TMI Blog1999 (10) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of goods description/signature of parties, as mentioned at pp. 15-16 of the assessment order. AO 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 3rd Aug., 1996. Production of rice bran had been shown only between 29th Oct., 1996 to 30th Nov., 1996, totalling 326.72 qtls. AO confronted the assessee vide letter dt. 30th Sept., 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 AO to furnish photocopies of seals also. AO informed that keeping in view the nature of seals, photocopies could not be provided. Complete particulars as written on the packets were, however provided AO asked the assessee vide letter, dt. 11th Nov., 1997, to inspect the said packets, which was done on 12th Dec, 1977. AO 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 boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Lai during the course of hearing on 11th Dec, 1997. In the affidavit, Shri Sham Lai 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 11th Dec, 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. AO 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, AO concluded that no reliance could be placed on the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 s. 69 and as undisclosed income of the assessee during the financial year relevant to asst. yr. 1997-98. 3.1. Learned counsel Shri P.C. Jain submitted that a survey under s. 133A was conducted on the premises of the assessee on 5th Dec, 1996, which was converted into a search on 6th Dec, 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 wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to the decision in the case of Neena Syal vs. Asstt. CIT (1999) 70 ITD 62 (Chd), wherein the Tribunal noted at pp. 69-70, the decisions in CIT vs. Bai Vina (1965) 58 ITR 100 (Guj), CIT vs. Rampur Timber Turnery Co. Ltd. (1973) 89 ITR 150 (All), CIT vs. Deepak Textile Industries Ltd. (1987) 66 CTR (Guj) 1 : (1987) 168 ITR 773 (Guj), CIT vs. S. Teja Singh (1959) 35 ITR 408 (SC), CIT vs. Chhote Lal Kanhaiyalal (1971) 80 ITR 656 (MP) on the scope of the provisions of ss. 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 AO 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver 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 AO. 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 AO 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny 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 vs. CIT 1977 CTR (SC) 200 : (1977) 107 ITR 938 (SC) for the proposition that possibility of earning the alleged income, which is deemed as income of the assessee by AO has to be seen. Learned counsel submitted that the deemed income by AO 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 AO before concluding that the assessee has deemed income of so much proportion. He referred to the decision in the case of Dalmia Cement Ltd. vs. 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 vs. Asstt. CIT (1999) 104 Taxman 80 (And), wherein it was held that retraction made before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee 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. AO 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. AO 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 AO asked the assessee to explain various issues relating to this addition, as mentioned in the questionnaire, dt. 11th Nov., 1997 refer pp. 316, 320 of paper-book. He referred to letter of AO, dt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 AO. It is further observed that AO 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, AO 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, AO arrived at the figure of Rs. 1,69,50,812. It is obvious from the tenor of assessment order that AO has not brought any material on record to show that the assessee had actually indulged in pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. AO 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. AO, 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 ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould 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 unexplained 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 asst. yr. 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 asst. yr. 1997-98. He treated the said amounts as unexplained investments under s. 69 of the Act. 4.1. Learned counsel referred to pp. 105-260 of paper-book. The questionnaire issued by AO 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter completion of sale bid transaction, the Market Committee officials immediately note down complete particulars of such transaction after visiting the arhtia's shop/s. The purchaser, if he is a licensee of Market Committee, pays market fee himself, otherwise 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 AO was not correct in ignoring the evidence filed before him. He, therefore, urged that the additions which have been made by AO on surmises 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 Bansal partner in his statement, dt. 3rd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee had received amount of Rs. 4.35 lakhs through Shri Kaidar Nath, sent by JJTC. The assessee, in its reply, 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 1st Nov., 1996. AO 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, s. 69 of the Act. No separate addition of this amount was made as AO 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 dt. 31st Oct., 1996 as also copy of account in ledger, wherein it has been mentioned that cash was received on 1st Nov., 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 31st March, 1993. AO 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. AO, therefore, made addition of Rs. 5.97 lakhs under s. 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 AO. 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 pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 65, which contained account of Pyare Lal Bhagwan Dass. AO 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. AO 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. AO 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... going, 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 AO. AO confronted the assessee with p. 67 of document No. 65, which contained account of the assessee in the books of Mada Mal Sada Nand. AO 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. AO 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 s. 69 of the Act. AO also referred to the provisions of s. 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 19th Dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh flow account, credit entries have been made for incoming 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 31st March, 1993. He submitted that even addition of Rs. 1,60,500 (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 31st March, 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 Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imation. AO 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. AO observed that the assessee-firm through its partner Shri Bansal produced a letter reconstructed from pieces of letter belonging to SLSK dt. 4th Dec, 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.' AO observed that Shri Jagdish Rai Bansal in his covering note, dt. 9th Dec, 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 alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 5th Dec, 1996, there were only 8,678 notes of 100 rupee denomination, which showed that only 86 bundles were there of Rs. 100 notes. AO 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. AO 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 4th Dec, 1996 with Shri Jagdish Rai Bansal of Jagdamba Rice Mills. In answer to another question regarding his employment with Jagdamba Rice Mills on 4th Dec, 1996. Sultan Singh stated that he was in employment of Jagdamba Rice Mills on 4th/5th Dec, 1996. AO thereafter referred to the statement of Shri Gupta recorded on 3rd Dec, 1997, wherein he stated that Sultan Singh was at his shop and went to his godown on 3rd Dec, 1996. On a further question about whereabou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Learned counsel invited our attention to cash reconciliation statement as on 5th Dec, 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 31st Aug., 1996. He referred to entries of Rs. 3.45 lakhs as on 30th Aug., 1996 and of Rs. 20 lakhs as on 9th Sept., 1996. He referred to p. 5, where a copy of certificate, dt. 24th Dec, 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, dt. 4th Dec, 1996. He submitted that the Department had made enquiries from SLSK and that the same is not placed on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uested him to accommodate Shri Sultan Singh in his car on way to Sangur. Shri Gupta affirmed that he did not give cash to Shri Bansal 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 Bansal 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 11th Feb., 1997 and 3rd Dec, 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 4th Dec, 1997 (may read as 4th Dec, 1996) with Shri Bansal 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvey folder and submitted that Sultan Singh was present in godown No. 4 on 5th Dec, 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 4th Dec, 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 5th Dec, 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 dt. 4th Dec, 1996, learned Departmental Representative submitted that the same was not found by the survey party but the assessee alleged that it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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, dt. 3rd Dec, 1997 Shri Gupta confirmed that Sultan Singh was the same person who was present in the office of the AO 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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rai Bansal, 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 AO 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 Bansal. Further, the explanation rendered by the assessee cannot be called unsatisfactory in the light of statements of S/Shri Gupta, Sultan Singh and Bansal and the certificate issued by SBI. We, therefore, feel that the requirements of s. 69A of the Act have not been met by AO 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of the assessee in the light of detailed explanation given in the letter are correct. AO 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. AO observed that the said pages were originals of document No. 29 relating to carbon papers, dt. 23rd Oct., 1996, 26th Oct., 1996 and 27th Oct., 1996 and revealed unaccounted paddy purchases made by the assessee. AO referred to the statement of Shri Jagdish Rai Bansal recorded on 3rd Feb., 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. AO 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 s. 69 of the Act. 8.1. Learned counsel referred to p. 221 of paper-book. He submitted that AO found certain purchases aggregating to 249 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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