Narula Transport Company vs Astt. Cit on 26 June, 2002

Income Tax Appellate Tribunal – Amritsar

Equivalent citations: (2004) 87 TTJ Asr 803

ORDER

By The Bench

These cross-appeals are directed against the order of the Commissioner (Appeals), Jammu, Headquarters at Amritsar, dated 4-5-2000.

2. We will take assessee’s appeal first, i.e., IT(SS)A No. 8/Asr/2000.

3. Ground Nos. 1 and 2 relate to the addition of Rs. 20,000 made by the assessing officer on account of security deposited in cash with Markfed on 5-6-1996.

3.1 The facts of the case, in brief, are that a search under section 132 of the Income Tax Act, 1961, took place at the business premises and group cases of the assessee on 9-10-1997, during the course of which certain incriminating documents, etc., were found and seized. The assessing officer framed the assessment under section 143(3)/158BC of the Act for block period 1-4-1987 to 9-10-1997, on 25-10-1999. The amount of Rs. 20,000 was added for the assessment year 1997-98, on the basis that the assessee deposited a sum of Rs. 20,000 on 5-6-1996, with Markfed and the same was not recorded in the cash book. According to the assessing officer, the assessee could not furnish any plausible explanation for the deposit of security with Markfed.

4. In the first appeal before the Commissioner (Appeals), it was stated that the amount of Rs. 20,000 was available as cash in hand and, therefore, the addition should have been deleted. However, the learned Commissioner (Appeals) observed that no evidence has been furnished by the assessee regarding the availability of the cash and accordingly the addition of Rs. 20,000 was confirmed.

5. Before us, Shri Padam. Bahl, CA, the learned counsel for the assessee, submitted that the assessing officer has assessed the income of Rs. 67,000 and Rs. 88,000 for the assessment years 1988-89 and 1989-90, respectively. According to him, cash of Rs. 1,45,000 was available with the firm. He also brought to our notice that the learned Commissioner (Appeals) had confirmed the addition of Rs. 37,184 for the assessment year 1994-95 and Rs. 4,060 for the assessment year 1996-97. As such, cash in hand to the extent of Rs. 41,244 was also available with the assessee-firm on account of aforesaid additions. Accordingly, it was submitted by the learned counsel for the assessee that the assessee-firm had rotated cash in hand of Rs. 1,86,244 (Rs. 1,45,000 plus Rs. 41,244) available with it and the deposit of Rs. 20,000 was made out of that cash in hand. It was also submitted that the addition of Rs. 20,000 will amount to double taxation because the assessee had already suffered for Rs. 41,244 on the basis of addition for the assessment years 1994-95 and 1996-97. Reliance was placed on the decision on the Hon’ble Supreme Court in the case of Anantharam Veerasinghaiah & Co. v. CIT (1980) 123 ITR 457 (SC).

5.1 On the other hand, the learned senior departmental Representative submitted that the assessee could not produce any evidence in respect of the availability of the cash on 5-6-1996. So, the assessing officer was justified in making the addition in the hands of the assessee for the assessment year 1997-98. He also pointed out that the explanation of the assessee cannot be accepted as the assessee cannot be given the benefit of so long (a) period to create nexus between the cash deposited by way of security with Markfed amounting to Rs. 20,000 on 5-6-1996 and cash in hand shown by the assessee for different years. He further submitted that it cannot be ruled out that the cash in hand shown by the assessee might have been invested in the acquisition of other assets or incurred as expenditure in the business and the deposit of Rs. 20,000 was made out of undisclosed income of the assessee.

6. We have heard both the parties and also gone through the material available on record. It is not in dispute that the assessee deposited a sum of Rs. 20,000 on 5-6-1996 and the same was not recorded in the cash book. It is apparent from the records that the additions were confirmed to the tune of Rs. 37,184 and Rs. 4,060 for the assessment years 1994-95 and 1996-97, respectively. The department has not brought anything on record to establish that the assessee utilised the aforesaid amount for any other purposes than to make the deposit with the Markfed. The Hon’ble Supreme Court in the case of Ananatharam Veerasinghaiah & Co. v. CIT (supra), held as under :

“When an ‘intangible’ addition is made to the book profits during an assessment proceedings it is on the basis that the amount represented by that addition constitutes the undisclosed income of the assessee. The income, although commonly described as ‘intangible’ isasmuch a part of his real income as that disclosed by his account book. It has the same concrete existence. It could be available to the assessee as the book profits could be.”

In the instant case, it is beyond doubt that the additions of Rs. 37,184 and Rs. 4,060 were made in the hands of the assessee on account of undisclosed income for the assessment years 1994-95 and 1996-97, respectively. The deposit under consideration is dated 5-6-1996. In other words the deposit was made after the period relating to the assessment year 1996-97. From the above facts it would be clear that the amount was available with the assessee for making deposit with Markfed. Considering the facts as well as the ratio laid down by the Hon’ble Supreme Court in the case of Anantharam Veerasinghaiah & Co. (supra), we find no justification in making the addition of Rs. 20,000 and accordingly the same deserves to be deleted. Accordingly, these grounds are allowed.

7. Ground Nos. 3 and 4 read as under :

“3 That the learned Commissioner (Appeals), Amritsar, has grossly erred in confirming the addition of Rs. 1,89,904 on account of the income for the period 1-4-1997 to 9-10-1997, on the ground that books of account were not available on the date of search and in applying the provisions, of section 145 in the block assessment.

4., That both the learned Commissioner (Appeals), Amritsar, and Asst. CIT, Inv. Circle-I, Amritsar, have failed to appreciate that the assessee had filed an Income Tax return for the assessment year 1998-99 declaring a gross profit rate of 6.26 per cent on gross receipts on 19-11-1998 and had also claimed interest and salary to partners and depreciation”.

Vide aforesaid grounds, the grievance of the assessee relates to the addition of Rs. 1,89,904 for the period 1-4-1997 to 9-10-1997. The assessing officer applied the provisions of section 145 of the Act on the ground that the vouchers supporting the books of accounts were not produced and commission income was not shown. The assessing officer noticed that the receipts of the assessee as per books were Rs. 36,00,968 during the period 1-4-1997 to 9-10-1997. He added TDS at 2 per cent amounting to Rs. 72,019 to the aforesaid receipts and total receipts were worked out at Rs. 36,72,987. He applied the net profit rate of 8 per cent and worked out the profit at Rs. 2,93,839. Out of that profit he allowed a sum of Rs. 96,148 (against total claim of Rs. 1,92,296) on account of depreciation. In this manner a sum of Rs. 1,97,641 was added to the income of the assessee.

8. Before the learned Commissioner (Appeals), it was submitted that the assessee had declared net income of Rs. 1,89,904 for the assessment year 1998-99. However, total income declared worked out at Rs. 6,36,301 which came to 6.26 per cent of the gross receipts. It was submitted that interest paid to partners and depreciation allowable worked out to Rs. 4,46,497. It was also submitted that the assessing officer had not considered the claim of the assessee with respect to salary and interest paid to partners while applying provisions of section 145 of the Act. It was also submitted that the provisions of section 145 are not applicable to block assessment. The reliance was placed on the decision of the Tribunal, Patna Bench, in the case of D.N. Kamani (HUF) v. Dy. CIT (1999) 65 TTJ (Pat)(TM) 504, wherein it has been held that “Chapter XIV-B is a code in itself and provisions of section 145 are not applicable in block assessments for purposes of rejecting the books of account. These provisions will apply to regular assessments only.” The learned Commissioner (Appeals) after considering the submissions of the assessee observed that the income disclosed by the assessee was Rs. 1,89,904 whereas the assessing officer determined the income at Rs. 1,97,641. According to the learned Commissioner (Appeals), the addition of Rs. 7,737 had been made by the assessing officer in the light of various seized documents and also in the face of adverse findings regarding non-disclosures of commission and other income. As regards the claim of depreciation at Rs. 96,148, the learned Commissioner (Appeals) observed that it was not clear whether the assessee actually claimed the same before the assessing officer. According to him, the income of Rs. 1,89,904 as disclosed by the assessee was rightly assessable since the books of accounts on the date of search were not available.

Accordingly, the addition of Rs. 1,89,904 was confirmed whereas remaining addition of Rs. 7,737 was restored to the assessing officer to ascertain the extent and nature of addition from the seized material.

9. Before us, Shri Padam Bahl, CA, the learned counsel for the assessee, reiterated the submissions made before the authorities below and also submitted that the assessing officer while computing the addition at Rs. 1,97,641 allowed the depreciation only for half of the year whereas the claim of the assessee was for full year and the claim was in accordance with law. He further pointed out that in the facts and circumstances of the case, there was no justification in invoking the provisions of section 145 of the Act. Alternatively, it was contended that the assessing officer should have given the deductions on account of salary and interest paid to partners while applying the net profit rate of 8 per cent. It was brought to our notice that for the period 10-10-1997 to 31-3-1998, the assessing officer has not allowed salary and interest paid to the partners to the extent of 50 per cent amounting to Rs. 1, 27, 100. On the other hand, for the period 1-4-1997 to 9-10-1997, the depreciation only was allowed at 50 per cent amounting to Rs. 96,148. It was submitted that the facts of the case were not appreciated by the authorities below properly. It was also brought to our notice that the assessing officer applied a rate of 8 per cent probably on the basis of section 44AD of the Act although the application of provisions of section 44AD of the Act to transport contractors is totally misconceived because the provisions of section 44AD are applicable only to civil contractors or labour contractors, whereas the transport contractors are totally on different footings. It was also submitted that the GP rate of the assessee for the last three years was as per following details

Asst. yrs.

G.P. Rate

1998-99

6.27 per cent

1997-98

5.13 per cent

1996-97

5.44 per cent

It was claimed that the GP rate disclosed by the assessee at 6.27 per cent was quite fair and reasonable and the benefits for depreciation as well as interest and salary to partners. It is also submitted that the benefit for the claim of depreciation as well as interest and salary to partners should be given, which is denied by the authorities below.

9.1 In his rival submissions, Shri S.J. Singh, the learned senior departmental Representative submitted that the assessing officer was justified in invoking the provisions of section 145 of the Act as the assessee has not produced any books of accounts for that period and there was no alternative left with the assessing officer except to estimate the income on the basis of net profit rate. Reliance was placed on the following decisions :

(i) Samrat Beer Bar v. Asstt. CIT (2000) 75 TTD 19 (Pune) (TM)

(ii) Khopade Kisanrao Manikrao v. Assistant Commissioner (2000) 74 ITD 25 (Pune)(TM)

(iii) Pioneer Publicity Corp. v. Dy. CIT (2000) 67 TTJ (Del) 471

(iv) Ideal Plot Vikri Kendra v. Asstt. CIT (2000) 74 ITD 117 (Pune)(TM).

10. We have heard the learned representatives of both the parties. It appears that the assessing officer while making the addition estimated the income of the assessee for the period 1-4-1997 to 9-10-1997, by applying the net profit rate of 8 per cent on the total receipts of Rs. 36,72,987. He allowed the benefit of depreciation only for half year but disallowed the claim on account of interest and salary to the partners. It seems that the assessing officer allowed the depreciation on the basis that the period involved was 1-4-1997 to 9-10-1997, and considering that the depreciation was allowed for half year. We find merit in this contention of the learned counsel for the assessee that the benefits for interest and salary to the partners is also to be given for the period 1-4-1997 to 9-10-1997, which is available as per law. It is made clear that the issue relating to the application of GP rate of 8 per cent on the gross receipts was not seriously contested by the learned counsel for the assessee. In that view of the matter, we find substance in the alternative argument of the learned counsel for the assessee that the deduction on account of salary and interest paid to the partners at 50 per cent and also for the depreciation at 50 per cent should be allowed for this period. As regards the amount of depreciation as well as the salary and interest to the partners is concerned, the assessing officer should verify the same from the material available with him and thereafter he should give the benefit to the assessee accordingly. In nutshell, we direct the assessing officer to estimate the income of the assessee by applying the GP rate of 8 per cent on the total receipts of Rs. 36,72,987 and thereafter give the benefit on account of depreciation as well as salary and interest to the partners in respect of the period from 1-4-1997 to 9-10-1997.

11. Sh. Padam Bahl, CA, the learned counsel for the assessee, also challenged before us that the assessing officer was not justified in treating the income for the period 1-4-1997 to 9-10-1997, as undisclosed income for the purposes of block assessment. It was submitted that the assessee would have shown the income in the return to be filed in due course as the accounting year for this period was ending on 31-3-1998. So, there was no justification for treating the income as undisclosed. The only information obtained was obtained from the bank pass book wherein whole of the receipts were deposited by the assessee. In other words, it was submitted that the figures taken by the assessing officer was already disclosed by the assessee by way of deposit in its bank account. Hence, the deposit cannot be considered as undisclosed.

11.1 Sh. Padam Bahl, CA, the learned counsel for the assessee, also submitted that Chapter XIV-B a is code in itself providing for special procedure for assessment of search cases and as per sub-section (2) of section 158BB in computing the undisclosed income for the block period, the provisions of sections 68, 69, 69A, 69B and 69C may be applied but nowhere it is provided under this chapter that provisions of section 145 would be applicable in computing the undisclosed income for the block assessment. Reliance was placed on following case laws :

(i) CIT v. Dr. M.K.E. Menon (2001) 112 Taxman 96 (Bom)

(ii) Smt. Usha Tripathi v. Assistant Commissioner (2000) 66 TTJ (All) 508

(iii) CIT v. Shambhulal C. Bachkaniwala (2000) 245 ITR 488 (Guj)

(iv) Verma Roadways v. Asstt. CIT (2001) 70 TTJ (All) 728.

11.2 In his rival submissions, Shri S.J. Singh, the learned senior departmental Representative, submitted that the assessing officer was justified in including the income of the assessee estimated under the provisions of section 145 in block period as undisclosed income because the books of accounts were not produced before the assessing officer, so there was no alternative except to estimate the income under the provisions of section 145 of the Income Tax Act, 1961.

12. After considering the above submissions of both the parties, we are of the view that the assessing officer was not justified in treating the income of the period 1-4-1997 to 9-10-1997, as undisclosed income of the assessee. In the instant case, it is not in dispute that the figures of total receipts were taken by the assessing officer from the bank account of the assessee and nowhere it is claimed by the department that the contract receipts were found unrecorded during the course of search. The assessing officer has not disputed the contract receipts which were shown in the regular bank account and TDS on contract receipts was deducted by the contractual party. The amount of TDS was also not disputed by the department. Further, it was also brought to our notice that refund of Rs. 1,45,000 was allowed for the assessment year 1998-99 on the basis of return submitted by the assessee in the regular course. Admittedly, in this case, search was conducted on 9-10-1997, and at that stage the assessee did not know that search will be conducted. However, the contract receipts were shown in the bank account upto that date, therefore, there was no justification for considering the income of that period as undisclosed income. In view of the above discussion, we are of the considered view that the income for the period 1-4-1997 to 9-10-1997, should not be treated as undisclosed income for the block period. We accordingly direct the assessing officer not to consider the income as undisclosed income for the purposes of block assessment. We are also fortified for the aforesaid view by the decision of the Tribunal, Allahabad Bench, in the case of Smt. Usha Tripathi v. Assistant Commissioner (supra), where it has been held that :

“The provisions of section 158BB clearly specify that the undisclosed income shall be the aggregate of the total income. of previous year falling within the block period, computed in accordance with the provisions of Chapter IV of the Act and reduced by the aggregated total income already assessed or declared in any pending return and increased by the loss for such previous year, either assessed or declared in pending return.”

It has been further held that

“Even otherwise, the provisions of section 145 can be applied only after rejecting the books of account or documents found during the search as unreliable or on the ground that the true income cannot be deducted therefrom and if the books of account or the documents found during the search are rejected, then there is no question of any income or undisclosed income on the basis of such books of account or documents which is a prerequisite and the only condition for computation of undisclosed income.”

It is relevant to point out that the aforesaid decision o f the Tribunal has been upheld by the Hon’ble Allahabad High Court in CIT v. Smt. Usha Tripathi (2001) 166 CTR (All) 77 : (2001) 249 ITR 4 (All).

12.1 At this stage, we may also refer to a decision of Hon’ble Gujarat High Court in the case of CIT v. Shambhulal C. Bachkaniwala (surpa), wherein on a reference (head notes), it has been held that :

“The Tribunal was correct in holding that only undisclosed income as defined in section 158B of the Income Tax Act, 1961, has to be assessed income other than undisclosed income under Chapter XIV and that this is also the effect of the amendment in section 158BA of the Act with retrospective affect from June, 1995. No question of law arose from its order.”

It would also be relevant to point out here that during the course of search nothing was detected by the department to justify that the assessee, in fact, has undisclosed income in the form of contract receipts. In that view of the matter also, no addition is called for in the block period. Accordingly, ground Nos. 3 and 4 are disposed of.

13. Vide ground No. 5, the assessee contended as under :

“5. That the learned Commissioner (Appeals), Amritsar, has grossly erred in not appreciating that a TDS of Rs. 1,95,410 had been deducted from the assessee-firm and that the books of account were never demanded from the assessee at the time of search. ”

14. It was the contention of the learned counsel for the assessee before us that this ground is co-related with ground Nos. 3 and 4. Since, we have already disposed of ground Nos. 3 and 4, so no separate findings are required to be given for this ground.

15. Ground No. 6 raised by the assessee, reads as under:

“6. That the learned Commissioner (Appeals), Amritsar, has grossly erred in confirming the interest under section 158BBFA(1) of the Income Tax Act, 1961. ”

16. Before us, Sh. Padarn Bahl, CA, the learned counsel for the assessee, submitted that the delay in filing the return could not be attributed to the assessee. It was emphasised that the assessee was served with notice dated 6-3-1998, to file return within 30 days. After the receipt of the notice the assessee applied for obtaining photocopies of the seized documents on 9-3-1998. Again, a request was made vide letter dated 30-3-1998 and yet again vide letter dated 3-4-1998. However, the photocopy work started in June, 1998 and was completed somewhere in Oct., 1998. Shri Padam Bahl, CA, the learned counsel for the assessee, also submitted that, in fact, the assessing officer was not in possession of the seized record on the date of issue of notice. Also, he was not in a position to supply the photocopies of the seized record. Accordingly, it was submitted that the delay in filing the block return was attributable to the department, as the department delayed in supplying the photocopies of the seized documents. Reliance was also placed on the decision of the Tribunal, Patna Bench, in the case of Dy. CIT v. Late Ratan Lal Jain (2001) 73 TTJ (Pat) 364.

17. Sh. S.J. Singh, the learned senior departmental Representative, strongly objected to the above contentions of the learned counsel for the assessee. He further argued that the assessee himself was negligent and had not obtained the photocopies in due time. He accordingly submitted that there was no reasonable cause for the delay in filing the return for the block period.

18. After hearing the learned representatives of both the parties, we find that in the case of Dy. CIT v. Late Ratan Lal Jain (supra), the Patna Bench of the Tribunal had held that :

“Although the provisions for charging interest under section 158BFA, in case of delayed filing of block return, seems to be mandatory, yet, inasmuch as, interest is of penal nature, atleast, to some extent, in such a case, it has got to be considered that if the delay be not attributable to the assessee, the assessee cannot be penalised by way of charging of interest under section 158BFA. ”

In the present case also, it has been submitted that it was beyond the control of the assessee to file the block return within the time-limit as allowed by the assessing officer because the photocopies of the seized documents were not supplied by the department. In our view, there is merit in this contention of the learned counsel for the assessee that the department cannot ask the assessee to do something impossible and at the same time, penalise him for not being able to do so. Admittedly, the photocopies of the documents were made available to the assessee by the Income Tax department in the month of October, 1998. Considering all the facts of the present case and also keeping in view the ratio of the decision of the Tribunal, Patna Bench, in the case of, Dy. CIT v. Late Ratan Lal Jain (supra), we are of the opinion that in the instant case, the assessee was prevented by sufficient cause from filing the return for the block period in time. In our view, reasonable cause can be reasonably said to be a cause which prevents a man of average intelligence or ordinary prudence, acting under normal circumstances, without negligence or inaction or want of bona fides.

18.1 In view of the above, we do not find any justification in levying the interest under section 158BFA of the Income Tax Act, 1961. We accordingly direct the assessing officer not to charge interest under section 158BFA of the Act.

19. Now, we will take the departmental appeal, i.e., IT(SS)A No. 16/Asr/2000. In this appeal, the department has raised the following grounds :

“1. That on the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in admitting the additional evidence during the course of appellate proceedings inspite of specific objections raised by the assessing officer in his report furnished to the learned Commissioner (Appeals). It is in violation of the provisions of the r. 6A of the Income Tax Act, 1961 (sic Income Tax Rules, 1962).

2. That the learned Commissioner (Appeals) has erred in allowing relief of Rs. 4,27,633 and Rs. 46,691 totalling Rs. 4,74,324 out of additions made by the assessing officer for the assessment years 1994-95 and 1996-97, respeciively, on account of undisclosed income for non reflection of payments from Rallies India Ltd.

3. That the learned Commissioner (Appeals) has erred in deleting the additions of Rs. 46,693 for the assessment year 1995-96, Rs. 16,327 for the assessment year 1996-97 and Rs. 3,50,809 for the assessment year 1997-98, totalling Rs. 8,15,829, on account of unexplained liabilities under the head transport charges payable made by the assessing officer.

4. That the learned Commissioner (Appeals) has erred in deleting the additions of Rs. 46,500 for the assessment year 1995-96 made by the assessing officer on account of expenses incurred but not recorded in the books of accounts, Rs. 14,040 and Rs. 12,602 for the assessment year 1996-97 and 1997-98 respectively, for restoring back to the assessing officer for fresh decision.

5. That the learned Commissioner (Appeals) has erred in deleting the addition of Rs. 12,27,700 on the basis of additional evidence admitted made by the assessing officer as per Annexs. A-93, A-94, A-96 and A-98 on account of payments made to various Government officials.

6. That it is prayed that the order of the Commissioner (Appeals) may be vacated on the above issues and that of the assessing officer be restored.

7. That the appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed of.”

20. Vide ground Nos. 1 and 5, the grievance of the department is that the learned Commissioner (Appeals) admitted additional evidence given during the course of appellate proceedings in violation of provisions of rule 46A of the Income Tax Rules, 1962 while deleting the addition of Rs. 12,27,700 on account of illegal gratification paid to the different officials of the Government department.

20.1 During the appellate proceedings the assessee requested for permission to file additional evidence in the form of affidavit of Shri Surjit Singh s/o Shri Joginder Singh dated 2-10-1999 and submitted by way of application by stating as under :

“It is humbly submitted that the diaries as per Annexs. A-43, A-33, A-14, A-9, A-96, A-98, A-93 and A-94, etc., which have been made the basis for addition for Rs. 12,27,700 have been written by Sh. Surjit Singh s/o Sh. Joginder Singh. This fact was brought to the notice of assessing officer by the assessee on several occasions as is evident from photocopy of the letters addressed to the Assistant Commissioner. It was presumed that the assessing officer had accepted the submission of the assessee. Although, an affidaWt dated 2-10-1999, had been procured from Sh. Surjit Singh, no need was felt to file the same with assessing officer. This is eiddent from the submission made in the case of Daljit Singh & Bros., Amritsar. The assessee submitted that, “It is also submitted that the relevant papers under reference were not seized from any of the partners or business premises of the firm. The papers were seized from the residence of Sh. Joginder Singh where Surjit Singh s/o Sh. Joginder Singh also resides. It appears that the papers are in the handwriting of Sh. Surjit Singh and only he is competent to explain the nature of those expenses”. Again Sh. M.R. Bhagat, vide his letter in the case of Daljit Singh & Bros., dated 22-10-1999, submitted that ‘the learned assessing officer had proposed an addition of about Rs. 50 lakhs on account of alleged illegal gratification paid to the different officials of Government department. The diaries/notebooks/papers regarding their alleged payments were found and seized under section 132 of the Income Tax Act, 1961, from 19, Golden Avenue, Amritsar. That house is owned by Sh. Joginder Singh and he along with his five sons is residing there. On the date of search, three of his sons were married and two sons were unmarried. Sh. Surjit Singh, one of his sons, was married in the year 1991. He is President of Chabal Kalan Co-op. L & C Society Ltd. That society is also engaged in the business of road construction. These abovesaid documents were in the handwriting of Sh. Surjit Singh.’

The assessee submitted that the affidavit of Sh. Surjit Singh s/o Sh. Joginder Singh was very crucial to decide as to whom those transactions belong. The learned Commissioner (Appeals) sent the aforesaid application to the assessing officer for his comments. In response to that, vide letter dated 3-3-2000, it was submitted by the assessing officer as under :

“In the case of Narula Transport Co., the assessee never submitted during the course of search or of block assessment proceedings that the documents seized from his premises relate to Sh. Surjit Singh as they are in the handwriting of Sh. Surjit Singh. During the course of block assessment proceedings vide his letter dated 27-7- 1999, the assessee specifically submitted that the various amounts which are mentioned on various pages of various annexures (A-97 and A-98) shall be surrendered in the pending block returns. Vide an order sheet entry dated 1-10-1999, the assessee was specifically asked :

‘As per Annexures A-93, A-94, A-96 and A-98 money has been paid to various government officials why should be it allowed to you as expenditure. If it belongs to some body else than please obtain his confirmation.’

The date of compliance was fixed for 6-10-1999. In response to this vide his reply filed on 6-10-1999, the assessee submitted ‘That A-93, A-94, A-96 and A-98 do not belong to our firms as is clear from the documents themselves.’

Even at this stage it was not mentioned as to whom it belongs to. If Mr. Surjit Singh filed an affidavit which is dated 2-10-1999, than why it was not filed in this case on 6-10-1999, i.e., the date of last hearing. Moreover, 2-10-1999, was a national holiday, how can an affidavit be got sworn with the judicial authorities on that day. The documents submitted in other cases were well after the closing of the assessment proceedings in this case and they were also not supported by any evidence.”

The learned Commissioner (Appeals) after considering the circumstances narrated in the application of the assessee and reply of the assessing officer came to the conclusion that failure to furnish affidavit before the assessing officer occurred due to the presumption that the explanation of the assessee had been found to be satisfactory. He further noted that the papers were in the handwriting of Sh. Surjit Singh and this fact was also brought to the notice of the assessing officer during the block period assessment proceedings. So, it was open to the assessing officer to make necessary querries from Sh. Surjit Singh and since these enquiries were not made the assessee was under the bona fide belief that its version had been found to be acceptable and, therefore, the learned Commissioner (Appeals) allowed the admission of additional evidence in the form of affidavit.

21. After hearing the rival submissions, we are of the view that the Commissioner (Appeals) was fully justified in accepting the additional evidence during the course of appellate proceedings. As per the Explanation to section 251 of the Income Tax Act, 1961, the Commissioner (Appeals), while disposing of an appeal may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before him by the appellant. In this regard, we may also refer to a decision of the Hon’ble Bombay High Court in the case of CIT v. Scindia Steam Navigation Co. Ltd. (1971) 80 ITR 589 (Bom) wherein it has been held that :

“Powers conferred upon the Appellate Assistant Commissioner by the Income Tax Act are much wider than the powers of an ordinary court of appeal, Under the Income Tax Act, 1961, once an assessment comes before the Appellate Assistant Commissioner, his competence is not restricted to examining those aspects of the assessment which are complained of by the assessee, but ranges over the whole assessment and it is open to him to correct the Income Tax Officer not only with any other matter which has been considered by the Income Tax Officer and determined in the course of the assessment.”

It is also well-settled law that powers of the first appellate authority are coterminus with those of the assessing officer. In other words, he can do what the assessing officer could do and can also direct the latter to do what the latter failed to do. Section 250(4) provides that the first appellate authority may before disposing of any appeal make such further inquiry as he thinks fit, or may direct the assessing officer to make further inquiry and report the result of the same to the Commissioner (Appeals).

22. In view of the above, we do not see any merit in this contention of the learned senior departmental Representative that the learned Commissioner (Appeals) exceeded his jurisdiction while allowing the assessee to produce additional evidence in the shape of affidavit of Sh. Surjit Singh son of Shri Joginder Singh, one of the partners of the assessee-firm.

22.1 As regards the merits of the issue, the assessing officer for making this addition of Rs. 12,27,700 on account of payments to public servants stated as under

“No reply for annexs. A-93 and A-94 was filed. For Annex. A-96 the assessee admitted as P-34 containing a classification of Rs. 1,55,000 which is filed for block period. P-35 with details of Rs. 2,17,000 which is also being surrendered in the return of block period.” For Annex. A-88 the assessee’s reply was as under

“P-106, 109, 110, 111, i.e., Rs. 70,000, Rs. 91,200, Rs. 27,475, Rs. 40,200 are being surrendered in the return to be filed for the block period. ”

Later on vide a written reply filed on 6-10-1999, Sh. Bahl submitted that “That A-93, A-94, A-96, A-98 do not belong to our firm as is clear from the documents themselves.”

The assessee has changed his version now and claims that the abovementioned annexures do not belong to it, but also failed to furnish the name of the persons to whom these documents pertain to, which is required as per section 132(4A) of the Income Tax Act. The onus is on the assessee. He just cannot deny the ownership of these papers when these have been found from its premises. Once it has admitted that amounts mentioned in the annexures “being surrendered” which neither if surrendered in its return nor in the two returns of the group which were filed on 30-9-1999. Now its disown these without stating as to whom these annexures belong to. On some of the pages source of receipt and dates have also been mentioned as “K.L.” which stands for Sh. Kharati Lal, who admitted of having cash of the assessee-firm at the time of search at his residence, thus establishing a link with the firm. If it does not belong to the assessee-firm. then he should have admitted as to whom this amount belongs to. Under the circumstances, the assessee is treated as owner of these documents and amounts mentioned as these documents appear to have been payments made to various Government officials, which are not allowable expenditure as per Explanation to section 37 of Income Tax Act. These amounts are as per various annexures which were found from the premises of the assessee and are added to the assessee’s income, as expenditure incurred by him out of the books of accounts and not recorded in the books of accounts and details are as under :

Annexures

Page No.

Date

Amount

A-93

—

1,64,500

A-94

—

1,64,500

—

1,11,000

3,78,000

A-96

—

1,55,000

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2,11,000

A-98

106

4-1-1997

1,41,000

—

107

—

700

—

108

—

500

—

109

21-1-1997

71,500

—

110

24-1-1997

26,300

—

111

28-1-1997

46,200

In these documents certain other expenditure was also recorded which has been accounted for. The details and amount of annex. A-93 tallies with the details and amount of Annex. A-94. If amount of A-93 is ignored, the residual amounts to Rs. 12,27,700. The same is added to the firms income.

22.2 In the first appeal before the learned Commissioner (Appeals), it was submitted that almost all the papers on the basis of which these additions have been made were written by Sh. Surjit Singh s/o Sh. Joginder Singh, who was the President of Chabal Kalan Co-operative Society, at the relevant time. It was submitted that the explanation was given to the assessing officer that those papers had no connection with the business of Narula Transport Co. (assessee) and those papers represented expenses incurred by Sh. Surjit Singh for and on behalf of the Chabal Kalan Cooperative Society in his capacity as president. It was submitted that it was illegal to include any income in the hands of the assessee on the basis of a document which was not written by any partner of the firm. Moreover, from the papers it was evident that the expenses had no connection with the business of the assessee and the assessing officer failed to prove nexus between the business run by the assessee and the alleged money paid to the Government officials. It was stated that the assessee had income from transportation of trucks to fertiliser company and was not engaged in any personal business in which it could be held to have incurred the expenses as payment to any Government officials. It was submitted that the papers on the basis of which the addition was made were written by Sh. Surjit Singh and not by assessee. As such the assessee had proved that the diary was not seized from its possession. Sh. Surjit Singh was never examined by the assessing officer even though he had admitted in his affidavit that the papers were in his handwriting, however, the assessing officer has not accepted the contents of the affidavit. Accordingly, it was stated that the assessee has discharged the initial onus that laid on it and hence the notings in the papers could not be used against the assessee. The learned Commissioner (Appeals) after considering the submissions deleted the addition by observing as under :

“10.3, I have considered the above facts and arguments. In my Appellate Order No. A-210/99-2000, dated 19-4-2000, in the case of Daljit Singh & Bros., Goal Bagh, Amritsar, which is a sister-concern of the Narula group, I have held that these payments are required to be considered in the hands of Chabal Kalan Co-op. L/C Society Ltd., Amritsar. In my Appellate Order No. A-210/99-2000, dated 27-4-2000, in the case of Chabal Kalan Co-op. L/C Society Ltd., Amritsar, the amount of Rs. 12,27,000 has been held to be an unexplained expenditure incurred by the said society. Under these circumstances and for these reasons, the addition of Rs. 12,27,700 in the hands of the appellant is not justified. The addition is accordingly deleted.”

23. We have heard the learned representatives of both the parties at length and also carefully gone through the orders of the authorities below. In the instant case, it is not in dispute that the additions were made by the assessing officer only on the basis of notings by Sh. Surjit Singh, who later on, by way of affidavit admitted that those notings were related to Chabal Kalan Co-operative Society and not to the assessee. The assessing officer has not brought any material on record to establish that the notings were, in fact, related to the assessee and not to Chabal Kalan Cooperative Society. It is also not in dispute that the learned Commissioner (Appeals) confirmed the addition in the hands of Chabal Kalan Co-operative Society on substantial basis and, therefore, considering the totality of the facts and the circumstances as narrated above, we are of the view that the assessing officer was not justified in making the addition in the hands of the assessee when there was no evidence in his possession that the expenses were incurred by the assessee and, therefore, the learned Commissioner (Appeals) was justified in deleting the addition. We accordingly uphold his decision on this issue. Accordingly, ground Nos. 1 and 5 are dismissed.

24. Ground No. 4 relates to the relief given by the learned Commissioner (Appeals) amounting to Rs. 4,27,633 and Rs. 46,691 for the assessment years 1994-95 and 1996-97, respectively.

24.1 During the course of assessment proceedings, the assessing officer asked for the details from the various companies with whom the assessee carried out job work of transportation of fertilisers. The assessing officer tallied those details with the receipts, shown by the assessee in its books of account and noted that in the financial year 1993-94, there was a difference of Rs. 4,64,817 with Rallies India Ltd., and for the financial year 1995-96, the difference was to the tune of Rs. 50,7751. The assessee explained that initially during the financial year 1993-94, it was doing handling on behalf of the dealer and the company used to pay dealer directly, so the amount had been wrongly debited in the account of the assessee. The assessing officer made the addition by observing that the explanation of the assessee was not having any force and accordingly the addition of Rs. 4,64,817 was made in the assessment year 1994-95 and another addition of Rs. 50,751 was made for the assessment year 1996-97.

25. In the first appeal before the learned Commissioner (Appeals), it was stated that if at all any addition was called for, it was only for the profit earned by the assessee in respect of those receipts and not the entire receipts. The reference was made to the decision of the Chandigarh Bench of the Tribunal in the case of Wazir Singh v. Asstt. CIT (2000) 108 Taxman 291 (Chd)(Mag) and also to the decision of the Tribunal, Ahmedabad Bench, in the case of Kishor Mohanlal Telwala v. Assistant Commissioner (1999) 64 TTJ (Ahd) 543, wherein it has been held that Chapter XIV-B taxes the undisclosed income and not undisclosed receipts. The learned Commissioner (Appeals), after considering the submissions of the assessee and the decisions quoted, as mentioned above, came to the conclusion that the assessing officer had determined the income from the transport business at 8 per cent of the receipts. He, therefore, by applying 8 per cent profit rate on the aforesaid receipts reduced the addition to Rs. 37,184 and Rs. 4,060 only for the assessment years 1994-95 and 1996-97, respectively.

26. Before us, the learned senior departmental Representative submitted that the assessee had not shown receipts amounting to Rs. 4,64,870 and Rs. 60,791 for the assessment years 1994-95 and 1996-97, respectively, and never explained the position before the assessing officer although proper opportunity was given. Under those circumstances, in the absence of any satisfactory explanation, the assessing officer had rightly made the addition, so the learned Commissioner (Appeals) was not justified in deleting the additions amounting to Rs. 4,27,633 and Rs. 46,691 for the assessment years 1994-95 and 1996-97, respectively.

26.1 In his rival submissions, Sh. Padam Bahl, CA, the learned counsel for the assessee, reiterated the submissions made before the authorities below and submitted that the assessing officer had made the additions of the entire transport charges received by the assessee out of the books without allowing any deduction for expenditure incurred to earn these transport charges. It was further submitted that the entire receipts could not be treated as undisclosed income because some expenses were required to be incurred to earn the receipts. It was, therefore, submitted that the learned Commissioner (Appeals) was justified in computing the undisclosed income on the basis of profit rate applied by the assessing officer to the undisclosed gross receipts. Reliance was also placed on the following case laws:

1. Wazir Singh v. Assistant Commissioner (supra)

2. Kishor Mohanlal Telwala v. Assistant Commissioner (supra)

3. CIT v. S.M Omer (1992) 201 ITR 608 (Cal).

4. Income Tax Officer v. Gurubachan Singh J. Juneja (1995) 216 ITR 99 (Ahd)(AT).

After considering the rival submissions and going through the material available on records, it appears that the assessing officer made the addition for whole of the receipts, which were not accounted for in the books of accounts. It is wellsettled proposition that whole of the receipts cannot be considered as income because some expenses are required to be made to earn the income. In the instant case, it is also not in dispute that the assessing officer applied a GP rate of 8 per cent on the total receipts of the assessee. When the assessing officer himself was of the view that the assessee earned a GP rate of 8 per cent only on the contract receipts, so there was no justification in treating the unaccounted receipts as the income of the assessee. In that view of the matter, we are of the view that the learned Commissioner (Appeals) was justified in the directing the assessing officer to consider only the income of Rs. 37,180 and Rs. 4,060 for the assessment years 1994-95 and 1996-97, respectively. We are also fortified by the Third Member decision of the Tribunal in the case of Income Tax Officer v. Gurubachan Singh J. Juneja (supra), wherein it has been held that the Commissioner (Appeals) was justified in deleting the addition of Rs. 10,85,003 made on account of’unexplained cash sales. It has been further held that the value of cash sales cannot be added to the total income as there was no material on records that the assessee made the investment to make unaccounted sales.

Accordingly, it was directed by the Tribunal that the GP can be applied to the unaccounted sales. Ground No. 2 stands disposed of in the manner discussed above.

27. Vide ground No. 3, the grievance of the department relates to the deletion of additions of Rs. 46,693, Rs. 16,327 and Rs. 3,50,809 for the assessment years 1995-96, 1996-97 and 1997-98, respectively, on account of transport charges payable.

27.1 The assessing officer has discussed this issue at p. 5 of the assessment order, which is reproduced hereinbelow

“Vide order sheet entry dated 1-10-1999, the assessee was asked to furnish the details of various liabilities as payable as per balance sheet for the periods ending on 31-3-1995, 31-3-1996, 31-3-1997 and 31-3-1998, along with names and address of the persons and their copies of accounts, to establish the genuineness of these liabilities. He was also asked to state as to why no commission on various pay liabilities has been charged. (Annexs. A-107 to A-185)., He was also asked to explain the entries of Annexs. A-93, A-94, A-96, A-98 and to reconcile the receipts of various companies. The date of compliance was fixed for 6-10-1999. On 6-10-1999, a written reply was filed and instead of filing the name and address, copy of accounts and confirmations of the various creditors to whom various liabilities are payable, a list of truck Nos. was filed stating that the liabilities were payable to these truck owners, It was submitted that the liability under the head transportation charges payable is almost equal to cheques in hand. These outstandings are cleared in 2-3 months. No confirmations from the various creditors or their copies of accounts or any evidence of payments or their addresses were filed. Regarding the liabilities, the assessee has failed to furnish any evidence to show that these liabilities of transport charges are genuine. No copies of accounts were filed, no name and address were furnished, no basic records were maintained to establish the genuineness of these liabilities. Just by furnishing the truck No. to, whom this liability belongs to, the whole of the liability cannot be treated as genuine. Also, no evidence of payments of these liabilities has been furnished which must have been settled if it was at all, in the subsequent period. The transport charges payable account was not credited during the period 1-8-1997 to 25-12-1997, when the assessee has claimed that no number of family trucks were used for the transportation on freight-paid basis. The majority of trucks belongs to the various family members of the group as evident from the perusal of these numbers. There is a possibility that some of the payments might be due to the various truck owners, but in the absence of any evidence the whole of the liabilities cannot be treated as genuine. The assessee is allowed a benefit of 10 per cent of the total transportation charges debited in the P&L a/c as liability and worked out as under

Asst. yr.

Transportation Charges

10% Transportation Charges

Rs.

1995-96

30,62,422

3,06,242

1996-97

41,30,436

4,13,044

1997-98

38,76,673

3,87,667

The peak of the difference of the liability under this head and these amount in the respective assessment years are added to the income of the assessee, which is worked out as under :

Asst. yr.

Liability shown

10% of TC

Difference

Rs.

1995-96

3,54,935

3,06,242

48,693

1996-97

8,78,064

4,13,044

4,65,020

19 97-98

12,03,496

3,87,667

8,15,829

Thus, an addition of Rs. 48,693 in the assessment year 1995-96, Rs. 4,16,327 in the assessment year 1996-97 and Rs. 3,50,809 in the assessment year 1997-98 is added to the undisclosed income of the assessee.”

27.2 Before the Commissioner (Appeals), it was explained that the assessee for the period, relevant to the assessment year 1995-96, had cheques in hand of Rs. 2,63,594 and TDS of. Rs. 1,34,240. In this manner, the amount stood blocked as on 31-3-1995, to the extent of Rs. 3,97,834 as against the transport charges payable at Rs. 3,54,935. It was submitted that the transport charges were payable to the various truck owners and the list of truck owners to whom those charges were payable was filed before the assessing officer and it was explained to him that the entire liability was cleared in the next year. As regards to the liability for the assessment year 1996-97, it was stated that the liability was outstanding because the amounts due to the assessee totalling Rs. 11,29,186 were yet to be recovered and the entire liability was cleared in the subsequent financial year out of the chequesin-hand on the same ground. The position was also clarified with respect to the assessment year 1997-98. The learned Commissioner (Appeals), after considering the submissions and the facts available on record held that the assessee had filed the details of outstanding, liability vide letter dated 6-10-1999, wherein it was clearly mentioned that the outstanding liability was cleared within 2-3 months after the end of the financial year when the cheques-in-hand were cleared. He further observed that the liabilities for transport charges were almost equal of the cheques-in-hand as on 31st March of every year. He further observed that the books of accounts were open to the assessing officer to make investigation and to ascertain the correct position from the books of accounts when detailed particulars of trucks, their registration numbers and the amounts due had been furnished by the assessee. The learned Commissioner (Appeals) noted that the assessing officer had already accepted 90 per cent of those liabilities as genuine and, therefore, there was no justification in treating 10 per cent of the liabilities on estimate basis as bogus. Accordingly, the additions made by the assessing officer at 10 per cent of the liabilities were considered as based on conjectures and guess work and, therefore, the additions were deleted.

27.3 Before us, the learned senior departmental Representative strongly supported the order of the assessing officer and also submitted that neither confirmations from various transporters (nor) copies of accounts along with the addresses were filed before the assessing officer. Hence, the assessee failed to discharge the onus cast upon it to establish the genuineness of the liability. Therefore, the action of the assessing officer was justified in making the additions, submitted by the learned senior departmental Representative.

27.4 In his rival submissions, Shri Padam Bahl, CA, the learned counsel for the assessee, submitted that the assessee explained before the assessing officer that the funds of the assessee remained blocked on 31st March and as a result, the transport charges remained unpaid on 31st March of every year. It was stated that the assessee filed the list of transport charges payable to various truck owners giving the list of truck numbers. However, the assessing officer treated the transport charges payable as on 31st March of every year to the extent of 10 per cent of total transport charges as unexplained liability of the assessee and treated the same as undisclosed income of the block period. It was vehemently argued that the allegation of the assessing officer that the amount in excess of 10 per cent of transport charges must be paid by the assessee out of undisclosed income, was totally baseless and was only conjectures devoid of any evidence. The learned counsel for the assessee, therefore, justified the learned Commissioner (Appeals) in coming to the conclusion that the additions made by the assessing officer were based on conjectures and guesswork. He also relied on the following case laws

1. Essem Interport Services (P) Ltd. v. Assistant Commissioner (2000) 68 TTJ (Hyd) 103.

2. Ravi Kant Jain v. Asstt. CIT (2000) 67 TTJ (Del) 797.

3. CIT v. Shambhulal C. Bachkaniwala (supra).

27.5 We have considered the rival submissions. In the instant case, it seems that the assessing officer made the additions on estimate basis by presuming that 10 per cent of the liabilities were paid by the assessee out of its undisclosed income. On taking such a view, the assessing officer has not brought any material on record. We find some force in this contention of the learned counsel for the assessee that the assessing officer himself had admitted 90 per cent of the liabilities as genuine and considered 10 per cent as bogus on the basis of conjectures and guess work. Considering the totality of the facts, as discussed above, we are of the considered view that the assessing officer made the addition only on the basis of surmises and conjectures, which is not tenable in the eyes of law. We, therefore, uphold the view of the learned Commissioner (Appeals) for deleting the additions. This ground is disposed of accordingly.

28. The next ground, i.e., ground No. 4 relates to the deletion of addition of Rs. 46,500 made by the assessing officer on account of expenses incurred but not recorded in the books of account for assessment year 1996-97 and restoring the issue back to the file of the assessing officer for fresh decision in respect of Rs. 14,040 and Rs.,12,602 for the assessment year 1996-97 and 1997-98, respectively.

28.1 The assessing officer has discussed this issue at p. 7 of the assessment order, which is

reproduced hereinbelow

“As per Annex. A-22, of the Punchnama drawn in the case of Daljit Singh & Bros., Goal Bagh, Amritsar, as per pp. 40 and 45, Rs. 20,000 paid on 7-4-1994 and Rs. 26,500 paid on 8-4-1994, as transport charges, but not recorded in the books of account. Similarly, as per Annex. A-12, page nos. 106 to 108 expenditures of Rs. 14,040 for the financial year 1995-96 are not recorded in the books of accounts. No explanation has been furnished by the assessee, therefore, a sum of Rs. 46,500 in the assessment year 1995-96 and Rs. 14,040 in the assessment year 1996-97 are added to the undisclosed income of the assessee.

As per Annex. A-32, page no. 47, bill dated 4-11-1995, for Rs. 1,608, as per page No. 56, bill of Rs. 8,000 and Rs. 3,000 dated 3-6-1996, are not recorded in the books of accounts. No proper or satisfactory explanation has been furnished by the assessee, therefore, a sum of Rs. 12,608 is added to the undisclosed income of the assessee in the assessment year 1997-98.

Before the learned Commissioner (Appeals), it was submitted that the addition was not called for as the expenses were allowable in view of the decision of the Tribunal, Ahmedabad Bench “A”, in the case of Ruby Builders v. Income Tax Officer reported in 50 BCAJ 526 and in the case of S.F. Wadia v. Income Tax Officer (1987) 27 TTJ (All) 437. The learned Commissioner (Appeals) after considering the submissions of the assessee observed that the assessing officer himself has held that a sum of Rs. 46,500 represented transportation charges. On that basis, he held that the expenditure was an allowable business expense. Accordingly, the addition of Rs. 46,500 was deleted.

28.2 As regards the additions amounting to Rs. 14,040 and Rs. 12,608 for the assessment years 1996-97 and 1997-98, respectively, the learned Commissioner (Appeals) observed that the assessing officer has not given any finding. He, therefore, restored the issue to his file for fresh decision.

28.3 Before us, the learned senior departmental Representative submitted that the assessee had not furnished satisfactory explanation before the assessing officer, so the addition was rightly added considering the same as undisclosed income, hence, the learned Commissioner (Appeals) was not justified in deleting the addition of Rs. 46,500 and restoring the issue to the file of the assessing officer in respect of another additions of Rs. 14,040 and Rs. 12,608. He, therefore, prayed that the additions made by the assessing officer may be restored.

28.4 In his rival submissions, the learned counsel for the assessee reiterated the submissions made before the learned Commissioner (Appeals) and also submitted that the decision of the learned Commissioner (Appeals) was based on sound reasoning and, therefore, need not be disturbed.

28.5 After considering the rival submissions, we are of the view that the learned Commissioner (Appeals) was justified in deleting the addition of Rs. 46,500 because the assessing officer has himself admitted that the assessee made the payments for it transportation charges. In the instant case, it seems that the assessing officer considered the undisclosed receipt as undisclosed income but no deduction was allowed on account of undisclosed expenditure. It is relevant to point out that the Tribunal, Ahmedabad Bench, in the case of S.F Wadia v. ITO (supra) has held that where undisclosed expenditure is treated as undisclosed income, the undisclosed expenditure would also be allowed as a deduction if that expenditure is a business expenditure of revenue nature. In the instant case, he earned Commissioner (Appeals) followed the decision of the Tribunal, Ahmedabad Bench. In that view of the matter, we are of the view that the learned Commissioner (Appeals) was justified in deleting the addition of Rs. 46,500.

28.6 As regards another two additions of the Rs. 14,040 and Rs. 12,608 are concerned, the assessing officer has not passed a speaking order and the learned Commissioner (Appeals) was justified in restoring the issue back to his file for readjudication. We find no infirmity in the direction of the Commissioner (Appeals). We, therefore, find no merit in this ground of appeal of the department.

29. Ground Nos. 6 and 7 are general in nature so do not require any comments on our part

30. The assessee has also raised an additional ground, which reads as under

“That the notice under section 158BC issued by Assistant Commissioner, Investigation Circie-I, Amritsar, dated 5-3-1998, is void ab initio and block assessment proceedings are illegal”.

Since we have disposed of the appeal on merits so we do not think it appropriate to discuss the issue raised by the assessee by way of additional ground.

31. In the result, the appeal of the assessee is partly allowed and that of the department is dismissed.

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Narula Transport Company vs Astt. Cit on 26 June, 2002

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