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6. The CIT(A) observed that the AO had already given sufficient and adequate opportunity to the assessee before deciding the issue. According to him the AO had sought explanation from the assessee vide his letter dt. 19th February, 1990, and in response to the said notice the assessee had submitted his reply by way of a letter dt. 17th March, 1990. The CIT(A) further observed that the assessee had not adduced any evidence to prove that the travellers cheques in question were purchased out of funds of customers. Similarly, the assessee could not substantiate his claim that these travellers cheques were purchased by the firm M/s. Kamal Auto Consultant. According to the CIT(A), no evidence was produced to show that these travellers cheques were recorded in the books of accounts of the firm M/s. Kamal Auto Consultant. On the contrary, it was found by the AO that these travellers cheques were purchased by the assessee in his own name. The CIT(A), therefore, concluded that these travellers cheques were purchased by the assessee in his individual capacity and further he failed to explain the source of amount investment in these travellers cheques. According to the CIT(A), the AO was justified in treating the amount of Rs. 1,49,000 as unexplained and added the same to total income of the assessee. Consequently, the addition was confirmed by the CIT(A).

9. The learned counsel for the assessee further submitted that the Appellate Authority below vide para 8 of the impugned order has categorically held that the only source of income of the assessee was share of profits from M/s. KAC Shri Jain, further pointed out that vide order dt. 7th February, 1986, under s. 131(3) of the Act, all the relevant books of accounts of the firm for various years including the asst. yr. 1982-83, have been seized by the Department and the same are still lying with them. He, however, submitted that in the case of M/s. KAC, after verification of the documents found at the time of search, it has been accepted that the said firm was deriving income from the dalali business on purchase and sales of auto-rickshaws, commission on sales of scooters. He, therefore, submitted it is clear that the assessee had not purchased travellers cheques out of his own funds. He further contended that the travellers cheques had been purchased on different dates not exceeding an amount of Rs. 30,000 on a particular date. The amount of Rs. 1,49,000 was not invested in a single day. These travellers cheques had been purchased in the regular course of the business of the firm, wherein the assessee is a partner. He, therefore, submitted that the addition in the hands of assessee is not justified.

(1) CIT vs. Maharaja Pratapsingh (1961) 41 ITR 421 (SC);

(2) CIT vs. Dumraon Cold Storage & Refrigeration Service (1974) 97 ITR 137 (Pat);

(3) Rasbihari Tobacco Processors Ltd. vs. Dy. CIT (1997) 57 TTJ (Ahd) 120

12. On the other hand Shri Rajiv Nabar, the learned Departmental Representative heavily relied on the orders of the authorities below. His further contention was that the assessee has miserably failed to show that the travellers cheques were purchased out of funds of customers. According to the learned Departmental Representative the assessee could not establish on record that these cheques were recorded in the books of M/s. KAC. These cheques were purchased by the assessee in his name from the State Bank of India and, therefore, it can be said that these travellers cheques were purchased out of assessee's own funds. The assessee further failed to explain the source of amounts invested in travellers cheques. He, therefore, submitted that the Appellate Authority below was justified in confirming the addition. The learned Departmental Representative also submitted that under the provisions of law, there was no need to the AO to record the reasons under s. 148(2) of the Act. The learned Departmental Representative also objected to the above contention of the learned counsel for the assessee. According to the learned Departmental Representative the assessee had never raised such a plea before the authorities below. The assessee had never questioned as to whether the AO had obtained the requisite sanction from the Chief CIT or the CIT. According to the learned Departmental Representative the assessee cannot raise such plea for the first time before the Tribunal. He, therefore, submitted that the travellers cheques were never purchased by the firm, M/s. KAC but these cheques were purchased by the assessee out of his own unexplained source of income and, therefore, the addition in the hands of the assessee was justified.

19. It will not be out of place to mention here that the AO has committed error of law while solely relying on the order made under s. 132(5) of the Act. Even in the assessment order the AO has reproduced the objections made against the order passed under s. 132(5) of the Act. We find considerable force in the contention of Shri P. F. Jain, the learned counsel for the assessee, that the AO has not assigned any cogent reason while making the addition of Rs. 1,49,000 in the assessment order dt. 3rd December, 1987 under s. 143(3) of the Act. In our opinion, the essential and material distinction between the provisions contained in s. 132(5) and s. 143(3) have gone unnoticed at the hands of AO. Sec. 132(5) concerns a situation where any money, bullion, jewellery or other valuable article or thing is seized under s. 132(1) or s. 132(1A). Sec. 132(5) empowers the ITO to estimate the undisclosed income of the person concerned in a summary manner to the best of his judgment and the action taken or orders made under s. 132(5) are really in the nature of interlocutory orders. On the other hand, there is specific procedure prescribed for the assessment to be made under s. 143(3) of the Act. In our view, the AO was not justified solely relying on the order passed under s. 132(5) of the Act. The AO has not discussed the other relevant objections raised by the assessee during the course of assessment proceedings. He has also not appreciated the fact that from the date of search it has been claimed by the assessee that he had not purchased any travellers cheque out of his own fund. In such circumstances, the burden of proving that the assessee was the person who had purchased the travellers cheques in question, was on the taxing authority. The AO has not given any cogent reason while making the addition. In our view there is substantial force in the above contention of the learned counsel for the assessee that the above addition in the hands of the assessee was not proper and justified. Further, more, there is no material on record to suggest that the assessee had purchased the travellers cheques in question out of his individual income. Admittedly, the assessee is a partner in M/s. KAC and the business of the said firm, M/s. KAC is auto consultant and selling scooters, auto-rickshaws on commission basis. It is evident from the record that the assessee's only source of income was from share of profit from the said firm. There is not an iota of evidence on record to show that the assessee was deriving income from another source. It is also an admitted fact that these travellers cheques were not purchased in a single day, therefore, the addition of lump sum amount of Rs. 1,49,000 is not justified. Why the IT authorities have not verified the facts from the books of the firm of M/s. KAC is also not understandable. On the other hand, the Department had accepted a disclosure of Rs. 3,50,000 in the hands of the said firm. Even in the appellate order dt. 30th March, 1992 for asst. yr. 1988-89 in assessee's own case, the CIT(A) noted that in view of the statement of the assessment recorded at the time of search it would be proper and reasonable to hold that the cash found, belonged to the firm, M/s. KAC and not to the assessee. In our view, there is substance in the contention of the learned counsel for the assessee that the travellers cheques were purchased in the name of the partner of the firm, M/s. KAC keeping in view the nature of negotiable instrument so that the same could be encashed in any place in India as per the needs of the business.