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Income Tax Appellate Tribunal - Chandigarh

Smt. Neena Syal vs Assistant Commissioner Of Income Tax on 21 September, 1998

Equivalent citations: [1999]70ITD62(CHD)

ORDER

B.S. Saluja, J.M.

1. The assessee has filed this appeal against order of Asstt. CIT, dt. 24th September, 1996.

2. Grounds Nos. 1 and 2 have not been pressed by learned counsel at the time of hearing before us. The same are, therefore, rejected.

3. Grounds No. 3 relates to rate of 60 per cent of tax as applied to the whole of the income. Ground No. 4 relates to proper opportunity being not provided to the assessee in respect of material collected or various documents taken or documents and appraisal report relied upon by AO which were not confronted to the assessee. These grounds are related to other grounds raised by the assessee in this appeal and, therefore, do not call for any comments separately.

4. Grounds Nos. 5(a) to (d) mainly relate to addition of Rs. 4,83 lakhs treated as premium paid over and above the cost of plot mentioned in the registered deed for purchase of land. AO noted that p. 5 of item No. A-20 seized at the residence of Smt. Pamela Syal and Shri A. L. Syal during search on 7th September, 1995, related to purchase of land by various family members at Mirpura in the month of August, 1995. He noted that in the case of Smt. Neena Syal, the transaction related to 12 bighas of land of Mirpura and that date of registration was 24th August, 1995, at an amount of Rs. 3 lakhs. He also noted that total consideration paid for the said plot was Rs. 7.83 lakhs. He observed that perusal of the aforesaid document showed that certain payments were made to sellers over and above registered value of property. He also observed that the assessee denied payment of any such premium. He also observed that the seller had filed affidavit in response to summons under s. 131, where she denied having received any premium. He further observed that, according to the assessee, there were two proposals - one by individual and family and the other by Golden Forest (India) Ltd. (for short GFI Ltd.) The assessee contended that individuals brought the land on cash down payment but GFI Ltd. offered them FDRs for higher amounts. AO did not accept the said plea on the ground that p. 14 of item No. A-8 seized from the residence of Shri Vinod Viyogi confirmed that premium of Rs. 4.83 lakhs was paid over and above the cost mentioned in the registered deed. He, therefore, added back the said amount of Rs. 4.83 lakhs as income of the assessee from undisclosed sources for asst. yr. 1996-97 ending on 7th September, 1995 and brought it to tax at a rate of 60 per cent.

5. Learned counsel Shri P. C. Jain at the outset submitted that the appeal was mainly on four issues, i.e. alleged unexplained investment in purchase of land, jewellery, cost of construction and fixed deposit receipts found during search. Learned counsel referred to the provisions of ss. 69, 69A and 69B of IT Act and submitted that the said provisions are deeming in nature and though there are rules of evidence but income is deemed as income of the assessee by fiction and that as such these income may not be the actual income. He further submitted that the real state of affairs on the face of it may not be real but it deemed to be real under the said provisions. He, therefore, submitted that the question of onus to be discharged by the assessee/Department is of paramount importance. He further mentioned that in s. 69, the words used are the 'assessee has made investments which are not recorded in the books of account'. In this connection, he submitted that AO has to record a finding that the assessee has made investment and, therefore, such investment is to be proved by the Department and such proof cannot be based on an argument in the air. He further submitted that the second facet of s. 69 is that in the opinion of the AO the assessee does not offer any explanation about the nature and source of the investments or the explanation offered by him is not found satisfactory, only then the value of the investment could be deemed to be the income of the assessee of the relevant financial year. He has stressed that the satisfaction of the AO has to be objective, i.e. judicious to be backed by some evidence and that such satisfaction cannot be subjective satisfaction of AO. He further submitted that certain principles have been evolved by Courts with reference to such deeming provisions. He referred to the decision of Hon'ble Gujarat High Court in the case of CIT vs. Bai Vina (1965) 58 ITR 100 (Guj) wherein it was observed that 'legal fictions are created only for a definite purpose and they are limited to the purpose for which they are created and should not be extended beyond their legitimate field'. The said observations were made in the context of second proviso to s. 10(2)(vii) of the Indian IT Act, 1922. He further referred to the decision of Hon'ble Allahabad High Court in the case of CIT vs. Rampur Timber & Turnery Co. Ltd. (1973) 89 ITR 150 (All), wherein it was observed that s. 41(1) of the Act creates a legal fiction that the sum of Rs. 6,092 shall be deemed to be the business income of the assessee for the relevant previous year, although in fact the business had ceased to exist. If so, the inevitable corollary of that fiction would be that the business would be deemed to have been carried on in that year'. He further referred to the decision of Hon'ble Gujarat High Court in the case of CIT vs. Deepak Textile Industries Ltd. (1987) 168 ITR 773 (Guj), wherein it was observed that it is clear that the purpose of the legislature in introducing the legal fiction is to give the benefit of the unabsorbed depreciation in the following previous year or in the succeeding previous years and when that is the purpose of legal fiction, all the facts necessary for the purpose of earning depreciation under s. 32(1) of the Act must be secured and, therefore, for the following previous year, the ownership of machinery, user of machinery and user of machinery for the purpose of business and existence of business also will be required to be assumed for giving effect to the legal fiction'. He further referred to the decision of Hon'ble Supreme Court in the case of CIT vs. S. Teja Singh (1959) 35 ITR 408 (SC), wherein in the context of s. 18A(3) of 1922 Act, it was observed that 'by reason of this fiction the notice required to be given under s. 22 must be deemed to have been given, and the assessee must be deemed to have failed to comply with it'. It was further observed that 'it is a rule of interpretation well settled that in construing the scope of a legal fiction it would be proper and even necessary to assume all those facts on which alone the fiction can operate. A construction which defeats the very object sought to be achieved by the legislature must, if possible, be avoided'. In view of the above cases, learned counsel submitted that the imaginary or assumed state of affairs must be in existence, i.e. source of investment must have existed. He further submitted that in order to give effect to fiction the consequences should come out to be true. He cited an example that where the assessee had shown investment in a particular asset at Rs. 5 lakhs and the Department claims investment of Rs. 10 lakhs, additional investment of Rs. 5 lakhs should not only be assumed but should be factually correct. He pleaded that in such a situation rule of evidence would apply and that there cannot be a further fiction on a fiction. He referred to the decision of Hon'ble Madhya Pradesh High Court in the case of CIT vs. Chhotelal Kanhaiyalal (1971) 80 ITR 656 (MP) wherein in the context of levy of penalty under s. 271 it referred to the provisions of s. 271(2) and observed that the said sub-section creates a fiction in law that although the firm against which a penalty is to be imposed is a registered firm and, therefore, not liable to pay the tax, yet that firm has to be assumed to be unregistered for the purpose of calculating tax liability and on that basis penalty has to be imposed. It further observed that the relevant year of assessment was 1958-59 and the liability to tax had to be determined under s. 1922 Act. It also observed that in case of unregistered firm advance tax had to be deposited by the firm and, in case of a registered firms, the individual partners deposited advance tax according to their own personal liability and such advance payment of tax was given credit in the ultimate tax liability found at the end of the year. It further held that since in the said case it was a registered firm there was to be no determination of tax liability, apart from the nominal tax which the registered firms had to pay after the year 1956. It was ultimately held that the contention of the Department that only the amount deposited in advance by the firm can be deducted, was correct. It also observed that the fiction created by s. 271(2) of 1961 is merely to this extent that for the purpose of calculating penalty imposable on the firm, the basis will be the same which would have been applied if the firm had not been registered. It, therefore, held that this fiction must be applied to the existing facts and it cannot further be supposed that the advance deposits made by the individual partners were deposits made by the firm. Such a supposition would not be a mere extension of the original fiction created by s. 271(2) but would be a new fiction, for which there is no warrant in law. He, therefore, submitted that the aforesaid principles applied also to the provisions of ss. 69, 69A and 69B.

6. Learned counsel further argued that the papers relating to purchase of land were found at the residence of Smt. Pamela Syal and Shri A. K. Syal and not at the residence of the assessee. He referred to p. 2 of the assessee's paper book (for short APB). He pointed out that on left hand side of the said page, the name of the assessee is appearing and the amount shown in Rs. 3,19,500 with reference to the purchase of 12 bighas of agricultural land. He submitted that the assessee purchased the land at Rs. 1 lakh per acre. He further referred to the balance sheet in the case of Smt. Neena Syal as on 30th March, 1996 onwards, placed at pp. 36 to 46 of the APB. At p. 46, in the balance sheet as on 7th September, 1995, an amount of Rs. 3.20 lakhs has been shown, i.e. Rs. 3 lakhs for the purpose of plot at Mirpura and stamp duty and other charges at Rs. 20,000. He pointed out that the second figure at p. 2 shown against figure (2) is Rs. 4,83 lakhs, which is treated by the Department as payment made as premium or in black. He further referred to p. 23 of APB, where a copy of the letter written by AO to the assessee is placed. He pointed out that the only query raised is with reference to the purchase of land at Mirpura in the context of item No. A-20 for a consideration of Rs. 7.83 lakhs. He referred to reply of the assessee at pp. 7 to 11 of APB. The assessee submitted that she had purchased land on 28th August, 1995 for Rs. 3 lakhs and a further amount of Rs. 18,000 was spent on stamp paper and Rs. 2,000 as miscellaneous expenditure, which is duly declared in the personal balance sheet filed before AO. The assessee further stated that nowhere in the seized documents or in the registered deed any such alleged amount of Rs. 7.83 lakhs has been mentioned, as stated by AO in notice, dt. 22nd April, 1996. The assessee enclosed a copy of registered deed for perusal of AO. Learned counsel submitted that the original deed of purchase of land in Mirpura is with the Department. He further submitted that the assessee emphatically denied payment of any premium on the said plot of land. He also submitted that there was no other evidence with the Department except item A-20 at p. 2 of APB. On a query as to whether the seller of the plot was confronted regarding receipt of extra payment, learned counsel replied in the negative. He submitted that the registered deed and the balance sheet of the assessee at p. 46 of APB were direct evidence for purchase of plot in question at Rs. 3 lakhs. On a further query, learned counsel submitted that AO never asked the assessee to produce seller of the plot and, therefore, she felt that the explanation given to the AO has been accepted. He, however, pointed out that AO independently issued summons under s. 131 to the seller, Smt. Ajaib Kaur, and that she filed an affidavit, placed a p. 1 of APB. On a further query as to whether the seller appeared in person before AO, learned counsel submitted that it was not clear. Learned counsel pointed out that in the affidavit filed by Smt. Ajaib Kaur, she had certified in para 3 that she had received only an amount of Rs. 3 lakhs and that no other amount of whatsoever kind either in cash or cheque or draft or in any other form was received from Smt. Neena Syal against sale of the said plot. He also referred to the affidavit field by other sellers of the land who were summoned under s. 131 and whose statements were recorded. Copies of the said affidavits are placed at pp. 12 to 16 of APB. He submitted that they have been clearly mentioned in the affidavits that they had not received any payment as premium on the sale of plots. Learned counsel thus submitted that a natural corollary arises, i.e. whether any such payment was made by the assessee or received by the seller. He referred to the decision of Hon'ble Supreme Court in the case of K. P. Varghese vs. ITO (1981) 131 ITR 597 (SC), wherein in the context of s. 52(2), it was observed that 'the sub-section has no application in the case of an honest and bona fide transaction where the consideration received by the assessee has been correctly declared or disclosed by him'. It was further observed that 'sub-s. (2) relieves the Revenue of all burden of proof regarding the extent of understatement or concealment and it does not create any fictional receipt'. He, therefore, urged that the receipt of excess money by the seller was required to be proved by the Department. Learned counsel further submitted with reference to the document at p. 2 of APB that search party did not put any question regarding writing of such document and the person by whom it had been written. He further referred to preliminary/final statement of Smt. Neena Syal on 7th September, 1995, given at pp. 31-35 of APB and submitted that there was no question or whisper about the document placed at p. 2 regarding purchase of land at 'Mirpura. He, therefore, submitted that veracity of the said document and its evidentiary value is doubtful, as it is not clear by whom the said document has been written and as to whether it speaks of any transaction in the nature of money being paid and received. He further submitted that there are no signatures or date on this paper and no witness. He, therefore, urged that it was a dumb document and does not relate to any person, property or transaction. He referred to the decision of the Tribunal in the case of Ashwani Kumar vs. ITO (1992) 42 TTJ (Del) 644 : (1991) 39 ITD 183 (Del), wherein it was held that where document found at the time of search did not indicate whether figures referred to quantities of money or to quantities of goods, was a dumb document and, therefore, no addition could be made on basis of such document. He further submitted that there were two facets of document found during search under s. 132, i.e. (a) finding of the document; and (b) truthfulness of the document and its veracity has to be evaluated before making any addition on the basis of such document. He further submitted that the presumption mentioned in s. 132(4A) is for the purpose of making an order under s. 132(5) and not for the purpose of making assessment under s. 143(3). He also referred to the following decisions :

(i) Addl. ITO vs. T. Mudduveerappa Sons (1993) 45 ITD 12 (Bang), wherein the Tribunal held that presumption raised under s. 132(4A) could not be availed of for purpose of making an order of assessment under s. 143(3).

(ii) Asstt. CIT vs. Rajeshbhai Jagjivandas Thakkar (1996) 56 TTJ (Ahd) 288 : (1996) 58 ITD 283 (Ahd), where AO relying upon under s. 132(5) added the value of the ornaments in the assessee's hands. The Tribunal observed that the essential and material distinction between the provisions contained in ss. 132(5)/143(3) had gone unnoticed at the hands of the AO and by virtue of fiction enacted under s. 132(5) for the limited purpose of making summary assessment, the person found to be in possession of money, bullion, jewellery and other valuable articles, etc, is to be treated as the owner of the said items. It further held that the said fiction enacted for the limited purpose cannot be extended while completing the assessment under s. 143(3) and, therefore, the burden of proving that the assessee was the owner of the gold ornaments in question clearly was on the taxing authority.

(iii) Amar Natvarlal Shah vs. Asstt. CIT (1997) 57 TTJ (Ahd) 454 : (1997) 60 ITD 560 (Ahd), wherein the Tribunal held that where seized sheets mentioned only date and month and not year and AO mentioned year 1988 thereon, there could be no basis for addition on basis of those sheets in asst. yr. 1989-90.

(iv) Devilal Gherilal Shah vs. Dy. CIT, wherein an addition made on the basis of paper seized during search which had no date or name mentioned thereon, was deleted.

(v) ITO vs. Mohan Lal Vig & Anr. (1983) 139 ITR 681 (P&H), wherein in the context of prosecution of partners under ss. 277/193, IPC, it was held that 'even if be presumed that the recovery of the Dasti Bahi from the business premises of the firm stood proved, it could not be said that proof of the recovery of the Dasti Bahi also amounted to the proof of the truth of the contents of the Dasti Bahi. In order to show that Bahi contained a true account relating to the business conducted by the firm of the respondents, some evidence should have been led by the respondents or by somebody at their instance, but no evidence whatsoever had been produced to prove the contents of that Bahi'.

(vi) Pushkar Narain Sarraf vs. CIT (1990) 183 ITR 388 (All), wherein in the context of provisions of ss. 132(4A) and 68, it was observed that 'the legislature has provided under s. 132(4A) that the books of account, other documents, money, bullion, jewellery or other valuable articles seized from the possession of the assessee shall be presumed to belong to the assessee if they are found in the possession or control of the assessee in the course of the search. A similar presumption may also be made as to the correctness of the contents of the books of account so seized. So also the signatures and every other part of the books of account may be assumed to be in the handwriting of the books of account may be assumed to be in the handwriting of the person by whom it is purported to have been written. This presumption cannot, however, have the effect of excluding s. 69 when regular assessment is made in regard to the income of the person from whose possession those books of account were seized under s. 132. It does not obviate the necessity to establish by independent evidence the genuineness of cash credits'.

7. Learned counsel then referred to item A-8, as relied upon by AO for making the impugned addition of Rs. 4.83 lakhs. He pointed out that the said document cited as A-8 was seized from the residence of Shri Vinod Viyogi, as mentioned by AO. He stated that the assessee is not aware of any such person or any such document and that the said evidence was never confronted by AO to the assessee. He, therefore, submitted that the said evidence has no meaning, as Shri Vinod Viyogi is not the assessee's agent or buyer.

8. Learned counsel next referred to the provisions of s. 158BB, whereunder the undisclosed income of the block period is to be computed in accordance with the provisions of Chapter IV, on the basis of evidence found as a result of search or requisition of books of account or documents. He, therefore, stressed that the undisclosed income has to be computed on the basis of record of the assessee and not on the basis of record of any other person. He submitted that the Department may have collected any information but that information should have been taken on record, confronted to the assessee and the assessee should have been allowed opportunity to cross-examine Shri Vinod Viyogi. He, therefore, emphasised that the said document A-8 is de hors in the face of positive evidence filed by the seller in the form of affidavit and the registration deed.

9. Learned Departmental Representative Sh Rakesh Goyal, at the outset submitted that the GFI Ltd. had floated various schemes for accepting deposits from public, yet the chart filed by learned counsel relating to various schemes for accepting deposits from public, yet the chart filed by learned counsel relating to various such documents has not been certified and it cannot be said that the said schemes were in force during the relevant period. At this stage, learned counsel submitted that the said papers were available to the public. He referred to the Rule Book of GFI Ltd. He submitted that the calculations mentioned in chart were filed with reference to the argument taken by the assessee before AO that there were two proposals - one by individual and family and the other by GFI Ltd. - and that individual bought land on cash down payment whereas GFL Ltd. was offering them on FDRs for higher amounts.

10. Learned Departmental Representative further submitted that the presumption incorporated by statute in ss. 69/69B were valid and keeping those provisions in view, the investment is rightly deemed to have been made by the assessee. He submitted that the decisions relied upon by learned counsel reported in (1965) 58 ITR 100 (Guj) and (1973) 89 ITR 150 (All) (supra) are distinguishable on facts. Learned Departmental Representative referred to the decision of Hon'ble Supreme Court in the case of CIT vs. Sun Engineering Works (P) Ltd. (1992) 198 ITR 297 (SC) for the proposition that it is neither desirable nor permissible to pick out a word or a sentence from the judgment of the apex Court divorced from the context of the question under consideration and treat it to be the complete law declared by the Court. He further submitted that the decisions reported in (1959) 35 ITR 408 (SC) (supra) and as relied upon by learned counsel, is actually in favour of the Department. Similarly, he submitted that the decision reported in (1971) 80 ITR 656 (MP) (supra) is on different issue. He further submitted that the provisions of the Evidence Act are not applicable to the deeming provisions of ss. 69/69B.

11. Learned Departmental Representative pointed out that Mr. Vinod Viyogi was doing work of purchasing land for GFI Ltd. He referred to p. 22 of the Department's paper book (for short DPB), where a copy of an affidavit filed by Mr. Vinod Viyogi is placed. In Para 2 of the said affidavit, it is mentioned that he is arranging purchase of various agricultural lands for and on behalf of different group of companies of GFI Ltd. through various brokers and sub-brokers who are paid commission as per normal practice in the said business. It is also mentioned in para 1 that he is working as a property consultant for and on behalf of Golden Forest Group Companies. Learned Departmental Representative submitted that the said affidavit has been filed to prove relationship of Shri Vinod Viyogi with the assessee. On a query as to whether the said affidavit was confronted to the assessee and where it was filed or taken on record, learned Departmental Representative kept silent.

12. Learned Departmental Representative invited our attention to copies of certain pages of diary of Shri Vinod Viyogi (pp. 19-21 DPB). He submitted that at p. 20 on right hand side, the amount paid to Smt. Ajaib Kaur with reference to 12 bighas of land is clearly mentioned. It mentioned the advance of Rs. 1.50 lakhs and the amount of duty at Rs. 18,000, actual payment made at Rs. 3 lakhs and further payment to be made at Rs. 3.33 lakhs. He submitted that against said payment of Rs. 3.33 lakhs, No. (2) is indicated, which means that the amount has been paid beyond the amount indicated in the registered deed. He further referred to p. 9 of DPB, wherein an amount of Rs. 6.33 lakhs is indicated against Smt. Ajaib Kaur with reference to 12 bighas of land at Hamirpura and advance of Rs. 1.50 lakhs is also indicated. Total amount at Rs. 7.83 lakhs is also mentioned under the heading 'total'. He further referred to p. 11 of DPB, where against the name of Smt. Ajaib Kaur similar entries are found. He further referred to pp. 12-13 of DPB, where figure of Rs. 3 lakhs is mentioned against the word 'reg', which means against registration and balance amount of Rs. 4.83 lakhs is mentioned after deducting Rs. 3 lakhs out of Rs. 7.83 lakhs. At p. 13, the said amount has been mentioned against Smt. Neena Syal wife of Shri R. K. Syal. He further referred to p. 16 DPB, where similar entries as mentioned in diary of Shri Vinod Viyogi (p. 20 of DPB) are found in relation to 12 bighas of land purchased from Smt. Ajaib Kaur. In view of the said documents, learned Departmental Representative submitted that the story of two proposals as mentioned by the assessee before AO going together is not correct. He emphasised that Shri Vinod Viyogi is the key man in these deals and that there is a clear case of on money being given to sellers beyond the amount indicated in the registration deeds. He further referred to the preliminary statement of the assessee and submitted that she did not know anything about purchase of land.

13. Learned Departmental Representative was fair enough to show the original document comparable to p. 2 of the assessee's paper book, wherein no signature of any person are there.

14. Learned Departmental Representative further referred to the preliminary statement of Shri Vinod Viyogi recorded on 7th September, 1995, and pointed out that he purchased land in various villages mentioned at p. 2 of the statement and Mirpura is included therein. Learned Departmental Representative pointed out that Shri Vinod Viyogi clarified that the entire record in the form of diary pertained to the transactions of GFI Ltd. He further referred to pp. 19-21 of DPB, which are extracts from the diary seized from the residence of Shri Vinod Viyogi, marked as A-35. He also referred to p. 10 of DPB, where entries against name of Smt. Ajaib Kaur for purchase of 12 bighas of land in Mirpura are made and the rate is indicated at Rs. 2.61 lakhs. Learned Departmental Representative then referred to balance sheet of Smt. Neena Syal beginning with pp. 36 of APB and submitted that the said balance sheet had been prepared upto date of search and that they were not found during search. He pointed out that in the balance sheet as on 31st March, 1986 (p. 36 APB), the assessee had shown Indira Vikas Patras (IVPs) worth Rs. 1 lakh. He submitted that there is no evidence of purchase of these IVPs. He further submitted that in balance sheet as on 31st March 1987 (p. 37 of APB), IVPs have been shown at Rs. 75,000 and that there is no evidence of sale IVPs and investment in shares of GFI Ltd. He also submitted that whereas members of this family are investing in IVPs, the company GFI Ltd. is making offers to other people to double their money in a limited period. He referred to balance sheet as on 31st March, 1993 (p. 43 APB) and submitted that on the assets side of IVPs have not been shown and there is no evidence regarding their disposal as also about source of assets of Rs. 2,64,770 shown therein. He, therefore, submitted that the assessee was trying to build up sources through device of these balance sheets so as to explain payment of Rs. 3 lakhs for purchase of property at Mirpura, as reflected in the balance sheet as on 7th September, 1995 (p. 46APB).

15. Learned Departmental Representative next submitted that though the assessee filed return of income for asst. yr. 1995-96 as per computation of income (p. 1 of DPB), no WT return was filed. He further referred to the preliminary statement of Smt. Neena Syal recorded on 7th September, 1995 (pp. 2-5 DPB), and pointed out that the assessee had no knowledge of source of income and assets and that she was only a housewife. He submitted that it was Shri Vinod Viyogi, who took proposals to the sellers of land and he has given an affidavit that he was purchasing land for directions of GFI Ltd. He again referred to pp. 11-12 of DPB, where entries in the name of Smt. Ajaib Kaur have been recorded. He, therefore, submitted that the same family was involved in these transactions and there is a clear business relationship. He, therefore, summed up that the amount of Rs. 4,83 lakhs represented on money paid to the seller Smt. Ajaib Kaur.

16. With reference to the chart filed by learned counsel showing amount of return receivable by investors in various schemes floated by GFI Ltd. learned Departmental Representative referred to Scheme No. 3 in which the amount of Rs. 1,000 becomes Rs. 1,600 in three years at an interest of 16.96 per cent. He submitted that this was the lowest rate of interest and that in schemes of less than three years rate of interest was 17 and 17.5 per cent whereas for longer duration interest varied from 18.94 to 24.58 per cent. He submitted that these details were not placed before AO and the said document was not found during search.

17. Learned Departmental Representative next submitted that the affidavit filed by Smt. Ajaib Kaur is from district Ambala and that she is a resident of district Patiala. He further submitted that she did not appear before AO, affidavit was received in 'dak' and that the contents thereof are in consonance with the reply filed by the assessee two days earlier. Learned Departmental Representative again referred to pp. 9-10 of DPB and submitted that in respect of plot at Mirpura, rate of Rs. 2,61 lakhs per acre is clearly written and that further entries at pp. 9-10 establish the relationship of the assessee and Shri Vinod Viyogi. He further submitted that the documents placed at pp. 9-21 of DPB represented common books maintained by Shri Vinod Viyogi for purchase of land. He submitted that these diaries were perused by director of GFI Ltd. and thus these are books of account of the assessee maintained by Shri Vinod Viyogi. He further referred to p. 16 of DPB and pointed out that the said page corresponds to p. 104 of the diary seized from the residence of Shri Vinod Viyogi.

18. Learned Departmental Representative referred to the provisions of s. 132(4) and (4A) and submitted that whatever is seized during search or found in possession or control of the concerned persons in the course of search is presumed to belong to such person. It is also presumed that the contents of the books of account and other documents so found are true.

19. Learned Departmental Representative referred to the following case law in support of his arguments :

(a) Pushkar Narain Saraf vs. CIT (supra), wherein it is observed that presumption regarding correctness of books not available to assessee when regular assessment is being made.

(b) ITO vs. Prem Dass (1992) 198 ITR 93 (P&H), wherein it is observed that in case of books of account seized in raid, there is a presumption that contents of books are true.

(c) CIT vs. S.M.S. Investment Corporation (P) Ltd. (1994) 207 ITR 364 (Raj), wherein it is observed that presumption under s. 132(4) that contents of documents seized in search is true, is rebuttable.

(d) Chuharmal vs. CIT (1988) 172 ITR 250 (SC), wherein it was observed that the expression 'income' as used in s. 69A of the IT Act, 1961, had a wide meaning which meant anything which came in or resulted in gain.

(e) Roshan Di Hatti vs. CIT (1977) 107 ITR 938 (SC) for the proposition that onus of proving source of on money paid to seller at Rs. 4.83 lakhs which represented unexplained investment, was on the assessee.

(f) Bidyut Prova Raha vs. ITO (1971) 79 ITR 187 (Assam) for the proposition that assessment is not vitiated by mentioning a wrong section.

(g) CIT vs. Satnam Transport Co. (P) Ltd. (1973) 92 ITR 42 (P&H) for the proposition that the citation of a wrong section in the order will not make it invalid.

(h) Sewduttroy Rambullav & Sons vs. CIT (1993) 204 ITR 580 (Cal) for the proposition that the violation of principles of natural justice in the completion of an assessment will not lead to nullity of the entire proceedings and that such violation merely results in illegality or irregularity supervening the course of proceedings under the law but does not destroy the jurisdiction of the authority, if he had seisin at the initial stage when the proceedings arose and if the authority while acting had lawfully assumed jurisdiction to proceed to act.

20. Learned Departmental Representative submitted that no arguments have been advanced by the assessee regarding assessment being a nullity. He also pointed out that the counsel before AO and the Tribunal is the same. He further submitted that on the basis of preponderance of probabilities, it is clear that premium or on money of Rs. 4.83 lakhs has been paid by the assessee to seller of land, Smt. Ajaib Kaur.

21. Learned counsel, in reply, reiterated that the provisions of ss. 69 to 69B are deeming provisions. He again referred to the principles evolved by Courts for interpretation of the deeming provisions and submitted that learned Departmental Representative has not rebutted any of the said principles. Learned counsel pointed out that there are more than 20 deeming provisions in IT Act, for example, sections 7, 8, 9, 25A, 41(1), 45(1), 59, 68 to 69D, 73A, etc. whereunder things or state of affairs which are not actual are deemed to be actual. He submitted that the decision reported in (1959) 35 ITR 408 (SC) (supra) also relates to a deeming provision.

22. Learned counsel further raised a basic objection to the admission of the paper book filed by the Department. He urged the Tribunal to peruse the said paper book and submitted that taking documents contained in the said paper book on record was possible only if such documents were part of record of the assessee/Court. He submitted that these documents were never part of record of the assessee and that the concept of the group, as mentioned by learned Departmental Representative is not relevant. He submitted that AO has rightly indicated document marked A-8 as part of record of Shri Vinod Viyogi. He also submitted that the Tribunal is the last appellate authority and that it is not an IT authority and that in this case the Department is respondent. He urged that the assessee cannot be put to a worst position than she was in before AO. He also urged that no second inning should be provided to the Department, as the provisions of Chapter XIV-B relating to special procedure for assessment of search cases are required to be interpreted strictly. He submitted that even AO has not perused all the documents placed in the DPB. There is no mention of any of these documents in assessment order. Learned counsel emphasised that if any paper was required to be considered, it was paper marked A-20 (p. 5), as mentioned by AO in para 3 of assessment order. He further submitted that if the Tribunal was to peruse other documents and sort out document, it will be impliedly doing reassessment. He further submitted that the Tribunal is not an advisory body. He also emphasised that no positive evidence has been mentioned by learned Departmental Representative for the proposition that any on money has been paid to seller. He submitted that direct evidence in this case is the document as reflected in the balance sheet (p. 46 of APB). He also mentioned that there is no requirement to find out the balance sheet during the course of search. He stressed that balance sheets as placed in the APB have been admitted by the Department. He highlighted that the registration deed for purchase of plot by the assessee from Smt. Ajaib Kaur has not been questioned and that even in the affidavit filed by Smt. Ajaib Kaur, no fault has been found by AO. He also mentioned that Smt. Ajaib Kaur is a resident of Dera Bassi and there is nothing wrong, as alleged by learned Departmental Representative in preparing affidavit in district Ambala. He emphasised that all the sellers from whom land has been purchased have admitted that no on money has been received by them. He submitted that learned Departmental Representative has jumped to circumstantial/inferal evidence. He emphasised that unless direct evidence as placed by the assessee and seller before the Department is found to be a facade, circumstantial/inferal evidence cannot override direct evidence. He further submitted that preponderance of probabilities, as urged by learned Departmental Representative is a circumstantial evidence. Learned counsel submitted that even if for the sake of argument we agree that Shri Vinod Viyogi is doing work on behalf of GFI Ltd. that he may have signed purchase deed, then how it is established that Shri Vinod Viyogi is related to this particular transaction in the case of the assessee. Learned counsel referred to preliminary and final statement of Smt. Neena Syal recorded on 7th September, 1995 (pp. 31-35 of APB) and submitted that not a single question about purchase of land in Mirpura by the assessee has been put to her. He further referred to the statement of Shri A. K. Syal (pp. 7-8 of DPB) and submitted that no question about this transaction was put to Shri Syal. Learned counsel further referred to the statement of Shri Vinod Viyogi and the assessment order in his case. He referred to p. 6 of the said assessment order and pointed out that addition of Rs. 14.20 lakhs found at the residence of Shri Vinod Viyogi has been made in his case and there is no discussion of the diary found at his residence. He, therefore, submitted that the sanctity of the said diary for the purpose of making an addition in the case of Smt. Neena Syal is very much open to doubt. He further submitted that even circumstantial evidence is in favour of the assessee, as the said diary nowhere mentions that Shri Vinod Viyogi received any money from Smt. Neena Syal for the purpose of paying premium or on money to Smt. Ajaib Kaur. He also submitted that the Department's case rests only on the said diary written by Shri Vinod Viyogi and the averment that Shri Viyogi was acting on behalf of Smt. Neena Syal. Learned counsel further submitted that the assessee had taken a consistent stand that there were two proposals-one for purchase of land by individual on cash down payment and the other for purchase of land by offering FDRs by GFI Ltd. for higher amounts. He pointed out that no question was raised by AO regarding various schemes floated by GFI Ltd., which ranged from 1 to 25 years. He further submitted that ledger of the company was not verified with reference to purchase of land and payment of alleged on money.

23. With reference to case law relied upon by learned Departmental Representative, learned counsel pointed out that the provisions of s. 132(4A) are for the purpose of seizure and are linked with the provisions of s. 132(5) for the purpose of making a summary order. He, therefore, submitted that learned Departmental Representative was taking a paradoxical stand inasmuch as though the contents of the papers seized from the person at whose premises search is conducted are presumed to be correct, such presumption is confined to order made under s. 132(5) and the assessee is not precluded from arguing in regular assessment proceedings under s. 143(3) that the burden is on the Department to prove that on money has been actually paid, refer (1996) 56 TTJ (Ahd) 288 : (1996) 58 ITD 283 (Ahd) (supra). He further submitted that the decision in (1992) 198 ITR 83 (P&H) (supra), as referred to by learned Departmental Representative was rendered in the context of provisions of ss. 276C/277 of the IT Act, relating to prosecution. In the said case, the assessee had withheld the books of account and the return was filed on estimated income and the verification in the return had been made incorrectly. The ITO filed a complaint against the assessee under s. 276C and 277. He pointed out that on the said facts, the presumption mentioned in s. 278D was applied, wherein the provisions of s. 132(4A) had been made applicable so far as it may be in relation to assets or books of accounts or other documents. Learned counsel submitted that the said decision is not relevant as the document in question, i.e., A-8, having not been found at the residence of the assessee. Learned counsel further submitted that similarly decisions relied upon by learned Departmental Representative and reported in (1994) 207 ITR 364 (Raj) and (1988) 172 ITR 250 (SC) (supra) are distinguishable on facts. He further submitted that the decision in (1977) 107 ITR 938 (SC) (supra), as relied upon by learned Departmental Representative, is also relied upon for the possibility that the assessee had earned the amount of Rs. 4.83 lakhs, which is allegedly paid as on money. He submitted that in the said case, the onus of proving the source of money found to have been received was placed on the assessee by the apex Court and that in the present case the allegation of the Department is not for receipt of Rs. 4.83 lakhs by the assessee but for payment of that amount by the assessee to the seller and, therefore, the burden lies on the Department to prove receipt of such money by the assessee before the assessee could have paid any on money of that amount. Learned counsel further submitted that there was no attempt by the Department to find out the actual market value of the land before alleging payment of any premium/on money by the assessee. He emphasised that the document relied upon by the Department do not prove conclusively that any premium/on money was given by the assessee. Learned counsel referred to the decision of Hon'ble Supreme Court in the case of CIT vs. Shivakami Co. (P) Ltd. (1986) 159 ITR 71 (SC), wherein it was held in the context of provisions of s. 12B(2), proviso (i), of 1922 Act, that 'though the legislation in question is to remedy a social evil and should be read broadly and should be so read that the object is fulfilled, yet the onus of establishing a condition of taxability must be fulfilled by the Revenue. Unless there is evidence that more than what was stated was received, no higher price can be taken to be the basis for computation of capital gains'. It was further observed that 'capital gains tax was intended to tax the gains of an assessee, not what an assessee might have gained.' Learned counsel summed up his reply by submitting that the Department's case is based on a number of possibilities and that it had made no effort to established or prove that any premium or on money was received by Smt. Ajaib Kaur.

24. Learned Departmental Representative at this stage referred to order-sheet entry, dt. 12th August, 1994 and submitted that the documents in general were discussed by AO with learned counsel for the assessee and that it being a group case, documents were confronted to the counsel together. Learned counsel referred to letter of AO dt. 22nd April, 1996, and submitted that p. 2 of APB only was confronted. Shri Sunil Mukhi made a statement at the Bar that the other documents were not confronted to the assessee.

25. In the hearing fixed for 6th May, 1998, learned Departmental Representative produced before us a certificate from Shri Varinder Mehta, AO, who had made assessment in this case. In the said certificate, dt. 29th April, 1998/1st May, 1998, it has been mentioned that Shri S. K. Mukhi, Advocate, used to appear on behalf of the various members of group of cases of M/s. Golden Forest India Ltd. and others. It is further mentioned that all the relevant seized documents were discussed and confronted to Shri S. K. Mukhi with a clear understanding that these will be used as and where required in the various cases of this group. It is also mentioned that the application for inspection and photocopies of seized record was received as a group and the same was given as group. It is further mentioned that even at the time of inspection, before handing over the documents, the material was discussed and the inferences were drawn in the relevant cases of the persons of the group. It is also stated that due to large number of seized documents, paucity of time, complexity of issues and lengthy proceedings, the recordings of the confronted documents were recorded in the general language on the order sheet, the authorised representative of the assessee was clear regarding the documents confronted and relevant for the proceedings. Shri Varinder Mehta has further clarified that in the case of Smt. Neena Syal, he has perused the paper book submitted by the AO and the said documents were confronted at the various stages and that he had written a letter on 22nd April, 1996, in this case. It is also stated that after getting reply and further discussion after tallying various seized documents pertaining to purchase of immovable property transaction at Mirpura, order-sheet entry was made on 12th August, 1996, to the effect that 'in case of Mirpura property, on 24th August, 1995, registration is done for Rs. 3 lakhs and as per documents seized this is for Rs. 7.83 lakhs. Explain why Rs. 4,83 lakhs should not be treated as undisclosed income. Learned Departmental Representative also filed a copy of order-sheet entries beginning from 1st July, 1996, to 2nd September, 1996, in the case of Smt. Neena Syal. Similarly, order-sheet extracts have been filed in the case of Smt. Bimla Syal and Shri A. L. Syal. Learned Departmental Representative, therefore, submitted that the seized documents have been duly confronted to the assessee and that the said documents have also been inspected. On a query as to whether inspection of documents amounts to confrontation to the assessee. Learned senior Departmental Representative who was present during hearing, submitted that mere inspection and objecting copies does not amount to confrontation but he hastened to refer to the order-sheet entry, dt. 12th August, 1996, whereby learned counsel was asked as to why amount of Rs. 4.83 lakhs should not be treated as undisclosed income. He further submitted that beginning with 9th August, 1996, there were six hearings and that show cause letter, dt. 22nd April, 1996, has been issued asking the assessee to file details. He referred to Sr. No. 6 of the index to DPB and submitted that reference in order-sheet entry dt. 12th August, 1996, was to the seized papers placed in the paper book at pp. 12-13 and the other documents placed in the paper book were in respect of documents placed at pp. 12-13. He further urged that in case the Tribunal reaches a conclusion that principles of natural justice have been violated, it may restore the matter back to the AO.

26. Learned counsel, in rejoinder, strongly assailed the certificate filed by Shri Varinder Mehta, AO. He submitted that it is not clear as to whether the said document addressed by Shri Mehta to the Bench is a letter or a certificate or an affidavit. He submitted that since Shri Mukhi made a statement at the Bar that document at Sr. Nos. 4-12 of the DPB were never confronted, former AO has written this letter which may be taken as a certificate and that the same is a prelude to the statement made by Shri Mukhi. He further submitted that documents seized from the third party are not a direct evidence and that DPB was filed in pursuance of direction of the Bench. He further submitted that the said certificate would mean that none of the documents placed in the DPB form part of the assessee's report. He submitted that the certificate at the most says that certain papers were confronted to Shri Mukhi. He further submitted that a certificate is not evidence under the CPC or under the Evidence Act and such a certificate is only confirmation of the Department's assertion and that it cannot be taken as evidence that documents were actually confronted. He also submitted that an affidavit is a piece of evidence once it is given in Court and similarly statement at Bar is evidence. He further submitted that whereas affidavit is declaration of facts, a certificate is only confirmation of assertion. He also submitted that the facts can be proved by evidence or through affidavit and that knowledge and belief are important limbs of an affidavit. He further submitted that formation of belief is on the basis of source of information and knowledge is based on facts which could be proved. He emphasised that the impugned certificate is based on conjectures and surmises of Shri Virender Mehta, who was AO in the year 1996, and who is now ADI. He further emphasised that Shri Mehta was acting on memory and that such certificate was not admissible as evidence. He referred to the decision of Hon'ble Supreme Court in the case of ITO vs. Madnani Engg. Works Ltd. (supra), wherein with reference to counter-affidavit filed by the Department in which grounds were not disclosed on the plea that it would cause prejudice to the interest of the Revenue, it was held that the said counter-affidavit was not tenable and that mere disclosure of belief without setting out material on the basis of which belief was arrived at was not sufficient. He further, referred to the decision of Hon'ble Delhi High Court in the case of Asoke Kumar Sen vs. ITO (1981) 132 ITR 707 (Del). He also referred to the decision of Hon'ble Supreme Court in the case of A. K. K. Nambiar vs. Union of India AIR 1970 SC 652, wherein the apex Court referred to the provisions of CPC, 1908, Order 19, r. 1, and held that affidavit not properly verified cannot be admitted in evidence. It further observed that the importance of verification is to test the genuineness and authenticity of allegations and also to make the deponent responsible for allegations. He further referred to the decision of Hon'ble Supreme Court in the case of CBI vs. V. K. Shukla, copy placed on file, wherein it was held in the context of ss. 34 and 18 of the Evidence Act that books of account kept in regular course of business were admissible in evidence but entries in the books have to be proved by independent evidence and that such entries are not by themselves sufficient to charge any person with liability. He further referred to the decision of Hon'ble Allahabad High Court in the case of Juggi Lal Kamla Path vs. Ram Janki Gupta & Anr. AIR 1962 All 407, wherein in the context of Order 19, r. 1 of CPC 1908, it was observed that where the Court had before it a duly sworn affidavit of the pairokar of the plaintiff in support of his suit dismissed for default of appearance and there was no counter-affidavit in traverse of the allegations contained in that affidavit, it was not open to the Court to disbelieve the allegations of the plaintiff in the affidavit. Hon'ble High Court relied on the decision reported in AIR 1956 SC 554. In view of the foregoing case law, learned counsel asserted that the aforesaid certificate filed by Shri Varinder Mehta, AO, has no legs to stand. He also referred to the provisions of r. 10 of the IT (Appellate Tribunal) Rules, 1963, wherein it is provided that 'where a fact which cannot be borne out by, or is contrary to, the record is alleged, it shall be stated clearly and concisely and supported by a duly sworn affidavit'. He, therefore, urged that the said certificate should be rejected outrightly, as it was no evidence. He referred to the contents of para 1 of the certificate, wherein it is mentioned that 'all the relevant issues/documents were discussed'. It further refers to a clear understanding with Shri S. Mukhi. Learned counsel submitted that no assessee would empower its counsel to reach any understanding with AO without reference to the list of seized documents and knowing the terms and conditions of the understanding. He further submitted that AO had drawn adverse inference on the basis of understanding without putting any question and that there was no minutes of the meeting or the said observations. He pointed out that the name of Smt. Neena Syal did not occur in the list of documents inspected or handed over and that even Shri S. Mukhi is not mentioned in that list. He submitted that copies of certain documents were given to Shri Surinder Panwar. Learned counsel pointed out that in the said certificate, Shri Varinder Mehta, AO, is making a confession that due to large number of seized documents, paucity of time, complexity of issues and lengthy proceedings, the record confronted documents were recorded in general order on order-sheet and that documents were not entered or mentioned anywhere. He further submitted that AO did not seek any reply from the assessee on any specific documents. He further submitted that Shri Varinder Mehta, AO, has mentioned that authorised representative of the assessee was clear regarding documents confronted and for relevant proceedings'. He mentioned that how the then AO could certify about state of mental charity of S. Mukhi. He referred to the decision of Hon'ble Supreme Court in the case of CIT vs. Durga Prasad More (supra), wherein it was observed that though an apparent statement must be considered real until it was shown that there were reasons to believe that the apparent was not the real, in a case where a party relied on self-serving recitals in documents, it was for that party to establish the truth of those recitals. He further referred to para. 2 of the certificate, wherein Shri Varinder Mehta, AO, has mentioned that he had written a letter on 22nd April, 1986, to Smt. Neena Syal. He referred to p. 23 of APB, where a copy of the said letter is placed and wherein reference has been made to document A-20 and the assessee has been asked to explain the source and acquisition of Rs. 7.83 lakhs, which has been mentioned by AO as price of land purchased at Mirpura in August, 1995. Learned counsel pointed out that the document A-20 was found from the residence of Smt. Pamila Syal and Shri A. L. Syal, as mentioned in para 3 of the assessment order. He also pointed out that the assessee had filed return on 2nd March, 1996, and that by 22nd April, 1996, when AO asked the assessee to explain the source of acquisition of Rs. 7.83 lakhs, he would have received an appraisal report and other documents. He then referred to order-sheet entry, dt. 1st July, 1996, and submitted that AO only asked about source of acquisition of Mirpura property and no mention was made about seized documents. He further referred to order-sheet entry, dt. 9th August, 1996, when Shri S. Mukhi filed balance sheet and cash flow statement. Even at that stage, there was no question asked about documents of Shri Vinod Viyogi. He further referred to order-sheet entry dt. 12th August, 1996, and submitted that the matter relating to construction of house was discussed and documents A-6, A-7, A-11, etc. were only confronted. He further referred to reply given by the assessee, which is placed at pp. 72-73 of APB. He also submitted that assessment was completed on 24th September, 1996, and that sequence of events would show that AO never confronted the assessee with papers now filed by the Department. He pointed out that AO is only relying on one document, i.e., A-8, and that veracity of the other papers in Departmental paper book (DPB) is not there. He, therefore, emphasised that the documents placed at Sr. Nos. 4 to 12 of DPB were never confronted to the assessee. He further urged that the certificate now filed is self-contradictory when AO himself had not relied on other documents placed in DPB. He also pointed out that if papers were confronted to the assessee, there would have been some reply by the counsel. He submitted that there was no prayer by the Department for admission of additional evidence under the IT (Appellate Tribunal) Rules and that the Department was only attempting to improve its case. Learned counsel also submitted that the assessee was not taking any ground of violation of principles of natural justice and that, therefore, no second innings should be provided to the Department.

27. Learned counsel also filed an affidavit from Shri S. Mukhi, in response to the aforesaid certificate by Shri Varinder Mehta. It is stated therein that in the case of the assessee, i.e., Smt. Neena Syal, no other document, except the documents appearing in the assessee's paper book at p. 2 being A-20, p. 5, seized from Smt. Pamila Syal's residence and a letter, dt. 22nd April, 1996, appearing at p. 23, was confronted and given to him or to the assessee. He has further stated that the contents of para 2 of the certificate to the effect that all the impugned papers in DPB placed at Sr. Nos. 4 to 12 and from pp. 9 to 23 were discussed and these papers were seized from Shri Vinod Viyogi's residence in the case of Smt. Neena Syal, are absolutely incorrect and without any basis and evidence. Similarly, Shri Mukhi has stated that the mentioning by Shri Varinder Mehta that at the time of inspection before handing over documents the material was discussed and inferences drawn in the relevant cases of persons of the group and having attached proof of handing over various such documents is incorrect since inspection of copies of documents was done by Shri Surinder Panwar of GFI Ltd. and copies were supplied to him and the then AO had taken receipt of documents on record on 23rd May, 1996, while he had already written a letter on 22nd April, 1996, to the assessee about document A-20, p. 5. Shri Mukhi has further stated in para 6 of the affidavit that the certificate that 'Sh. S. Mukhi, Advocate, was clear regarding documents confronted and relevant for the proceedings, i.e. impugned documents seized from Shri Vinod Viyogi in the matter of Smt. Neena Syal', is based on surmises and conjectures.

28. Learned counsel further filed an affidavit from Shri A. L. Syal, authorised attorney of GFI Ltd. Shri Syal has mentioned that the documents seized from Shri Vinod Viyogi's resident, as per DPB, submitted in the matter of Smt. Neena Syal were never confronted to her or to her advocate, Shri S. Mukhi. He has also affirmed that the contents of the affidavit of Shri S. Mukhi in this matter are correct since Shri Mukhi always used to discuss and prepare replies on each issue in consultation with Shri Syal and others. It is further stated that Shri Vinod Viyogi is not an employee of the company, i.e. GFI and also not a part of their family. It is also stated that in respect of purchase of property at Mirpura and while dealing with assessment of Smt. Neena Syal, document A-20, p. 5, seized from Smt. Pamila Syal and himself were confronted and no document seized from Shri Vinod Viyogi's residence was either confronted to Smt. Neena Syal or any question was put in statement taken by AO to Smt. Neena Syal, Shri R. K. Syal, Smt. Pamial Syal or Shri Vinod Viyogi. It is also stated that AO himself has not relied upon all seized documents of Shri Vinod Viyogi except A-8, p. 14, and total cash found from him at the time of search and arising out of the said document amounting to Rs. 14.20 lakhs has been assessed in the hands of Shri Vinod Viyogi as his undisclosed income. It is further stated that production of search documents by the Department before the Tribunal, though not relied upon by the then AO in the case of Smt. Neena Syal and contained in DPB at pp. 9 to 23 at Sr. Nos. 4 to 12 seized from Shri Vinod Viyogi is an attempt to complicate the proceedings and mislead the Tribunal. Learned counsel submitted that the Department may file a counter-affidavit having regard to the aforesaid affidavits of Shri S. Mukhi and Shri A. L. Syal. Learned counsel further filed a copy of assessment order dt. 24th September, 1996, in the case of Shri Vinod Viyogi as also copies of statements of various persons. He submitted that no question regarding purchase of property at Mirpura was put to either Shri Vinod Viyogi or to other persons. In view of the foregoing, learned counsel summed up that the so-called diary of Shri Vinod Viyogi cannot be relied upon and that the Department has not filed any corroborative evidence with reference to documents placed in DPB. He reiterated that the certificate from Shri Varinder Mehta is a circumstantial evidence to justify circumstantial evidence contained in DPB.

29. On next date of hearing on 19th May, 1998, learned Departmental Representative referred to certificate given by learned counsel in the assessee's paper book. He submitted that the documents at Sr. Nos. 5, 6, 17, 21 and 27 of the index to APB do not form part of record of the assessee. He, therefore, submitted that the Department has filed certain documents in DPB in the connected cases to prove their point as the assessee has filed the paper book containing documents in the cases of other persons. He submitted that accordingly no application for admission of additional evidence has been filed by the Department. With reference to filing of counter-affidavit by the Department, learned Departmental Representative referred to the provisions of s. 293 and submitted that indirectly AO will be open to proceedings in civil Court and, therefore, no counter-affidavit is proposed to be filed. Learned Departmental Representative again referred to order-sheet entry, dt. 12th August, 1996, and reiterated that the counsel attended proceedings for different assessees of this group and that relevant documents were confronted. He further submitted that in case of block assessments the Tribunal, being the first appellate authority, the powers under ss. 251 and 254 got merged and in case any further enquiry is necessary, it can order such an enquiry. He referred to the decision of Hon'ble Supreme Court in the case of Hukumchand Mills Ltd. vs. CIT (1967) 63 ITR 232 (SC), wherein in the context of para 2 of Removal of Difficulties Order, it was held that the Tribunal had sufficient power under s. 33(4) of the IT Act to entertain the contention of the Department with regard to the application of para. 2 of the Taxation Laws (Part B) (Removal of Difficulties) Order, 1950, and remand the case to the ITO. It further observed that the words 'pass such order as the Tribunal thinks fit' include all the powers (except possibly the power of enhancement) which are conferred on the AAC by s. 31. It further observed that consequently the Tribunal has authority under s. 33 to direct the AAC or the ITO to hold a further enquiry and dispose of the case on the basis of such enquiry. Learned Departmental Representative, therefore, prayed that AO may not be required to file any counter-affidavit with reference to affidavits filed by Shri S. Mukhi and Shri A. L. Syal. He again referred to various documents filed in DPB. He pointed out that document at pp. 12-13 is a document referred in assessment order and document at pp. 9 to 18 are from the same bunch of loose papers marked as document A-8. He submitted that the other documents are explanatory of pp. 9-18 of document A-8. He reiterated that as mentioned in the certificate of Shri Varinder Mehta, all relevant documents had been confronted to the assessee and, therefore, there was no necessity to file any counter-affidavit to make an application for admission of additional evidence. He further referred to the provisions of r. 18 of the IT (Appellate Tribunal) Rules, 1963, wherein it is specified that if the respondent proposes to refer or rely upon any document or statement or other papers on the file by or referred to in the assessment or appellate orders, he may submit a paper book in duplicate containing such papers duly indexed, etc.

30. Learned counsel submitted that r. 18 talks about papers from assessment order and that in this case except document A-20, p. 5, no other document was confronted to the assessee. He also submitted that document A-20 is a bunch of papers which also covers construction of property in the case of Smt. Neena Syal. He again submitted that Shri S. Mukhi made a statement at the Bar, which was followed by certificate from the then AO, Shri Varinder Mehta, then Shri Mukhi filed an affidavit which was also corroborated by affidavit filed by Shri A. L. Syal and that now the Department is claiming that all the papers of documents A-8 and A-20 were confronted. Learned counsel again referred to judgments cited earlier and submitted that certificate of AO is only an assertion of facts and not proof of facts, while affidavits filed by Shri Mukhi and Shri Syal are evidence of factual position and the position is that aforesaid documents were never confronted to the assessee. He again highlighted that no question was asked even to Shri Vinod Viyogi in his statement recorded by AO. Similarly, there was no indication or any whisper about other papers while recording the statement of Shri Neena Syal or her husband. He again submitted that para 3 of assessment order is basis of assessment and that AO has referred only to documents A-20 and A-8 and that out of the said documents only document A-20 was confronted. He submitted that AO relied on his own on document A-8, p. 14, without confronting the same to the assessee and there was no evidence, direct or indirect, to show that the said document had been confronted to the assessee. He also referred to the provisions of r. 10 of the IT (Appellate Tribunal) Rules and submitted that there was no immunity in the case of Department. He, therefore, submitted that in case no counter-affidavit is filed by the Department, the documents placed in DPB should not be taken on record. He also submitted that there is difference between perusal of certain papers and taking them on record and that there is no prayer by the Department for taking such papers on record.

31. In the alternative, learned counsel reiterated that, at the most, document A-8, p. 14, only could be taken on record, as AO relied upon it and that if document A-8, p. 14, is taken on record, the impugned addition of Rs. 4.83 lakhs has been made under s. 69 and it is deemed as income by fiction and, therefore, heavy burden lies on the Department to prove to the hilt that it is undisclosed income of the assessee. He further submitted that if one paper can lead to various possibilities, then the provisions of s. 69 cannot be made applicable and that the said provisions can only apply where only one conclusion is possible.

32. Learned Departmental Representative also made a statement that even document A-8, p. 14, is sufficient to make addition in the case of the assessee and in case the Tribunal takes a decision that the said document had not been confronted, let the matter be restored back to the file of AO.

33. We have carefully considered the rival submissions and have perused order of AO, various papers placed in the assessee's paper book as also the Department's paper book to which our attention was invited during the course of hearing. We have also seen the case law relied upon by the parties. It is observed that AO while making addition of Rs. 4.83 lakhs has mainly relied on document No. A-8, p. 14, seized from the residence of Shri Viyogi. He also referred to document A-20, p. 5, seized from the resident of Smt. Pamila Syal and Shri A. L. Syal at the time of asking the assessee to explain the source and acquisition of Rs. 7.83 lakhs, p. 23 of APB. In reply, pp. 8-11 of APB, it was submitted that the assessee had purchased land on 28th August, 1995, for Rs. 3 lakhs and a further amount of Rs. 18,000 was spent on stamp paper and Rs. 2,000 as miscellaneous expenditure and that the said amount of Rs. 3.20 lakhs was duly declared in balance sheet filed before AO. The assessee also stated that the alleged amount of Rs. 7.83 lakhs was not mentioned either in the seized document A-20 or in the registration deed. AO also mentioned in assessment order that the assessee had denied payment of any premium and that seller of land had also filed an affidavit in response to summons under s. 131, wherein she denied having received any premium. AO further referred to contention of the assessee that there were two proposals - one by individual and family and the other by GFI Ltd. - and that individuals bought land on cash down payment but GFI Ltd. was offering sellers FDRs for higher amounts. He rejected the plea of the assessee by referring to p. 14 of item A-8 seized from the residence of Shri Viyogi and concluded that the said document confirmed that premium of Rs. 4.83 lakhs was paid over and above the cost mentioned in the registration deed. It is clear that the explanation given by the assessee in her reply, pp. 7-11 of APB, has not been controverted by AO and that he did not make any further enquiry from the assessee in this respect. It is also observed from the preliminary and final statements, pp. 31-35 of APB, that no question had been put to the assessee with respect of any premium paid by her for purchase of plot at Mirpura from Smt. Ajaib Kaur. AO came to the conclusion that premium had been paid by the assessee to the seller of the plot only on the basis of document A-8, p. 14, which was seized from the residence of Shri Viyogi and which was not specifically confronted to her. We may make here a reference to order-sheet entry, dt. 12th August, 1996, recorded by AO in the case of the assessee, wherein it is mentioned that in case of Mirpura property, on 24th August, 1995, registration is done for Rs. 3 lakhs and, as per documents seized, this is for Rs. 7.83 lakhs. Explain why Rs. 4.83 lakhs should not be treated as undisclosed income ? This order-sheet entry has been the subject-matter of hot debate before us between both the parties. While the Department filed a certificate from the then AO, Shri Varinder Mehta, the assessee filed affidavits from Shri Sunil Mukhi, Advocate, and Shri A. L. Syal. Shri Mukhi also made a statement at the Bar that the impugned document No. A-8 and the diaries seized from Shri Viyogi were not specifically confronted by AO to him. This statement at the Bar led to filing of aforesaid certificate by the Department and the aforesaid affidavits by learned counsel and Shri A. L. Syal. The contents of the said certificate and affidavits have been mentioned in the foregoing paragraphs of this order. It is observed that AO's assertions made in the said certificate are general in nature and the fact that the documents seized from Shri Viyogi were specifically confronted to the advocate of the assessee/assessee is not born out. Further, the Department declined to file any counter-affidavit of AO in reply to affidavits filed by Shri Mukhi and Shri A. L. Syal. Learned Departmental Representative referred to the provisions of s. 293 of the Act and submitted that AO filing counter-affidavit may make him liable for civil prosecution. We may mention that actually the provisions of s. 293 provide a protection to the officers of the Government for anything done or intended to be done in good faith under the provisions of the Act and bar the filing of suits in civil Courts so as to set aside or modify any proceedings taken or order made under the said Act. The aforesaid facts thus show that the concerned AO was in a state of doubt/suspicion with reference to the actual confrontation of the material seized from the residence of Shri Viyogi to the assessee. Thus, having regard to the decision of Hon'ble Supreme Court reported in AIR 1970 SC 652 (supra) and of Hon'ble Allahabad High Court in AIR 1962 All 407 (supra) and in the circumstances, we cannot help but give due weightage to the averments made by learned counsel Shri Mukhi and Shri A. L. Syal in the affidavits filed before us, which cannot be legally ignored, in the absence of any counter-affidavit filed before us, which cannot be legally ignored, in the absence of any counter-affidavit filed from the Department.

34. As mentioned above, while making impugned addition of Rs. 4.83 lakhs, AO straight away referred to document A-8, p. 14, an concluded that Rs. 4.83 lakhs is undisclosed income of the assessee. He has not discussed in the assessment order as to whether the assessee furnished any explanation or not with reference to the premium of Rs. 4.83 lakhs paid to the seller of plot at Mirpura or, if the explanation was furnished as to whether it was unsatisfactory, as contemplated under the provisions of s. 69 of the Act. Thus, AO has not given any reason for either not accepting the explanation of the assessee or for finding the explanation as unsatisfactory. It is further observed that even the affidavit filed by the seller, Smt. Ajaib Kaur, was not confronted to the assessee. We may refer here also to the statement of Shri Viyogi recorded on 7th September, 1995. It is observed that no question was put to Shri Viyogi about payment of premium to the seller of plot in Mirpura or other places. Thus, we feel that on the facts and circumstances of the case AO did not comply with the conditions stipulated in s. 69 of the Act, which are mandatory in nature and are relevant for assessment made under s. 143(3) r/w s. 158BC. It may be mentioned that under s. 158BB(2), the provisions of ss. 68, 69, 69A, 69B and 69C have been made applicable for the purpose of computing undisclosed income of the block period. It is also observed from the decision of the Tribunal in the case of Asstt. CIT vs. Rajeshbhai Jagjivandass Thakkar (supra) that "the fiction enacted under s. 132(5) for the limited purpose cannot be extended while completing the assessment under s. 143(3) and, therefore, the burden of proving that the assessee was the owner of the gold ornaments in question in the face of his spontaneous statements and statements of the family members lies on the taxing authority". We may also refer to the decision of the Hon'ble Allahabad High Court in the case of Pushkar Narain Saraf vs. CIT (supra), wherein it is held in the context of s. 132(4A) that the books of account, other documents, money, bullion, jewellery or other valuable articles seized from the possession of the assessee shall be presumed to belong to the assessee if they are found in the possession or control of the assessee in the course of search. This presumption cannot, however, have the effect of excluding s. 68 when regular assessment is made in regard to the income of the person from whose possession those books of account were seized under s. 132. We may mention that in the present case even the seized documents on the basis of which the impugned addition of Rs. 4.83 lakhs has been made, have not been found at the residence of the assessee and, as already mentioned, the same have not been specifically confronted to the assessee before making the impugned addition. Further, in assessment of Shri Vinod Viyogi addition of Rs. 14.20 lakhs found at his residence has been made without discussing the diary seized at his residence. Thus, having regard to the foregoing facts, we feel that addition of Rs. 4.83 lakhs is not sustainable in the case of the assessee when AO has failed to comply with the basic conditions stipulated in s. 69 of the Act. The case law relied upon by learned Departmental Representative is clearly distinguishable on facts and is of no help to the Department. We may also mention that for the sake of argument, even if it is assumed that document A-8, p. 14, and other relevant pages were impliedly confronted to Shri Mukhi, AO has not followed up this matter to the logical end. The assessment order is silent about any explanation specifically sought by AO from the assessee with reference to such document and source of Rs. 4.83 lakhs and as to whether any explanation was furnished by the assessee and, if furnished, how the explanation was unsatisfactory. We, therefore, find merit in the submissions of learned counsel that the aforesaid documents are open to more than one possibility of interpretation and do not prove conclusively that any premium was given by the assessee or received by Smt. Ajaib Kaur. Here, we may mention the decision of Hon'ble Supreme Court in the case of CIT vs. Shivakami Co. (P) Ltd. (supra), wherein it was held that 'unless there is evidence that more than what was stated was received, no higher price can be taken to be the basis for computation of capital gains'. It was also observed that though the legislation in question, i.e. s. 12B(2), proviso (i), of Indian IT Act, 1922, was to remedy a social evil and should be read broadly and should be so read that the object is fulfilled, yet the onus of establishing a condition of taxability must be fulfilled by the Revenue. Thus, we feel that in the present case, AO has simply jumped to the conclusion that the impugned amount of Rs. 4.83 lakhs is undisclosed investment, without following due course of law.

35. We may now deal with plea of learned Departmental Representative that in case the Tribunal comes to the conclusion that the documents in question have not been confronted to the assessee, the matter may be restored to the file of AO. We may refer here to the scheme of Chapter XIV-B, inserted by the Finance Act, 1995, w.e.f. 1st July, 1995, and the object underlying the said provisions. In the Budget Speech given by the then Finance Minister, he mentioned that in order to make the procedure more effective. I am proposing a new scheme under which undisclosed income detected as a result of search shall be assessed separately at a flat rate of 60 percent. An appeal against the order can be filed directly before the Tribunal" refer Para 71 of 212 ITR (St) 87. In the notes on clauses to cl. 32 of the Finance Bill, 1995, refer 212 ITR (St) 306-309, it is mentioned that 'in order to make the procedure of assessment of search or requisition cases effective, it is proposed to introduce new provisions for assessment of undisclosed income detected as a result of search or requisition'. It is further mentioned that the undisclosed income of block period shall be taxed at a flat rate of 60 per cent specified in s. 113K and that no penalty under ss. 271(1)(c), 271A, 271B or 273 or interest under ss. 234A, 234B or 234C will be levied or imposed. Notice under s. 148 of the Act has also been dispensed with. It is also mentioned that the order of assessment for the block period shall be passed by an AO not below the rank of Asstt. CIT with the previous approval of the CIT. It is further mentioned that proceedings under s. 132(5) will no longer be necessary for searches initiated after 30th June, 1995. It is also mentioned that the provisions of ss. 68 and 69A to 69C shall, as far as may be, apply in computing the undisclosed income for the block period. It is also mentioned that the onus of proving to the satisfaction of the AO that any undisclosed income has already been disclosed in any return of income filed by the assessee before the date of search will be on the assessee. It is further mentioned that brought forward losses or unabsorbed depreciation will be allowed to be carried forward for set off in regular assessments and will not be set off against the undisclosed income determined in the block assessment. It is further mentioned that where the AO finds that any undisclosed income belongs to any person other than the person in whose case the search was conducted, the AO having jurisdiction over such other person will proceed against him in accordance with the provisions of the said Chapter. In the memorandum explaining the provisions in Finance Bill, 1995 [refer 212 ITR (St) 345-349], it is also mentioned that under the present scheme, valuable time is lost in trying to relate the undisclosed incomes to the different years and that tax evaders generally manage to divert the focus to procedural and legal issues and often invent new evidence to explain undisclosed income. It is also mentioned that in order to make the procedure of assessment of search cases cost-effective, efficient and meaningful, it is proposed to introduce a new scheme of assessment of undisclosed income determined as a result of search under s. 132 or requisition under s. 132A. It is also mentioned at p. 347 that where the assessee offers no explanation about the nature and source of acquisition of certain assets or the explanation offered by him is not, in the opinion of the AO, satisfactory, the value of such assets may be deemed to be the income of the previous year in which the search took place'. Thus, it will be seen that the new provisions are more stringent inasmuch as the assessee is liable to pay tax at 60 per cent in relation to undisclosed income, assessment order is to be made by an officer not below the rank of Asstt. CIT and with the previous approval of the CIT. We, therefore, feel that the provisions of the new Chapter have placed a greater burden on the Departmental authorities to comply with the essential provisions of law and that these provisions have to be construed strictly. Thus, in a situation where AO has failed to comply with the basic provisions of s. 69/69B, whereunder the impugned addition has overtly been made, it is difficult to accept the plea of learned Departmental Representative that the matter may be restored to the file of AO, so that the requisite material can be confronted to the assessee and then the addition made. We feel that it is not the function of the Tribunal to further allow opportunity to the AO so as to cover up legal lapses made by him while making addition, by restoring the matter back to his file. Moreover, the Department is only respondent in this case. We, therefore, turn down this plea of learned Departmental Representative. We may mention that learned Departmental Representative also advanced the plea of merger of function of first appellate authority under s. 251 and the powers of the Tribunal under s. 254. He had argued that since the Tribunal is the first appellate authority in this case, it could restore the matter to the file of AO in case it feels that certain documents have not been confronted to the assessee. We feel that there is no such intention of the legislature in enacting the provisions of the new Chapter XIV-B and the amendments made in s. 254. In case there was any such intention, the law, would have been amended to make this intention clear. We feel that in fact the legislature had only reduced one appeal under the new scheme. We may mention that rather after operation of the new provisions for a period of one year, the legislature has again amended the provisions, so that the first appeal lies to the CIT(A). We may further mention that the power of remand under s. 254 is required to be exercised in a disciplined and responsible manner and that the same cannot be invoked in a case where AO has not cared to follow the provisions of s. 69/69B inasmuch as no explanation has been called for by AO in relation to the documents relied upon by him for making the impugned addition and further the said documents which were found with other persons, had not been specifically confronted to the assessee. We may refer to the decision of Hon'ble Gauhati High Court in the case of Jeypore Timber and Veneer Mills (P) Ltd. vs. CIT (1982) 137 ITR 415 (Gau), wherein while construing the expression 'such orders thereon as it thinks fit', it was observed that the word 'thereon' is a serious constriction on the exercise of the power by the Tribunal and that it can decide only the points or grounds raised before it whereas the IT authorities can travel beyond the grounds and consider the entire assessment and that the Tribunal has no power of enhancement of any penalty or assessment nor can it remand a case with the object of such enhancement. It further observed that the power of remand is within discretion of the Tribunal, but the power being judicial, it must be exercised judiciously, according to rule and not according to humour, the order must be legal and regular, disciplined as opposed to capricious. We may also refer to the decision of Hon'ble Patna High Court in the case of Chunnilal Surajmal vs. CIT (1986) 160 ITR 141 (Pat), where reassessment proceedings were taken in the case of HUF and on inspection of accounts and bank deposits, it was found that the bank deposits were in the name of wife of Karta of HUF and that the Karta's wife was not asked for explanation regarding the deposits and the bank deposits were included in the income of the HUF. It was held that reassessment were not valid and direction by the Tribunal to investigate bank deposits was not justified. In view of the foregoing, we reject the plea of the Revenue to restore the issue to the file of AO and delete the impugned addition of Rs. 4.83 lakhs.

36. Next ground raised by the assessee relates to addition of Rs. 5,46,093 with reference to construction of house No. 570, Sector 12, Panchkula, and charging tax at 60 per cent for asst. yr. 1995-96.

37. AO observed that the assessee had made investment in construction of house No. 570/12 having an area of 300 sq. mtrs. He referred to balance sheet as on 7th September, 1995, and observed that total amount spent on construction, after excluding the amount spent on purchase of plot, was shown at Rs. 8,74,630. He referred to the documents seized on 8th September, 1995, namely, A-6, A-7 and A-12. He determined the value of construction at Rs. 32,02,908 and asked the assessee to explain the difference. He further observed that the assessee had furnished reconciliation of expenses incurred along with valuation report by a registered valuer. He also noted the plea of the assessee that the amounts mentioned at p 2 of document A-12 were advances given for construction and that document A-12 contained list of total amount spent to the extent of Rs. 7,88,411 and that as per items 1 to 76 of that list and the actual expenses incurred in documents A-6, A-7 and A-11 were reflected in the list of actual amounts spent, as mentioned above. He referred to the statements of Shri A. L. Syal and Shri Deepak, who had carried out construction. AO also observed that there were totalling errors to the extent of Rs. 1,30,197 and Rs. 2,94,035 at pp. 86 to 89 and 113 to 140 of document A-11 respectively. After verification, AO found that contention of the assessee regarding advances given for construction and totalling errors were correct and it was also a fact that amount of Rs. 5,49,451 relating to list of actual amount spent was same as appearing in documents A-11, A-6 and A-7. He, therefore, determined the cost of construction at Rs. 14,20,725 as against Rs. 8,74,632 shown by the assessee and made an addition of Rs. 5,46,093 as income from undisclosed sources to be taxed at 60 per cent in asst. yr. 1995-96.

38. Learned counsel referred to balance sheet as on 7th September, 1995, p. 46 of APB, wherein total investment of Rs. 10,99,375 including cost of plot and registration deed is reflected against house No. 570/12. He submitted that the assessee had a plot of 300 sq. mtrs., which was a small plot in the context of residential accommodation in Chandigarh/Panchkula. He further submitted that the assessee had disclosed rate of construction of Rs. 396 per sq. ft. and that expenditure incurred on construction is duly supported by vouchers, etc. which are with the Department. He referred to the details placed at pp. 95 to 176 of APB, where copies of various vouchers are placed. He further referred to the valuation report placed at pp. 49 to 55 of APB, wherein cost of construction has been worked out at Rs. 8,21,900 and it is mentioned that cost of land, as per sale deed, was Rs. 1.95 lakhs plus expenses on registration at Rs. 25,000 totalling Rs. 2.20 lakhs. He further referred to note given at p. 60 of APB, wherein it is mentioned that in the case of Smt. Pamela Syal, covered area of house No. 573, Sector 12, Panchkula is 3,751 sq. ft. as compared to covered area of 2,223 sq. ft. in the assessee's case, but the alleged construction cost has been taken at Rs. 32,03,908, while in the case of Smt. Pamela Sayal, it was proposed to be taken at Rs. 23,97,106. He further submitted that the registered valuer had based the cost of construction on the standard CPWD rates. He pointed out that in initial letter written by AO, p. 61 of APB, he mentioned the cost at Rs. 32,02,908, which works out to Rs. 1,600 per sq. ft. He referred to reply given by the assessee, pp. 47-48 of APB, wherein it was pointed out that total expenditure was not correctly worked out by AO, as at different places the estimate given by various labourers/sanitary and other construction material suppliers had been calculated, while at later stages of calculating the actual amount paid against the said estimate for that amount has been calculated. Again, the advance given against alleged estimates and actual payment have also been calculated so as to arrive at exaggerated figure/amount of construction. Learned counsel, therefore, submitted that the assessee filed reconciliation statement as at pp. 56-59 to APB. He further submitted that document A-12 is summary of actual amount spent, vouchers in relation to which are placed at pp. 95-123 of APB. He further clarified that Shri A. L. Syal, father-in-law of the assessee, looked after construction of two houses simultaneously, i.e. house Nos. 573 and 570. He further submitted that Shri Deepak was an attendant and, therefore, AO was not correct in making impugned addition on the basis of his statement. He further submitted that AO has accepted in the assessment order that the contention of the assessee regarding advance given for construction and totalling errors are correct and that the amount of Rs. 5,49,451 relating to list of actual amount spent is same as appearing in documents A-6, A-7 and A-11 and ultimately reduced the estimate of cost of construction to Rs. 14,20,725 he submitted that totalling mistake of Rs. 18 lakhs and odd has been corrected by AO, which shows that the estimate based on seized documents is not correct. He further submitted that AO has taken into account document A-12 and other documents also, whereas he should have either taken into account document A-12 or only the other documents. He referred to p. 58 of APB, where summary of expenses relating to house No. 570/12 is given. Against documents A-6, A-7, A-11 and A-12, actual investment has been shown at Rs. 5,49,451 and after adding various items aggregating to Rs. 2,48,972, total expenditure on cost of construction has been worked out at Rs. 7,98,429. Further addition of Rs. 95,433 has been made with reference to doors, which expenditure was not written in the list of expenses. A further addition of Rs. 11,988 was made with reference to building material not reflected in the list of expenses. Another addition of Rs. 8,772 was made with reference to expenses incurred for common wall and thus total cost of construction was worked out at Rs. 8,74,632. He further referred to pp. 116-124 of APB and pointed out that at p. 116 expenses of Rs. 10,974 have been shown with reference to electrical wiring. He further referred to p. 57 of APB and submitted that expenses of Rs. 28,019 against Sr. No. 38 were estimates only and similar expenses against Sr. Nos. 39 to 44 were also estimates only. He also referred to pp. 135-142 of APB, where the word 'estimate' has been given at the top to indicate that the same were only estimated expenses. He further referred to p. 143 and submitted that the expenses mentioned reflected the payments actually made and that the said page was part of document A-11. In view of the foregoing, learned counsel stressed that there was no material with the Department to make the impugned addition and that even report of DVO was not there. He, therefore, urged that evidentiary value of report of registered valuer cannot be ignored. He referred to the decision of the Tribunal in the case of Shanti Complex vs. ITO (1997) 63 ITD 181 (Pat) (TM), wherein the AO did not consider report of the registered valuer at all nor gave copy of DVO's report to the assessee. The question arose whether in view of the fact that the books of account were not maintained by the assessee, reference made by AO to DVO was justified. While the Tribunal held that AO was justified in making such reference, it observed that the procedure followed by AO manifestly decimated evidentiary value of report of VO and its acceptance by AO was untenable in law. It was further observed that the difference between DVO and the registered valuer would not make the registered valuer lesser mortal or put him on a lower pedestal qua the quality of his opinions though given to private citizens subject of course to their acceptance by an IT authority or the Tribunal or the higher judicial forum of the High Courts or the Supreme Court and that the only other difference between the two classes of experts is that while the report of a VO is binding under sub-s. (6) of s. 16A of the WT Act on a WTO, no such binding character is attached to the report of the registered valuer. It was further observed that AO referred the matter to the DVO without making any specific comments on the report of the registered valuer submitted by the assessee and, in law, it would have been a shade better if the reason about his dissatisfaction with the assessee's stand as to the cost of construction was recorded by AO. Learned counsel pointed out that under the IT Act, DVO's report was not binding unlike under the WT Act. He further submitted that there was corroborative value of report of the registered valuer as the AO did not point out any defect in the said report. He further submitted that in the case of Smt. Pamela Syal, cost of construction was taken by AO at Rs. 405 per sq. ft. and that in the case of the assessee it was at Rs. 638 per sq. ft.

39. In the alternative, learned counsel submitted that the assessee filed return in time on 30th June, 1995, and that the addition made by AO is different than in the present case worked out as undisclosed investment. He pointed out that under the provisions of s. 158BB, undisclosed income of the block period has to be computed in accordance with provisions of Chapter IV, on the basis of evidence found during search, as reduced by the aggregate of total income determined in assessment under s. 143 for the earlier years. He referred in particular to the provisions of s. 158BB(1)(d), wherein it is provided that where previous year has not ended or the date of filing return of income under s. 139(1) has not expired, undisclosed income may be determined on the basis of entries relating to such income or transaction as recorded in the books of account and other documents maintained in the normal course or before the date of search or requisition relating to such previous year. He submitted that in the present case the previous year has not ended and that the assessee had maintained the books of account relating to cost of construction, wherein all transactions are recorded. He submitted that the expression 'books of account' and 'record' are not defined in the Act. He referred to the definition of these expressions as given in Webster's Dictionary, wherein it is mentioned that a volume or collection of sheets in which accounts are kept; a register of debits and credits, receipts and expenditure, etc; to keep a set of books; hence, a record; and an account'. He further referred to the definition of a 'book', as given in Stroud's Judicial Dictionary, wherein it is defined as "bound manuscript notes will sometimes (generally) pass under a bequest of 'books'". He also referred to the definition of a 'book', as given in Biswas Encyclopaedic Law Dictionary, wherein it is defined as a 'portion of a book and also any number of sheets connected together with a view to forming a book or a portion of a book'. He further submitted that in the present case, construction of the house was completed by 31st March, 1995, and that proper assessment year for any addition on this account is asst. yr. 1996-97 and that such addition, if any, should be taxed at the normal rate. He referred to p. 46 of APB, where a copy of balance sheet as on 7th September, 1995, is placed and submitted that construction of the house was completed during financial year ending on 31st March, 1995, and that only an amount of Rs. 1.20 lakhs was spent in the remaining period upto 7th September, 1995, i.e., date of search.

40. Learned Departmental Representative basically relied on order of AO. He referred to the statements of Shri Syal and Shri Deepak and to document A-12. He submitted that in response to a query letter by AO, the assessee filed reconciliation statement, which was accepted by AO and that amount of Rs. 5,49,457 was deducted on account of totalling mistake and rest of the amount was taken as a cost of construction. He further submitted that the books of account, if any, were maintained by the contractor and father-in-law of the assessee. He further referred to p. 56 of APB, where quantity of bricks is given at 70,861 and quality is not indicated. He further submitted that the payment made by the assessee is only for 13 trucks, whereas 70,861 bricks are reflected at p. 56. He further submitted that report of the registered valuer is a report from the person employed by the assessee. With reference to alternative plea taken by learned counsel, learned Departmental Representative submitted that let the matter be restored to file of AO and the assessee be asked to reconcile total amount. He submitted that there may be variation in cost of construction and that the cases cited by learned counsel are not relevant. With reference to plea of learned counsel that construction was completed by 31st March, 1995, and that addition, if any, should be taxed at the rate of 30 per cent, learned Departmental Representative submitted that no regular books of account were kept by the assessee with reference to cost of construction. He further submitted that powers of first appellate authority as mentioned in s. 251 get merged with powers in s. 254, when the Tribunal is hearing first appeal and that these powers of the Tribunal are coterminus with powers of AO. He referred to the following decisions :

(a) CIT vs. McMillan & Co. (1958) 33 ITR 182 (SC), wherein in the context of s. 13, proviso, of the Indian IT Act, 1922, it was observed that if the ITO has failed to apply his mind to the proviso to s. 13 or has come to a wrong determination for or against the assessee in the computation of the income, the AAC can correct that error when he has seizin of the assessment on an appeal filed by the assessee. It is further observed that whether in a particular case a remand will be the proper order depends on the circumstances of each case and the AAC has the power to correct the error in the way most suitable in the circumstances of the case.

(b) P. N. Balasubramanian vs. ITO (1978) 112 ITR 512 (AP), wherein it was observed at p. 522 that it was not proper for the AAC, even in cases of best judgment assessment, to look into the books which the assessee failed to produce when asked to do so, in order to ensure that the judgment of the AO is not capricious or arbitrary and, if it is defective, to rectify it on a valid and proper basis.

(c) CIT vs. Indian Express (Madurai) (P) Ltd. (1983) 140 ITR 705 (Mad) for the proposition that there is a distinction of dispute arising between two parties in a civil litigation and in the tax proceedings. It is observed at p. 722 of the report that the provision in s. 254, which confers appellate jurisdiction on the Tribunal, clearly lays down that the Tribunal, in disposing of an appeal, may pass such orders thereon as it things fit. Hon'ble High Court has also referred to the decision of apex Court in the case of CIT vs. Mahalakshmi Textile Mills (1967) 66 ITR 710 (SC) and observed that the Tribunal is not precluded from 'adjusting' tax liabilities of the assessee in the light of its findings merely because the findings are inconsistent with the case pleaded by the assessee.

41. Learned Departmental Representative, therefore, pleaded that the matter may be restored to the file of AO for further verification of figures of expenses, if necessary.

42. Learned counsel, in reply, referred to the decision in (1997) 63 ITD 181 (Pat) (TM) (supra) and submitted that the registered valuer is not an employee of the assessee and that AO did not find any defect in his report. He also strongly protected in going back to AO on the issue. With reference to points raised by learned Departmental Representative regarding payments made by the assessee for bricks, he referred to pp. 106 and 120 of APB, wherein payments of Rs. 10,770 is shown for bricks and sand (p. 106) and payment for 13 trucks has been shown at Rs. 46,020 and payment for another 9,650 bricks and sand, bajri and stone dust is shown at Rs. 32,560 (p. 120). He further submitted that p. 58 of APB gives a summary of expenses relating to house No. 570/12 and that this summary is reflected in documents A-6, A-7, A-11 and A-12. He, therefore, submitted that the actual amount spent by the assessee is Rs. 8,74,632 and that AO has committed arithmetical error in computing cost of construction at Rs. 14,20,725. He, therefore, urged that no addition is called for.

43. We have carefully considered the rival submissions on this issue and have perused order of AO and relevant documents filed in the paper book to which our attention was invited during course of hearing. We have also seen the case law relied upon by the parties. It is observed that AO initially determined value of construction of house No. 570/12 at Rs. 32,02,908, when he asked the assessee to explain the said expenditure. The assessee filed a reply, which is placed at pp. 47-48 of APB. The assessee explained that total expenditure was not correctly worked out by AO and that at different places the estimates given by various labourers and suppliers had been calculated and at later stages the actual amount paid against said estimates had also been included and that even the advances given against alleged estimates and actual payments had also been included in computation of exaggerated figure of Rs. 32,02,908. The assessee further filed reconciliation statement of expenditure and explained the expenditure incurred on cost of construction with reference to balance sheet as drawn upto 7th September, 1995, and pointed out that the expenditure was Rs. 8,74,632. The assessee also supported the said explanation with a copy of report of registered valuer (pp. 49-55 of APB), wherein cost of construction has been worked out at Rs. 8,21,942. It is also observed that the registered values has applied the C.P.W.D. rates (as mentioned at p. 54 of APB) while working out cost of construction. It is further observed from the statement of Shri Syal recorded under s. 131 on 6th September, 1996 (pp. 64-70 of APB) that while explaining document A-11, he pointed out that there were totalling mistakes in pp. 86-89 and that expenses included in document A-11 are reflected in list of actual expenditure in document A-12 and that pp. 32-36 related to labour payments received, which are already taken in items 6, 47, 51, 57 and 76 of document A-12. With reference to document A-30, Shri Syal explained that it indicated various bills, advances, payments, price list pertaining to various items of construction, sanitaryware, etc. of house No. 568/12, belonging to Smt. Ramila Sinha, duly declared in her balance sheet and return of income. It is also observed from the statement of Shri Deepak recorded on 6th September, 1996 (pp. 70-71 of APB) that he was only asked to identify document A-12 and state whether signature on the said document were of Shri Deepak. He stated that the said signatures are his and that he was looking after construction of house Nos. 570 and 573/12. He also mentioned that he was receiving advances for construction of both the houses from Shri Syal and after submitting the bills he used to receive further advances when money was exhausted/spent. In view of the foregoing, we feel that there is no basic contradiction between the explanation furnished by the assessee in the aforesaid reply placed at pp. 47-48 of APB and the statement of Shri Syal. Deepak has only mentioned that he was receiving advances with reference to construction of two houses. Further, as already noted, the explanation given by the assessee is supported by report of the registered valuer. We feel that AO has made the impugned addition without discussing the said report or pointing out any defect therein and discrediting the said report. We feel that report of the registered valuer cannot be ignored and that in the absence of any other material it has to be given due weightage and the decision of the Tribunal reported in (1997) 63 ITD 181 (Pat) (supra) supports this proposition. It is also observed from assessment order in the case of Smt. Pamila Syal that AO has taken cost of construction at Rs. 15,28,585 with reference to covered area of 3,751 sq. ft., as against total cost of construction taken in the case of the assessee at Rs. 14,20,725 for covered area of 2,223 sq. ft. The cost of construction taken in the case of the assessee works out to Rs. 639 against Rs. 407 in the case of Smt. Pamila Syal. It is not in dispute that both the houses were constructed simultaneously under the supervision of Shri A. L. Syal. We may also refer here to the decision of the Tribunal in the case of Sunder Agencies vs. Dy. CIT (1997) 59 TTJ (Mumbai) 610 : (1997) 63 ITD 245 (Mumbai), wherein it has been held that the scheme of Chapter-XIV-B does not give power to the Revenue to draw presumptions in regard to undisclosed income. Thus, on the facts and circumstances of the case we feel that AO has made the impugned addition of Rs. 5,46,093 only on the basis of estimates and certain assumptions ignoring the explanation of the assessee as also report of the registered valuer and that there is no sound basis for making the impugned addition. Addition of Rs. 5,46,093 is, therefore, deleted.

44. In view of this position, we do not feel it necessary to adjudicate on the alternative argument taken by learned counsel for taxing the aforesaid addition in next assessment year at normal rate. We may mention here that under the provisions of the new scheme, the block period has to be taken up to the date of search and the entire undisclosed income in the block period is to be taxed @ 60 per cent.

45. With reference to the contention of learned Departmental Representative that the matter may be restored to the file of AO as the Tribunal has the powers conferred on the first appellate authority under s. 251, we turn down this plea for the reasons already given while disposing of ground No. 5 relating to addition of Rs. 4.83 lakhs.

46. Ground No. 7 mainly relates to addition of Rs. 1,03,600 on account of jewellery found at the time of search.

47. AO observed in assessment that out of total jewellery found, 111 tolas belonged to Smt. Neena Syal and her two minor children. He also observed that 34 tolas were acquired by the assessee before block period on marriage and other occasions and jewellery worth Rs. 2 lakhs had been purchased in financial year ending on 31st March, 1995. He further observed that jewellery belonging to minor children was received as gift on various occasions. AO gave credit for 45 tolas and made an addition of Rs. 1,03,600 with reference to remaining jewellery weighing 66 tolas by applying the rate of Rs. 4,600 per tola. While making the said addition, AO gave credit of purchase of jewellery for Rs. 2 lakhs in financial year ending on 31st March, 1995. He held that the said amount of Rs. 1,03,600 was income of the assessee from undisclosed sources for asst. yr. 1995-96 to be taxed at 60 per cent.

48. Learned counsel referred to letter by AO to the assessee, dt. 22nd April, 1996, at p. 23 of APB, wherein he pointed out that at the time of search, jewellery worth Rs. 13,60,550 was seized. He asked the assessee to state as to whom the said jewellery belonged and explain source and acquisition thereof. He also referred to reply filed by the assessee, as at pp. 77-81 of APB. The assessee mentioned that total jewellery found from different family members and their residence and lockers was to the extent of 5,438 grams, which belonged to four families, i.e. Shri A. L. Syal and Smt. Bimla Syal; Smt. Pamila Syal and her daughter; Smt. Romila Sinha and her family including her husband and two sons; and Shri R. K. Syal and Smt. Neena Syal and their children Ms. Madhurima Syal and Master Nikhil Syal. The assessee further stated that the said jewellery and other ornaments were acquired by various family members at the time of their respective marriage ceremonies or as gifts at different occasions and was also purchased from time to time in different years, as duly declared in their personal balance sheets filed before AO. The assessee pleaded that looking into family status and background of Syal family and taking into consideration the circular of the CBDT, said jewellery as found was quite reasonable and as per declared source of acquisition of each family member, as stated above. Learned counsel further submitted that the assessee, Smt. Neena Syal, was married in January, 1980, and she belonged to a good business family and that she was a graduate. He further referred to p. 87 of APB, where details of various jewellery items are given. It was claimed that out of 1,110 grams, jewellery weighting 794 grams belonged to Smt. Neena Syal, 206 grams to Ms. Madhurima Syal and 110 grams to Master Nikhil Syal. Learned counsel pointed out that AO has admitted only jewellery of 45 tolas. Learned counsel referred to balance sheet as on 31st March, 1995, at p. 45 of APB, where jewellery worth Rs. 2.10 lakhs is reflected and out of this, silver was of Rs. 10,000. He submitted that taking into account the rates prevalent in that year, jewellery weighing 44 tolas approximately is reflected in balance sheet and that only 22 tolas remained to be explained. He further submitted that AO has not given any credit for jewellery of the children. He referred to the statement of Smt. Neena Syal recorded on 7th September, 1995, at p. 35 of APB, wherein she stated that 'the remaining jewellery belonged to my children'. He further referred to CBDT Circular No. F.288/63/93-IT(Inv)II, dt. 11th May, 1994, which relates to guidelines for seizure of jewellery and ornaments in the course of search. The Board has specified that in case of a person not assessed to wealth-tax, gold jewellery and ornaments to the extent of 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family need not be seized. Learned counsel submitted that the said circular is not only with reference to seizure of jewellery but the intention underlying the same is also relevant for computation or deemed investment in jewellery. He referred to the provisions of s. 132(1)(c), which relate to information in possession of Director General or Director that any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purpose of the Act (referred to as the undisclosed income or property), then the DG/DD may conduct search and seize such money, bullion; jewellery or other valuable article or thing found as a result of such search. The seizure is mentioned in cl. (iii) of s. 132(1). He further referred to the provisions of s. 132(4A), wherein it is specified that where any money, bullion or jewellery or other valuable article or thing are found in possession or control of any person in the course of search, it may be presumed that such money, bullion, jewellery or other valuable article or thing belongs to such person. He submitted that the said presumption provided in s. 132(4A) is for the purpose of seizure and not for the purpose of assessment. He further referred to the provisions of s. 69A and submitted that AO can invoke the provisions of the said section where the assessee offers no explanation about nature and source of acquisition of money, bullion or other valuable article or thing or explanation furnished is not found satisfactory by AO and thereafter value of bullion, jewellery, article or thing could be deemed to be income of the assessee for the relevant financial year. Learned counsel referred to the decision of the Tribunal in the case in (1996) 56 TTJ (Ahd) 288 : (1996) 58 ITD 283 (Ahd) (supra) for the proposition that the provisions of s. 132(5) have limited application and that during the course of regular assessment under s. 143(3), burden of proof that the assessee was owner of gold ornaments in question in the face of spontaneous statement and statement of family members clearly lay on the taxing authority and that burden has not been discharged. He further referred to the decision in (1990) 183 ITR 388 (All), wherein it was held that the presumption provided under s. 132(4A) cannot have the effect of excluding s. 68 when regular assessment is made in regard to the income of the person from whose possession the books of account were seized under s. 132 and that it does not obviate the necessity to establish by independent evidence the genuineness of cash credits. He further submitted that whereas in s. 132(1)(c), the words 'in possession of jewellery' have been used and the presumption specified in s. 132(4A) is with reference to jewellery 'belonging to' the person found in possession thereof, s. 69A uses the expression 'owner of any jewellery'. He referred to the decision of Hon'ble Supreme Court in the case of Nawab Sir Mir Osman Ali Khan vs. CWT (1986) 162 ITR 888 (SC). He also referred to the decision of the Tribunal in the case of ITO vs. Smt. Ishro Devi 90 Taxman 135 (Chd), wherein in the context of notice issued under s. 148, it was observed that issue of such notice was unwarranted and illegal as it violated the spirit behind CBDT Circular No. 439, dt. 15th November, 1985, assuring against apprehension of penalty or prosecution. The Tribunal further observed that there was nothing to assume that entire declared wealth was acquired during previous year. It further observed that the assessee having given sufficient explanation and there being no rebuttal, onus had been properly discharged by the assessee. The Tribunal ultimately held that when there was nothing to presume that wealth was acquired by making any unexplained investment during previous year, no addition could be made. He submitted that the assessee is not owner of jewellery belonging to the children and her husband. He, therefore, submitted that the explanation furnished by the assessee is plausible and ought to be accepted and the impugned addition deleted.

49. Learned Departmental Representative mainly relied on order of AO. He further submitted that CBDT instructions dt. 11th May, 1994, are only meant for officers of the Department and are not for public use. He also submitted that the assessee was showing only an income of Rs. 60,000 from consultancy in balance sheet as on 31st March, 1995, (p. 45 of APB). He submitted that the source of acquisition is to be proved by the assessee and that AO could not travel back to the time of marriage. He further submitted that the Department has been quite reasonable in accepting jewellery of Rs. 2 lakhs, which is alleged to have been purchased during financial year ending on 31st March, 1995, and as reflected in balance sheet for that financial year. He also submitted that AO has accepted the explanation of the assessee for 45 tolas including jewellery of the children. He further referred to para (iv) of CBDT instructions dt. 11th May, 1994, wherein it is mentioned that a detailed inventory of jewellery and ornaments found must be prepared to be used for assessment purposes. He, therefore, submitted that the assessee is still required to explain the source of jewellery. Learned Departmental Representative also referred to decision of Hon'ble Supreme Court in the case of CIT vs. N.C. Budharaja & Co. (1993) 204 ITR 412 (SC) for the proposition that the principles for construing a statute as enunciated in the said decision are also relevant for construing abovesaid CBDT instructions.

50. Learned counsel, in reply, submitted that the provisions of s. 132(4) are basically meant for detecting undisclosed income and, therefore, the aforesaid instructions of CBDT are relevant not only for the purpose of seizure of jewellery but also for computing or deeming the value of seized jewellery as undisclosed income of the assessee. He further submitted that in the case of Smt. Pamela Syal, jewellery of 50 tolas has been accepted by the Department. He further submitted that there was no rebuttal by AO of explanation given by the assessee in her reply, pp. 79-80 of APB. He, therefore, urged that the impugned addition ought to be deleted.

51. We have carefully considered the rival submissions on this issue and have also perused order of AO and various documents placed in the paper book to which our attention was invited during the course of hearing. We have also seen the case law relied upon by the parties. The AO has given a credit of 45 tolas out of total jewellery of 111 tolas and treated balance of 66 tolas as unexplained jewellery and after allowing credit of Rs. 2 lakhs with reference to jewellery purchased during financial year ending on 31st March, 1995, he has proceeded to make an addition of Rs. 1,03,600, without giving any basis for the same. We feel that while making regular assessment under s. 143(3) r/w s. 158BC, AO is required to rebut the explanation given by the assessee and come to a conclusion that the explanation is not satisfactory before invoking the provisions of s. 69A and deeming value of jewellery found during search as income of the assessee. In this case, though AO has given credit for jewellery worth Rs. 2 lakhs purchased during financial year ending on 31st March, 1995, and as reflected in balance sheet, he has not discussed to explanation furnished by the assessee and the reasons as to why the said explanation is not satisfactory. In this connection, we may refer to the decisions in (1996) 56 TTJ (Ahd) 288 : (1996) 58 ITD 283 (Ahd) (supra) and (1990) 183 ITR 388 (All) (supra). Further, in the case of Smt. Pamela Syal, AO has allowed benefit of 50 tolas while computing undiscussed income with reference to investment in jewellery of 211 tolas. We feel that the submission made by learned counsel that the intention underlying CBDT instructions issued on 11th May, 1994, is also relevant with reference to deeming provisions of s. 69A, has force. It is observed from the said instructions that 500 grams jewellery is permitted to be retained in the case of a married lady, 250 grams for unmarried lady and 100 grams for male member of family. It is also observed from para (iii) of the said instructions that the authorised officer may having regard to the status of the family and customs and practice of the community to which the family belongs and other circumstances decide to exclude a larger number of quantity of jewellery and ornaments from seizure. We may also mention that we have come across a decision of the Tribunal in the case of Devi Lal Soni vs. Asstt. CIT (1998) 99 Taxman 324 (Jp), wherein aforesaid CBDT instructions, dt. 11th May, 1994, have been considered in the context of s. 69. In the said case, AO made an addition of Rs. 2,14,720 as unexplained investment in gold jewellery. The assessee submitted that the ornaments belonged to various ladies of family and the assessee's wife also explained source of possession of items of jewellery. The Tribunal held that since AO had not challenged possession of 94 tolas of gold ornaments and he only doubted and pointed out the difference in the statements of the assessee and his wife which mentioned the gift of ornaments which varied slightly and AO had not rebutted the other things and did not bring any evidence on record to disprove various evidence, the addition could not be sustained. The Tribunal also took into account the facts like status, customs, gift at the time of marriage, childbirth and held that the entire jewellery in possession of the assessee was well-explained. It is, however, observed from details of jewellery, p. 87 of APB, that 794 grams have been shown against the name of assessee, 206 grams in the name of Ms. Madhurima Syal, daughter, and 110 grams against Master Nikhil Syal, son of the assessee. Having regard to the CBDT instructions, we have, therefore, to examine as to whether possession of 794 grams by the assessee is explained or not. In her statement, Smt. Neena Syal admitted 350 grams of jewellery, p. 33 of APB and jewellery in locker. Jewellery of Rs. 2 lakhs purchased by the assessee in financial year ending on 31st March, 1995 is also accepted by AO, which is roughly 44 tolas. Thus, when both are taken into account, then gold jewellery of 794 grams is explained. Further, keeping in view the status of the family, age of both the children and other circumstances of the case, we feel that out of remaining jewellery it would be just and fair to allow credit of 120 grams and 50 grams respectively to Ms. Madhurima Syal and Master Nikhil Syal. Thus, on the facts and circumstances of the case, the impugned addition of Rs. 1,03,600 is restricted to the balance of jewellery, i.e. (1,110 minus 964) 146 grams @ Rs. 4,600 per 10 grams. AO may recompute the addition and allow appropriate relief to the assessee.

52. Ground No. 8 mainly relates to addition of Rs. 50,000 on estimate basis as income from undisclosed sources.

53. AO observed that during search at the residence of Shri R. K. Syal and Smt. Neena Syal, FDRs worth Rs. 88,866 were seized. He further observed that out of said FDRs, an FDR of Rs. 12,000 belonged to Smt. Neena Syal and rest belonged to the minor children. He further observed that FDRs in the names of minor children for Rs. 7,920 each in the names of Master Nikhil Syal and Miss Madhurima Syal were seized. Keeping in view the written submissions made by the assessee on 16th September, 1996, that FDRs in the names of minors have been made out of gift, money and prizes won by them in individual capacity and FDRs worth Rs. 12,000 is reflected in balance sheet of Shri A. L. Syal made in the name of daughter-in-law, AO accepted the said FDR and made an addition of Rs. 50,000 for balance of FDRs as income from undisclosed sources to be taxed at 60 per cent.

54. Learned counsel invited our attention to p. 93 of APB, where a copy of Annexure 'O' is placed, indicating details of various FDRs amounting to Rs. 88,886. He further referred to balance sheet as on 31st March, 1994, in the case of Shri A. L. Syal, wherein FDR of Rs. 12,000 in the name of minor is reflected. He submitted that AO has accepted FDRs worth Rs. 27,840 and out of balance of Rs. 61,026, AO has made an addition of Rs. 50,000. He submitted that all these FDRs were in the names of minors and investments in FDRs have been made out of pin money, birthday gifts, prizes and daily collection. He also submitted that the money had grown on account of reinvestment from time to time. He further invited our attention to reply of the assessee on this issue, p. 92 of APB. It is stated that FDRs found and seized during search have been duly depicted in respective balance sheet of each family member of Syal family out of their declared source of income, while in the case of minors the same have been made out of their personal source and bank accounts, i.e. out of gifts and shaguns, pin money or other cash prizes won by them in their individual capacity. The assessee further stated that the income from said FDRs in the names of minors has been included in the hands of respective parents w.e.f. asst. yr. 1993-94, as per amended provisions. The assessee further stated that the said FDR was out of maturity amount of old FDR and from reinvestment, etc. Learned counsel submitted that AO has not rebutted the aforesaid explanation and that he only gave ad hoc credit of about Rs. 27,000 and made addition of Rs. 50,000. Learned counsel referred to the provisions of s. 69A and 69B and submitted that AO has to come to a conclusion in the first instance that the assessee is the owner of these FDRs and further the explanation offered is not satisfactory. He submitted that AO has not complied with the aforesaid provisions of law. He urged that the assessee had offered a reasonable explanation and that both the children could have collected an amount of approximately Rs. 50,000 in 9-10 years on various occasions, like birthday, prizes, pin money, etc. and that for a family of the assessee's status, the aforesaid amount is quite reasonable. He, therefore, urged that the impugned addition ought to be deleted.

55. Learned Departmental Representative basically relied on order of AO and submitted that the assessee did not adduce any direct evidence or explanation and that she came up with the story of gifts etc. He, therefore, submitted that AO has rightly made addition of Rs. 50,000.

56. Learned counsel, in reply, made almost the same submissions as in the main arguments.

57. We have carefully considered the rival submissions and have perused assessment order and other relevant documents placed in the paper book to which our attention was invited during the course of hearing. It is observed that out of total FDRs of Rs. 88.866 seized during search, AO allowed credit of FDRs worth Rs. 12,000 in the name of the assessee which is reflected in balance sheet of Shri A. L. Syal and that in the case of the children AO gave credit of two FDRs of Rs. 7.920 each in the names of minor children, i.e. Rs. 15,840. The explanation given by the assessee is that investment in FDRs in the name of minor children has been made out of money received by them in their individual capacity on various occasions, like birthday gifts, shaguns, pin money, cash prizes, etc. The assessee further stated that the income from FDRs in the case of minor children has been included in the hands of respective parents w.e.f. asst. yr. 1993-94. As already held by us in the foregoing part of this order, the provisions of s. 69A etc. are required to be complied with while deeming income as undisclosed, while making regular assessment under s. 143(3) r/w s. 158BC. It is observed that AO has not rebutted the explanation furnished by the assessee and has proceeded to make an ad hoc addition of Rs. 50,000. We feel that it is customary in Hindu family to give and receive gifts on occasions of birthdays of minor children and it is quite possible to accumulate an amount of Rs. 50,000 in 9-10 years on various occasions connected with minor children and that explanation furnished by the assessee is quite reasonable, keeping in view the status of the family and other circumstances. Thus, on the facts and circumstances of the case, we feel that impugned addition of Rs. 50,000 is not sustainable. The same is, therefore, deleted.

58. In the result, the appeal is partly allowed.