAYABLE BY THE FIRM AS EA RLY AS 1982 IS PLACED AT PG. 250, PB-LLL. III) HE WAS DIRECTOR OF PUNJAB SALTPETRE REFINERIES - LETTER FROM B K KHANNA DT. 16.02.1998 TO ADI (PG. 370, PB-I). CONFIRMATORY LET TER FROM PUNJAB SALTPETRE REFINERIES PG. 248 OF PB-LLL. IV) B K KHANNA WAS OWNER OF COLD STORAGE OF 14000 B AGS CAPACITY. THE PARTNERSHIP DEED DT. 01.04.1988 OF SUTLEJ COLD STOR AGE IS PLACED AT PG. 242-246, PB-LLL. A) THE COLD STORAGE WAS MAKING PROFITS BUT THE SAM E WAS SHOWN TO BE IN LOSS INTENTIONALLY SO AS TO PREVENT SHARING OF PROFIT WI TH RECALCITRANT PARTNERS AS STATED IN B K KHANNA'S LETTER DATED 01.10.1999 (PG. 150, P B-LLL). THE PARTNERSHIP DEED DT. 01.04.1988 CORROBORATES THE SAME (PG. 242, PB-LLL) B) THE TRADING ACCOUNT OF COLD STORAGE DEPICTS THE TRUE STATE OF AFFAIRS. HOW CAN A 'LOSS MAKING UNIT' PAY ELECTRICITY CHARGES RA NGING FROM RS. 3 TO 4 LACS EVERY YEAR (PG. 180, PB-III) V) THE FUNDS DIVERTED FROM FEROZEPUR WERE UTILIZED BY HIM FOR PURCHASE OF PROPERTY AT CHD/PANCHKULA AND DECLARED UNDER VDIS ( PG. 200, PB-III) BY B K KHANNA& HIS WIFE SHANTA KHANNA. VDIS CERTIFICATE AT PG. 401 & 216, PB-I. VI) ALL THE ABOVE FACTS HAVE BEEN STATED IN THE LET TER DT. 16.02.1998 FROM BK KHANNA TO ADI BY B K KHANNA (PG. 370, PB-I) AND FUR THER ELABORATED IN THE LETTER DT. 01.10.1999 (PG. 146-225, PB-III) VII) B K KHANNA WAS PRESIDENT OF ROTARY INTERNATION AL, DISTT. 310, FEROZEPUR. THIS FACT HAS BEEN STATED IN THE LETTER DT.16.02.1998 AN D THE CERTIFICATE IN THIS BEHALF IS PLACED AT (PG. 254, PB-III). VIII) B K KHANNA IS ALLEGED TO BE AN EMPLOYEE OF LI QUOR CONTRACTOR SINCE 1986- 87 BUT THE PARTNERSHIP DEED OF THE COLD STORAGE REV EALS THAT B K KHANNA WAS PARTNER TO THE EXTENT OF 50% W.E.F 01.04.1988 (PG. 242, PB-III). THE REAL POSITION EXTRACTED FROM BK KHANNA'S LETTER DT. 16.02.1998 TO ADI (PG.371, PB-I) IS REPRODUCED BELOW: 'I WAS NEVER THEIR EMPLOYEE THOUGH THEY HAD BEEN GI VING ME SOME HONORARIUM/REMUNERATION. I HAVE STATED BEFORE YOU O N 10.01.1998 THAT ON MANY OCCASIONS, I LOANED SUBSTANTIAL SUMS OF MONEY TO M/ S DALIP KUMAR SARJIVAN KUMAR. HOW CAN OWNER OF A COLD STORAGE WITH CAPACIT Y TO ADVANCE LOAN BE EMPLOYEE OF A BORROWER.' IX) THE 'NEGATIVE CASH BALANCE' PROPOSITION ADVANCE D BY AO IS INCORRECT AS WOULD BE SEEN BY THE ENCLOSED STATEMENT, ANNEXURE - 7. THE AO'S CONTENTION THAT B K KHANNA SOLD 90 TOLAS (900 GMS.) GOLD PROVES HIS RICH BACKGROUND. HOWEVER THERE IS EVIDENCE OF PURCHASE OF JEWELLERY BY B K K HANNA'S WIFE, DECLARED UNDER VDIS. X) BK KHANNA'S CASH BOOK SHOWS THAT HE RAISED LOANS AND ALSO PAID THEM BACK. THIS IS PART AND PARCEL OF RUNNING A BUSINESS . 52 XI) HOW CAN A BUSINESSMAN, 80 YEARS OLD, AT THE TIM E OF RECORDING OF HIS STATEMENT ON 10.01.1998 REMEMBER SOURCES OF INVESTM ENT IN SEVERAL PROPERTIES OWNED BY HIM AND THE MODE OF SUCH PAYMENT. HOWEVER B K KHANNA DECLARED UNEQUIVOCALLY THAT ALL HIS INVESTMENTS/BANK TRANSAC TIONS/PAYMENTS/RECEIPTS ARE REFLECTED IN HIS PERSONAL CASH BOOK FROM 09.12.1988 TO 09.01.1998 WHICH HE HANDED OVER PERSONALLY TO ADI ON THE VERY DAY HE WA S APPROACHED BY ADI AT FEROZEPUR ON 10.01.1998. J. SOURCES OF INCOME OF B K KHANNA THE FINANCIAL RESOURCES OF B K KHANNA EMERGING FROM HIS CASHBOOK AND OFFICIAL LETTERS AND BANK ACCOUNTS ARE AS UNDER: I. ADVISORY CHARGES FROM DALIP KUMAR SARJIVAN KUMAR, L -L LICENSEE'S AT FEROZEPUR. II. INCOME FROM COLD STORAGE ROLLED OVER TO HIS BUSINES S CONCERN VRINDAVAN ELECTRICALS AND DECLARED UNDER VDIS(RS. 4.5 LACS BY B K KHANNA AND RS. 1.3 LACS BY SHANTA KHANNA IN DEC 1997). III. B K KHANNA HAD A RICH PAST BECAUSE OF PARTNER EARNINGS FORM M/S HAVELLI RAM BAL KRISHAN KHANNA (L-I LICENSEE), PUNJAB SALTP ETRE REFINERIES, PETROL PUMP, GOVERNMENT CONTRACTOR, SUTLEJ COLD STORAGE (UPTO 19 87) AND FINALLY TAKEN OVER 01.04.1988. HE WAS THEREFORE IN POSSESSION OF A LOT OF GOLD. THE AO HAS SAID THAT B K KHANNA SOLD 90 TOLAS (900 GMS) OF GOLD ON DATES R ECORDED IN HIS CASH BOOK AND MONEY DEPOSITED IN BANK THROUGH CHEQUES (08.02.1989 , 28,09.1992, 27,09.1993, 13.03,1995, 15.09.1997). B K KHANNA, THEREFORE, HAD INCOME THROUGH 'SALE OF GOLD'. IV. B K KHANNA SOLD HIS PLOT NO. 654/SEC 23A, GURGA ON ON 24.09.1997 FOR RS. 12.90 LACS AND RECEIVED RS. 7.5 LACS AS ADVANCE DUL Y ENTERED IN HIS CASH BOOK (1997- 98) AT PG. 7. THE TRANSACTION DETAILS ARE GI VEN IN B K KHANNA'S LETTER DT. 01.10.1999 (PG.190, PB-III). HE HAD INCOME OF RS. 1 0 LACS (APPROX.) FROM CAPITAL GAINS FOR WHICH HE PAID A TAX OF RS. 1,88,489/- ON RECEIPT OF REFUND OF SEIZED CASH. V. FINANCIAL CONTRIBUTIONS FROM HIS SONS AND RELATI ONS SETTLED IN CANADA & DELHI. THESE ARE ALSO RECORDED IN HIS CASH BOOK ON VARIOUS DATES. VI. IT DESERVES NOTICE OF THE HON'BLE ITAT THAT THE RE IS NO FINANCIAL DEALING BETWEEN K K JERATH& B K KHANNA, A FACT ESTABLISHED BY BANK ACCOUNTS OF K K JERATH C-187 AND 3487 AND INTIMATED TO AO VIDE LETTE R DT. 31.08.1999 FROM K K JERATH (PG. 92 OF AO'S ORDER) IT WAS FURTHER SUBMITTED THAT NO INCRIMINATING MATE RIAL RELATING TO THE IMMOVABLE PROPERTY WAS FOUND DURING THE COURSE OF S EARCH AND THAT NO PROPERTY WAS IN THE NAME OF THE ASSESSEE. 57.1 THE LD. COUNSEL FOR THE ASSESSEE FURTHER STATE D THAT PROPERTIES WERE IN THE NAME OF SMT. SAVITA JERATH W/O THE ASSESSEE AND SHR I KAPIL JERATH S/O THE ASSESSEE WHO HAD MADE THE INVESTMENT OUT OF THEIR I NCOME AND THE SOURCES 53 WERE EXPLAINED TO THE DEPARTMENT. IT WAS SUBMITTED THAT 1 KANAL, INDUSTRIAL PLOT NO. 93, PHASE-2, PANCHKULA WAS OWNED BY SHRI B.K. K HANNA & SHRI KAPIL JERATH TO EXPLAIN THE SOURCE OF INVESTMENT, REFERENCE WAS MAD E TO PAGE NO. 123 OF THE PAPER BOOK (PART-I) WHICH IS COPY OF THE CONFIRMATI ON OF SHRI B.K. KHANNA, PAGE NOS. 223 & 224 PAPER BOOK (PART II) WHICH IS THE CO PY OF THE AFFIDAVIT OF THE SELLER SHRI NARAYAN DAS, PAGE NO. 372 TO 374 OF THE PAPER BOOK(PART1) WHICH IS THE COPY OF THE LETTER WRITTEN TO THE DEPARTMENT BY SHR I KAPIL JERATH AND PAGE NOS. 396 TO 400 WHICH ARE THE COPIES OF THE SEIZED AGREE MENT TO SELL WHEREIN THERE WAS A REFERENCE OF AMOUNT OF RS. 2,50,000/- ONLY. T HE REFERENCE WAS ALSO MADE TO PAGE NO. 223 AND 224 OF THE ASSESSEES PAPER BOOK (PART II) WHICH IS THE COPY OF THE SEIZED AFFIDAVIT OF THE SELLER SHRI NARAYAN DAS TO TIE HIM DOWN WITH AGREEMENT. 57.2 IT WAS FURTHER STATED THAT DURING THE COURSE O F SEARCH, HAND WRITTEN NOTES OF SHRI KAPIL JERATH WERE SEIZED FROM THE PREMISES OF M/S VRINDAWAN ELECTRICALS WHICH CLEARLY CARRIED THE ENTRY OF RS. 2,50,000/- . IT WAS STATED THAT THE A.O. MERELY RELIED UPON THE STATEMENT OF SHRI NARAYAN DA S RECORDED AT THE BACK OF THE ASSESSEE DURING THE COURSE OF POST SEARCH WITHO UT GIVING ANY OPPORTUNITY TO CROSS EXAMINE WHICH WAS SOUGHT VIDE LETTER DT. 12/1 1/1999 AND 27/11/1999 COPIES OF WHICH ARE PLACED AT PAGE NO. 405 TO 407 R ESPECTIVELY OF THE ASSESSEES PAPER BOOK(PART I). THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS : P K GANESHWARI V/S DEPUTY COMMISSIONER OF INCOME TAX ( 2002) 80 ITD429 (CHENNAI) CHITRA DEVI V/S ASSTT COMMISSIONER OF INCOME TAX (2002 ) 77 TTJ (JD) 640 VIGNESH FLAT HOUSING PROMOTERS V/S DCIT (2002) 77 TT J (CHENNAI) 873 ANIL NAGPAL V/S ACIT (2005) 94 TTJ (MUMBAI) 745 DCIT V/S PRATAP SINGH RAJENDRA CHAMOLA & CO. (2009) 19 DTR (CHD- TRIB) 182 DHANWANT KAURVS ITO IN ITA NO. 1027/CHD/2014 O RDER DATED 19.11.2015 GREAT INDIA STEEL FABRICATORS IN ITA NO. 746/CHD/2 014 DATED 03.03.2017 SMT SUNITA JAIN & OTHERS IN ITA NO. 501 & 502/AHD/20 16 ANDAMAN TIMBER INDUSTRIES VS COMMISSIONER OF CENTRA L EXCISE 2015 281 CTR 241 54 CIT VS SMT SUNITADHADDA IN ITA NO. 197/2012 (99 CCH 394 RAJ HC) ORDER DATED 31.07.2017 (RAJASTHAN HC) CIT VS. SMC. SHARE BROKERS LT. (2007) 288 ITR 345 ( DEL) SHREE BISHANDAS IRON WORKS VS DCIT IN ITA NO. 1232/ KOL/2014 ORDER DATED 26.12.2017 57.3 IT WAS SUBMITTED THAT THE A.O. MADE THE ADDITI ON EVEN WHEN NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND THE SELLER SHRI NARAYAN DAS SIGNED THE AGREEMENT TO SELL AND ALSO I N THE AFFIDAVIT HE HAD STATED THAT AN AMOUNT OF RS. 2,50,000/- HAD BEEN PA ID TO HIM THEREFORE THE PRESUMPTION THAT WHATEVER WAS STATED IN THE REGISTE RED DEED WAS CORRECT UNLESS THE CONTRARY WAS PROVED BY THE CREDIBLE EVIDENCE. T HE RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: ORDER OF THE ITAT, CHANDIGARH, IN THE CASE OF ITO VS HARPAL SINGH (ITA NO. 363 & 364/CHD/2005). THE HON'BLE HIGH COURT OF PUNJAB & HARYANA IN THE C ASE OF COMMISSIONER OF INCOME TAX VS. HARPAL SINGH REPORTED IN (2008) 3 DTR 254 THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF COMM ISSIONER OF INCOME TAX VS. DINESH JAIN HUF REPORTED IN 254 CTR (DEL) 534 THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENC H, CHANDIGARH IN THE CASE OF I. T. 0. V. SHRI MANJIT SINGH REPORTED IN (2010) 128 TTJ(CHD)(U0) 82 THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENC H B, CHANDIGARH IN THE CASE OF L.T.O. VS. SHRI MOHINDER SINGH REPORTED IN (2008) ITR 118 (ITAT, CHD) THE DOT VS M/S RIAR BUILDERS PVT LTD. (116/ASR/2017 ORDER DATED 26.09.2017 57.4 AS REGARDS TO THE AGRICULTURAL LAND AT KHANGSE RA PANCHKULA, IT WAS STATED THAT THE SAID LAND WAS IN THE NAME OF SMT SAVITA JE RATH WHO IS A SEPARATE ASSESSEE AND THE INVESTMENT WAS MADE OUT OF HER IND EPENDENT INCOME, THE ASSESSEE DID NOT CONTRIBUTE ANYTHING IN THE SAID IN VESTMENT. IT WAS EMPHASIZED THAT THE PROPERTY WAS PURCHASED FROM THREE PERSONS NAMELY SHRI SWARAN SINGH, SMT. JASPREET KAUR AND SHRI AVTAR SINGH. THE PURCHA SER SMT. SAVITA JERATH FURNISHED THE DOCUMENTS THROUGH LETTER DT. 05/01/19 98. REFERENCE WAS MADE TO PAGE NO. 185 OF PAPER BOOK (PART I) WHICH IS THE CO PY OF SIMILARLY PLACED PROPERTY CARRYING THE SAME PRICE OF LAND, IT WAS FU RTHER STATED THAT SMT. SAVITA JERATH EXPLAINED THE SOURCE OF RS. 4,82,000/-(PAGE 351-355 PAPER BOOK PART I). IT 55 WAS STATED THAT SUBSEQUENT TO THE SEARCH, THE ADIT RECORDED THE STATEMENT OF CERTAIN PERSONS THROUGH COERCION WHEREIN THEY WERE FORCED TO SAY THAT HIGHER AMOUNT HAD BEEN PAID BY THE ASSESSEE FOR PURCHASING THE SAID LAND. IT WAS SUBMITTED THAT WHEN NOTHING INCRIMINATING WAS FOUND DURING THE COURSE OF SEARCH, NO ADDITION COULD HAVE BEEN MADE ON THE BAS IS OF POST SEARCH ENQUIRIES, PARTICULARLY WHEN THE SELLERS WHOSE STAT EMENTS WERE RECORDED POST SEARCH BY THE ADIT, DULY CONFIRMED THE FACT OF COER CION BY WRITING LETTERS TO THE ADIT, COPY OF WHICH ARE PLACED AT PAGE NO. 378, 379 OF PAPER BOOK(PART1) AND 391 OF PAPER BOOK(PART II) OF THE ASSESSEE. THEREFO RE THE ADDITION MADE BY THE A.O. MERELY ON THE BASIS OF THE STATEMENT OBTAINED THROUGH COERCION AND AT THE BACK OF THE ASSESSEE WITHOUT GIVING OPPORTUNITY OF CROSS EXAMINATION WAS NOT JUSTIFIED AND THE LD. CIT(A) RIGHTLY DELETED TH E SAME. 57.5 AS REGARDS TO THE PROPERTY NO. 1659 SECTOR-4 P ANCHKULA, IT WAS STATED THAT THE SAID PLOT WAS PURCHASED BY SMT. SAVITA JERATH I N JANUARY 1997 AND PAYMENT WAS MADE FROM HER BANK ACCOUNT NO. 2837, COPY OF WH ICH IS PLACED AT PAGE NO. 474 OF THE ASSESSES PAPER BOOK (PART I) AND TH E DOCUMENTS FOR COMPARABLE PROPERTY WITH PRICE ARE PLACED AT PAGE NO. 261 TO 4 31 OF THE ASSESSES PAPER BOOK(PART II). IT WAS CONTENDED THAT THE SOURCE OF INVESTMENTS BY SMT. SAVITA JERATH VIS MUSIC TUITIONS, CAPITAL GAINS, GIFT FROM FATHER AND FATHER-IN-LAW, SHARES IN HUF WERE PROVIDED ON RECORD, THEREFORE THE ADDIT ION MADE BY THE AO ONLY ON THE BASIS OF STATEMENT OF THE SELLER (WHICH WAS EVE N RETRACTED LATER ON) COULD NOT BE RELIED UPON. FIRSTLY THE SAID STATEMENTS WER E TAKEN AT THE BACK OF THE ASSESSEE AND SECONDLY THOSE WERE TAKEN BY THREATENI NG THE PERSONS WHO LATER ON RETRACTED THEIR STATEMENT. 57.6 AS REGARDS TO THE PLOT AT GURGAON SOLD BY SMT. SAVITA JERATH IT WAS STATED THAT THE PAYMENT OF RS. 13,761/- ON 09/08/1991 WAS THROUGH CHEQUE FROM HUF ACCOUNT AND RS. 12,600 (TRANSFER FEE ON 22/11/1993) WAS TO BE MADE BY THE PURCHASER OF THE PLOT AS RECORDED IN CONDITION NO. 3 OF THE AGREEMENT TO SELL THEREFORE THE ADDITION MADE BY THE AO WAS RIGHTLY D ELETED BY THE LD. CIT(A). 56 58. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE IT IS NOTICED THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND THE PROPERTY FOR WHICH ADDITIONS WERE MADE IN THE HANDS OF THE A SSESSEE DID NOT BELONG TO THE ASSESSEE. THE ACTUAL OWNER OF THESE PROPERTIES EXPLAINED THE SOURCE FOR MAKING THE INVESTMENT AND ALL OF THEM ARE INDEPENDE NT ASSESSEES, FURNISHING THE RETURN OF INCOME TO THE DEPARTMENT AND SECONDLY THE ADDITIONS WERE MADE BY THE AO ON THE BASIS OF THE STATEMENTS RECORDED A T THE BACK OF THE ASSESSEE. THE PERSONS WHOSE STATEMENTS WERE RECORDED SUBMITTE D THE LETTER STATING THEREIN THAT THOSE STATEMENT WERE RECORDED THROUGH COERCION AND EVEN FEW OF THE PERSONS RETRACTED THEIR STATEMENTS. IN OUR OPIN ION, THE LD. CIT(A) AFTER EXAMINING ALL THE MATERIAL / DOCUMENTS AVAILABLE ON THE RECORD, RIGHTLY DELETED THE IMPUGNED ADDITIONS. WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 59. NEXT ISSUE VIDE GROUND NO. 2(V) RELATES TO THE ADDITION OF RS. 2,88,085 MADE BY THE AO ON ACCOUNT OF CAPITAL GAIN ON SALE O F PLOT IN GURGAON IN THE NAME OF SMT. SAVITA JERATH W/O THE ASSESSEE. 60. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE TH AT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT SMT. SAVITA JER ATH SOLD A PLOT IN GURGAON IN DECEMBER 1993 AND IN THE RETURN OF INCOME FOR TH E A.Y. 1994-95 SHE HAD FILED COMPUTATION OF CAPITAL GAIN AND HAD ALSO GIVEN THE DETAILS OF THE SOURCE FROM WHICH SHE HAD MADE THE INVESTMENT OF RS. 2,34,000/- FOR THE PURCHASE OF THIS PLOT THE SOURCE OF INVESTMENT WAS AS UNDER: DATE SOURCE AMOUNT RS 20.10.86 HUF A/C 3487 41,000 19.6.89 -DO- 55,000 23.12.92 -DO- 20,000 4-9-1989 SH.K.K.JERATH SB A/C 20000 15.7.1991 -DO- 10075 20.3.1992 -DO- 28210/- MUSIC CLASSES 15000/- LOAN FROM FATHER IN LAW 20000 57 LOAN FROM FATHER 20000 LIC PART PAYMENT 28210 TOTAL 234000 60.1 HE FURTHER OBSERVED THAT AS PER THE LETTER DT. 03/02/1997 OF THE ESTATE OFFICER, GURGAON THE TOTAL PAYMENT MADE WERE OF RS. 2,41,746/- . THE AO ALSO EXAMINED THE BANK ACCOUNT FROM WHICH THE PAYMENTS W ERE MADE TO HUDA WHICH REVEALED THE PAYMENTS OF RS. 2,16,841/- WERE MADE FROM THE BANK ACCOUNT. THE AO OBSERVED THAT THERE WERE NO CORRESP ONDING WITHDRAWALS IN THE BANK ACCOUNT OF SMT. SAVITA JERATH FOR THE PAYMENT OF RS. 13,671/-ON 09/08/1991 AND RS. 12,600/- ON 22/11/1993 AND THAT THERE WAS D ISCREPANCY OF RS. 24,935/- BETWEEN THE PAYMENT MADE TO HUDA AND THE WITHDRAWAL MADE FROM THE BANK ACCOUNT. THE AO OBSERVED THAT THE PLOT WAS SOLD IN DECEMBER 1993 FOR THE CONSIDERATION OF RS. 5,75,000/- AND SMT. SAVITA JER ATH HAD SHOWN CAPITAL GAIN IN HER RETURN OF INCOME. THE AO WAS OF THE VIEW THAT T HE ASSESSEE HAD DEVISED MECHANISM TO INVEST IN THE IMMOVABLE PROPERTY IN TH E NAME OF SMT. SAVITA JERATH AND FOR THIS PURPOSE THE ENTITY OF THE ALLEG ED HUF WAS CREATED. THE AFORESAID CAPITAL GAIN ARISING OUT OF THE SALE OF T HE PLOT WAS CONSIDERED IN THE HANDS OF THE ASSESSEE AS PER THE FOLLOWING DETAILS: SALE CONSIDERATION RS. 5,75,000/- IN DEC, 93 LESS COST OF ACQUISITION RS. 2,34,000/- ACQUISITION INDEX RS. 2,34,000 X 244/199 = 2,86,9 15/- CAPITAL GAIN (RS. 5,75,000 2,86,915/-) = 2,88,085 /- 61. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: 'DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A SSESSING OFFICER NOTICED THAT THE ASSESSEE'S WIFE SMT .SAVITA JERATH HAD SOLD A P LOT IN GURGAON IN DECEMBER, 1993. SHE HAD FILED HER INCOME TAX RETURN FOR THE Y EAR DULY DISCLOSING THE CAPITAL 58 GAINS AND HAD ALSO EXPLAINED THE SOURCES FOR INVEST MENT IN PLOTS. THE ASSESSING OFFICER HAS DISBELIEVED THE SUBMISSIONS ON SOME PRE TEXT OR THE OTHER AND HAS TAXED THE CAPITAL GAINS ARISING OUT OF THE SALE OF PLOT AT RS.2,88,085/-. THE ASSESSE'S WIFE SMT. SAVITA JERATH HAD FILED HER INDEPENDENT INCOME TAX RETURN AND HAD DULY DISCLOSED THE CAPITAL GAINS ON THE SAL E OF THE ABOVE PLOT AT GURGAON. THE QUESTION OF TREATING IT AS UNEXPLAINED INCOME OF THE ASSESSEE DOES NOT ARISE. THE INCOME TAX DEPARTMENT HAS ASSESSED T HE CAPITAL GAINS AND HAS ISSUED ASSESSMENT ORDER U/S.143(1)(A). EVIDENCE OF RETURN FILED AND ITS ACCEPTANCE BY THE INCOME TAX DEPARTMENT IS ENCLOSED. CASH FLOW STATEMENT OF SMT. SAVITA JERATH FOR THE BLOCK PERIOD 1 ST APRIL, 1987 TO 21 ST NOVEMBER, 1997 IS ENCLOSED WHEREIN ALL INVESTMENTS AND WITHDRAWALS HAVE BEEN D ISCLOSED. HENCE, THE QUESTION OF ANY ADDITION DOES NOT ARISE. 61.1 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE DELETED THE ADDITION BY OBSERVING IN PARA 12.2 OF THE IMPUG NED ORDER AS UNDER: 12.2- I HAVE GONE THROUGH THE ARGUMENTS OF THE LEAR NED COUNSEL AND THE CONTENTS OF THE IMPUGNED ASSESSMENT ORDER. I FIND T HAT THE ASSESSMENT ORDER IS SILENT ON THIS ISSUE, WHETHER THE SAID CAPITAL GAIN S HAD BEEN DULY DISCLOSED BY MRS. SAVITA JERATH IN HER RETURNS OR NOT. THE SUBMI SSIONS OF THE APPELLANT ON THIS ISSUE ARE FOUND TO BE CORRECT. SINCE MRS. SAVITA JE RATH HAD ALREADY SHOWN THE CAPITAL GAINS WITH RESPECT TO THIS PROPERTY IN QUES TION IN HER INDIVIDUAL RETURNS THAT HAD BEEN ACCEPTED BY THE DEPARTMENT ON 27-4-95 (DCR NO.236) FOR A.Y. 94-95 U/S. 143(1 )(A), THE ADDITION MADE IN THE HANDS OF THE APPELLANT CANNOT BE UPHELD IN VIEW OF DOUBLE TAXATION WHICH IS NOT PERM ISSIBLE UNDER THE INCOME TAX ACT AS CLARIFIED IN PARA 10.2 OF THIS ORDER. THUS, THE ADDITION TO THE TUNE OF RS.2,88,085/-IS DELETED. (RELIEF;- RS. 2,88,085/-) 62. NOW THE DEPARTMENT IS IN APPEAL. 63. THE LD. DR REITERATED THE OBSERVATIONS MADE BY THE AO AND FURTHER SUBMITTED THAT SINCE SMT. SAVITA JERATH WAS NOT HA VING ANY APPARENT SOURCE OF INCOME AS HELD BY THE AO AFTER MAKING DETAILED INVE STIGATION AND THE ACTUAL OWNER OF THIS PROPERTY WAS THE ASSESSSEE SHRI K.K. JERATH, THEREFORE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE IMPUGNED ADDITION . 64. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT THE WIFE OF THE ASSESSEE SMT. SAVITA JERATH PURCHASED T HE PLOT IN GURGAON AND LATER 59 ON SOLD THE SAME TO EARN THE CAPITAL GAIN WHICH WAS SHOWN IN HER RETURN OF INCOME AND THE DEPARTMENT HAD ACCEPTED THE SAME VID E ASSESSMENT ORDER IN THE NAME OF SMT. SAVITA JERATH, COPY OF WHICH IS PL ACED AT PAGE NO. 409 TO 422 OF THE ASSESSEES PAPER BOOK(PART1). 64.1 IT WAS FURTHER STATED THAT THE DIARY OF SMT. SAVITA JERATH FOUND DURING THE COURSE OF SEARCH EXPLAINED THE CAPITAL GAIN, COPY O F WHICH IS PLACED AT PAGE NO. 428 TO 430 OF THE ASSESSEES PAPER BOOK(PART1). SHE HAD ALREADY DISCLOSED THE CAPITAL GAIN AND PAID TAX ON THE SAME WHICH WAS ALREADY ACCEPTED BY THE DEPARTMENT VIDE ORDER PASSED UNDER SECTION 143(1) O F THE ACT THEREFORE THE ADDITION AGAIN MADE IN THE HANDS OF THE ASSESSEE WA S A DOUBLE TAXATION. 65. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD I N THE PRESENT CASE, IT APPEARS THAT SMT. SAVITA JERATH EARNED CAPITAL GAIN OF RS. 2,88,085/- ON THE SALE OF PLOT IN GURGAON. THE SOURCE FOR PURCHASE OF THAT PLOT AND SALE VALUE WAS DISCLOSED BY HER WHILE FILING THE RETURN OF INCOME WHICH WAS ACCEPTED AND THE INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE AC T. THE FACTS RELATED TO THE SAID TRANSACTION OF EARNING CAPITAL GAIN WAS ALSO R ECORDED IN THE DIARY OF SMT. SAVITA JERATH SEIZED DURING THE COURSE OF SEARCH, A DDITION MADE BY THE AO IN THE HANDS OF THE ASSESSEE WILL CERTAINLY LEAD TO TH E DOUBLE TAXATION. THEREFORE, THE LD. CIT(A) RIGHTLY DELETED THE SAME. WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 66. NEXT ISSUE VIDE GROUND NO. 2(VI) RELATES TO THE DELETION OF ADDITION OF RS. 1,50,000/- MADE BY THE AO ON ACCOUNT OF NRI GIFT RECEIVED FROM SHRI P.K. SHARMA. 67. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE TH AT DURING THE COURSE OF SEARCH, A CERTIFICATE ISSUED TO SHRI P.K. SHARMA BY VIJAYA BANK, GURGAON WAS SEIZED FROM THE RESIDENCE OF THE ASSESSEE WHICH REVEALED THAT T HE DD NO. 177/96 WAS ISSUED IN FAVOUR OF THE SHRI B.K. KHANNA FROM THE NRI ACCO UNT OF SHRI P.K. SHARMA WHO IS 60 BROTHER-IN-LAW OF SHRI SUNIL KALIA WHO WAS DOING LI AISON WORK FOR SOME COMPANIES FOR PROCURING ORDERS FROM CHANDIGARH ADMINISTRATION . THE AO RECORDED THE STATEMENTS OF SHRI P.K. SHARMA ON 26/11/1997 WHO ST ATED AS UNDER: IT WAS ISSUED FOR RS. 1.50 LACS IN AUGUST 1996. IT WAS ISSUED ON THE REQUEST OF MY BROTHER-IN-LAW SHRI SUNIL KALIA. HE TOLD ME, ON HIS VISIT TO GURGAON AT MY RESIDENCE, THAT MR. KHANNA IS FATHER-IN-LAW OF MR. K.K.JERATH, WHO IS CHIEF ENGINEER IN CHANDIGARH. I KNOW THAT MY BROTHER IN LAW IS DOING THE LIAISON WORK IN CHANDIGARH ON DGS&D RATE CONTRACTS FOR PROCURING ORDERS FOR TH E COMPANIES LIKE KESLEC TUBES LIGHTS, ADVANCE ELECTRICALS LTD. ETC. I ALSO KNOW T HAT HE ENJOYS VERY GOOD RELATIONSHIP WITH MR. K.K.JERATH AS HE USED TO MENT ION IT WHENEVER WE MET. I WOULD ALSO LIKE TO STATE THAT I HAVE NEVER SEEN MR. KHANNA NOR I HAVE MET HIM. THIS CHEQUE HAS BEEN ISSUED ONLY ON THE REQUEST OF MY BR OTHER-IN-LAW SHRI SUNIL KALIA. HE PAID ME BACK THE MONEY OF RS.1.50 LACS IN CASH A T THE SAME TIME AND I HANDED OVER THIS DRAFT OF RS.1.50 LACS TO MR. KALIA . IN THIS WAY IT WAS NOT A GIFT BUT WAS A D/D OF RS.1.50 LACS AGAINST WHICH I RECEIVED FULL CONSIDERATION BACK. ' 67.1 THE AO FURTHER OBSERVED THAT SHRI SUNIL KALIA ADMITTED THAT HIS BROTHER-IN- LAW SHRI P.K. SHARMA DID NOT PERSONALLY KNOW SHRI B .K. KHANNA AND THEY HAD NEVER MET EACH OTHER. THE AO ALSO OBSERVED THAT WHE N SHRI B.K. KHANNA WAS ASKED TO GIVE HIS VERSION TO THIS TRANSACTION HE ST ATED THT HE HAD ASKED SHRI SUNIL KALIA TO ARRANGE MONEY FOR HIM AND SHRI SUNIL KALIA HAD SUGGESTED THAT HE WOULD ARRANGE THE MONEY FROM SHRI P.K. SHARMA AND THAT SH RI SUNIL KALIA HAD GIVEN THIS DRAFT TO SHRI B.K. KHANNA IN SECTOR -17 MARKET WHO FILLED THE FORM AND ASKED SHRI KAPIL JERATH TO DEPOSIT IN THE BANK AND GET THE CON FIRMATION FROM VIJAYA BANK, GURGAON WHICH HE GOT THAT IS WHY THE SAME WAS FOUND FROM THE RESIDENCE OF SHRI K.K. JERATH (THE ASSESSEE). THE A.O. HOWEVER, TREATED THE AFORESAID AMOUNT IN THE HANDS OF THE ASSESSEE BY OBSERVING THAT THIS TRANSACTION WAS ENTERED INTO ONLY ON THE REQUEST OF SHRI SUNIL KALIA WHO WAS DOI NG LIAISON WORK FOR CERTAIN COMPANIES AND CLOSELY CONNECTED TO THE ASSESSEE. 68. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: 'THIS ADDITION PERTAINS TO ASSESSEE'S FATHER-IN-LAW SH. B. K. KHANNA, WHO HAD RECEIVED AN NRI GIFT OF RS. 1,50,000/- FROM HIS FRI END SH P.K. SHARMA. THE SAME WAS DISBELIEVED AND SH. B. K. KHANNA FILED VDIS SURREND ERING THE ABOVE AMOUNT. THE ADDITION HAS BEEN MADE IN THE HANDS OF THE ASSESSEE ON SUBSTANTIVE BASIS AND NO 61 ADDITION HAS BEEN MADE ON PROTECTIVE BASIS IN THE H ANDS OF SH.B. K. KHANNA. HENCE, SINCE THE SAME HAS BEEN COVERED UNDER VDIS 1 997, THE SAME DESERVES TO BE DELETED. VDIS CERTIFICATE ISSUED BY THE INCOME T AX DEPARTMENT IS ENCLOSED. 68.1 THE LD. CIT(A) ALSO REPRODUCED THE RELEVANT PO RTION OF THE ASSESSMENT ORDER OF SHRI B.K. KHANNA WHICH READ AS UNDER: 'P. K. SHARMA HAD ISSUED DD OF RS. 1,50,000/- AFTER RECEIVING THE CASH, NOT BECAUSE HE WAS FRIEND OF SH.B. K. KHANNA OR BECAUE OF PERSONAL RELATIONS OF SH. SUNIL KALIA WITH SH. B. K .KHANNA. THIS TRANSACTION WAS ENTERED INTO ONLY ON THE REQUEST OF SH. SUNIL KALIA, AS SH. SUNIL KALIA WAS DOING LIAISON WORK FOR CERTAIN COMPANIES AND SH. K. K. JERATH WAS IN A POSITION TO FAVOUR SH. SUNIL KALIA BY PLACING ORDERS ON THESE COMPANIES. THE THEORY THAT THE TRANSACTION WAS ARRANGED BY SH. SUNIL KALIA ON ACCOUNT OF PERSONAL RELATIONS WITH SH. B.K. KHANNA WAS THROWN IN JUST TO MYSTIFY THE ISSUE AND CAST A VEIL ON THE NEXUS BETWEEN SH. K. K. JERATH AND SH.SUNIL KALIA. THE D.D. WAS TAKEN IN THE NAME OF SH. B.K. KHANNA S INCE SH. K. K.JERATH BEING A GOVT. SERVANT COULD NOT ENTER INTO SUCH TRANSACTION DIRECTLY AS IT WOULD AMOUNT TO VIOLATION OF CONDUCT RULES WHICH PROHIBIT ACCEPTING FAVOUR FROM PERSONS WITH WHOM HE WAS DEALING IN OFFICIAL CAPACITY. RECEIPT WAS TAKEN FOR THE CASH GIVEN BACK TO SH. B. K. KHANNA: SH.P. K. SHARMA HAD GIVEN AN ENTRY FROM HIS NRE A/C FOR WHICH A CAS H OF RS. 1,50,000/- WAS PAID TO HIM BY SH. SUNIL KALIA AT THE SAME TIME I.E. AUGUST , 96. IN THEIR STATEMENTS SH.SUNIL KALIA AND SH. B. K. KHANNA HAVE PLEADED THAT THE CA SH WAS PAID BACK IN SEPTEMBER, 1996 AND SH. SUNIL KALIA HAD ISSUED A RE CEIPT WHEN HE HAD RECEIVED THE CASH FROM SH. B. K. KHANNA. IT IS STRANGE THAT ON ONE HAND IT IS CLAIMED THAT THE AMOUNT WAS GIVEN BY SH. P. K. SHARMA TO SH.B. K. KH ANNA AS THEY WERE OLD FRIENDS, BUT THE RECEIPT FOR THE SO CALLED 'RETURN' OF MONEY WAS ISSUED BY SH. SUNIL KALIA, IF THE MONEY WAS ADVANCED BY SH. P. K. SHARMA IT WAS H E WHO WAS TO ACKNOWLEDGE THE DISCHARGE OF THE LOAN. IT ONLY PROV ES THAT THE RECEIPT WAS TAKEN TO GIVE AUTHENTICITY TO THE FACT THAT IT WAS SH. B. K. KHANNA WHO HAD PAID BACK THE CASH. IN FACT THE CASH WAS PAID TO SH. P.K SHAR MA AT THE SAME TIME WHEN HE HAD TAKEN OUT THE DD IN FAVOUR OF SH. B. K. KHANNA IN AUGUST, 96 ITSELF AS STATED BY SH.P. K. SHARMA MOREOVER THERE IS NO REASON FOR SH. P. K. SHARMA TO MAKE A FALSE STATEMENT.' 68.2 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE DELETED THE ADDITION BY OBSERVING IN PARA 13.3 OF THE IMPUG NED ORDER AS UNDER: 13.3- I HAVE GONE THROUGH THE ARGUMENTS OF THE LEAR NED COUNSEL AND THE CONTENTS OF THE IMPUGNED ASSESSMENT ORDER. THE LD. ASSESSING OFFICER HAD NOT POINTED OUT ANY SEIZED DOCUMENT SUGGESTING THAT THE APPELLANT, SH. K. K.JERATH HAS PAID RS.1,50,000/- TO SH.P. K. SHARMA OR TO SH. B. K.KHANNA OR EITHER TO ALLEGED SH.SUNIL KALIA TO PURCHASE THE SAID DRAFT OF RS.1,5 0,000/- FROM SH. P.K. SHARMA FROM 62 HIS NRE ACCOUNT. NEITHER THE ASSESSING OFFICER HAS H ELD THAT THE SAID DRAFT OF RS. 1,50,000/- WAS RECEIVED BY AND CREDITED IN IN THE A CCOUNT OF THE APPELLANT, SH. K. K. JERATH NOR THAT THAT THE DD DEPOSITED IN THE ACC OUNT OF SH.B. K. KHANNA HAS BEEN EN-CASHED BY HIM AND PASSED ON TO SH.K. K JERA TH, THE APPELLANT. THUS, I AM UNABLE TO CONCUR WITH THE VIEWS OF THE LD. ASSES SING OFFICER THAT THE SEARCH AND SEIZURE OPERATION HAS ENABLED THE LD. ASSESSING OFFICER WITH AN EVIDENCE TO TREAT THE AMOUNT OF RS.1,50,000/- IN DD ISSUED BY S H. P. K. SHARMA IN THE NAME OF SH. B. K .KHANNA TO BE THE UNDISCLOSED INCOME OF TH E APPELLANT, SH. K. K. JERATH. ALL THE DISCUSSION IS FOUND TO BASE ON PRESUMPTIONS AND ASSUMPTIONS ONLY AND NOT ON PROVEN FACTS. THE LD. ASSESSING OFFICER HAS ALSO NOT MENTIONED THAT SH.P. K.SHARMA HAD ADMITTED THE SAID DD OF RS. 1,50,000/- WAS ISSUED FOR AND ON THE REQUEST OF SH. K. K. JERATH OR ANY BENEFIT HAS BEEN PASSED ON BY SH. K. K. JERATH TO SH. P. K. SHARMA. THUS, THE ACTION OF THE LD. A.O. CANNOT BE UPHELD. HENCE, THE SAID ADDITION IS DELETED. ( RELIEF:-RS. 1,50,000/-) 69. NOW THE DEPARTMENT IS IN APPEAL. 70. THE LD. CITDR SUBMITTED THAT PURPOSE OF THE TRA NSACTION UNDER CONSIDERATION WAS THAT WHITE MONEY WAS NEEDED FOR T HE BUSINESS BEING RUN IN THE NAME OF SHRI B.K. KHANNA AND FOR INVESTMENT IN LAND IN THE NAME OF SMT. SAVITA JERATH. IT WAS FURTHER STATED THAT AS PER TH E STATEMENT OF SHRI B.K. KHANNA HE HAD ASKED SHRI SUNIL KALIA TO ARRANGE MONEY FOR HIM AND SHRI SUNIL KALIA ARRANGED THE ENTRY FROM HIS BROTHER-IN-LAW AT THE S AME TIME SHRI B.K. KHANNA CLAIMED THAT AN AMOUNT OF RS. 1,50,000/- WAS LYING IN HIS HOUSE IN LAST COUPLE OF YEARS THOSE STATEMENTS WERE CONTRADICTORY WHICH PRO VED THAT THE ACTUAL FACT WERE NOT STATED BY SHRI B.K. KHANNA. IT WAS SUBMITT ED THAT INFACT THE CASH WAS PAID TO SHRI P.K. SHARMA AT THE SAME TIME WHEN HE H AD TAKEN OUT THE DD IN FAVOUR OF SHRI B.K. KHANNA IN AUGUST 1996 ITSELF AS STATED BY SHRI P.K. SHARMA AND THERE WAS NO REASON FOR HIM TO MAKE A FALSE STATEME NT. THEREFORE THE AO RIGHTLY HELD THAT ULTIMATELY THE BENEFICIARY OF THIS MONEY WAS THE FAMILY OF SHRI K.K. JERATH(THE ASSESSEE)AND THE ADDITION WAS RIGHTLY MA DE IN HIS HANDS THEREFORE THE DECISION OF THE LD. CIT(A) IN DELETING THIS ADD ITION IS NOT ACCEPTABLE. 71. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT THE TRANSACTIONS UNDER CONSIDERATION WAS IN BETWEEN SHR I B.K. KHANNA, ASSESSEES 63 FATHER-IN-LAW, AND ONE SHRI P.K. SHARMA AN NRI WHO ADVANCED RS. 1,50,000/- TO SHRI B.K. KHANNA WHO CONFIRMED TO THE ADIT DURING T HE COURSE OF STATEMENT RECORDED ON 10/01/1998 AT FEROZEPUR THAT HE HAD TAK EN RS. 1,50,000/- FROM SHRI P.K. SHARMA. HE ALSO CONFIRMED TO THE AO THROUGH HI S LETTER DT. 10/06/1999, COPY OF WHICH IS PLACED AT PAGE NO. 123 TO 127 OF THE AS SESSEES PAPER BOOK(PART1). IT WAS FURTHER SUBMITTED THAT SHRI B.K. KHANNA MADE VD IS DECLARATION FOR RETURNING RS. 1,50,000/- TO SHRI P.K. SHARMA, A COPY OF WHICH IS PLACED AT PAGE NO. 401 OF THE ASESSEES PAPER BOOK(PART1). THEREFORE THE ASSE SSEE HAD NOTHING TO DO WITH THESE TRANSACTIONS AND THE ADDITION HAS RIGHTLY BEE N DELETED BY THE LD. CIT(A). 72. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE INSTANT CA SE IT IS NOT IN DISPUTE THAT THE SUM OF RS. 1,50,000/- WAS RECEIVED BY SHRI B.K. KHA NNA THROUGH DD ISSUED BY SHRI P.K. SHARMA AN NRI, SHRI B.K. KHANNA ADMITTED THIS FACT BEFORE THE AO AND LATER ON DISCLOSED IT IN THE VDIS WHICH CLEARLY SHOWS THA T THE ASSESSEE HAD NOTHING TO DO WITH THIS TRANSACTION, THEREFORE THE LD. CIT(A) RIGHTLY DELETED THIS ADDITION. WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTME NTAL APPEAL. 73. NEXT ISSUE VIDE GROUND NO. 2(VII) RELATES TO TH E DELETION OF ADDITION OF RS. 41,987/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED T RAVELLING EXPENSES BY SMT. SAVITA JERATH W/O THE ASSESSEE. 74. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE TH AT THE AO MADE THE IMPUGNED ADDITION ON THE BASIS OF A PERSONAL DIARY WRITTEN B Y SMT. SAVITA JERATH WHICH WAS FOUND DURING THE COURSE OF SEARCH WHICH CONTAINED D ETAILS OF CERTAIN TRAVELLING UNDERTAKEN BY SMT. SAVITA JERATH TO RAJASTHAN, BOMB AY, BANGALORE ETC. BY RAIL / AIR. SMT. SAVITA JERATH STATED THAT SHE HAD INCURRE D THOSE EXPENSES FROM HER SAVINGS BUT THE AO DID NOT ACCEPT THIS VERSION ON T HE GROUND THAT SHE DID NOT HAVE ANY OTHER SOURCE OF INCOME FROM WHICH SHE COUL D HAVE SAVED THE MONEY. HE THEREFORE TREATED THE AMOUNT OF RS. 41,987/-AS D EEMED INCOME OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 64 75. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: 'DURING THE COURSE OF SEARCH AND SEIZURE, A PERSONA L DIARY WRITTEN BY SMT. SAVITA JERATH WAS FOUND AND SEIZED. THE DIARY CONTAINED DE TAILS OF CERTAIN TRAVELLING UNDERTAKEN BY SMT. SAVITA JERATH TO RAJASTHAN, BOMB AY, BANAGALORE ETC BUY RAIL/AIR. THE TRAVELLING PERTAINS TO SMT. SAVITA JE RATH, THE ASSESSEE'S WIFE AND NOT TO THE ASSESSEE. THE CASH FLOW STATEMENTS OF THE ASSES SEE'S WIFE SMT.SAVITA JERATH DULY ACCOUNTS FOR THE SOURCES OF EXPENDITURE ON ACC OUNT OF DOMESTIC TRAVELLING. THE SAME IS FROM THE CASH IN HAND AVAILABLE WITH TH E ASSESSEE'S WIFE OUT OF HER INCOME FROM MUSIC TUITION, SALE OF MILK, AND PROCEE DS FROM SHARE IN MODERN ICE FACTORY, GURDASPUR. IT IS PERTINENT TO MENTION THAT SH.SURINDER KUMAR JERATH, BROTHER-IN-LAW OF SMT. SAVITA JERATH HAS MADE A VDI S DISCLOSURE OF RS. 1,00,000/- AS SETTLEMENT OF SHARE ACCOUNT OF SMT. SAVITA JERATH./ SH. K. K. JERATH FROM MODERN ICE FACTORY, A FAMILY CONCERN OF THE JERATH'S NO AD DITION IN THE HANDS OF THE ASSESSEE ON SUBSTANTIVE BASIS OR IN THE HANDS OF HI S WIFE ON PROTECTIVE BASIS IS CALLED FOR AS THE SOURCE STANDS EXPLAINED. 75.1 THE LD. CIT(A) DELETED THE ADDITION BY OBSERVI NG IN PARA 15.2 OF THE IMPUGNED ORDER AS UNDER: 15.2- I HAVE GONE THROUGH THE ARGUMENTS OF THE LEAR NED COUNSEL FOR THE APPELLANT AS WELL AS THE CONTENTS OF THE IMPUGNED A SSESSMENT ORDER. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE FACT IS NOT DENI ED THAT THE DETAILS OF EXPENSES HAVE BEEN CULLED OUT FROM THE PERSONAL DIARY WRITTE N BY MRS. SAVITA JERATH FOUND FROM THE RESIDENCE DURING THE SEARCH AND SEIZURE OP ERATION. MRS. SAVITA JERATH HAS NEVER DISOWNED THIS DIARY. THUS, THERE APPEARS NO COGENT REASON WHY THE ENTRIES IN THIS DIARY BE CONSIDERED IN THE HANDS OF THE APPELLANT, SH.K. K. JERATH. UNLESS, EXPENSES DISOWNED BY MRS. SAVITA JERATH THE SAME COULD HAVE NOT FORMED PART OF INCOME OF THE APPELLANT, HER HUSBAND SH.K. K. JERATH DESPITE THE FINDINGS OF THE LD. ASSESSING OFFICER THAT SHE DID N OT HAVE ANY SOURCE OF INCOME OF HER OWN TO COVER THESE EXPENSES. RIGHT COURSE WOULD HAVE BEEN TO CONSIDER THIS DIARY IN HER HANDS AND IF REMAINED UNEXPLAINED COUL D HAVE BEEN ADDED AS UNDISCLOSED INCOME OF MRS. SAVITA JERATH FROM UNDIS CLOSED SOURCES. THUS, THE ADDITION IN THE HANDS OF THE APPELLANT IS DELETED. ( RELIEF :-RS.41,987/-) 76. NOW THE DEPARTMENT IS IN APPEAL. 77. THE LD. DR REITERATED THE OBSERVATIONS MADE BY THE AO AND FURTHER SUBMITTED THAT SINCE SMT. SAVITA JERATH WAS NOT HAV ING ANY SOURCE OF INCOME THE EXPENSES WERE MADE BY SHRI K.K. JERATH AND THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE SAME. 65 78. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT NOTHING INCRIMINATING RELATING TO THE ASSESSEE WAS FOUND BUT A DIARY WAS FOUND IN HAND WRITING OF SMT. SAVITA JERATH WHO NEVER DIS OWNED THE SAME AND EVEN EXPLAINED THE SOURCE RELATING TO THE TRAVELLING EXP ENSES WHICH WERE INCURRED FROM THE CASH IN HAND AVAILABLE WITH HER OUT OF HER INCOME FROM MUSIC TUITION AND PROCEEDS FROM SHARE IN THE MODERN ICE FACTORY, GURDASPUR. IT WAS POINTED OUT THAT A VDIS DECLARATION WAS MADE BY SHRI SURIND ER KUMAR JERATH BROTHER OF THE ASSESSEE FOR HAVING PAID RS. 1,00,000/- TO SMT. SAVITA JERATH ON ACCOUNT OF SETTLEMENT OF SHARE OF M/S MODERN ICE FACTORY, GURD ASPUR, REFERENCE WAS MADE TO PAGE NO. 432 OF THE ASSESSEES PAPER BOOK(PART I I). IT WAS ACCORDINGLY SUBMITTED THAT THE EXPENSES WERE INCURRED BY SMT. S AVITA JERATH OUT OF THE CASH IN HAND AVAILABLE WITH HER, THEREFORE, THE IMPUGNED ADDITION WAS RIGHTLY DELETED BY THE LD. CIT(A). 79. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE IT IS NOTICED THAT SMT. SAVITA JERATH INCURRED A SUM OF RS. 41,987/- FOR VA RIOUS TRAVELLING UNDERTAKEN BY HER TO DIFFERENT PLACES IN INDIA, SHE ALREADY DISCL OSED THE SOURCE FOR MAKING THE EXPENSES AND THE AO DID NOT BRING ANY MATERIAL ON R ECORD TO SUBSTANTIATE THAT THE ASSESSEE INFACT INCURRED THOSE EXPENSES FOR TRA VELLING OF SMT. SAVITA JERATH, THEREFORE, THE ADDITION MADE BY THE AO ON THE BASIS OF PRESUMPTION WAS RIGHTLY DELETED BY THE LD. CIT(A). WE DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE. 80. THE NEXT ISSUE VIDE GROUND NO. 2(VIII) RELATES TO THE DELETION OF ADDITION OF RS. 37,699/- MADE BY THE AO ON ACCOUNT OF UNEXPLAIN ED INVESTMENT FOR PURCHASE OF CERTAIN MATERIAL TO BE SENT IN AN ASHRA M IN MATHURA. 81. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE TH AT DURING THE COURSE OF POST SEARCH INQUIRIES THE AO NOTICED THAT THE ASSESSEE H AD ARRANGED FOR CERTAIN 66 MATERIAL TO BE SENT TO PREM SAROVAR, NAND GAON MATH URA . THE ASSESSEE SHOWED IGNORANCE WHEN HE WAS ASKED ABOUT THE INVESTMENT IN THE LAND AND BUILDING OF THIS ASHRAM. HOWEVER THE AO OBSERVED THAT THE INVES TIGATION SHOWED THAT THE ASSESEE HAD SUPPLIED DOORS AND OTHER WOODEN MATERIA L TO THIS ASHRAM AND HAD MADE PAYMENT OF RS. 37,699/- FOR THE SAME. THE AO P OINTED OUT THAT SHRI DSARSHAN SINGH, SHRI NAND LAL AND THE DRIVER STATED THAT SHRI K.K. JERATH(THE ASSESSEE) HAD NOT ONLY PURCHASED THE WOODEN ITEMS B UT HAD TRANSPORTED THE ITEMS TO VRINDAWAN AFTER MAKING THE PAYMENTS OF RS. 22,189/- BILL NO. 3254 DT. 07/01/1995 AND RS. 15,510/- BILL NO. 3435 DT. 24/04 /1995. THE ASSESSEE HOWEVER DID NOT AGREE WITH THE STATEMENT OF SHRI DARSHAN SI NGH KALSI THAT THE PAYMENT OF TWO BILLS WERE MADE BY HIS DRIVER. THE AO HELD THAT THE ASSESSEE HAD HIMSELF ARRANGED A DISPATCH OF WOODEN MATERIAL TO VRINDAWAN AND ARRANGED FOR PAYMENT OF THIS MATERIAL TOO. ACCORDINGLY AN AMOUNT OF RS. 37,699/- WAS CONSIDERED AS UNEXPLAINED EXPENDITURE AND TREATED A S DEEMED INCOME IN THE HANDS OF THE ASSESSEE. 82. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: 'DURING THE COURSE OF POST-SEARCH ENQUIRIES, THE AS SESSING OFFICER NOTICED THAT THE ASSESSEE HAD ARRANGED FOR CERTAIN MATERIAL TO BE SE NT TO AN ASHRAM IN MATHURA OF WHICH HE WAS A FOLLOWER. ON THE BASIS OF CERTAIN INF ORMATION, THE ADIT AS WELL AS THE ASSESSING OFFICER QUESTIONED SH. DARSHAN SINGH K ALSI OF MOHALI WHO STATED THAT HE HAD SUPPLIED CERTAIN MATERIAL TO THE ASHRAM AT M ATHURA AMOUNTING TO RS.37,699/-. HE HAD STATED THAT THE PAYMENT WAS MAD E TO HIM BY THE DRIVER OF THE ASSESSEE, MR. K. K. JERATH. SH. DARSHAN SINGH KALSI WAS EXAMINED BY THE ASSESSING OFFICER AT THE BACK OF THE ASSESSEE. THE TRUE PICTUR E IS THAT, A DEVOTEE FROM MATHURA WHERE THE ASHRAM WAS BEING BUILT, VISITED C HANDIGARH AND CONTACTED MR. K. K. JERATH AS HE WAS ALSO A FOLLOWER. HE HAD REQUESTED SH.K K. JERATH TO ORGANISE CERTAIN ITEMS AT COST PRICE. THE ASSESSEE THROUGH HIS GOOD OFFICES SENT THE DEVOTEE ALONG WITH HIS DRIVER TO SH. DARSHAN SI NGH KALSI WHO HAD HIGH REGARDS FOR HIM. THE PAYMENT WAS MADE BY THE DEVOTEE OF THE ASHRAM AND NOT THE ASSESSEE. THERE IS NO EVIDENCE ON RECORD TO CONFIRM THAT THE ASSESSEE SH.K. K. JERATH OR ANYBODY ON HIS BEHALF HAD MADE THE PAYMEN T. THE DRIVER OF THE ASSESSEE WHO IS ALLEGED TO HAVE MADE PAYMENT WAS NE VER EXAMINED BY THE ADIT OR ASSESSING OFFICER IT WILL NOT BE OUT OF PLAC E TO MENTION THAT NO BILLS OR ANY OTHER INCRIMINATING EVIDENCE WAS FOUND FROM THE RES IDENTIAL PREMISES OF THE ASSESSEE DURING THE COURSE OF SEIZURE TO JUSTIFY HI S MONETARY INVOLVEMENT IN THE ABOVE TRANSACTION. THE ADDITION IS THEREFORE UNJUST IFIED AND ILLEGAL AND DESERVES TO BE DELETED.' 67 82.1 THE LD. CIT(A) DELETED THE ADDITION BY OBSERVI NG IN PARA 16.2 OF THE IMPUGNED ORDER AS UNDER: 16.2- I HAVE GONE THROUGH THE ARGUMENTS OF THE LEAR NED COUNSEL FOR THE APPELLANT AS WELL AS THE CONTENTS OF THE IMPUGNED A SSESSMENT ORDER. I FIND FORCE IN THE ARGUMENTS OF THE APPELLANT ON THIS ISSUE. TH ERE APPEARS NO MENTION OF ANY SPECIFIC PIECE OF EVIDENCE FOUND DURING THE SEARCH AND SEIZURE OPERATION CONCLUSIVELY PROVING THAT THE EXPENDITURE TO THE TU NE OF RS.37,699/- AS ALLEGED BY THE LD. ASSESSING OFFICER ON THE BASIS OF A FEW STAT EMENT RECORDED AT THE BACK OF THE APPELLANT HAS ACTUALLY BEEN INCURRED BY THE APP ELLANT HIMSELF. THUS, IN VIEW OF THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CAS E OF CIT VS. RAVI KANT JAIN 250 ITR 145. SUCH AN ADDITION CANNOT BE SUSTAINED AND H ENCE IS DELETED. (RELIEF:-RS. 37,699/-) 83. NOW THE DEPARTMENT IS IN APPEAL. 84. THE LD. CIT DR REITERATED THE OBSERVATIONS MADE BY THE AO AND FURTHER SUBMITTED THAT IN VIEW OF THE INQUIRIES MADE BY THE ADIT AND THE AO THE RELIEF ALLOWED BY THE LD. CIT(A) BY OBSERVING THAT NO EVID ENCE WAS FOUND DURING THE COURSE OF SEARCH PROVING THE SAID EXPENDITURE WAS N OT JUSTIFIED. 85. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT NOTHING INCRIMINATING MATERIAL WAS FOUND AT THE TIM E OF SEARCH AND THAT THE AO HAD INQUIRED AND RECORDED THE STATEMENT OF THE SUPP LIER OF THE MATERIAL AT THE BACK OF THE ASSESSEE. HOWEVER NO CROSS EXAMINATION WAS ALLOWED TO THE ASSESSEE ON THE STATEMENT TAKEN AT THE BACK OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE PAYMENT WAS ACTUALLY MADE BY ONE OF THE DEVOTEES OF THE ASHRAM AND NOT BY THE ASSESSEE. THEREFORE THE LD. C IT(A) RIGHTLY DELETED THE IMPUGNED ADDITION. 86. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE, NOTHING INCRIMINATING WAS FOUND DURING THE COURSE OF SEARCH TO SUBSTANTIATE T HAT THE ASSESSEE INCURRED 68 SOME EXPENDITURE ON ACCOUNT OF MATERIAL SENT TO ASH RAM IN VRINDAWAN. THE AO MADE THE IMPUGNED ADDITION ON THE BASIS OF A FEW ST ATEMENTS RECORDED POST SEARCH, AT THE BACK OF THE ASSESSEE BUT NO OPPORTUN ITY TO CROSS EXAMINATION WAS ALLOWED TO THE ASSESSEE AND THERE WAS NO EVIDENCE T O SUBSTANTIATE THAT THE ASSESSEE HIMSELF INCURRED THE EXPENSES AMOUNTING TO RS. 37,699/-. WE THEREFORE ARE OF THE VIEW THAT THE LD. CIT(A) RIGHTLY DELETED THIS ADDITION. 87. LAST ISSUE AGITATED BY THE DEPARTMENT RELATES T O THE DELETION OF ADDITION OF RS. 1,00,015/- MADE BY THE AO ON ACCOUNT OF INVE STMENT IN MOVABLE PROPERTY. 88. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE T HAT DURING THE COURSE OF SEARCH OPERATION CERTAIN BILLS OF MOVABLE ASSETS WERE FOUN D AT THE RESIDENCE OF ASSESSEE AND HIS FAMILY MEMBERS. THESE ASSETS WERE IN THE NAME OF SMT. SAVITA JERATH WIFE OF THE ASSESSEE, SHRI AMLOK KUMAR FATHE R OF THE ASSESSEE, SHRI B.K. KHANNA FATHER-IN-LAW OF THE ASSESSEE AND HIS FRIEND S. THE DETAILS OF THESE ASSETS WERE AS UNDER: S.NO DATE ANNEX & D. NO. PARTICULARS OF THE ITEM AND BILL NO. NAME AMOUNT RS. 1. 11.7.88 A-6,15 WASHING MACHINE FARA DAYS CABLE CORP..VOUCH NO.7909 SANJAY KHANNA 11,500 2. 1.2.91 A-6,13 PHILIPS STEREO, M/S DEEPAK RADIO, VOUCHER 117 AMOLAK RAM JERATH 6,425 3. 30.7.91 A-6,12 PHILIPS BLACK & WHITE 14TV DEEPAK RADIOS BANSI LAL CHIBBER 3,100 4. 4.3.94 A-1,9 COOKING RANGE INALSA SUPER GAS SERVICE SAVITA JERATH 10,550 5. 3.1.96 A-6,5 SONI MUSIC SYSTEM MELODY HOUSE.SEC 17-D, CHD B.K . KHANNA 26,500 6. 18.11.94 A-6,14 PHILIPS TV SURINDRA RADIOS SAVITA JERATH 21,500 7. 7.3.97 A-4,52 SAMSUNG VIDEO CAMERA MELODY HOUSE AGENCIES,B.NO 4945, B.K.KHANNA 33,490 8. 28.4.97 A-6,6 WATER HEATER PREM VIJAY&CO. SEC 18D.CHD BILL NO 43971 NIL 4,800 9.. 29.4.97 A-6,7 WATER HEATER PREM VIJAY &CO..SEC 18-D.CHD BILL N0.43972 NIL 4,800 10. 5.9.97 A-6,11 WASHING MACHINE IFB SUPREMO B. K. KHANNA 20,900 69 MODERN SALES,SEC 22- B,CHANDIGARH 88.1 ACCORDING TO THE AO SHRI B.K. KHANNA AND SMT. SAVITA JERATH DID NOT SUBMIT ANY PLAUSIBLE EXPLANATION FOR ACQUISITION OF VARIOUS MOVABLE ASSETS AND REPLY SUBMITTED BY SHRI JERATH WAS EVASIVE AND NOT COMPLETE. THE AO WAS OF THE VIEW THAT THE ASSESSEE HAD UTILIZED HIS UNACCOUNTED FUNDS FOR PURCHASE OF ELECTRONIC AND OTHER MOVABLE ASSETS. HE, THEREFORE, TREATED THE INVESTMENT IN THE ELECTRONIC GAZETS AND OTHER ITEMS AS UNEXPLAINE D AND CONSIDERED THE SAME AS DEEMED INCOME OF THE ASSESSEE UNDER SECTION 69 O F THE ACT. ACCORDINGLY THE ADDITION OF RS. 1,00,015/- WAS MADE IN THE HANDS OF THE ASSESSEE. 89. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: 'DURING THE COURSE OF SEARCH, BILLS OF CERTAIN MOVA BLE ASSETS WERE FOUND AT THE RESIDENCE OF THE ASSESSEE AND HIS FAMILY MEMBERS. T HE ASSETS WERE IN THE NAME OF SMT. SAVITA JERATH, SH. B. K. KHANNA, SH. AMOLAK RA M JERATH, FATHER OF THE ASSESSEE, AND HIS FRIENDS. THE BILLS OF THE INVENTO RY AND THE ASSETS FOUND WAS PREPARED. ADDITION OF RS.1,00,015/- WAS MADE ON ACC OUNT OF UNEXPLAINED INVESTMENT. THE ADDITION OF THE FOLLOWING ITEMS WER E MADE:- SR. ITEM NAME DATE VALUE NO. (RS.) 1 PHILIPS STEREO SH.AMOLAK RAM 1-2-91 6,425/- 2 B & W TV (PHILIPS) SH.BANSI LAI CHIBBER 30-7-91 3,100/- 3 MUSIC SYSTEM (SONI) SH.B. K. KHANNA 31-1-96 26,500/- 4 VIDEO CAMERA (SAMSUNG) SH. B. K .KHANNA 7-3-97 33,490/- 5 WATER HEATER CASH 28-4-97 4,800/- 6 WATER HEATER CASH 29-4-97 4,800/- 7 IFB WASHING MACHINE SH. B. K. KHANNA 5-9-97 20,900/- TOTAL 1,00,015 PHILIPS STEREO WAS PURCHASED ON 1 ST FEBRUARY, 1991 BY SH. AMOLAK RAM JERATH THE ASSESSEE'S FATHER. THE BILL IS ALSO IN THE SAME NAM E. HENCE, NO ADDITION IN THE 70 HANDS OF THE ASSESSEE IS CALLED FOR AS THE SAME WAS PURCHASED BY THE ASSESSEE'S FATHER AND NOT BY HIM. BLACK & WHITE TV. PHILIPS WA S PURCHASED FOR RS.3100/- ON 30 TH JULY, 1991 BY SH. BANSI LAI CHIBBER, A FRIEND OF T HE ASSESSEE. THE SAME WAS PURCHASED AND GIFTED TO THE ASSESSEE'S WIFE SMT. SA VITA JERATH BY THEIR FRIEND. EVEN THE BILLS MENTIONS THE NAME OF THE PURCHASER. HENCE NO ADDITION IS CALLED FOR IN THE HANDS OF THE ASSESSEE. SONY MUSIC SYSTEM WAS GIFTED BY SH. B. K. KHANNA ON 31 ST JANUARY, 1996 PRICED AT RS.26,500/-. THE SAME WAS PURCHASED WITH THE MONEY GIVEN BY HIM AS A GIFT FOR HIS DAUGHTER ON ACCOUNT OF SILVER ANNIVERSARY OF HER MA RRIAGE. SOURCES OF THE SAME HAVE DULY BEEN REFLECTED IN THE CASH FLOW STATEMENT OF SH. B. K. KHANNA, HENCE NO ADDITION IS CALLED FOR. VIDEO CAMERA (SAMSUNG) WAS ALSO PURCHASED BY SH. B. K. KHANNA ON 7 TH MARCH, 1996 FOR RS.33,490/- AND THE SOURCES OF THE SAME HA VE BEEN DULY REFLECTED IN THE CASH FLOW STATEMENT. ONLY BILL FOR PURCHASE OF CAMER A WAS FOUND AND THE CAMERA WAS NOT FOUND DURING THE COURSE OF SEARCH AT THE RE SIDENTIAL PREMISES OF THE ASSESSEE. SINCE THE SOURCE OF THE SAME IS OUT OF KN OWN SOURCES, NO ADDITION IS CALLED FOR. TWO WATER HEATERS WERE PURCHASED FOR RS.9600/- ON 2 8./29 TH APRIL, 1997 RESPECTIVELY OUT OF THE CASH IN HAND AVAILABLE WITH ASSESSEE'S WIFE, SMT. SAVITA JERAH AS PER HER CASH FLOW STATEMENT OUT OF TUITION AND DIARY INCOME. NO SEPARATE ADDITION IS THEREFORE CALLED FOR. IFB WASHING MACHINE WAS PURCHASED BY SH. B. K. KHAN NA 5 TH SEPTEMBER, 1997 FOR RS.20,900/-. THE SOURCE OF THE SAME HAS BEEN DULY R EFLECTED IN THE CASH FLOW STATEMENT OF SH.B. K. KHANNA AND NO ADDITION IS THE REFORE CALLED FOR IN PURCHASE OF THE ABOVE ASSET. HENCE, THE ADDITION ON ACCOUNT OF MOVABLE ITEMS STANDS EXPLAINED AND DESERVES TO BE DELETED.' 89.1 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE DELETED THE ADDITION BY OBSERVING IN PARA 20.2 AS UNDER: 20.2- I HAVE GONE THROUGH THE ARGUMENTS OF THE LEARNED COUN SEL FOR APPELLANT AS WELL AS THE CONTENTS OF THE IMPUGNED ASSESSMENT ORDER ON THIS ISSUE DISCUSSED ON PAGE 87-89. IT IS SEEN FROM THE ASSESSMENT ORDER ITSELF THAT THE ADDITION HAS BEEN MADE FOR 7 ITEMS OUT OF THE 10 ITEMS FOUND AND SHOWN PURCHASED WITHIN THE SPAN OF THE PERIOD FROM 11-7-88 TO 5-9-97. IT IS FU RTHER NOTICED THAT THESE ITEMS HAVE BEEN IDENTIFIED ON THE BASIS OF BILLS FOUND AN D SEIZED AS PER ANNEXURE-A-1, A-4 AND A-6 MENTIONED IN THE ASSESSMENT ORDER. THES E BILLS UN-DISPUTEDLY DISPLAY THE NAMES OF THE PURCHASER MENTIONED THEREIN. THUS, IN MY OPINION, THESE SEIZED DOCUMENTS HAVE TO BE TREATED TO DISCLOSE TRUE FACTS ABOUT THE TRANSACTIONS AND THE PARTIES IN THE TRANSACTIONS. NONE OF THE BILLS SUGGEST THAT ANY OF THE ITEMS IS PURCHASED BY THE APPELLANT SH. K. K. JERATH. NEITHE R THE LD. A.O. HAS BROUGHT ANY ADVERSE MATERIAL ON RECORD TO SUGGEST THAT THE CONT ENTS OF THESE BILLS INCLUDING THE NAMES OF THE PURCHASER ARE CONCLUSIVELY INCORRE CT AND CANNOT BE RELIED UPON. THE LD. A.O. COULD HAVE RECALLED THE PROVISION S OF SECTION 132(4A) WHERE THE CONTENTS OF THE SEIZED DOCUMENT HAVE TO BE RELI ED UPON. IF THE LD. ASSESSING 71 OFFICER CHOOSES TO DISBELIEVE THESE DOCUMENTS, IN MY OPINION, THERE REMAINS NO EVIDENCE FOUND DURING THE SEARCH AND SEIZURE TO EMB ARK UPON THESE ITEMS. THE HON'BLE ALLAHABAD HIGH COURT ALREADY HELD THAT IF T HE SEIZED MATERIAL IS DISBELIEVED, THERE WOULD REMAIN NO EVIDENCE IN HAND FOR MAKING THE ADDITIONS UNDER SECTION 158BC FOR THE UNDISCLOSED INCOME. THU S, BEING NO EVIDENCE FOUND DURING THE SEARCH AND SEIZURE INDICATING THE INVESTMENT MADE BY THE A PPELLANT IN THE AFORESAID ITEMS, THE ACTION OF THE LD. A.O. TO TREAT THE SAID INVESTMENT TO REPRESENT THE UNDISCLOSED INCOME OF THE APPELLANT C ANNOT BE UPHELD IN VIEW OF THE LEGAL POSITION DISCUSSED IN THIS ORDER IN EARLI ER PARAS. HENCE THE SAME IS DELETED. ( RELIEF :-RS.1,00,015/-) 90. NOW THE DEPARTMENT IS IN APPEAL. 91. THE LD. CIT DR REITERATED THE OBSERVATIONS MADE BY THE AO AND FURTHER SUBMITTED THAT THE CONTENTS OF THE BILLS UNDISPUTED LY DISPLAYING THE NAME OF THE PURCHASER MENTIONED THEREIN WHO WERE THE FAMILY MEM BERS OF THE ASSESSEE HAVING NO SOURCE OF INCOME. IT WAS FURTHER SUBMITTE D THAT THE ASSESSEE FAILED TO FURNISH ANY PLAUSIBLE EXPLANATION IN RESPECT TO THE INVESTMENT MADE IN THE MOVABLE ASSETS, THEREFORE, THE ADDITION WAS RIGHTLY MADE BY THE AO. 92. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT FEW OF THE ITEMS WERE PURCHASED IN THE SPAN OF 11/07/19 88 TO 05/09/1997, THE ITEMS HAD BEEN IDENTIFIED FROM THE PURCHASE BILLS FOUND A T THE TIME OF SEARCH WHICH WERE IN THE NAME OF SHRI B.K. KHANNA AND OTHER FAMI LY MEMBER. IT WAS STATED THAT THE DOCUMENTS OF ALL THE SEVEN ITEMS WERE FOUN D DURING THE COURSE OF SEARCH COPY OF WHICH ARE PLACED AT PAGE NO. 441 TO 447 OF THE ASSESSES PAPER BOOK(PART II). IT WAS STATED THAT SHRI B.K. KHANNA FATHER-IN-LAW OF THE ASSESSEE HAD CONFIRMED THE PURCHASE OF THESE ITEMS BELONGING TO HIM OUT OF THE FUNDS AVAILABLE WITH HIM, THE REPLY OF SHRI B.K. KHANNA I S CONTAINED IN HIS LETTER DT. 22/08/2000 WRITTEN TO THE AO COPY OF WHICH IS PLACE D AT PAGE NO. 460 TO 463 OF THE ASSESSEES PAPER BOOK (PART II) AND SINCE THE A O DID NOT BRING ANY MATERIAL ON RECORD TO SUGGEST THAT THE CONTENTS OF THE BILLS WERE WRONG. IT WAS CONTENDED THAT THE ADDITION IN THE BLOCK ASSESSMENT CAN ONLY BE MADE ON THE BASIS OF THE 72 MATERIAL UNEARTHED WHICH IS UNDISCLOSED. THE RELIAN CE WAS PLACED ON THE FOLLOWING CASE LAWS: ASSISTANT COMMISSIONER OF INCOME TAX VS. A.R. ENTERPRIS ES 350 ITR 0489 (SC) COMMISSIONER OF INCOME TAX (CENTRAL)-I VS. VATIKA TOWNSH IP PRIVATE LIMITED 367 ITR 466 (SC) COMMISSIONER OF INCOME TAX VS. PINAKI MISHRA 98 CCH 02 08 (DEL HC) ASSISTANT COMMISSIONER OF INCOME TAX & ANR. VS. HOTEL B LUE MOON 321 ITR 0362 (SC) N.R. PAPER & BOARD LTD. & ORS. VS. DEPUTY COMMISSIONE R OF INCOME TAX 234 ITR 0733 (GUJ HC) COMMISSIONER OF INCOME TAX VS. RAVI KANT JAIN 250 ITR 0141 (DEL HC) DR. GAUTAM SEN VS CHIEF CIT 74 TAXMANN.COM 128 (BOM HC) COMMISSIONER OF INCOME TAX VS. DR. RATAN KUMAR SINGH 35 7 ITR 0035 (ALL HC) COMMISSIONER OF INCOME TAX VS. R.M.L. MEHROTRA 320 ITR 0403 (ALL HC) COMMISSIONER OF INCOME TAX VS. JUPITER BUILDERS (P) LTD . 287 ITR 0287 (DEL HC) COMMISSIONER OF INCOME TAX VS. VISHAL AGGARWAL 283 ITR 0326 (DEL HC) COMMISSIONER OF INCOME TAX VS. SUNIL AGGARWAL 379 ITR 0367 (DEL HC) T. JAYABHARATHI VS. DEPUTY COMMISSIONER OF INCOME TAX 4 6 CCH 0120 (CHENNAI TRIB) MANI AND MONEY LTD. VS. DEPUTY COMMISSIONER OF INCOME T AX 26 ITR (TRIB) 0009 (CHENNAI TRIBJ MAHESH BHATT VS. ASSISTANT COMMISSIONER OF INCOME TAX 8 7 TTJ 0734 (MUM BENCH) SUNDER AGENCIES VS. DEPUTY COMMISSIONER OF INCOME TAX5 9 TTJ 0610 (MUM BENCH) 93. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE IT IS NOTICED THAT NONE OF THE MOVABLE ASSETS MENTIONED BY THE AO WAS IN THE N AME OF THE ASSESSEE. ALL THE ITEMS HAD BEEN IDENTIFIED FROM THE PURCHASE BIL LS WHICH WERE IN THE NAME OF SHRI B.K. KHANNA FATHER-IN-LAW OF THE ASSESSEE, SMT . SAVITA JERATH WIFE OF THE ASSESSEE, SHRI AMLOK JERATH FATHER OF THE ASSESSEE. SHRI B.K. KHANNA HAD CONFIRMED VIDE LETTER DT. 22/08/2000 TO THE AO THAT ITEMS WERE PURCHASED BY HIM. IN THE INSTANT CASE THE AO HAD NOT BROUGHT ANY ADVERSE MATERIAL ON RECORD TO SUBSTANTIATE THAT THE CONTENTS OF THE BILLS AND THE NAME OF THE PURCHASER ON THOSE BILLS WERE WRONG AND ANY OF THE BILL WAS IN T HE NAME OF THE ASSESSEE, THEREFORE THE ADDITION MADE BY THE AO ON THE BASIS OF PRESUMPTION WAS RIGHTLY 73 DELETED BY THE LD. CIT(A). WE DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE. 94. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISM ISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 08/07/2021) SD/- SD/- .. .., (R.L. NEGI ) ( N.K. SAIN I) # $%/ JUDICIAL MEMBER / VICE PRESIDENT AG DATE: 08/07/2021 *% +,-. -( COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. ** ! / CIT 4. ** ! /01 THE CIT(A) 5. - 245*#*4)56789 DR, ITAT, CHANDIGARH 6. 8:' GUARD FILE *% + ! BY ORDER, ; ASSISTANT REGISTRAR