TMI Blog2002 (8) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... (9A) had not been complied with and the AO had no jurisdiction to make the assessment, in view of non-compliance of the mandatory provisions of the said section; (iii) no 'undisclosed income' was detected in course of search operations and the applicability of provisions of Chapter XIV-B are prima facie illegal. (iv) the notice dt. 9th Oct., 1997 under s. 158BC, in pursuance of which assessment have been made, is invalid being vague, non-specific and not in accordance with the provisions of law. 2. Because none of the following additions- Sl. No. Asst. yr. Rs. Particulars (a) 1997-88 24,45,055 Alleged unexplained investment in Gold ornaments weighing 5090.110 gms out of stock found during the course of search. (b) 1997-98 2,38,030 Alleged unexplained cash found during the course of search (c) 1997-98 22,313 Alleged unexplained investment in silver utensils (d) 1997-98 30,208 Alleged unexplained investment in silver coins (e) 1997-98 39,433 Alleged unexplained investment in silver bricks (f) 1997-98 20,611 Alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 2 above are not maintainable even on facts as the appellant had submitted detailed reconciliation in relation to each and every item, duly supported by the documentary and other evidences. 7. Because the addition of Rs. 5,000 on account of deposit in SB Account of Ashok Kumar HUF is prima facie illegal: (a) as neither the bank account belonged to appellant firm, nor; (b) there existed any material, which could go to show that the deposit in question had been made by the appellant-firm in the said account. 8.01 Because the Benarasi Saree Business was being carried on by Smt. Ambika Devi with the aid and assistance of her own funds even during the pre-search period and there being no material to hold that the firm had carried this business, such income could not have been added to the income of the assessee. 8.02 Because the provisions of Chapter XIV-B cannot be invoked to assess the income already discussed in the hands of the other "person" in the absence of any incriminating material having been found during the course of search operations which may lend support to the contention of learned AO. 9. Because the assessment has been completed against all the prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee-firm. In response to these notices, the assessee filed written submission stating that part compliance of the notice dt. 18th Aug., 1997, has already been made and further compliance is made of the notice and letter dt. 29th Oct., 1997. 4. Through question No.1 and questionnaire dt. 18th Aug., 1997, the assessee had been asked to explain new gold jewelleries weighing 5090.110 gms. recorded on the order book. The item No. 2 of Anne. 'A' of panchnama prepared for the business premises on 3rd Nov., 1996 and order book was found and seized which reveals that out of gold jewellery weighing 7,137 kgs the following quantity of gold are appearing in the names of the following partners: Chart A S. No. Name address Date of receipt of old ornaments Weight 1 2 3 4 1. Shri Gopal Dutt Dwivedi, Chhotipiyari, Varanasi 03.04.96 259.150 gms 2. Shri Awadesh Kumar Dwivedi, Varanasi 04.04.96 482.580 gms 3. Shri Kailash Singh, Nariya, Varanasi 11.04.96 458.000 gms 4. Rani Devi, Hirapur, Varanasi 12.06.96 32. 180 gms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness premises of the firm. Ashok Kumar, partner in the firm, made statement at that time and surrendered Rs. 1,89,880, but this figure was not included subsequently in the return filed. The AO after considering the explanation of the assessee came to the conclusion that in Kachi Rokar Rs. 56,520.10 is available to the assessee as well as Rs. 50,000 withdrawn by Ashok Kumar on 26th Oct., 1996, from the Bank. Thus, the AO concluded that the assessee should be in possession of Rs. 1,06,520 only. The AO further observed that the assessee has also failed to explain the cash amounting to Rs. 18,150 seized from the residential premises of Ashok Kumar and as such, held that unaccounted cash with the assessee-firm as on the date of the search was Rs. 1,89,880 + Rs. 1,26,520 + Rs. 18,150 minus Rs. 1,06,520 = Rs. 2,28,030 and made addition of this amount. Similarly, the AO found silver ornaments, silver coins, silver bricks and silver utensils in the premises of the assessee-firm and after considering the reply of the assessee made addition in a sum of Rs. 22,313, Rs. 30,208, Rs. 39,433 and Rs. 20,611 respectively on account of the above articles and treated the same as undisclosed investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997, containing the name and address of the customers, date of receipt of old ornaments, gross weight, receipt and delivery of the new ornaments and wages charged for these works, copy of the notice dt. 29th Oct., 1997, issued under s. 142(1) and 143(2) alongwith query letter issued by the Asstt. CIT, Central Circle-II, Varanasi after the change of the jurisdiction, copy of the assessee's letter dt. 6th Nov., 1997, furnished in compliance of the AO's notice dt. 29th Oct., 1997, copies of the reconciliation statement pertaining to cash and gold and silver ornaments on 3rd Nov., 1996, copy of the assessee's letter dt. 8th Nov., 1997, copy of the balance sheet alongwith the assessment orders from asst. yrs. 1994-95 to 1997-98, copy of the comparative chart of the job work receipts for making/repairing of ornaments, copies of the cheque of Rs. 50,000 encashed on 23rd Oct., 1997, copy of the bill of labour charges raised for job work, copies of the assessment orders of Smt. Ambika Devi. The learned counsel for the assessee also filed supplementary paper book from pp. 161 to 309 containing copy of the panchnama dt. 3rd Nov., 1996, copies of the relevant books of account and other docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. He has relied upon the judgment of the Hon'ble Supreme Court in the case ITO vs. Ch. Atchaiah (1996) 130 CTR (SC) 404 : (1996) 218 ITR 239 (SC). The learned counsel for the assessee also relied upon the order dt. 31st July, 2001, of the Tribunal, Lucknow Bench, in the case of Narendra Kumar Jain vs. Dy. CIT(A). 8. On the other hand, the learned Departmental Representative argued that there was no illegality in the search warrant. It is argued that as according to search warrant, issued under s. 132(1), the residential premises of Ashok Kumar and business premises of the assessee-firm was searched though warrant of search was in the name of Ashok Kumar. The learned Departmental Representative was directed during the course of the argument to produce the original search warrant, which he has produced the same and we have perused the same. The search warrant was issued in the name of Ashok Kumar; however, it was directed that the residential premises of Ashok Kumar and business premises of the firm M/s Vishwanath Pd. Ashok Kumar be searched. Therefore, it is clear that there was no authorisation in the name of the assessee-firm and as such, there was no search warrant in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er argued that the case law relied upon by the learned Departmental Representative in (2002) 255 ITR 144 (Mad) has not decided the question about the satisfaction and as such the same is not applicable. He has further argued that the AO should mention in the notice that he was proceeding under s. 158BD. The learned counsel for the assessee relied upon the order of the Tribunal, Chandigarh Bench, in the case of Ved Prakash Sanjay Kumar vs. Asstt. CIT (2000) 66 TTJ (Chd) 442, the order of the Tribunal, Allahabad Bench in the matter of Ajay Kumar Agrawal dt. 15 Jan., 2001, the order of the Delhi Bench in the case of India Seed House vs. Asstt. CIT (2000) 69 TTJ (Del)(TM) 241 (Third member case) and the order of the Tribunal, Delhi Bench in the matter of ITO vs. Ashok Kumar Agrawal (1990) 38 TTJ (Del) 189, order of the Tribunal, Allahabad Bench in the matter of Ashok Kumar Jaiswal vs. ITO dt. 17th July, 1992 However, the learned counsel for the assessee during the course of argument fairly conceded that in view of the statement of the learned Departmental Representative that there was no search warrant in the name of the assessee-firm, the order in the case of Narendra Kumar Jain of Lu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has referred to paper book's pp. 254 to 262 which are the copies of the cash book in which all the payments have been mentioned before search. The learned counsel for the assessee further argued that since all these entries are made in the books of account, therefore, proceedings under s. 158BC are not applicable. The learned counsel for the assessee has taken us to pp. 177 to 206 in the paper book which are the copies of the seized documents, which shows that all the sale purchase of jewellery taken for remaking have been entered into the record, which was seized by the Department. The learned counsel for the assessee has also taken us to p. 64 of the paper book, which is the reconciliation of the gold jewellery ornaments. The learned counsel for the assessee has also taken us through various documents in the paper book to show that all the gold jewellery entered into the records prior to the search including the sale purchase etc. and comparative chart was submitted to the satisfaction of the AO. According to him, the proceeding of the search was in the mid of the year and regular return was filed subsequently and no difference or defect was found therein which would go to show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Ltd. (1992) 107 CTR (SC) 209 : (1992) 198 ITR 297 (SC). 9. On the other hand, the learned Departmental Representative argued that the inventory of the books of account seized, copy of which is filed at p. 164 of the paper book shows that the books were not written upto 3rd Nov., 1996,. He has further argued that the details mentioned at pp. 177 to 206 in the paper book are purchase vouchers of the gold and these purchases have not been entered into the books of account maintained in the regular course of the business. The learned Departmental Representative on a specific question asked by the Bench admitted that the purchase vouchers are not disputed. The learned Departmental Representative further argued that the order book was written from 3rd April, 1996 to 20th Aug., 1996 and it has not recorded the source of purchases in the books and the Departmental Representative further argued that all the new jewellery was found. The learned Departmental Representative relied upon Fakir Mohmed Haji Hasan vs. CIT (2001) 165 CTR (Guj) 111, Daya Chand vs. CIT (2001) 167 CTR (Del) 446 : (2001) 250 ITR 327 (Del),CIT vs. K.T.M.S. Mahamood (1997) 140 CTR (Mad) 282 : (1997) 228 ITR 113 (Mad) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no whisper at all in any of the proceedings. The learned counsel for the assessee argued that even in the panchnama it was mentioned that the warrant was in the case of Shri Ashok Kumar and M/s Vishwanath Prasad Ashok Kumar and as such, the AO proceeded on the basis that such warrant was issued in the name of the assessee-firm also, which was not however, a fact. According to the learned counsel for the assessee, therefore, the AO did not satisfy himself as required under s. 158BD. Since the AO proceeded on the assumption that the warrant was issued in the name of the assessee-firm also, therefore, the satisfaction as required under s. 158BD was not complied with. The learned counsel for the assessee further argued that the Tax Act has to be read as a whole and to be interpreted strictly and no equity could follow. The learned counsel further argued that since learned Departmental Representative argued that all the gold jewellery were purchases and the same were not given for remaking would go to show that it was not a case of undisclosed income/investment as the learned Departmental Representative admitted this fact. The learned counsel for the assessee argued that the AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are maintained according to Gold Control Act, though it is not applicable at present. In case of job work only the quantity is mentioned in the bills but in the case of purchases, the value and quantity are recorded. The learned counsel for the assessee on that basis argued that all the vouchers are maintained on this pattern, which were also seized by the Department. The learned counsel for the assessee prayed that the assessment order may be set aside and quashed. 10. We have bestowed our careful consideration. The entire arguments of both the representatives of the parties raises preliminary issue and issues on merits. 11. The preliminary issue raised is whether the AO has recorded his satisfaction as required under s. 158BD of the IT Act before proceeding to make assessment in respect of block period under Chapter XIV-B of the IT Act. Before proceeding to decide the merits of the appeal, we feel it appropriate to decide the above preliminary issue first. 12. Chapter XIV-B inserted by Finance Act, 1995 w.e.f. 1st July, 1995 provides special procedure for assessments in search cases. Sec. 158BC of the IT Act provides special procedure for block assessment. Where any sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... XIV-B is that for assessment under s. 158BC, the AO is not required to record his satisfaction before proceeding to determine the undisclosed income in respect of block period. However, in the case of s. 158BD, the AO who had been handed over the seized material, documents and assets etc. by the search party will have to satisfy himself that any undisclosed income belongs to any person other than the person searched under s. 132 or whose books of account or documents were requisitioned under s. 132A of the IT Act. Therefore, though it is not provided under the Act what satisfaction is to be recorded by the AO but the Act clearly provides that before proceedings under s. 158BD the AO who received the seized material and documents from the search party shall have to be satisfied that any undisclosed income belongs to any person other than the person searched. The difference is created in these two provisions of law under the same chapter XIV B that it should be the objective satisfaction of the AO and that satisfaction of the AO has to be on the material found during the search and the AO will have to identify that such seized material which reveals the undisclosed income of other pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r s. 158BD that the AO having seized material should be satisfied that any undisclosed income belongs to any person other than the person searched. 13. The Hon'ble Madras High Court in the matter of Shakthivel Bankers Ors. has HELD: "It has been rightly found by the Tribunal that the notices issued by the AO, to whom the records of the persons against whom notices had been issued, had been transferred, were perfectly valid and the application of the provisions of Chapter XIV-B was equally valid in their cases as well". However, with great respect to the aforesaid judgment the point of satisfaction has not been decided in this authority. Only validity of the notices were questioned. 14. That Tribunal, Chandigarh Bench in the matter of Ved Prakash Sanjay Kumar vs. Asst. CIT (2000) 66 TTJ (Chd) 442, while dealing with the similar questions involved in this appeal as well as the question in case where the AO is the same is the case of the person searched and such other person has held in the head note: "Search and seizure—Block assessment proceedings under s. 158BD—Before proceeding, against B under Chapter XIV-B on the basis of search made on A where the AO conducting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l showing undisclosed income of such other person and it is only after such satisfaction and transmission of relevant material that the other AO has to take action and proceed to issue notice under s. 158BC. Thus, the powers of the AO, under s. 158BD cannot be invoked in a light and arbitrary manner and without complying with basic prerequisites specified in s. 158BD. We feel that the object underlying the provisions of s. 158BD is not to give unbridled power to the AO to proceed against any person without reaching satisfaction in an objective manner based on the cogent material/documents seized at the time of search. The satisfaction of the AO is not a mere formality but it should be positive satisfaction that the seized material pertains to the other person and reveals undisclosed income of that other person. We feel that the provisions of s. 158BD, incorporated in Chapter XIV-B dealing with special procedure for assessment of search cases, have to be construed strictly, as the same provide a launching pad for the AO to assume jurisdiction and proceed against a person other than the searched person, so as to rope him within the provisions of Chapter XIV-B. We feel that the AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r s. 132 in the name of Shri Ashok Kumar only with directions to search the residential premises of Ashok Kumar and business premises of M/s Vishwanath Pd. Ashok Kumar. Since there was no valid authorisation in the name of the assessee-firm, therefore, the provisions of s. 158BC would not be applicable to the case of the assessee. The Hon'ble Delhi High Court in the matter of Ajit Jain vs. Union of India has held: "Search and seizure—Block assessment—Condition precedent for block assessment—Valid search—Search can be made only in case of information which results in reason to believe that person in possession of money or other asset will not disclose it for income-tax purposes—Intimation simpliciter by CBI that cash was found in the possession of individual—Individual having a reasonable explanation for such possession—No "information" for purposes of s. 132 search based on such information and consequent block assessment were not valid—IT Act, ss.132 158BC" It was further HELD: "The mere fact that the petitioner was in possession of the said amount could not straight away lead to the inference that it was his undisclosed income." The AO in the case of the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities below have not cared to mentioned anywhere that the AO was satisfied that any undisclosed income belongs to such other person other than the person who is searched under s. 132 of the IT Act. It is undisputed fact that the search material was never handed over the ITO, Ward-4 Varanasi, who was having jurisdiction over the assessee-firm. Therefore, there is no question of his satisfaction at all as required under s. 158BD of the IT Act. 16. We have perused the original assessment record, in which Asstt. CIT, CC-I, Varanasi on 7th July, 1997, issued notice under s. 158BC(a) against the assessee-firm and no satisfaction as required under s. 158BD is found to have been mentioned. Similarly, in the block assessment order of Shri Ashok Kumar dt. 27th Nov., 1997, the same AO, Asstt. CIT, CC-II, Varanasi has nowhere mentioned about this satisfaction about undisclosed income of other person than the person searched under s. 132 of the IT Act, rather similarly, the AO mentioned about the search in pursuance of the warrant of authorisation under s. 132 as is recorded by the AO in the case of the assessee-firm. The learned Departmental Representative tried to make out an al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elayed. In order to make the procedure more effective, I am proposing a new scheme under which undisclosed income detected as a result of search shall be assessed separately at flat rate of 60 per cent" 20. Sec. 158B(b), which is reproduced above shows that briefly the following conditions must be satisfied, to treat income as 'Undisclosed Income' i.e. (1) It must be in the form of money, bullion, jewellery other valuable articles or things or should constitute income or property based on any entry in the books of account of transaction. (2) It should be clear that the assets or entry in the books represents income or property which have not been disclosed or would not have been disclosed for the purpose of this Act. 21. Sec. 158BA provides for assessment of undisclosed income as a result of search and 1518BA(3) provides that "where assessee proves to the satisfaction of the AO that any part of income referred to in sub-cl. (1) relates to an assessment year for which the previous year has not ended or the date of filing the return of income under sub-s. (1) of s. 139 for any previous year has not expired and such income or transaction relating to such income are recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the normal course relating to such previous year." Though block assessment period in the present appeal starts from the asst. yrs. 1987-88, to 1997-98, yet the entire additions are made in the asst. yr. 1997-98, except of Rs. 1,02,300 in the asst. yr. 1996-97 in respect of unexplained income added substantively in the hands of the assessee of Smt. Ambika Devi. There is no dispute that first requirement is satisfied as search was conducted on 3rd Nov., 1996, and the previous year has not expired. Let us examine whether it is a case of undisclosed income or the assessee is entitled to the benefit of s. 158BA(3) of the IT Act. Unexplained investment in Gold Ornaments/Jewellery: 24. The AO has dealt with this issue and issued questionnaire dt. 18 Aug., 1997, whereby the assessee has been asked to explain gold jewelleries weighing 5090.110 gms. recorded on the order book. It was stated that these gold articles were found mentioned against the names of 17 customers, which is incorporated in this order also. The assessee replied the same. The assessee initially filed 14 affidavits of these customers and for one customer, Shri Kailash Singh, Advocate, affidavit was filed on 22nd O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of search. The AO himself admitted that the different gold jewellery of different weights have been found recorded against the names of 17 parties. The details have already been given above in this order. We fail to understand, the moment the AO mentioned this fact in the assessment order that the gold jewellery is found mentioned in the records of the assessee and the books of account prior to the date of the search, how the same can be treated as undisclosed income. All the details of 17 parties who have handed over their gold ornaments for remaking were found mentioned in the records, which were seized by the search party. The assessee has filed 14 affidavits of the different customers at the initial stage and also filed one more affidavit of Shri Kailash Singh, Advocate on 22nd Oct., 1997, to prove the dealings with these customers. The remaining two affidavits could not be filed as the articles belonging to Smt. Rani Devi were already returned on 18th Oct., 1996 i.e., prior to the search. The details are mentioned in the paper book at p. 176 and the same tallies in the weight also. Another customer, Shri Ganesh Prasad Manjul, had already appeared before the AO and was exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work and dealings with the karigars prior to the search on 3rd Nov., 1996,. All the details are entered into the records of the assessee. The aims and objects of Chapter XIV-B was to unearth the black money. Since the assessee has shown every dealing with the customers and further dealing with the karigars in its record prior to the search, therefore, it is unbelievable that any undisclosed income was discovered during the search operation. The very purpose of the Chapter XIV-B is frustrated in this case in view of the entries made in the books of account and other records of the assessee, which were also seized and scrutinized. by the Department. We have already indicated that search was made prior to the expiry of the previous year and the assessee has shown all the details in the regular assessment also, therefore, no presumption could be drawn against the assessee that the assessee would not disclose the dealings with the customers and karigars in its return for the purpose of the IT Act. The scope of s. 158BC is to assess undisclosed income not recorded in the books or documents maintained in the ordinary course of business relating to previous year. Since all the entries were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case, the assessee has failed to prove that the cash does not belong to him." 26. The learned Departmental Representative also relied upon Chuharmal's case, in which also the assessee failed to discharge their burden and on the basis of s. 110 of the Evidence Act, the case was decided against the assessee. The petition of the assessee was dismissed. The facts are clearly distinguishable. The learned Departmental Representative also relied upon the judgment of Allahabad High Court in the matter of Pushkar Narain Sarraf. This case is also distinguishable on facts. The learned Departmental Representative also relied upon (1986) 49 CTR (SC) 379 : (1986) 157 ITR 67 (SC), in which it was held that the entries of the books of account is not determinative of the question whether the assessee has earned profit or not. This case is also distinguishable on facts and is not applicable. The learned Departmental Representative also relied upon (2002) 175 CTR (Bom) 651 : (2002) 256 ITR 20 (Bom), which is with regard to penalty, maintenance of the books of account and is not applicable as distinguishable on facts. We have already held that the assessee has been able to prove that all the entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thdrawn on 26th Oct., 1996. Thereafter in the cash reconciliation the assessee has shown cash sale of gold ornaments (150.300 gms) in a sum of Rs. 82,316 on 1st Nov., 1996, and on the same date, cash sale of silver in a sum of Rs. 4,508.50. On that date, some petty cash was also recovered from M/s Roopanjai Swarn Kala Kendra against sale and trade tax. Certain expenses are also shown. That the account on 2nd Nov., 1996 cash sale of gold ornaments (161.130 gms) in a sum of Rs. 83,787.60 is shown. The remaining small details are also mentioned with regard to the petty sales and cash recovered from M/s Roopanjai Swarn Kala Kendra. The major items are the sales of gold ornaments in a sum of Rs. 82,316 and Rs. 83,787.60. The AO believed that only gold weighing 5090.110 gms was to be explained, though the entries in the stock register were found of 7134.780 gms. of gold ornaments. The remaining items were the gold ornaments sold on 1st Nov., 1996 and 2nd Nov., 1996, which is reconciled from the cash reconciliation. If the Department has accepted the sales on 1st Nov., 1996 and 2nd Nov., 1996 of gold ornaments on the cash available out of these sales should also have been believed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , though a ground for scrutiny of evidence, cannot be made the foundation of decision. Conjecture is not a substitute for legal proof. Suspicion, however, strong, cannot take the place of proof." Though Ashok Kumar, Partner of the assessee-firm has surrendered cash of Rs. 1,89,880 in his initial statement on 3rd Nov., 1996, but in the same statement, Ashok Kumar partner has specifically stated that he was not sitting in the shop for the last ten days and therefore, he is not aware of the cash details. We have already stated above that though Ashok Kumar has surrendered cash of Rs. 1,89,880 but subsequently, Ashok Kumar had been able to explain the inflow and outflow of cash. The major difference was of the sales made on 1st Nov., 1996 and 2nd Nov., 1996. Ashok Kumar has explained that he was not sitting in the shop for the last ten days, therefore, his retraction from the earlier statement was quite normal and supported by evidences of the sales which were admitted by the Department. The assessee has been able to explain the discrepancy in the cash from the reconciliation, which is supported by the documents and as such in our considered view, no addition could be made on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made the addition as no evidence to the so-called loan was found at the time of search. As far as silver ornaments are concerned, purchase bill is a document. The AO failed to make any enquiry with regard to this purchase. Nothing is mentioned in the assessment order whether the AO has made any enquiry from any of the dealers from whom the purchases are made by the assessee. The details of the bill were produced before the AO. No reasons were given by the AO that the assessee would not disclose some purchases in the return for the purpose of IT Act which is a condition precedent to treat the same as undisclosed income. Once the bill is produced, such presumption should not have been drawn by the AO against the assessee. The assessee has shown the purchases in the regular assessment and no defect was found by the Department. The assessment is framed after the end of previous year i.e., the end of March, 1997 at the time everything was available with the AO, therefore, the AO should have made enquiry into the evidences filed by the assessee instead of rejecting the explanation of the assessee summarily. Similarly, for silver coins bill was produced, details were furnished before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee-firm and as such, the AO did not take any adverse view against the assessee and did not make any addition in the hands of the assessee-firm. On the same reasons, the AO should have believed the statements of the assessee. In the case of Ashok Kumar (HUF), it is very clear that the account did not belong to the assessee-firm. No evidence is found that the assessee-firm has deposited this amount in the account of Ashok Kumar (HUF). Admittedly, this account in the name of Ashok Kumar (HUF) did not belong to the assessee-firm, therefore, the AO himself contradicted by his own observation from the observation made in the case of Smt. Vimla Devi and Gajendra Kumar. The entire addition is made without any basis and is liable to be deleted. We accordingly delete the addition in the hands of the assessee-firm. This issue is also decided in favour of the assessee against the Department. Unexplained income of the assessee added substantively shown by Smt. Ambika Devi, Assessee from saree business. 31. The AO made the addition of Rs. 1,02,300 in the Block asst. yr. 1996-97 on substantive basis in the hands of the assessee. This income was shown by Smt. Ambika Devi in her return in tin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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