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Income Tax Appellate Tribunal - Chandigarh

Jagdamba Rice Mills vs Assistant Commissioner Of Income Tax on 29 October, 1999

Equivalent citations: (2000)67TTJ(CHD)838

ORDER

B.S. SALUJA, J.M.:

The assessee has filed this appeal against the assessment order, dated 31-12-1997 made under section 158BC read with section 143(3) of the Income Tax Act, 1961.

2. Ground Nos. 1 and 2 relating to conversion of survey proceedings into search proceedings and approval by CIT to the assessment order were not pressed by learned counsel. The same are, therefore, rejected.

3. Learned counsel took up ground No. 23 relating to addition of Rs. 1,69,50,812 first, as the other additions have been telescoped by the assessing officer into this addition. Brief facts are that during search, 37 sealed samples of rice bran and phak were found and seized.These contained details of despatch of rice bran and phak from 27-10-1996 to 3-12-1996. The particulars of quantity of rice bran and phak were not found recorded in the regular books of account. The sealed samples contained particulars relating to the name of the party, date, vehicle number, number of bags, nature of goods description/signature of parties, as mentioned at pp. 16-16 of the assessment order. Assessing Officer observed that as per p. 7 of the document No. 2, i.e. stock register, the assessee was having 'nil' stock of rice bran as on 3-8-1996. Production of rice bran had been shown only between 29-10-1996 to 30-11-1996, totalling 326.72 qtls. Assessing Officer confronted the assessee vide letter dated 30-9-1996 with 2,315 bags, which included 2, 234 bags of rice bran and 81 bags of phak. He asked the assessee that these bags represented in the sealed sample packets were on account of paddy milled outside the books of account. The assessee, in its reply, asked for inspection of the said packets. It requested assessing officer to furnish photocopies of seals also. Assessing Officer informed that keeping in view the nature of seals, photocopies could not be provided. Complete particulars as written on the packets were, however provided. Assessing Officer asked the assessee vide letter, dated 11-11-1997, to inspect the said packets, which was done on 12-12-1977. Assessing Officer also furnished detailed working of unaccounted income earned on account of sale of rice bran at 1,117 qtls, which was the result of paddy milled outside the books. The detailed working of undisclosed income at Rs. 1,69,50,812 has been given at p. 17 of the order. Assessing Officer in the first instance took the quantity of each bag of rice bran at 60 kg and arrived at a figure of 1,117 qtls, allegedly sold by the assessee. He applied yield of 3.3 per cent of rice bran and calculated that for production of 1, 117 qtls, 33,848.48 qtls of paddy would have been milled. He further applied yield of 66 per cent for rice obtained from paddy so milled and held that the assessee had produced 22,340 qtls of rice, 1,015.45 qtls of phak and 4,476.46 cftls of husk and finally arrived at figure of Rs. 1,69,50,812. Assessing Officer confronted the assessee with the proposed addition and also asked it to produce S/Shri R.B. Singh and Gopal Krishan as their names appeared on 37 sample packets. He also asked the assessee to give names along with confirmed copies of account from the concerned solvent plant/s to which the alleged rice bran was despatched and sold. In reply, dated 11-12-1997, the assessee stated that it as trading in rice bran, i.e. purchase and sale. It mentioned that rice bran was controlled item and, therefore, transactions were not recorded in the books. Rice bran was purchased from the market through Shri Sham Lal broker and sales were made through S/Shri Raj Kumar and Verinder brokers. Assessing Officer referred to the statement of Shri Jagdish Rai Barisal, partner of the assessee-firm, given before the Asstt, Director of Inspection (ADI) on 3-2-1997. ADI showed Shri Bansal the packets of samples and asked him to identify those bags and explain seal and nature thereof. Shri Bansal replied that the said packets contained samples of rice bran and phak sent by the assessee-firm through agents and dalals. He mentioned that the goods had been sent as directed by agents or dalals. He mentioned that he did not know the names of the parties to whom the goods as per samples had been sent. He also denied knowledge of names and addresses of the agents/dalals through whom seal is placed on the packets. The various questions put to Shri Barisal during recording of his statement are reproduced at pp. 18-19 of the order. Assessing Officer concluded on the basis of the said statement that the assessee had shown total ignorance about the names of agents/dalals or about other particulars appearing on the packets of samples.

He also observed that Shri Bansal did not want to give details and deposed in evasive/vague manner. The assessee furnished along with reply an affidavit from Shri Sham Lal son of Shri Dev Raj resident of Dhuri, alleged broker who effected rice bran purchase for the assessee concern. The assessee produced Shri Sham Lal during the course of hearing on 11-12-1997. In the affidavit, Shri Sham Lal deposed that he was working as a dalal for the by-products of paddy milling, i.e., rice bran, rice phak and rice husk in the areas of Dhuri, Sunam, Sangrur, etc. for the last 10-12 years and he indulged in purchase/sale of the said, products for constituent parties on brokerage basis. He used to procure rice bran from market for Jagdamba Rice Mills on cash basis and charged brokerage thereafter. Statement of Shri Sham Lal was recorded on 11-12-1997, during which he was asked about quality of good rice bran, about laboratory dealing with rice bran and parameter for determining quality of rice bran. Assessing Officer noted that Shri Sham Lal did not have any knowledge about oil content in rice bran and laboratory operating in and around Dhuri, Sunam, Sangrur, etc. In view of the answers given by Shri Sham Lal, assessing officer concluded that no reliance could be placed on the affirmation of a person who was doing brokerage of rice bran for the last 10-12 years and was not aware of the product. Assessing Officer was surprised that Shri Sham Lal did not know how much oil content was contained in rice bran of goods quality and also did no know about laboratory dealing with rice bran in the area. Assessing Officer observed that statement of Shri Jagdish Rai Barisal was also recorded, wherein he was asked whether he could give an example of a single paper from the seized document which might point to the fact that he was trading in rice bran. Shri Barisal stated that the assessee-firm was trading in rice bran as and when market rates were favourable. On a further query, Shri Bansal stated that the assessee did not get the purchase vouchers and the same were not kept with reference to purchase of rice bran. Assessing Officer concluded that Shri Barisal did not want to divulge the information. Assessing Officer observed that in reply dated 12-11-1997, the assessee has come up with the explanation that purchase of rice bran was made through Shri Sham Lal and sale of rice brain was made through brokers S/Shri Raj Kumar/Verinder. Assessing Officer referred to reply, dated 17-12-1997, wherein the assessee tried to give explanation regarding addition of Rs. 1, 69,50,812. The assessee submitted that the proposed addition had been computed on surmises and conjectures and was purely a guess work. The assessee submitted that in the seized material there was no a single paper or entry indicating purchase of such huge quantity of rice paddy amounting to 52,000 bags. Assessing Officer observed that if it was true and there was no corresponding evidence of milling outside the books of account in the seized material, but seized material contained definite evidence regarding unaccounted purchase of paddy. The assessee had not been able to give any convincing reply to the questions put to him in the two statements, dated 3-2-1996 and 11-12-1997. The assessee has not been able to bring any direct evidence in support of its contention that it was trading in rice bran. Assessing Officer observed that if this was the case, then replies of the assessee would have been spontaneous and revealing. assessing officer, therefore, held that the affidavit of Shri Sham Lal alleged broker was nothing but an afterthought in order to cover up the things. In the ultimate analysis, assessing officer held that the assessee had been making purchases of paddy outside the books of account and figure of Rs. 1,69,50,812 represented unexplained investment made out of its business. He further held that rice bran weighing 1,117 qtls was by-product of unaccounted paddy milled by the assessee. He, therefore, treated the amount of Rs. 1,69,50,812 as unaccounted investment under section 69 and as undisclosed income of the assessee during the financial year relevant to assessment year 1997-98.

3.1. Learned counsel Shri P.C. Jain submitted that a survey under section 133A was conducted on the premises of the assessee on 5-12-1996, which was converted into a search on 6-12-1996. Not a single bag of rice, bardana or paddy was found outside the books of account. The assessee was maintaining all statutory record required by Food and Supply department, Punjab. He further submitted that in case of production of rice, 75 per cent of rice produced was to be handed over to the Government under the existing law. If the assessee was indulging in milling of paddy outside the books, the State Government should not have spared it. There was no evidence of any violation of law regarding levy rice, i.e. share of the Government. The assessee was maintaining bills of all purchases/ sales made. He submitted that within a period of about 37 days, the assessee is presumed to have milled paddy weighing 33,848.48 qtls. He submitted that there was no iota of evidence with the department that the assessee mined so much of paddy and sold rice and other by-products during the said period. Learned counsel referred to Para. 46 of the assessment order and submitted that finding of assessing officer is that rice bran weighing 1,117 qtls was produced on account of paddy milled by the assessee. He mentioned in brief the system of purchase of paddy in mandis. There is a clearly a kacha arhatia and that heaps of paddy he in the open and are auctioned by various shopkeepers. He referred to the system that the intending buyer will come to a particular shop in the mandi and estimate the number of bags of paddy stacked for sale. The said particulars are entered in the Sauda Bahi. There is no written agreement for purchase of the said bags and it might happen that at the time of lifting the goods the shopkeeper may refuse as he might have already sold the same. When the Sauda materialises, the seller issues Form J to the buyer wherein name of buyer and quantity of paddy sold is mentioned. He referred to p. 87 of the paper book, where a copy of Form J is placed. Then the kacha arhatia issues a bill in Form I, copy given at p. 88. He referred to Form F at p. 89 and pointed out that the information in the said form is required to be sent through the Market Committee. In the said form, name of the product, actual weight, name of the purchaser, price per qtl, labour charges, etc. have to be indicated. Market fee is to be paid to the Market Committee under the Punjab Agricultural Produce Act. He referred to Form M at pp. 90-91, wherein information regarding daily sales/purchases have to be furnished to the Food Controller. He referred to pp. 92 onwards of paper-book, where record of purchases made by the assessee is kept. He submitted that the above mentioned evidence was given before assessing officer. Learned counsel further referred to the provisions of section 69 of the Act dealing with unexplained investment and submitted that before arriving at the conclusion of deemed income, assessing officer has to give a finding that it constitutes income/deemed income of the assessee and it has to be examined as to whether the finding of assessing officer is correct inasmuch as the explanation furnished by the assessee is satisfactory or not. Learned counsel referred to the decision in the case of Neena Syal v. Asstt CIT (1999) 70 ITD 62 (Chd), wherein the Tribunal noted at pp. 69-70, the decisions in CIT v. Bai Vina (1965) 58 HR 100 (Guj), CIT v. Rampur Timber & Tumery Co. Ltd. (1973) 89 ITR 150 (Afl), CIT v. Deepak Textile Industries Ltd. (1987) 66 CTR (Guj) 1 (1987) 168 ITR 773 (Guj), CIT v. S. Teia Singh (1959) 35 TTR 408 (SC), CIT v. Chhote Lal Kanhaiyalal (1971) 80 ITR 656 (MP) on the scope of the provisions of sections 69, 69A and 69B. He also referred to the decision reported in (1998) 3 SCC 410, as noted at p. 84 of the said case. In view of the said decisions, learned counsel urged that corroborative evidence was necessary for assessing officer to conclude that there was unexplained investment and it constituted deemed income of the assessee. He submitted that there was not a single bill/voucher found during search by the department to conclude that the assessee had purchased so much quantity of paddy and milled the same. There was no evidence of labour charges, purchase of gunny bags or freight paid for handing so much of paddy. There was no gate-pass of the sheller with reference to paddy received in the mill. In case the assessee had milled so much of paddy, there was no evidence regarding consumption of electricity. He submitted that no sale bills for rice produced and other by-products or collection of sales had been found by the department. He submitted that assessing officer also made no enquiry from the Market Committee or sellers/buyers of paddy or rice and other by-products allegedly produced by the assessee. There was no proof regarding entry of trucks for bringing/taking away the goods and that assessing officer made no enquiry from the Truck Union. He stressed that the said goods could not be lifted by the buyers otherwise. Learned counsel submitted that there was complete tally of cash, stock and purchases made in the books of account- In the month of October, which is covered in the period mentioned by assessing officer, paddy requires to be dried up on the ground or in the drier. He submitted that no unaccounted stock was found by the ADI, which would mean that the assessee was purchasing/selling rice, etc. on daily basis. If it were so, then only one days's investment was required to be made by the assessee in the purchase of paddy and milling thereof and that thereafter the said investment would be recycled. On the said basis, the assessee would not require more than Rs. one to two lakhs of investment. Learned counsel pointed out that assessing officer never examined as to whether the assessee cowd have milled so much of paddy. Total capacity of sheller was approximately two per hour. Optimum working of sheller could not have been more than 18 hours per day. On an average, there was no power supply for three hours daily and that the assessee did not have a generator. On the basis of 15 hours of working of sheller, 300 qtls per day could have been the maximum million of paddy, which mearly roughly 9,000 to 9,300 qtls per month, He, therefore, submitted that in relation to the period under consideration the assessee would require 14,090 qtls of paddy whereas according to assessing officer milling of paddy should be 33,848 qtls while maximun, capacity of the assessee could not be more than 14,090 qtls. He referred to the past history of milling of paddy by the assessee and submitted that for the whole year the milling has not been more than 54,000. He referred to the milling charges. He, therefore, urged that within 37 days milling of paddy as calculated by assessing officer was not possible. He further submitted that for assessment year 1993-94, there was total turnover of Rs. 3.13 crores. On the basis of g.p. rate of 8.39 per cent, the assessee would require total turnover of 20.20 crores for earning Rs. 1,69,50,812 which, according to learned counsel, is a wild guess made by assessing officer. On a query as to from where 37 packets of samples came, learned counsel submitted that rice bran was purchased by the assessee for various solvent plants. There were separate brokers for purchase of rice bran. The assessee was only charging commission for supply of rice bran and that with reference to quantity of rice bran involved the commission could not be more than Rs. 50,000 to Rs. 1 lakh. He further submitted that the assessee acts as a guarantor for payments to be made to sellers and if payments were not received from the solvent plant/s, loss was to be incurred by the assessee. He submitted that particulars of truck number are mentioned in the slip inside the packets of samples and that assessing officer could make enquiries from the Road Transport Authority in order to ascertain the quantity loaded in the truck and to whom the vehicle belonged. He further submitted that the assessee has led evidence and two brokers have been produced-one of whom Shri Sham Lal has filed an affidavit and also stated that he was purchasing rice bran for the assessee. He referred to pp. 322-350 of paper-book. The reply is placed at pp. 322-323, copy of affidavit at p. 324 and statement of Sham Lal recorded on 11-12-1997 at 325-332. Learned counsel referred' to the last question at p. 326 regarding source of income, to which Sham Lal replied that he was earning brokerage from rice bran, rice husk, etc. He referred to p. 328, where Sham Lal stated that quality of rice bran is to be decided by the purchaser. The quality of rice bran is determined by its ruggedness or softness after rubbing it on palm and that normally it is decided by the purchaser/buyer. He referred to the certificate issued by Kunal Rice Mills at p. 335 of paper-book, wherein it has been certified that from 1-10-1996 to 31-12-1996 rice bran had been sold to the assessee-firm through broker Sham Lal son of Dev Raj resident of Dhuri. Total quantity is mentioned at 290.15 qtls. He referred to the explanation given at pp. 337-338 of paper-book. He also referred to the bill issued by Bansal Commission Agency on 3-11-1996, at p. 339 of paper-book. He then referred to p. 349, where details of production of rice bran during the last five years, i.e. 1992-93 to 1996-97 have been given. He submitted that assessing officer has not brought any material on record to rebut the evidence/explanation given by the assessee. Learned counsel referred to the decision in the case of CTT v. Smt. P.K Voorjahan (1999) 155 CTR (SC) 509: (1999) 237 ITR 570 (SC), wherein while discussing the meaning of 'may' as used in section 69, it observed that the Tribunal had taken the view that although the explanation of the assessee was liable to be rejected, section 69 of the Act conferred only a discretion on the Income Tax Officer to deal with the investment as income of the assessee and that it did not make it mandatory on his part to deal with the investment as income of the assessee as soon as the latter's explanation happened to be rejected. The High Court agreed with the said view and held that it could not be said that the Tribunal was wrong in having differed from the Income Tax Officer and the Appellate Assistant Commissioner in the matter of exercising judicial discretion as to whether even after rejecting the explanation of the assessee, the value of the investment were to be treated as income of the assessee. The High Court held that the Tribunal has not committerl any error in taking into account the complete absence of resources of the assessee. The apex court held that there was no error in the finding recorded by the Tribunal and dismissed the appeal of the revenue . He referred to the decision in the case of Roshan Di Hatti v. CIT 1977 CTR (SC) 200: (1977) 107 HR 938 (SC) for the proposition that possibility of earning the alleged income, which is deemed as income of the assessee by assessing officer has to be seen. Learned counsel submitted that the deemed income by assessing officer must be represented by movable/immovable assets in the form of liquidity with reference to utilisation of the alleged income. Some disproportionate asset should be found by assessing officer before concluding that the assessee has deemed income of so much proportion. He referred to the decision in the case of Dalmia Cement Ltd. v. CIT (1999) 153 CTR (SC) 401 .- (1999) 104 Taxman 97 (SC). He submitted that the onus was on the department to show that the sales had been made outside the books of account, which is cardinal principle of jurisprudence. He relied on the decision in the case of Nagindas Dahyabhai Patel v. Assistant Commissioner (1999) 104 Taxman 80 (Ahd), wherein it was held that retraction made before assessing officer could not be dismissed as a self-serving statement, especially when no disproportionate asset was found and seized by search party and addition of Rs. 3 lakhs on basis of statement under section 132(4) of an aged and illiterate agriculturist assessee without any collateral or supportive evidence, was not sustainable. He referred to the decision in the case of Dr. RML. Mehrotra vs- Asstt. CIT (1999) 64 TTJ (All) 259 : (1999) 68 ITD 288 (All), wherein in the context of section 69 it was observed that since no other diary or other record comparable to notebook were found by the search party for remaining period nor movable/immovable assets were found that could be attributed to such patently hypothetical receipts, assessing officer was not justified in adopting multiplication formula for making addition for the whole year. He referred to the decision in the case of Mirah Exports (P) Ltd. v. Collector of Customs (1998) 3 SCC 292 (SC) where it has been observed that the burden of proving a charge of under valuation lies upon the revenue and the revenue has to produce the necessary evidence to prove the said charge. Ordinarily, the court should proceed on the basis that the apparent tenor of the agreements reflect the real state of affairs and what is to be examined is whether the revenue has succeeded in showing that the apparent is not the real and that the price shown in the invoices does not reflect the true sale price'. He referred to the decision in the case of Arumugham & Ors. (1999) 4 SCC 350 (SQ wherein it has been observed in para 16 that burden of proof is relevant in the context of the amendment provisions of section 100 CPC and the same would not be relevant when both sides had adduced evidence. The burden of proof will be relevant only if a person on whom burden of profit lay failed to adduce any evidence altogether. He referred to the decision in the case of Chaman Lal & Co. v. Income Tax Officer (1995) 53 TTJ (Chd) 241 for the proposition that some material is needed for making such addition in block assessments. He further referred to the decisions in the cases of Patel Rajesh Kumar Kantilal & Co. v. Assistant Commissioner (1998) 62 TTJ (Ahd) 189, UP. Ceramics & Potteries Ltd. v. Dy CIT (1995) 52 TTJ (Del) 499 : (1995) 52 ITD 334 (Del) and Sunder Agencies v. Dy. CIT (1997) 59 TTJ (Mumbai) 610.- (1997) 63 ITD 245 (Mumbai). In view of the foregoing learned counsel urged that the assessee has given all possible evidence regarding trading in rice bran and that burden was on the revenue to prove that the assessee had milled so much of paddy and produced rice and other by-products. Assessing Officer has not brought any material on record against the assessee to show processing and sales of the said commodity. The sales-tax assessment has been done and nothing has been found therein. Assessing Officer could have made enquiries from the ST department. There would have been entries in the octroi record with reference to paddy coming into the sheller and outgoing products. He, therefore, urged that at the most income in respect of trading in rice bran could have been on account of commission received by the assessee on purchase/sale of rice bran. The department has not been able to collect any material against the assessee even after search.

3.2. Learned departmental Representative Shri R.R. Thakur relied heavily on the assessment order with reference to addition of Rs. 1,69,50,812. He submitted that assessing officer asked the assessee to explain various issues relating to this addition, as mentioned in the questionnaire, dated 11-11-1997 refer pp. 316, 320 of paper-book. He referred to letter of assessing officer, dated 8-12-1997 at p. 321, whereby final opportunity was afforded to the assessee. He referred to para 42 of the assessment order, whereby statement of partner has been discussed. He referred to questions put by assessing officer to Shri Sham Lal so-called agent regarding oil content in rice bran and location of lab. dealing in rice bran. He, therefore, submitted that the assessee was producing rice bran outside the books and that he was also purchasing paddy outside the books. He therefore, urged that the case reported as 3 SCC 410 (supra), as relied upon by learned counsel, was not relevant. Regarding capacity of the sheller processing two tons of paddy per hour, learned departmental Representative submitted that the said plea of learned counsel was not supported by any evidence. He submitted that the case law relied upon by learned counsel is distinguishable on facts. He referred to paras 36-38 of the assessment order and submitted that the packets of samples indicated quantity of rice bran supplied by the assessee.

3.3. Learned counsel, in his reply, submitted that the assessing officer inferred on the basis of packets of samples that the assessee producing rice and by-products so as to supply quantity of rice bran found from the samples. There could not be a natural inference that the assessee would have purchased paddy in order to produce rice and other by-products including rice bran. Turnover of 20 crore was needed in 37 days in order to achieve results, as alleged by assessing officer. He reiterated that the assessee was only purchasing rice bran for others through agents. There was no enquiry by assessing officer regarding labour charges, electricity bills, etc. The decision reported at 3 SCC 410 (supra) was cited for the purpose that there should be some circumstantial evidence to support the addition made by assessing officer.

3.4. We have carefully considered the submissions made by both the parties and have perused the assessment order as also various documents placed in the paper-book to which our attention was invited during the course of hearing. It is observed that assessing officer noted in para 36 of order that the assessee had made supplies of rice bran weighing 1, 117 qtIs. The assessee had filed affidavit of Shri Sham Lal and he was also produced before assessing officer in order to support the plea that the assessee had been trading in rice bran and had been purchasing rice bran through agents. Assessing Officer did not believe the statement of Shri Sham Lal on the plea that he could not explain the oil contents in rice bran of good quality and could not name lab. operating in and around Dhuri, Sangrur, Sunam, etc. It is observed from the statement of Shri Sham Lal that he had clearly mentioned that oil content in rice bran is judged by rubbing it on palm and that actual oil content in rice bran is determined by the purchaser. We feel that the statement of Shri Sham Lal could not have been disbelieved only on the basis, as has been done by assessing officer. It is further observed that assessing officer proceeded to make certain calculations with reference to quantity of paddy which would have been milled so as to obtain production of rice bran weighing 1,117 qtls. He computed the said figure by applying yield of 3.3 per cent of rice bran. Proceeding further in reverse direction, assessing officer computed that the assessee had milled 33,848.48 qtls of paddy and obtained 22,340 qtls of rice and various other by-products mentioned at p. 17 of assessment order. On the basis of these calculations, assessing officer arrived at the figure of Rs. 1,69,50,812. It is obvious from the tenor of assessment order that assessing officer has not brought any material on record to show that the assessee had actually indulged in purchasing/milling of paddy and had produced rice to the tune of 22,340 qtls and phak and husk of 1,016.45 and 4,476.46 qtls respectively. He has also not brought anything on record to show that the assessee had sold the said commodities and had earned/received the alleged income. We, therefore, find merit in the submissions made by learned counsel that milling of paddy and production of rice and other by-products as computed by assessing officer is without any basis and is in the realm of conjectures and surmises. It is strange that during search assessing officer could not find any corroborative evidence with reference to purchase of alleged paddy milled as also regarding sales of huge quantity of rice and other by-products. As rightly pointed out by learned counsel, there is no evidence of electricity bills, labour charges, purchase of gunny bags, freight, etc. We, therefore, feel that no addition is sustainable with reference to alleged production of rice weighing 22,340 qtls and other by-products. The addition of Rs. 1,69,50,812 is, therefore, deleted, as it has no legs to stand. However, it is observed that quantity of rice bran computed by assessing officer on the basis of packets of samples at 1,117 qtls has not been disputed by learned counsel, The value of rice bran @ 285 per qtl has been computed by assessing officer at Rs. 3,18,345, which has also not been disputed. We, therefore, feel that the assessee would have earned income on sale of rice bran valued at Rs. 3,18,345 and it would be just and fair to sustain an addition of Rs. 60,000 in this behalf.

4. Learned counsel then took up ground No. 4 relating to addition of Rs. 13,98,514 as unexplained investment on account of purchase of paddy for assessment year 1996-97 and Rs. 22,49,643 for assessment year 1997-98. During search, two notebooks which were marked as 'Jindal Double Book No.2' were found and seized. Assessing Officer observed that these documents were at Sr. Nos. 20 and 29 respectively of the Panchnama, dated 6-12-1989. Shri Jagdish Rai Bansal partner explained that these notebooks referred to estimated purchases. Assessing Officer observed that the note books contained details of purchase of paddy made by the assessee concern during financial years 1995-96 and 1996-97 respectively. Assessing Officer referred to the statement of Shri Bansal recorded on 3-2-1997, wherein he explained the entries made in the said notebooks. The first column denoted name of the party from whom purchases were made, second mentioned quality of paddy, third estimate of bags purchased, fourth related to rates, fifth column indicated actual number of bags filled or received. Estimated number of bags were not actually received some times and that actual receipt could be less or more. Assessing Officer asked the assessee as to whether all purchases mentioned in document Nos. 20 and 29 were recorded in regular books, to which the assessee replied that most of purchases as detailed in these documents are recorded/entered in the regular books. He stated that sometimes certain heaps remained unsold and they were not entered in the books. He pointed out that this was told to the employees who go for lifting the goods and that there is no such indication made in these documents. He submitted that the assessee-firm. did not receive copy of original details from the employees who go for lifting of paddy and, therefore, merely looking into these documents would not reveal as to which purchase out of these are not accounted for. assessing officer, however, concluded that replies of Shri Bansal were not convincing. After comparing the entries of purchase of paddy as per documents Nos. 20, 29 and 62 with regular books of account, 29,992 bags of paddy remained unaccounted for. Out of 29,992 bags, 6,988 bags were calculated from document No. 20 and rest of the bags were calculated out of document Nos. 29 and 62. Assessing Officer confronted the assessee with investments of Rs. 17,26,036 and Rs. 60,33,368 made in purchase of unaccounted paddy. The assessee asked for basis of computation and alleged difference of unaccounted purchase, which was provided by assessing officer, The assessee, in its reply, stated that these are books maintained to record the estimated purchases of paddy The entries made therein regarding the quantum of bags are made on estimate basis as provided by the kacha arhtias. In fact, this is a book where bids of paddy purchased are noted for memory particularly the rate of purchase It is submitted that the conclusions drawn by your honour is based on mere guess, surmises and conjectures. There is no evidence of outside purchase of paddy nor evidence of any investment therein'. Assessing Officer noted that the assessee had furnished five explanations in order to explain the transactions of paddy allegedly made outside the books. The said explanations are discussed in paras 16-17 of assessment order. Assessing Officer observed that the assessee furnished affidavits of certain persons who were operating as commission agents in the Grain Market. The statements of S/Shri Som Nath, Rakesh Kumar, Rattan Kumar, Vinod Kumar and Ashok Kumar were recorded after they were produced by the assessee. All these persons were asked as to whether they had any documentary evidence in order to substantiate their affirmations made. Assessing Officer mentioned in para 17 the questions put to these persons and the affirmations regarding factors relating to bid of agricultural produce between the sheller and farmers falling through completely as farmers cancel the bid voluntarily or the purchaser cancels the transaction due to quality variation, rains, etc. Assessing Officer observed that none of these persons could adduce documentary evidence in support of the circumstances under which bid of agricultural produce falls through, He also observed that entries in heap register maintained by the commission agents to record bid of agricultural produce were made only at the end of the day and that these entries are not spontaneous, i.e., as and when a bid is made the same is entered in the heap register He, therefore, held that the results flowing from the heap register could not be relied upon in order to examine the explanation given by the assessee. He, therefore, rejected some of the explanations given. He held that the assessee had unexplaned purchases of 5,662 bags of paddy, as per document No. 20 and 8,762 bags as per document No. 29. He calculated that investment made in purchase of paddy outside the books during financial year 1995-96 relevant in assessment year 1996-97 came to Rs. 13,98,514. Similarly, investment in purchase of 8,762 bags as per document No. 29 was worked out at Rs. 22,49,643 for assessment year 1997-98. He treated the said amounts as unexplained investments under section 69 of the Act.

4.1. Learned counsel referred to pp. 105-260 of paper-book. The questionnaire issued by assessing officer is at pp. 105- 110 and reply of the assessee at pp. 111- 118, Copies of affidavits from certain kacha arhtias are placed at pp. 119-135, copies of statements of S/Shri Som Nath, Rakesh Kumar, Rattan Kumar, etc, at pp. 136-160 of paper-book. Learned counsel tried to explain the manner in which paddy is purchased in mandis. He submitted that the employees of the assessee were maintaining Sauda Bahi, wherein they noted the estimated number of bags which were available in the mandi in the form of heaps. He submitted that there is no written agreement and some times it may happen that when the employee goes to lift the material from the mandi the same is not available having already been sold. He gave an example that if 100 bags are estimated as available, then entry of 100 bags is made in the Sauda Bahi and when material is not available at the time when the employees goes to lift the material, then column in Sauda Bahi is filled as 'nil'. Even in such a situation, assessing officer is trying to hold that the assessee purchased 100 bags. The second situation could be that instead of 100 bags, only 80 were available out of heap. In such a situation, assessing officer is trying to make an addition of 20 bags. The third situation could be excess quantity purchased. It may be that instead of 100 bags, actual number of bags out of heap turned out to be 110 bags and in such a situation. Assessing Officer is trying to take quantity of bags at 110. The fourth situation could be that a seller was having five shops and payment had been made in respect of paddy available from five shops and the assessee had debited its accounts. In such a situation, assessing officer is trying to hold that payment for 500 bags to seller is alright but assessing officer is trying to hold that payment in respect of paddy available from remaining four shops has not been made. Learned counsel pointed out that copy of account of each person who has sold goods to the assessee is placed in the aforesaid document from pp. 105-260 of paper-book. Similarly, affidavit of each seller has been filed. Payment for these purchases have been made by cheques. The purchase/sales accounts were produced and even the shopkeepers were produced before. assessing officer, whose statements have been recorded and mentioned in assessment order. He has stressed that assessing officer has not pointed out any defect and no statement has been discarded. He referred to affidavit of the President of Kacha Arhtia Association placed at pp. 214-215 of paper-book, wherein it is mentioned that every kacha arhtia maintained a register known as 'Heap Register', in which details in respect of sale of agricultural produce which is brought by farmers at his shop is maintained, giving particulars, i.e. farmer's name, purchaser's name, selling rate, quantity sold, etc, After completion of sale transaction, kacha arhtia sends information to the Market Committee giving details of such transactions. After completion of sale bid transaction, the Market Committee officials immediately note down complete particulars of such transaction after visiting the arlitia's shop/s. The purchaser, if he is a licensee of Market Committee, pays market fee himself, othervise market fee is paid by arhtia. It is mentioned that for the last many years, agricultural produce particularly paddy and wheat were being sold in open bid which had been adopted because of heavy rush of work due to instant arrival of paddy/wheat, fluctuating whether conditions and concentration of main period of arrival of paddy/wheat in mandis. Learned counsel, therefore, urged that assessing officer was not correct in ignoring the evidence filed before him. He, therefore, urged that the additions which have been made by assessing officer on sunrises and conjectures ought to be deleted.

4.2. Learned departmental Representative relied heavily on the assessment order.

4.3. We have carefully considered the rival submissions and have perused assessment order as also various documents placed in the paper-book to which our attention has been invited during the course of hearing. It is observed that Shri Jagdish Rai Barisal partner in his statement, dated 3-2-1997, as reproduced at p. 6 of the order, gave necessary details regarding entries made in various columns of document Nos. 20 and 29. He mentioned that 'some heaps are unsold and not entered in the books and this fact is told to our employee who goes for lifting the goods'. The said statement is corroborated by the aforesaid documents placed in the paper-book including various affidavits filed by kacha arhtias. It is also observed that transaction of purchase of paddy is regulated through the Market Committee, where proper record of sale/purchase is maintained by kacha arhtias which are further transmitted to the Market Committee. The purchaser has to pay market fee for purchase of pacidy, The statements of commission agents working in Grain Market were recorded, as mentioned in para 17 of assessment order. Assessing Officer has disbelieved the affirmations made by the commission agents in their affidavits regarding cancellation of bid and the circumstances under which bid falls through only on the ground that the commission agents have not been able to produce any documentary evidence. We feel that in view of the affirmations made by the commission agents, assessing officer could have made enquiries from kacha arhtias/Market Committee in order to ascertain the procedure regarding sale/purchase of paddy. On the facts and circumstances of the case, we, therefore, feel that assessing officer has wrongly rejected the explanation furnished by the assessee and has proceeded to make calculations with reference to alleged number of bags of paddy purchased and has made both the impugned additions on the basis of surmises and conjectures. Assessing Officer has simply added up figures of alleged bags of paddy from documents Nos. 20 and 29 without bringing any material on record to indicate that such paddy has been actually purchased from mandis or otherwise and the same has been processed by the assessee resulting in production of rice, etc. and sale thereof. Thus on the facts and circumstances of. the case, we feel that the impugned additions of Rs. 13,98,514 and Rs. 22,49,643 cannot be sustained. The same are, therefore, deleted.

5. Learned counsel then took up ground No. 22 relating to various additions. Facts relating to first addition of Rs. 4.35 lakhs are that the assessing officer confronted the assessee with p.49 of document No. 63, which is on letter head of Jai Janta Trading Co. dated 31-10-1996. Assessing Officer observed that the. Assessee had received amount of Rs. 4.35 lakhs through Shri Kaidar Nath, sent by JJTC. The assessee, in its Teply, stated that it had received payments from JJTC of Rs. 2 lakhs, from Jain Traders of Rs. 1,58,273 and from Lachhi Ram & Co. of Rs. 76,790, aggregating to Rs. 4,35,063, which was entered in cash book on 1-11-1996. Assessing Officer observed that the reply filed was neither convincing nor supported by any documentary evidence. He, therefore, held that the said amount remained unexplained. The same was, therefore, treated as unexplained investment under. section 69 of the Act. No separate addition ofthis amount was made as assessing officer held that the same was covered by the undisclosed income determined at Rs. 1,69,50,812.

5.1. Learned counsel submitted that the aforesaid three firms from whom payments had been received on account of sale of rice belonged to the same party. He referred to copy of letter dated 31-10-1996 as also copy of account in ledger, wherein it has been mentioned that cash was received on 1-11-1996 of Rs. 1,58,273 from Jain Traders, refer pp. 385-386 of paper-book. He referred to copy of account with Jain Traders, wherein the said amount has been credited. Similarly, he referred to copy of ledger showing receipt of cash of Rs. 2 lakh from JJTC and copy of account with the said company at pp. 387-388. Copy of ledger showing receipt of Rs. 76,790 from Lachhi Ram & Co. is placed at p. 389. He referred to copy of cash book at p. 391, where entries in relation to the said amount have been duly made. Learned counsel submitted that the said documents were produced before assessing officer. The department has not brought anything on record against the assessee with reference to receipt of the said payments. In the alternative he submitted that if payments made by the assessee are not genuine they might be taken out of sales made and the result would remain the same. On a query, learned counsel submitted that the aforesaid three firms are located at the same address and are controlled by the same family.

5.1.1. Learned departmental Representative mainly relied on the assessment order.

5.1.2. We have carefully considered the rival submissions and have perused the assessment order as also relevant documents placed in the paper-book to which our attention was invited during the course of hearing. We feel that the submissions made by learned counsel have force inasmuch as assessing officer has not brought anything on record to dislodge the documentary evidence placed before him regarding receipt of Rs. 4.35 lakhs from the aforesaid parties. He has only observed that the reply filed by the assessee is not supported by any documentary evidence. Further assessing officer has made the aforesaid addition under section 69 and has treated the receipt of payments as unexplained investment made by the assessee. He has not recorded any finding that the assessee made these investments with reference to purchase and sale of rice to the said parties, the quality of rice sold and as to what is the element of profit in the aforesaid investments. We fell that on the facts and circumstances of the case, the said addition cannot be sustained under the provisions of section 69 of the Act. In view of the foregoing, the said addition is deleted.

5.2. The facts relating to next addition based on document No. 64 are that assessing officer confronted the assessee with pp. 77-81, which were goods receipts of Dashmesh Truck Union. Assessing Officer observed that 360 qtls of rice was consigned to Har Gulab Ved Parkash, Delhi, on 12-2-1993 and basmati rice weighing 207 qtls was consigned to Shri Durga Ji Traders on 24-11-1992. The assessee, in its reply, stated that the Delhi firms did not accept the consignments and that the consignment set to Shri Durga Ji Traders was sent to Khushal Trading Co., Bombay and the consignment relating to Har Gulab Ved Parkash was sent to Shree India Traders, Delhi. Both the consignments were stated to have been credited by the second party on 31-3-1993. Assessing Officer held that the reply filed was neither convincing nor supported by any documentary evidence. The assessee was asked to show-cause as to why amount of Rs. 4.17 lakhs being the value of basmati rice weighing 207 qtls be not held as its undisclosed income since the assessee did not file any documentary evidence. He also asked the assessee to file confirmation from Har Gulab Ved Parkash and observed that it had not furnished the required information. assessing officer, therefore, made addition of Rs. 5.97 lakhs under section 69 of the Act. However, no separate addition was made in view of the addition of Rs. 1,69,50,812.

5.2.1. Learned counsel stated the brief facts as noted by assessing officer. He invited our attention to pp. 392-413 of paper-book, where confirmation from the parties are placed at pp. 400-401 and relevant copies of ledger are also placed. Copies of bills are at pp. 406-407, copies of goods receipts issued by Dashmesh Truck Union showing consignment of goods to Shree Durga Ji Traders on 24-11-1992, are placed at pp. 392-394. Similarly, receipts showing despatch of goods to Har Gulab Ved Parkash on 12-2-1993, are at pp. 396-397 and copies of ledger and account in respect of Shree India Traders are placed at pp. 412-413. In view of the aforesaid documents, learned counsel pleaded that the addition is based on surmises and conjectures and that the department has not brought anything on record to dislodge the said documentary evidence placed before assessing officer. He submitted that the said goods were sold to the two parties and as they were not found according to their orders the same were diverted to the other two parties. If there are no sales, as held by assessing officer, then the same may be taken out from the sales made to the Delhi parties. If one sale is taken out and replaced by the other, the result would be the same.

5.2.2. Learned departmental Representative relied on order of assessing officer.

5.2.3. We have carefully considered the rival submissions and have perused assessment order as also various documents placed in the paper-book to which our attention was invited during the course of hearing. It is observed from p. 400 that Shree Durga Ji Traders wrote a letter dated 6-11-1997, directly to assessing officer informing that since the quality of goods was not according to their order, it was rejected and the goods were lifted back by the party itself. It is further mentioned that they had no other transaction with the assessee. It is observed from copy of ledger at p. 401 showing account of Khushal Trading Co. that the goods valued at Rs. 1,91,970, Rs. 1,93,996 and Rs. 1,63,569 were credited in their account on 31-3-1993. In view of the foregoing and other evidence (mentioned in para 5.2.1) before the assessing officer, we feel that assessing officer was not correct in disbelieving the documentary evidence filed and his observations that the reply is not supported by any documentary evidence does not appear to be correct. Thus, on the facts and circumstances of the case we feel that addition of Rs. 5.97 lakhs made with reference to aforesaid consignments of rice cannot be sustained and the same is deleted.

5.3. Learned counsel further referred to the addition of Rs. 3.81 lakhs made by assessing officer. Assessing Officer confronted the assessee with entries appearing at p. 30 of document No. 65, which contained account of Pyare Lal Bhagwan Dass. Assessing Officer observed that after comparing entries of this page with the account of PLBD as appearing in ledger for financial year 1992-93, it was found that the payments made in cash for paddy purchases amounting to Rs. 3.81 lakhs were not accounted for. In reply, the assessee tried to evade the question by saying that no name was mention on the said page. Assessing Officer observed that since p. 30 of document No. 65 was found and seized from the premises of the assessee, it was for the assessee to explain the entries appearing therein. On further query, the assessee again submitted that no name was mentioned on the page. Assessing Officer therefore, proceeded to make addition of Rs. 3.81 lakhs as unexplained investment in purchase of paddy.

5.3.1. Learned counsel referred to p. 418 of paper-book and submitted that it was a dumb document. He referred to p. 419, where the assessee explained that p. 30 of document 65 carried certain notings, i.e. certain amounts were mentioned against certain dates and no name is mentioned on the page. The assessee stated that it was not clear whether items are payments or receipts or some other calculations- The assessee urged that no addition could be made on the basis of such a document. Learned counsel referred to copies of accounts of PLBD at pp. 420-425 of paper-book. He, therefore, urged that no addition could be made on the basis of such a dumb document. In support, learned counsel relied on the following decisions :

(i) Ashwani Kumar v. Income Tax Officer (1992) 42 TTJ (Del) 644 1- (1991) 39 ITD 183 (Del); (ii) Income Tax Officer v. Mohan Lal Vig (1983) 139 ITR 681 (P&H);

(iii) Amar Natvarlal Shah v. Assistant Commissioner (1997) 59 TTJ (Ahd) 454 : (1997) 60 ITD 560 (Ahd); and

(iv) 3 SCC 410.

Learned counsel submitted that the aforesaid decisions have been considered by the Tribunal in 70 ITD 62. In view of the said decisions, learned counsel urged that the impugned addition ought to be deleted.

5.3.2. Learned departmental Representative relied on the assessment order.

5.3.3. We have carefully considered the rival submissions and have perused assessment order. We have also seen the case law relied upon by learned counsel. We feel that the submissions made by learned counsel have force and the same are supported by the decision of the Tribunal in the case of Ashwam Kumar v. Income Tax Officer (supra), wherein it has been observed that where documents found at the time of search did not indicate whether figures referred to quantities of money or to quantities of goods, was dumb document and no addition could be made on the basis of the said document. Further in the decision of the Tribunal in the case of Amar Natvarial Shah vs, Assistant Commissioner (supra), it has been held that where seized sheets mentioned only date and month and not year and assessing officer mentioned year 1988 thereon, there could be no basis for addition on the basis of those sheets in assessment year 1989-90. It was held that since no tangible assets in the form of unexplained investment was found at the time of search justifying huge addition, impugned addition could not be sustained. In the case of Income Tax Officer vs, Mohan Lal Vig (supra), it has been observed that where Dasti Bahi was recovered from the business premises of the assessee-firm, the recovery did not amount to proof of truth of contents of the Dasti Bahi. It was further observed that some evidence should have been led by the prosecution for showing that those accounts were entered in that Bahi by the respondents or by somebody at their instance but no evidence whatsoever has been produced to prove the contents of that Bahi. In view of the foregoing, we feel that the ratio of the said decisions is applicable and addition of Rs. 3.81 lakhs cannot be sustained. The same is accordingly deleted.

5.4. Learned counsel then took up the addition of Rs. 70,000 made by assessing officer. Assessing Officer confronted the assessee with p. 67 of document No. 65, which contained account of the assessee in the books of Mada Mal Sada Nand. Assessing Officer observed that the assessee tried to evade the question by saying that the said paper did not belong to it and no addition was called for. Assessing Officer held that since p. 67 was found and seized from the premises of the assessee, it was for the assessee to explain the entry. He, therefore, treated the amount of Rs. 70,000 as unexplained investment under section 69 of the Act. Assessing Officer also referred to the provisions of section 40A(3) and observed that the assessee did not furnish any reply and, therefore, Rs. 70,000 paid in cash were held to be undisclosed income. No separate addition was made of this amount, in view of the addition of Rs. 1,69,50,812.

5.4.1. Learned counsel referred to p. 427 of paper-book, where a copy of account in the books of MMSN is placed. Learned counsel submitted that the assessee had taken loan of Rs. 1.40 lakhs on 19-12-1992. He referred to pp. 435-436, which showed loan account of MMSN in ledger of the assessee. He submitted that payment had been made by cheque. He referred to p. 437, where a copy of account of the said party in the books of the assessee is placed. Payment of Rs. 50,000 has been shown in the said account. He referred to p. 439, where a copy of account in the books of the other party is placed and submitted that ultimately account of Rs. 1.40 lakhs had been squared up by payments. He submitted that it is not a case of cash payment as held by assessing officer.

5.4.2. Learned departmental Representative basically relied on assessment order.

5.4.3. We have carefully considered the submissions made by both the parties and have perused orders and relevant documents placed in the paper-book. It is observed that assessing officer invoked the provisions of sections 69 and 40A(3) to hold that Rs. 70,000 was undisclosed income of the assessee. It is seen from p. 427 of paperbook that the assessee had taken loan of Rs. 1.40 lakhs on 19-12-1992 and the same is alleged to have been returned by three payments, i.e., Rs. 70,000 shown as paid on 20-1-1993 and Rs. 30,000 and Rs. 40,000 paid on latter dates. It is also seen from pp. 435 and 439, which is a copy of account of the assessee in the books of MMSN that the alleged payment of Rs. 50,000 by cheque has been made on 6-8-1992, i.e., much before the date of loan, which is 19-12-1992. The entries on various pages referred to by learned counsel thus do not support the contentions made before us. We, therefore, decline to interfere with the order of assessing officer in making addition of Rs. 70,000.

5.5. While concluding his submissions on ground No. 22 learned counsel was fair enough to mention that some entries regarding purchase of paddy, etc. might be of the nature as alleged by assessing officer. He conceded that unaccounted money was given by the assessee and also received, for example, Rs. 1 lakh, Certain purchases might have been entered and certain entries might have remained unexplained. In case the assessee did purchase paddy, the same had to be processed/sold. He, therefore, urged that even if purchase of paddy has been made outside the books, the same have been sold. Learned counsel referred to cash flow account given from 1992 onwards. He referred to pp. 415-416, 426, 440, 450, 459-460, 465, 467 of paper-book and submitted that in the said cash flow account, credit entries have been made for inconung money and debit entries made for outgoings. He submitted that the highest peak in the said account works out to Rs. 20,83,633, say Rs. 21 lakhs as before 31-3-1993. He submitted that even addition of Rs. 1,60,600 (ground No. 9) is included in the said amount. He, therefore, urged that the amount of Rs. 21 lakhs could be undisclosed income and that the assessee has already surrendered Rs. 18.50 lakhs in the return as undisclosed income. He submitted that the assessee had surrendered Rs. 13 lakhs before 31-3-1993. He, therefore, urged that at the most the addition of Rs. 8 lakhs could be made. He urged that after March, 1993, the said money had been in circulation. Learned counsel also made an alternative submission that the amount of Rs. 10 lakhs belonging to Delhi party may be telescoped in the peak of Rs. 21 lakhs, out of which Rs. 18,50 lakhs have already been surrendered. He further submitted that the amount of Rs. 21 lakhs is not in the form of assets and even other additions mentioned in various grounds not specifically argued are required to be telescoped in the said addition.

5.5.1. Learned departmental Representative submitted that peak of Rs. 21 lakhs mentioned in cash flow account could not be the basis for allowing relief as urged by learned counsel.

5.5.2. Learned counsel, in his reply, submitted that cash flow account has not been rebutted by learned departmental Representative. He therefore, submitted that at the most addition of Rs. 8 lakhs could be sustained in the hands of the assessee. He urged that cash of Rs. 10 lakhs and additions on account of purchase of paddy need to be telescoped within the peak amount of Rs, 21 lakhs. With reference to telescoping of additions in the peak, learned counsel relied on the following decisions :

(i) CIT v. S. Neffiappan (1967) 66 ITR 722 (SC)I-

(ii) Anantharam Veerasinghaiah &, Co. v. CIT (1980) 16 CTR (SC) 189 .- (1980) 123 ITR 457 (SC)I

(iii) CIT v. KS.M. Gumswamy Nadar & Sons (1984) 149 TTR 127 (Mad): and

(iv) Swaroop Chand Kojuram v. CIT (1997) 139 CTR (Raj) 460 : (1999) 235 ITR 732 (Raj).

5.5.3. The rival submissions on telescoping of various additions against peak of Rs. 21 lakhs have been considered and are discussed in para 9 of the order.

6. Learned counsel next took up ground No. 3 relating to addition of Rs. 10 lakhs on account of cash found. During survey, cash amounting to Rs. 13,00,449 was found. Keeping in view the unexplained cash and nature of incriminating documents survey was converted into search under section 132(l) and cash of Rs. 10 lakhs was seized. Assessing Officer has observed that Shri Jagdish Rai Bansal partner was asked about source of cash. He submitted that cash of Rs. 10 lakhs: was handed over to him by Sohan Lal Suresh Kumar, Delhi, (hereinafter referred to as 'SLSK') for handing over the same to Bansal Rice Factory, Sangrur, a sister-concern of SLSK. Subsequent entries proved that there was no truth in the submissions of Shri Bansal. Assessing Officer held that the assessee had tried to cover unexplained amount of Rs. 10 lakhs seized during search. Assessing Officer referred to the statement of Shri Suresh Bansal, partner of SLSK as well of Bansal Rice Factory. Assessing Officer noted that Shri Suresh deposed not to have demanded any money from SLSK and that he had no knowledge about cash of Rs. 10 lakhs sent by SLSK through Shri Jagdish Rai Bansal. He further deposed that if any cash had been sent by SLSK, he would have received information about the same. Assessing Officer observed that upto 9 p.m. on 5-12-1996, Suresh had not received any such intimation. Assessing Officer confronted Shri Jagdish Rai Bansal with the statement of Shri Suresh. In response, Shri Bansal deposed that he had no concern about statement of Shri Suresh and insisted that cash of Rs. 10 lakhs was handed over to him by Shri Rajinder Gupta of SLSK. Assessing Officer observed that the assessee-firm through its partner Shri Bansal produced a letter reconstructed from pieces of letter belonging to SLSK dated 4-12-1996. The said letter has been addressed to Bansal Rice Factory and bears signatures of Shri Gupta, partner of SLSK. It is mentioned that : 'Along this letter we are sending you worth of Rs. 10 lakhs: with our Sultan Singh. Kindly deposit the same Kindly despatch the same as early as possible because we are very much in need of wheat. Kindly deposit and given bank receipt to representative. We will be highly obliged to you-' assessing officer observed that Shri Jagdish Rai Bansal in his covering note, dated 9-12-1996 had stated that he found the pieces of alleged letter along with left-over documents after search and that he was under the impression that this letter was also seized along with other documents and cash. He further observed that Shri Bansal did not show the alleged letter to search party when he was confronted with availability of cash of Rs. 10 lakhs and that he did not refer to any such. letter. The alleged letter was never noticed during entire search operation. The comments of the authorised officers were obtained and all of them denied any such letter. assessing officer, therefore, observed that if the letter had been produced at the time of search, it would have been the best way to explain availability of cash with the assessee. He, therefore, held that the alleged letter was a cooked up bid and an afterthought on the part of the assessee to explain cash of Rs. 10 lakhs. Assessing Officer referred to the statement of Shri Rajinder Gupta recorded on 10-12-1996 by ADL He observed that Shri Gupta categorically denied to have sent cash of Rs. 10 lakhs through Shri Jagdish Rai Bansal of Jagdamba Rice Mills on 4-12-1996 for handing over the same to their sister-concern Bansal Rice Mills. However, it was stated by Shri Gupta that cash of Rs. 10 lakhs was sent through their employee Shri Sultan Singh on 4-12-1996 and incidentally Shri Jagdish Rai Bansal visited SLSK As per statement of Shri Gupta, it was borne out that the alleged cash of Rs. 10 lakhs was given to Sultan Singh and not Shri Bansal. He submitted that this fact was never mentioned by Shri Bansal in his statement recorded during search that Shri Gupta handed over cash to Sultan Singh, employee of SLSK. Assessing Officer observed that if this had been the correct state of affairs, he could have easily explained that Sultan Singh, employee of SLSK, carried cash and accompanied him in his car from Delhi to Sangrur but this was never referred to by Shri Bansal. The latter statement also confirmed that the amount of Rs. 10 lakhs was in fact unaccounted money of Jagdamba Rice Mills. Assessing Officer referred to the statement of Sultan Singh recorded on 11-2-1997 by Assistant Commissioner Co. Cir. 1 (3), New Delhi, and on 3-12-1997. He referred to the question put to Shri Sultan Singh as to where he was on 4-12-1996, to which he deposed that he had gone to Delhi with Shri Jagdish Rai Bansal. Shri Gupta in his statement recorded on 19-2-1997 had deposed that Sultan Singh was in his employment as on 4-12-1996. Assessing Officer observed that Sultan Singh as a matter of fact worked as a supervisor with Jagdamba Rice Mills. He, therefore, held that the statement of Shri Gupta that Sultan Singh was in his employment was not corroborated by any evidence, as no salary, etc. had been debited by Shri Gupta, partner of SLSK Sultan Singh had deposed that cash of Rs. 10 lakhs was in denomination of 100 bundles of Rs. 100 each, whereas in total cash of Rs. 13,00,449 found on 5-12-1996, there were only 8,678 notes of 100 rupee denomination, which showed that only 86 bundles were there of Rs. 100 notes. Assessing Officer referred to certain contradictions in the statements of S/Shri Sultan Singh and Gupta which, according to him, weighed more than anything else in the whole question of Rs. 10 lakhs belonging to SLSK assessing officer referred to the question put to Sultan Singh as to in what context he had gone to Delhi, Sultan Singh replied that he went to Delhi on 4-12-1996 with Shri Jagdish Rai Bansal of Jagdamba Rice Mills. In answer to another question regarding his employment with Jagdamba Rice Mills on 4-12-1996. Sultan Singh stated that he was in employment of Jagdamba Rice Mills on 4th/5-12-1996. Assessing Officer thereafter referred to the statement of Shri Gupta recorded on 3-12-1997, wherein he stated that Sultan Singh was at his shop and went to his godown on 3-12-1996. On a further question about whereabouts of Sultan Singh during the intervening night of 3rd/4-12-1996, Shri Gupta replied that he slept in his godown-255 GT Karnal Road Bakol. To a further question about attendance of duties of Sultan Singh on 4-12-1996, Shri Gupta submitted that he attended his shop around 11.30 on 4-12-1996 and he had sent him to bank along with other employee Shri Om Parkash in order to withdraw cash and to purchase drafts. Assessing Officer noted that the assessee in its reply, dated 17-12-1997 had stated that the alleged small variation in the statement had no bearing on the true nature of the transactions. Assessing Officer held that the contention of the assessee was far from convincing because statement of Shri Rajinder Gupta was founded on one premises, i.e. Sultan Singh was in his employment as on 4-12-1996 and he gave the alleged cash to him. Assessing Officer noted that in his statement, dated 4-12-1997, Shri Gupta also confirmed the fact that Sultan Singh was the same person who was present in the office of assessing officer before his statement was recorded. Assessing Officer observed that it was not possible that a single person could be present at two places, i.e. Sangrur and Delhi at one time. assessing officer, therefore, concluded that the statements of S/Shri Rajinder Gupta and Sultan Singh were contradictory and were accommodating in nature and cooked up. In business, minute care is taken regarding heavy cash being carried from one place to another. The statement of Shri Suresh Kumar was spontaneous and reliable. As he was a partner, of the two concerns, namely, SLSK and Bansal Rice Factory. Assessing Officer observed that the nature of seized documents and quantum of payments made in cash of the assessee point to the fact that cash of Rs. 10 lakhs should have been the proceeds of unaccounted transactions carried out by the assessee. He, therefore, held that Rs. 10 lakhs was unexplained cash available with the assessee-firm on 5-12-1996. assessing officer, however, did not include the said amount in the final computation of undisclosed income at Rs. 1,69,50,812.

6.1. Learned counsel referred to the basic facts as noted by assessing officer. He submitted that Sohan Lal Suresh Kumar were dealers in foodgrains: and that Shri Rajinder Gupta, managing partner of that firm, gave Rs. 10 lakhs to Sultan Singh for being handed over to Bansal Rice Factory, sister-concern. of SLSK. He submitted that the assessee was only a trustee in relation to the said amount of Rs. 10 lakhs. Learned counsel invited our attention to cash reconciliation statement as on 5-12-1996, given at p- 12 of paper-book. He pointed out that cash as per books was Rs. 2,89,346 and personal cash of Shri Jagdish Rai found in the brief-case was Rs. 10,000. There was a marginal difference of Rs. 1,102, after adjustment of cash of Rs. 10 lakhs shown as belonging to SLSK. Learned counsel referred to copy of bank account of SLSK, at pp. 13-28 of paper-book, wherein amounts had been deposited in cash, He submitted that there was a running account and deposits were made by bank transfer to maintain liquidity for purchase of rice, wheat, gram, etc. He referred to p. 20, where entry of Rs. 10 lakhs: finds place on debit side as on 31-8-1996. He referred to entries of Rs. 3.45 lakhs as on 30-8-1996 and of Rs. 20 lakhs as on 9-9-1996. He referred to p. 5, where a copy of certificate, dated 24-12-1996 from SBI is passed, wherein it is mentioned that SLSK withdrew cash from their current account No. 21860 amounting to Rs. 10 lakhs against cheque No. 689417, dated 4-12-1996. He submitted that the department had made enquiries from SLSK and that the same is not placed on record, as it might be favouring the assessee. He referred to p. 6, wherein the assessee gave explanation. It was mentioned that during survey cum-search operation on 5-12-1996 till 7-12-1996, the assessee had produced letters and documents to explain cash lying with them including letter of SLSK Cash worth Rs. 10 lakhs was seized and lots of books and documents as per Panchnama were also seized. It is also mentioned that later on the assessee found pieces of letter of SLSK in the left-over books and documents, although the assessee was under the impression that the said letter was already seized along with bunch of documents. The assessee had mentioned that being a relevant document, the same was reconstructed from pieces and duly laminated and sent to assessing officer. Learned counsel submitted that the said letter was found in the dustbin and the same was handed over to the department on the next day. He pleaded that it is not the charge of the department that the letter is concocted one. He referred to the statement of Shri Jagdish Rai Bansal, copy given at pp. 29-38 of paper-book. He referred to the relevant question relating to cash amounting to Rs. 13,00,449, in reply to which Shri Bansal stated that 'I have received Rs. 10 lakhs from SLSK, Delhi to deliver to Barisal Rice Factory, Sangrur, sister-concern of SLSK and Rs. 1.50 lakhs from Shri Nathji Trading Co., Delhi, on 4-12-1996, Rs. 19,402 and Rs. 7,600 from Shri Nathji Trading Co. on 4-12-1996'. He referred to the statement of Shri Raoder Gupta, managing partner of SLSK. In answer to question No. 5 regarding specific reasons for the money being sent in cash, he stated that 'We send cash to deposit the same with the bank to enable the persons to get DD/cheques'. In reply to question No. 16 regarding explanation of Shri Jagdish Rai Barisal about receipt of Rs. 10 lakhs from SLSK, Shri Gupta stated that he had given Rs. 10 lakhs to one of his employees, namely, Sultan Singh on 4-12-1996 with the direction to deposit it in the bank account of SLSK at Sangrur. He also stated that Shri Barisal's concern Jagdamba Rice Mills was their regular seller of rice and that on 1-12-1996 at around 5 p.m. Shri Barisal came to his shop and stated that he was going to Sangrur that night. Shri Gupta gave Shri Barisal drafts of Rs. 10 lakhs and Rs. 6 lakhs as payments of supplies made by him and that he also requested him to accommodate Shri Sultan Singh in his car on way to Sangur. Shri Gupta affirmed that he did not give cash to Shri Barisal for any onward transaction. In view of the foregoing, learned counsel submitted that the managing partner explained source of amount of Rs. 10 lakhs and that the bank account and books contained the relevant entries. Learned counsel referred to the stay application for extension of stay and submitted that 'garnishee' proceedings against sundry debtors were taken and an amount of Rs. 6 lakhs and odd was due from Barisal Rice Factory. He submitted that the party has admitted that the money belongs to it. Learned counsel referred to the statements of Sultan Singh recorded on 11-2-1997 and 3-12-1997, given at pp. 63-87 of paper-book. In reply to question regarding context in which he went to Delhi, Sultan Singh stated that he went to Delhi on 4-12-1997 (may read as 4-12-996) with Shri Barisal of Jagdamba Rice Mills. In response to further question, Sultan Singh stated that he was working with Jagdamba Rice Mills for last 5-6 years, refer p. 71. He worked as a Munshi to supervise labour work and to send goods, etc. He stated that he did not do any work anywhere, though he tried to work during last days of November, 1996 and SLSK, p. 72. Learned counsel, therefore, urged that there was no material with the department to come to the conclusion that the amount of Rs. 10 lakhs belongs to the assessee. The assessee has discharged the initial burden to show that the cash pertained to SLSK.

6.1.1. In view of the foregoing facts, learned counsel proceeded to make submissions on legal aspect. He submitted that under the provisions of section 69A of the Act, it must be found that the assessee is the owner of any money, bullion etc. The finding of the assessee being in possession of cash is not sufficient to make the assessee the owner of that cash. The words 'in possession or control' are mentioned in section 132(4A) and the purpose of the said section is connected with the order to be made under section 132(5). He submitted that the ambit/scope of the provisions of section 69A is two-fold. He referred to the decision in the case of Smt. Neena Syal (supra), where the deeming provisions of sections 69, 69A, etc. have been dealt with in detail. He submitted that the assessee has given explanation that the money belongs to the Delhi party and the assessee is only a trustee. The ownership of the money mentioned in section 69A is not a deeming ownership. On the date of search, all sundry entries could not be made in the books and that the amount was shown as a liability on 5-12-1996, which has been corroborated and confirmed by the Delhi party, whose books have also been verified. Before making any addition under section 69A, assessing officer has to hold that the explanation furnished by the assessee is not satisfactory, and assessing officer has observed that cash of Rs. 10 lakhs should be the proceeds of unaccounted transactions carried out by the assessee. In view of the above, learned counsel urged that there was no basis for making the addition of Rs. 10 lakhs.

6.2. Learned departmental Representative relied heavily on the assessment order. He referred to cash inventory and submitted that cash of Rs. 10 lakhs (Rs. 8 lakhs plus Rs. 2 lakhs) was found in a cloth bag at the business premises of the assessee. The balance cash of Rs. 3,00,499 was tallied and cash of Rs. 10 lakhs was seized.

He submitted that it is not clear as to who was employer of Sultan Singh to whom cash of Rs. 10 lakhs was handed over by SLSK. Learned departmental Representative referred to the survey folder and submitted that Sultan Singh was present in godown No. 4 on 5-12-1996 and helped the survey party in calculating bardana/rice bags, etc. and that he has also signed the relevant documents. Therefore, Sultan Singh could not be in Delhi on 4-12-1996. He referred to the statement of Shri Suresh of Bansal Rice Factory, wherein he stated that no cash was received from Delhi and that he had no information regarding sending of Rs. 10 lakhs. He submitted that the assessee-firm had business relations with SLSK and it was not clear as to why payment was given to the employee of the assessee and not to Shri Jagdish Rai Bansal. He submitted that if Sultan Singh reached Sangrur at 10.30 in the morning on 5-12-1996, why he did not go to Bansal Rice Factory and instead came to the business premises of the assessee. He submitted that cash of Rs. 10 lakhs could not have been handed over to Sultan Singh, as he could not be such a responsible person. He urged that identity of Sultan Singh is doubted/disputed. Regarding letter dated 4-12-1996, learned departmental Representative submitted that the same was not found by the survey party but the assessee alleged that it was found from the dustbin and it was handed over to assessing officer on 6-12-1996. Statement of Shri Suresh Kumar of Bansal Rice Factory was recorded on 5-12-1996, i.e. prior to survey. He submitted that Sultan Singh mentioned denomination of notes amounting to Rs. 10 lakhs differently. He, therefore, urged that the addition ought to be sustained.

6.3. Learned counsel, in his reply, submitted that the assessee had given direct evidence in the shape of letter, dated 4-12-1996, the denomination of currency notes were Rs. 100 and Rs. 50. The Delhi party bad debited money to the account of the assessee. An amount of more than Rs. 6 lakhs was due to the assessee. He referred to p. 83 of paper-book and submitted that Shri Rajinder Gupta of SLSK had stated that he did not inform Suresh Kumar regarding sending of Rs. 10 lakhs through the assessee. The money was taken both by S/Shri Jagdish Rai Bansal and Sultan Singh from SLSK. He referred to pp. 63, 71 and 73 and submitted that signatures of Sultan Singh tallied. He referred to p. 65, where Sultan Singh stated that they started from Delhi (Rohini) on 5-12-1996 at 5.30 a.m. and reached Sangrur at 10.30 a.m. In view of the foregoing, learned counsel submitted that too much cannot be read into the question as to whose employee Sultan Singh was. Cash of Rs. 10 lakhs was the same. Shri Rajinder Gupta of SLSK never claimed loss of Rs. 10 lakhs and no FIR was lodged. He, therefore, urged that the circumstances, sequence of events and direct probabilities in the form of circumstantial evidence was in favour of the assessee. He relied on the decision in the case of Sumati Dayal v. CIT (1995) 125 CTR (SQ) 124 : (1995) 214 = 801 (SC). In the alternative, learned counsel urged that this addition may be telescoped against peak amount of Rs. 21 lakhs.

6.4. We have carefully considered the submissions made by both the parties and have perused the assessment order as also various documents placed in the paper-book to which our attention has been invited during the course of hearing. We have also seen the case law relied upon by learned counsel. The main basis on which assessing officer has made the addition is that statements of S/Shri Rajinder Gupta of SLSK and Sultan Singh are contradictory. Assessing Officer has held that the statements are accommodating in nature and cooked up. As against the said statements, assessing officer has given weightage to the statement of Shri Suresh Kumar, which has been held to be spontaneous and reliable as he is a partner of SLSK and Bansal Rice Factory. We feel that the statements of S/Shri Gupta and Sultan Singh cannot be brushed aside on the said basis. It is observed that Shri Gupta is also managing partner of SLSK and he has maintained a consistent stand during his statements that an amount of Rs. 10 lakhs was given to Sultan Singh for being handed over to Bansal Rice Factory for the purpose of being deposited in bank. He also stated that he did not inform Shri Suresh Kumar regarding sending amount of Rs. 10 lakhs (p. 83 of paper-book). The only thing is that Shri Gupta claimed that Sultan Singh was employee of SLSK. The relevant part of statements of S/Shri Gupta and Sultan Singh have been reproduced above and it is observed that in his statement, dated 3-12-1997 Shri Gupta confirmed that Sultan Singh was the same person who was present in the office of the assessing officer before his statement was recorded. It is also clear that Sultan Singh was employee of the assessee during relevant period and that he had accompanied Shri Jagdish Rai Bansal partner when the amount of Rs. 10 lakhs was handed over to him. Sultan Singh has also stated that he and Shri Bansal reached the business premises of the assessee at 10.30 a.m. on 5-12-1996, when the raiding party reached that place. Further in his statement dated 3-12-1997, Shri Gupta has specifically stated that he did give a letter addressed to Barisal Rice Factory, a demand draft of Rs. 24,260 and an amount of Rs. 10 lakhs to Sultan Singh, refer p. 85 of paper-book. Thus it is observed that in the course of various statements, Shri Gupta has stuck to the basic averments that an amount of Rs. 10 lakhs was handed over to Sultan Singh, who was accompanied by Shri Barisal partner. It is also quite probable that both of them reached the business premises of the assessee in the morning of 5-12-1996. In view of the said circumstances, it cannot be ruled out that the amount of Rs. 10 lakhs found at the business premises of the assessee was the same as had been handed over by Shri Gupta to Sultan Singh on behalf of SLSK. It may also be mentioned here that SBI has certified that an amount of Rs. 10 lakhs was withdrawn by SLSK on 4-12-1996, p. 5 of paper-book. Assessing Officer has also referred to letter, dated 4-12-1996 written by SLSK to Barisal Rice Factory, which was handed over to assessing officer by the assessee through letter, dated 9-12-1996. Assessing Officer has held that the said letter was not found during search/ survey. He, therefore, did not accept the contents of the said letter and this has also prevailed with assessing officer in making the impugned addition. We feel that even if the said letter is ignored, the circumstantial evidence and preponderance of probabilities are in favour of the contentions/pleas of the assessee. As against this, assessing officer has relied on the statement of Shri Suresh Kumar recorded on 5-12-1996, relevant portions whereof have already been mentioned above. In his statement, Shri Suresh Kumar has mentioned that he had no knowledge about cash of Rs. 10 lakhs sent. by SLSK through Shri Jagdish Rai Bansal and that if any cash had been so sent he would have received the information. We feel that though in normal course Shri Suresh Kumar ought to have received some information from SLSK about sending of cash of Rs. 10 lakhs through Sultan Singh and Shri Bansal but this probability cannot outway the specific averments made by S/Shri Rajinder Gupta, including the fact that he did not inform Shri Suresh Kumar regarding sending Rs. 10 lakhs, S/Shri Sultan Singh and Jagdish Rai Barisal, who have been consistent in their basic stand during the course of various statements. Thus, on facts and circumstances of the case, we feel that addition of Rs. 10 lakhs has been made by the assessing officer on the basis of certain assumptions, surmises and conjectures. He has held that Rs. 10 lakhs should be the proceeds of unaccounted transactions by the assessee but he is silent as to what are those transactions resulting in this income. We also find merit in the submissions made by learned counsel that mere possession of cash of Rs. 10 lakhs: found at the business premises does not prove the ownership of the said money by the assessee, more so in view of the stand of Shri Gupta that the said money has been handed over through S/Shri Sultan Singh, Jagdish Rai Barisal. Further, the explanation rendered by the assessee cannot be called unsatisfactory in the light of statements of S/Shri Gupta, Sultan Singh and Barisal and the certificate issued by SBI. We, therefore, feel that the requirements of section 69A of the Act have not been met by assessing officer while making the said addition. The same is, therefore, deleted.

7. Learned counsel then took up ground No. 9 relating to addition of Rs. 1,60,550 in relation to assessment year 1997-98. Assessing Officer has observed that the assessee was confronted with pp. 78-79 of document No. 61, vide question No. 27(v) of questionnaire, dated 30-9-1997. The assessee replied that the said page appeared to contain some notings regarding receipt and payment of cash. The assessee submitted that some transactions were verifiable and the rest will be reconciled later on. Assessing Officer asked the assessee to explain as to why entries appearing at pp. 78-79 should not be assessed as undisclosed income. The assessee, in its reply, dated 10-12-1997, submitted that the transactions which were not verifiable be taken to cash-follow statement. Assessing Officer observed that items appearing on these pages included purchase of paddy and sale of rice and its by-products and total sales worked out to Rs. 1,60,937 and purchases to Rs. 1,73,420. He observed that this page related to financial year 1996-97 and it was supported by an entry at 28/11 relating to Sangrur Solvex account RB. The entries appearing on these pages did not appear in the regular books of account of the assessee, as they were not recorded. assessing officer, therefore, concluded that the assessee was making sales/purchases outside the books of account. assessing officer, therefore, made addition of Rs. 1,73,420 as undisclosed income of the assessee for assessment year 1997-98.

7.1. Learned counsel referred to pp. 273-278 of paper-book and submitted that all entries are in the books of account. He referred in particular to pp. 273, 275 and 277. He submitted that the books are with the department. He also submitted that this addition needs to be telescoped against the peak of Rs. 21 lakhs.

7.2. Learned departmental Representative relied on the assessment order.

7.3. We have carefully considered the rival submissions and we feel that it win be just and fair to telescope this addition against peak of Rs. 21 lakhs, as discussed in para 9 of this order.

8. Learned counsel next took up ground No. 5 relating to addition of Rs. 4.95,415 as unexplained investment for purchase of paddy in assessment year 1997-98. Assessing Officer confronted the assessee with document No. 62 showing 8,891 bags of paddy purchased, which were not found recorded in the regular books of account. In reply, the assessee stated that most of the calculations related to empty bags with different parties and notings were consolidated on the reverse of p. 28, assessing officer observed that the contentions of the assessee in the light of detailed explanation given in the letter are correct. Assessing Officer referred to particulars of transactions appearing at pp. 33, 35 and 36 of document No. 62 showing unaccounted investment made in purchase of paddy. These particulars have been mentioned at pp. 9-10 of assessment order. Total worked out to Rs. 4,95,415. Assessing Officer observed that the said pages were originals of document No. 29 relating to carbon papers, dated 23-10-1996, 26-10-1996 and 27-10-1996 and revealed unaccounted paddy purchases made by the assessee. Assessing Officer referred to the statement of Shri Jagdish Rai Barisal recorded on 3-2-1997, wherein he was asked about original copies of pages. He replied that the said pages were given to persons who went for lifting the paddy. Assessing Officer concluded that the assessee used to make entries of unaccounted purchases on original pages also which were not kept for record. He, therefore, held that an amount of Rs. 4,95,415, being value of unaccounted purchase of paddy was unexplained investment of the assessee under section 69 of the Act.

8.1. Learned counsel referred to p. 221 of paper-book. He submitted that assessing officer found certain purchases aggregating to 249 qtls, whereas assessing officer has taken the quantity at 600 and odd qtls, which means a different of Rs. 2,11,483. He submitted that there is a calculation mistake by assessing officer. He referred to p. 10 of assessment order and submitted that the figure of Rs. 11,207 as included in the addition of Rs. 4,95,415 is entered in the books. He also submitted that this addition needs to be telescoped against peak of Rs. 21 lakhs.

8.2. Learned departmental Representative relied on assessment order.

8.3. We have carefully considered the rival submissions and have perused assessment order. We feel that it will be just and fair to telescope this addition against peak of Rs. 21 lakhs, as discussed in para. 9 of this order.

9. As mentioned in para 5.5,3, now we proceed to deal with the question of telescoping of various additions on account of purchase of paddy, etc. It is observed that addition of Rs. 10 lakhs on account of cash seized has already been deleted vide para 6.4 of this order. Similarly, various additions mentioned in ground No. 22, which have been specifically argued before us have been deleted vide paras 5.1.2 (Rs. 4.35 lakhs), para 5.2.3. (Rs. 5.97 lakhs) and para 5.3.3. (Rs. 3.81 lakhs). The addition of Rs. 70,000 has been sustained by us vide para 5.4.4. We are, therefore, left with balance of the additions mentioned in grounds Nos. 5, 9 and 22 and other additions not specifically argued before us. It is observed that the assessee had referred to cash flow account before the assessing officer (para 57 of order). However, assessing officer observed that the assessee had not given basis of peak of Rs. 20 lakhs and odd and did not consider the cash flow account. We feel that assessing officer has also not given any basis for not considering the cash-flow account. He has not pointed out any infirmities in the said cash-flow account to come to the conclusion that he did. The observations of assessing officer that the assessee wants to take advantage of cash-flow account is no ground to deny the benefit, if admissible to the - assessee. Learned departmental Representative has also not been able to contest the correctness of entries in the said cash-flow account. We, therefore, feel that the cash-flow account deserves to be taken into account. It has not been disputed before us that the assessee had surrendered amount of Rs. 13 lakhs before 31-3-1993 and that the peak amount in the cash-flow account is between Rs. 20-21 lakhs, which represents the outgoings and incomings of the assessee during the relevant period, We, therefore, find merit in the contentions of learned counsel that at the most an addition of Rs. 8 lakhs as on 31-3-1993, can be made and thereafter the money remained in circulation, which will cover other additions mentioned in grounds Nos. 5, 9, 22 and other grounds not specifically argued before us. It is also observed that the assessee declared undisclosed income of Rs. 18.50 lakhs in the return, which means that in addition to Rs. 21 lakhs, a further amount of Rs. 5.50 lakhs was available to the assessee after 31-3-1993 till date of search for purposes of his unaccounted business. Thus, on the facts and circumstances of the case we feel that an addition of Rs. 8 lakhs plus Rs. 60,000 on account of trading in rice bran and of Rs. 70,000 on account of cash payment not entered in the relevant documents placed before us, will meet the ends of justice. We, therefore, sustain a total addition of Rs. 9.30 lakhs in this case.

10. In the result, the appeal is allowed in part.