ORDER
B.R Jain A.M. :
These cross-appeals arise from the order dated 25-6-2002, of the learned Commissioner (Appeals) New Delhi, for the block period 1-4-1989 to 27-7-1999, setting out the grounds as under
assessed’s grounds :
1. “That, on the facts and in the circumstances of the case, the Hon’ble Commissioner (Appeals) III, has erred in confirmiing the action under section 132 of the Income Tax Act and proceedings which ‘are barred by time and also assessment are bad in law.
2. That, on the facts and in the circumstances of the case, the Hon’ble Commissioner (Appeals) has erred in confirming the addition in the hands of the appellant of Rs. 1,65,000 made by assessing officer on account of interest during the assessment year 1998-99.
3. That, on the facts and in the circumstances of the case, the Hon’ble Commissioner (Appeals) has erred in confirming the addition of Rs. 50,000 for the assessment year 1990-91 on account of unexplained FDR of,Rs. 50,000, dated 27-5-1989.
4. That, on the facts and in the circumstances of the case, the Hon’ble Commissioner (Appeals) has erred in confirming the addition of Rs. 14,31,900 as undisclosed income under section 69 of the Act for the assessment year 1993-94.
5. That, on the facts and in the circumstances of the case, the Hon’ble Commissioner (Appeals) has erred in confirming the addition of Rs. 1, 19,948, i. e,, Rs. 44,648 for the assessment year 1992-93 and Rs. 75,300 for the assessment year 1993-94 as undisclosed income in the absence of any evidence for filing IT returns for these years.
6. That, on the facts and in the circumstances of the case, the Hon’ble Commissioner (Appeals) has erred in confirming the addition of Rs. 2,37,643 as undisclosed income for the following assessment years being difference in income-tax returns of block period and regular returns.
Asst. yr.
Disclosed income as shown in block period returns
Disclosed income as shown in regular returns
Difference
Rs.
Rs.
Rs.
1991-92
47,441
40,880
6,561
1994-95
86,700
54, 183
32,517
1995-96
1,86,250
57,945
1,28,305
1996-97
3,43,510
2,73,250
70,260
2,37,643
7. That, on the facts and in the circumstances of the case, the Hon’ble Commissioner (Appeals) has erred in confirming the levy of Rs. 9,32,537 on account of interest levied under section 158BFA(l) of natural justice.”
Revenue’s grounds :
“1. On the facts and in the circumstances of the case, the learned . Commissioner (Appeals) has erred in deleting the addition of Rs. 40.85 lakhs without taking into account the facts that the assessed had not filed the details regarding gifts received, during the assessment proceedings.
2. On the facts and. in the circumstances of the case, the learned Commissioner (Appeals) has erred in deleting the addition of Rs. 32.5 lakhs as sale. consideration of property J-3 Saket. Doing so, she has not considered the facts shown in the handwritten paper of D.D. Malhan seized during search.”
3. In the first ground, the assessed in his appeal contends that the assessment has been completed for the block period 1-4-1989 to 27-7-1999 after the limitation period as prescribed under section 158BE of the Act. A search was carried at assessed’s premises on 28-8-1999. During the course of search, a slip was found on which particulars of the locker in the name of Pappy and Kamal were written. No locker key was found. The revenue has sealed the locker No. 85/5 with United Bank of India,. Swaminagar, Delhi, by drawing Panchnama in the name of Puppy and Kamal. The Dy. Director.(Inv.) vide his letter dt, 30-8-1999, subsequent to the sealing of the said locker called upon the assessed to be present as they propose to drill it open on 15-9-1999, at 11 a.m. The assessed in order to co-operate with the departmental proceedings presented himself in the bank when the locker was drilled open. No contents were found in the locker so opened, and operated by the department. Without there being any valid authorisation on account of locker in the name of the assessed, Shri N. K. Malhan, the authorised officer added his name in the Panchnama placed at assessed’s paper book pp. 29 to 32. The original Panchnama for the same locker was drawn on 28-8-1999 and was in the name of Puppy and Kamal. This did not bear the name of the assessed. The assessed was searched on 27-7-1999 and search was completed on 28-8-1999. Under such facts there being no valid authorisation in the name of the assessed for operating bank locker on 15-9-1999, the assessing officer could not have computed the limitation period for the purpose of completion’of the block assessment with reference to the drilling open of. the locker on 15-9-1999 as the last authorisation stood executed on 28-8-1999. The assessment so made, therefore, is vitiated and needs to be quashed.
4. We have heard the parties with reference to material on record. Section 158BE of the Act mandates limitation for completion of block assessment within two years from the end of the month in which the last authorisation for search under section 132 was executed. In the case of the assessed a Panchnama has been drawn on 15-9-1999 with reference to pending proceedings dated 28-8-1999. The sealing of the locker No. 85/5 held with United Bank of India, Swaminagar, New Delhi in the name of Puppy and Kamal was a consequence of authorisation for search under section 132 on the assessed. It is in continuance of these proceedings the locker has been drilled open on 15-9-1999 where the warrant is stated to be in the case of Puppy and Kamal and Shri N.K. Malhan. Under such circumstances, we are not inclined to agree with the assessed that there was no warrant in the, case of the assessed on 15-9-1999 when the locker came to be operated by the authorised officer. Under such circumstances the. assessment cannot be held as barred by the limitation. Ground of the assessed, therefore, stands rejected.
5. Ground No. 2 in assessed’s appeal relates to the addition on account of interest of Rs. 1,65,000. Briefly the facts are that the assessing officer made an addition of Rs. 1,65,000 on account of interest paid on the basis of seized Annex. A-4/31, a copy placed on assessed’s paper book p. 36. The assessing officer as well as the learned Commissioner (Appeals) did not appreciate the explanation offered by the assessed and the addition of Rs. 1,65,000 was made as undisclosed income.
6. Before us the assessed’s counsel contends that the amount of Rs. 12,40,000 received from various persons were for purchase of property from the assessed and the entries thereof were found duly made in the regular books of account. The assessing officer did not raise any dispute about the correctness of the principal sum which stood admitted as explained. However on the basis of jottings and certain calculations, he presumed that this was the amount of interest paid by the assessed to the persons named therein. No proof of payment was found, nor brought on record by the department. The assessing authority and the learned Commissioner (Appeals) have not found any defect in the explanation tendered by the assessed. A reference was made to the written submissions before the learned Commissioner (Appeals) and placed before the Tribunal, A prayer has been made to delete the addition made on hypothetical basis.
7. The learned Departmental Representative relies on the order of authorities below and contends that there is no substance in the plea being made by assessed. This ground, therefore, needs to be rejecte .
8. We have heard the parties with reference to material on record. The impugned orders have also been perused carefully. A copy of the seized document is found placed at assessed’s paper book 1/36. Certain entries in the name of various parties have been made with jottings of interest. The assessed has explained before the authorities below that the principal amount written in this loose paper was the amount of advance received by the partnership firm M/s Malhan Builders for the sale of properties to these persons. These amounts were found duly recorded in the books of the partnership firm. Correctness of the entries has not been doubted by the authorities below and the explanation with respect to receipt of the amount for sale of properties also stands admitted. As regards interest, from mere jottings or calculations it cannot be said that there was any liability incurred by the assessed as he is also not found to have paid the amount from his resources nor utilised the amount for his individual benefits. The revenue did not examine these parties though the complete identity and particulars thereof were available before them. Proof of payment has also not been found. In case the calculations were made for interest, they were merely the cost estimates but cannot be said as a payment in reality or a liability incurred by the assessed. In any event the burden was on the revenue to show that the documents represented undisclosed income of the assessed. Without bringing any corroboratory evidence by the revenue, this burden ‘cannot be held to have been discharged. Under such peculiar circumstances and the facts as emerging from record, the entries of Rs. 1,65, 000 could, not have been treated as undisclosed income of the assessed for the block period. The addition so made is, therefore, directed to be deleted.
9. Next ground relates to the addition of Rs. 50,000 made on account of investment under FDR for Rs. 50,000 on 27-5-1989.
10. We have heard the parties with reference to material on record. The order of the authorities below have also been perused. The assessed has appended a copy of the balance sheet as on 3 1-3-1989 which is placed at; its paper book p. 46. Explanation has been tendered that the assessed had cash in hand of Rs. 56,500 as on closing of 31-3-1989 this balance sheet stood enclosed with the return for the assessment year 1989-90 of the assets including cash in hand stood accepted in the assessment of that year. Even after carrying out extensive search at business as well as residential premises of the assessed, the department has not been able to find utilisation. of the aforesaid closing cash on 31-3-1989 to the date of search for any other purpose. Availability of cash as on 31-3-1989 is riot in doubt. The application of the said amount into FDR essentially has, therefore, to be accepted as the FDR has been purchased out of such opening cash-in-hand of Rs. 56,500 which was available with the assessed prior to commencement of block period. No addition was thus warranted. The same is, therefore, directed to be deleted.
11. Next ground relates to the sustenance of addition of Rs. 14,31,900 as undisclosed income under section 69 of the Act for the assessment year 1993-94 forming part of the block period.
12. Briefly, the facts are that the assessing officer while scrutinising the seized material observed that seized Annex. A-XI containing pp. 1 to,3 shows certain nothings with the head of “chit”. Various entries have been written for payment monthwise. The assessed’s reply was sought but being not satisfied, the assessing officer presumed the same as undisclosed investment by the assessed and added the same under section 68 of the Act for the assessment year 1993-94 aggregating to Rs. 14,31,900. The learned Commissioner (Appeals) confirmed the action and rejected the explanation of the assessed that the seized document was a dumb document and held that the assessed has failed to explain the sources of investment in the chits.
13. It was further contended that the assessed’s paper book 1/31 would reveal an explanation tendered by the assessed before the authorities below. In this explanation the assessed has claimed that the facts have been misconstrued and it has wrongly been assumed that the assessed has made any investment in the chits. It was stated that these papers contain only some calculations. This does not indicate that the assessed has made any investments. Any particular; day, month of year has not been mentioned on the paper. There is also no material on record to prove that the assessed is contributing the amounts in shares or in any chit fund company. There is also no material on record that assessed has received any amount on maturity of any chit contribution as alleged to be belonging to the assessed. It is, therefore, stated that adverse inferences from such documents could not be drawn as they do not speak of any reality of the transaction. Reliance was made to the decision of Jagdamba Rice Mills v. Asstt. CIT (2000) 67 TTJ (Chd) 838.
14. We have perused the aforesaid explanation and the seized document placed at assessed’s paper book-I pp. 48 and 50. The document does not state of any date or the year against the entries written therein. It does not show whether the assessed has made or received any payment. It also cannot be deciphered from the said documents that the entries therein pertain to the block period. The assessing officer also did not bring on record any material to show that any investment has been made by the assessed in any chit fund company or otherwise. The document found and seized might raise strong suspicion, but it could not be held as a conclusive evidence without bringing some corroborative material on record. The document contained only the rough calculations and was silent about any investment. On the basis of such a dumb document, it cannot be said that there were investments made in fact by the assessed. Heavy onus lay upon the revenue to prove that the document gives rise to undisclosed investment by the assessed. This onus has not been discharged. Accordingly no addition of undisclosed income could be made on the basis of such a document. Such a view has also been entertained by the Hon’ble Allahabad High Court in CIT v. Dayachand Jain Vaidya (1975) 98 ITR 280 (All). The addition so made, therefore, is directed to be deleted.
15. Next ground in assessed’s appeal relates to the addition of Rs. 1,19,948 on account of non-furnishing of evidence for filing income-tax returns for the assessment years 1992-93 and 1993-94.
16. We have heard the parties with reference to material on record. The assessed has furnished evidence of payment of advance tax. Copies of documents placed at assessed’s paper book reveal that the assessed has derived income as share of profit from M/s Malhan Builders. Regular returns of this firm have also been filed. It has been pleaded that the acknowledgement for filing the return got mixed up with some papers at the time of search and is not traceable. If the same is not traceable with the assessed and the assessed has paid due taxes for the income derived from partnership firm, essentially the departmental record should speak of adjustment of such taxes received from the assessed in case any assessment was made. The assessing officer did not verify this fact from the demand and collection register or from any other control register. Without doing that it cannot conclusively be held that the assessed was not assessed to tax or did not file return for these two years, i.e., assessment years 1992-93 and 1993-94. We, therefore, set aside the addition and remand it back to the assessing officer to verify the fact from the departmental. record. The assessing officer shall give a conclusive finding with reference to such record maintained with the revenue before coming to conclusion in accordance with the law.
17. Ground No. 6 has not been pressed, the same has been dismissed as ‘not pressed’.
18. In ground No. 7 the assessed has challenged charging of interest under section 158BFA(l) of the Act without making any specific order thereof.
19. We have heard the parties with reference to material on record. The assessing officer did not pass any specific order for charge of interest under section 158BFA of the Act. Perusal of the order reveals that only the penalty proceedings under section 158BFA have been initiated. We have perused mandatory provisions in this respect contained in section 158BFA(l) which deals with charging of interest on undisclosed income determined under clause (c) of section 158BC of the Act where the return is furnished after the expiry of period specified in the notice or is not furnished in compliance to the notice. Sub-section (2) of section 158BFA mandates levy of penalty on undisclosed income determined under clause (c) of section 158BC if it is more than the returned income. Since & 158BFA deals with levy of interest and levy of penalty under two different sub-sections and the assessing officer initiated only the penalty proceedings under section 158BFA, it is therefore evident that no specific order for charge of interest as stated hereinabove has been made by the assessing officer, Since no specific order has been made, no demand on account of interest could be raised on that count. Such a view stands fortified by the decision in ClT v. KishanIal HUF (2002) 258 ITR 359 (Del) as also in CIT v. Insilco, Ltd. (2003) 261 ITR 220 (Del). Accordingly, the interest so demanded from the assessed is directed to be deleted.
20. In : revenue’s appeal in first ground, the learned Departmental Representative contends that the assessing officer vide para 6 of the assessment order found from the seized document that the assessed and his dependents have received gifts amounting to Rs. 40,55,000 from the persons who were totally unrelated to the assessed. The assessed filed details at the fag end when the assessment was about to be completed and thus the assessing officer considered the gifts so received as unexplained. The learned; Commissioner (Appeals), however, held that the identity of the donor has been explained. The gifts have been duly reflected in the accounts and balance sheet and statement of account filed with the returns before taking action under section 132 of the Act. The assessing officer could not have questioned the genuineness of such gifts without there being any adverse material in his possession. Since the gifts stood duly disclosed in the earlier year’s assessment and stood accepted, by the revenue, the same could. not be treated as undisclosed income of the assessed under the proceedings under section, 158BC of the Act and thus the addition was deleted by her. The learned Departmental Representative, however, contends that the learned Commissioner (Appeals) has erred in deleting the addition on account of gifts without allowing proper opportunity for examination of facts by the assessing officer,
21. On the, other hand, the assessed’s counsel contends that no new facts were placed before the learned Commissioner (Appeals). The documents of gifts containing declarations, etc., and evidence of furnishing return were available before him.
The gifts were declared in the regular assessment prior to the date of search. If the assessing officer failed to make proper enquiries, the disclosed amounts of gifts could not be treated as undisclosed , income and the assessed also cannot be subjected to undue tax liability. The scheme of Chapter XIV-B did not give power to revenue to draw a presumption adverse to assessed with regard to undisclosed income. The seized material also was available with the assessing officer for about 2 years. Even after such enquiry and enquiries made during the assessment proceedings, the revenue did not come in possession of any contrary material to hold that the amount, of gifts represented undisclosed income of the assessed. He, therefore, supported the decision taken by the learned Commissioner (Appeals) who had co-terminus powers and held that the gifts were genuine. It was therefore contended that there is no merit in the ground raised by revenue.
22. We have heard the parties with reference to material on record. This is an admitted fact that the gifts aggregating to Rs. 40,50,000 by assessed or his dependents stood duly disclosed prior to the date of search in the regular returns filed by them. As a result of search, no incriminating document was found to show. that the amount of gift represented undisclosed income for the block period of the assessed, The identity and capacity of the donors had also been proved as the assessed has filed evidence and explanation by way of gift deeds from the donors who paid the amount of gifts by way of cheques and the amounts were actually received as gifts by these persons. Under such facts merely on the basis of suspicion, the amount could not have been treated as undisclosed income of the assessed. Furthermore, all the facts were available before the assessing authority. Even after carrying out the search and availability of sufficiently long period with the authorised officer as well as the assessing authority, the department was not able to bring any material on record so as to draw any adverse inferences against the assessed. In case the assessing officer did.not investigate into the facts he is a partly himself guilty of remissness and gross negligence and thus is not entitled to indulgence being shown by the Tribunal. The learned Commissioner (Appeals) after appreciating the evidence on facts deleted p the addition. No, interference under such peculiar facts and circumstances is required to be made. Ground of the revenue having no merit stands rejected.
23. In ground 2, the learned Departmental Representative states that the facts and findings leading to the addition of Rs. 32.5 lakhs on account of property at J-3, Saket, New Delhi, are pari materia the same as in the case of another partner Shri D.D. Malhan who also had 25 per cent. share like the present assessed before the Tribunal. A prayer was, therefore, made to take the same decision in this case also.
24. We have heard the parties with reference to, material on record. This assessed and Shri D.D. Malhan both have 25 per cent share in property at J-3, Saket, New Delhi. The addition made by the assessing officer is on account of seized documents on the basis of which unaccounted consideration was presumed and such consideration was treated as undisclosed income and share to the extent of 25 per cent worked out at Rs. 32,50 lakhs in this case as well as .Rs. 32.50 lakhs in the case of Shri. D.D. Malhan whose facts are pari materia identical. No new facts have been brought to our notice. In IT(SS) Nos, 284 and 305/Del/2002 by our separate order, we have taken the decision as under :
“we have heard the parties with reference to material on record and carefully perused the seized documents placed in assessed’s paper book filed before us. The learned Commissioner (Appeals) has found as a matter of fact that only one portion of the ground floor has been sold up to the date of search. No other portion or floor in the building has been found sold by the assessed. There is also no documentary evidence in the possession of revenue to show that the entire property or the area referred in the paper so seized was sold by the assessed. The search was carried by the revenue in the same premises where the assessed and his brother are also staying. The assessed has recorded the actual sale consideration of Rs. 36 lakhs for the portion of ground floor sold by it in the regular books of account. A copy of sale deed was placed at assessed’s paper book at pp. 86-88 and was also available with the assessing authorities. Despite this, the buyer has not been examined to disprove the claim of assesspe, The revenue has not discharged their burden to prove that the actual, sale consideration is Rs. 1.65 crores and not Rs. 36 lakhs as disclosed by the assessed. No contrary material has also been placed on record to prove that the Commissioner (Appeals)’s finding is perverse and is not based on material on record. In that view of the matter no error can be found in the decision arrived at by her. The addition so deleted by the learned Commissioner (Appeals), therefore, calls for no interference at our end. We, therefore, confirm her decision and find no merit in ground raised by revenue which stands rejected.”
25. For the parity of reasons as taken in Shri D.D. Malhan’s case (supra) we do not find any merit in the ground raised by revenue. The same stands rejected.
26. In the result, assessed’s appeal stands partly allowed and that of revenue stands dismissed.