ORDER
M.A. Bakshi, Vice President
1. We find it convenient to dispose of this appeal of the Revenue and the cross-objection of the assessee relating to the block period 1st April, 1988 to 19th Nov., 1998, by this consolidated order. We have heard the parties and perused the records.
2. We first take up the appeal of the Revenue. The two effective grounds of appeal raised by the Revenue are as under:
1. The learned CIT(A) has, on facts as well as in law, erred in deleting the addition of Rs. 20,35,000 made by the AO on account of undisclosed investments/ loans/advances for the block period 1st April, 1988 to 19th Nov., 1998.
2. That the learned CIT(A) has, on facts as well as in law, erred in deleting the addition of Rs. 8,83,975 made by the AO on account of interest earned by the assessee.
3. The relevant facts, briefly stated, are that there was a search at the premises of the assessee and her husband as also at the business premises on 19th Nov., 1998. The respondent is also a regular taxpayer and so is her husband. The respondent along with her husband had substantial shareholdings in M/s Bonn Nutrients _(P) Ltd. The respondent was drawing a salary of Rs. 3 lakhs per annum from the said company. During the course of search, certain documents were found at the premises of the assessee. One of the documents described as Annex. 8 was found in the handwriting of the respondent. The respondent was questioned and her statement was recorded under Section 132(4) in which she explained the nature of the transactions and also stated that the transactions related to the income earned by her husband. Her husband also in his statement recorded under Section 132(4) as also by an affidavit filed subsequently in the course of subsequent proceedings, admitted the entries in Annex. 8 of the seized document as relating to his transactions. The husband of the assessee had filed a petition before the Settlement Commission under Section 245. The husband of the assessee also offered the income relating to Annex. 8 of the seized document for taxation. The AO had issued a notice under Section 158BC to the respondent on 17th Sept., 1999, asking her to file the return within 30 days of the service of notice. The assessee, however, filed the return for the block period 1st April, 1988 to 19th Nov., 1998, on 31st Jan., 2000, declaring total undisclosed income at Rs. 1,50,000 without specifically correlating the income to any seized material and without indicating the source thereof. During the course of assessment proceedings, assessee was confronted with the seized document, Annex. 8. The assessee reiterated her stand that all the documents found in the course of search have been owned by her husband in SOF before the Settlement Commission and, therefore, the entire documents are to be considered in the hands of her husband, namely, Shri Manjit Singh. The AO however, was not convinced with the claim of the assessee. As per the AO, since the document seized during the course of search was in handwriting of the assessee, the addition was required to be made in the hands of the assessee. The addition of Rs. 20,35,000 was made on account of document No. 3 of Annex. 8 on account of advances. A further sum of Rs. 8,83,975 was added on the basis of the same document as interest earned by the assessee. Assessee appealed to the CIT(A) against the additions made by the AO. The CIT(A), Ludhiana, vide impugned order dt. 30th March, 2001, held that the issue relating to the document being Annex. 8 was before the Settlement Commission in the name of Shri Manjt Singh, husband of the assessee. She has accordingly held that no addition could be made in the hands of the assessee. The CIT(A) held that in view of the settlement petition of assessee’s husband having been admitted by the Settlement Commission, the AO had no jurisdiction to deal with the issues, which were before the Settlement Commission.
4. Revenue is aggrieved. The learned Departmental Representative vehemently argued that the document being Annex. 8, which was in the handwriting of the assessee, pertained to her and, therefore, the AO was justified in assessing the income with reference to the said document in the hands of the respondent. It was contended that the proceedings before the Settlement Commission were in the name of the husband of the assessee and, therefore, the AO was not precluded from assessing the income in the hands of the non-applicant before the Settlement Commission. It was contended that in the petition filed by assessee’s husband before the Settlement Commission, there was no specific reference to Annex. 8 and, therefore, the CIT(A) was not justified in holding that the AO had no jurisdiction to deal with the issue in the hands of the respondent.
5. The learned Counsel for the assessee, on the other hand, invited our attention to paras 18, 20, 21 and 22 of the petition before the Settlement Commission filed by the assessee’s husband as also the order of the Settlement Commission dealing with the income derived from organizing kitties and earning of interest. The learned Counsel for the assessee also invited our attention to the affidavit of the assessee’s husband wherein he has categorically stated that the entire documents seized in the course of search belonged to him and that he will be responsible to be assessed in respect of the income as per the said documents. Our attention was also invited to the statement of the respondent as well as that of her husband wherein it has specifically been declared that the document being Annex. 8 related to the husband of the assessee and that the respondent had merely made the entries at his instance. It was accordingly pleaded that the appeal of the Revenue may be dismissed.
6. We have given our careful consideration to the rival contentions. It is not disputed that the document being Annex. 8-A- was found in the course of search and that the said document was in the handwriting of the respondent. It is also not disputed that the initial burden was upon the respondent to explain the contents of the document. The assessee has explained the contents of the document and has also categorically stated that the said document related to the transactions of her husband. Her statement that the document pertained to her husband would not have been of any evidentiary value but for the statement of her husband who has in unequivocal terms confirmed the statement of his wife that all the documents including Annex. 8 related to his transactions. This version was also corroborated by the statement of the respondent, the relevant portion of which is reproduced hereunder :
“Annex. 8 is written by me and as account of family kitty, for example, page No. 1 contained accounts of two kitties of Rs. 10,000 and Rs. 7,500 per month for 20 members each in this paper or (-) has been drawn after every amount when figure of thousand is constituted.
Page No. 1 states entries of Rs. two lacs and one lac which shows the collection of two kitties of 20 members each. The interest earning recorded in this belongs to my husband as deposits in kitties were also made out of his withdrawals. Page No. 3 relates to one family kitty, which also shows earning of interest which has been owned by my husband.
Q. Do you admit any income or investment appears in the documents seized from your residence ?
Ans. No, all income and investments, as I stated pertain, to my husband. Though, some of the entries regarding family kitties are in my handwriting since I used to assist my husband.”
Relevant portion of the statement of Shri Manjit Singh, husband of the assessee, is also reproduced as under:
“As regards statement of my wife, Smt. Prabhjot Kaur, I am in total agreement and explain that her handwriting is appearing in some of the documents as she was assisting me in my business. Therefore, whatever income or investment has been recorded by her reflected in my income or investment.”
In the affidavit filed before the AO, the assessee’s husband had stated as under :
“Though all the papers/loose documents are owned by me as seized by the Department but with particular reference to Annexure Nos. A1, A2, A4, A5, A8, All, A12, it is being stated and confirmed that they belong to me and my wife, Smt. Prabhjot Kaur, has written few pages only at my instructions/dictates and she only used to assist me and she has no link with these.”
It is evident from the stand of the assessee corroborated by the stand of her husband that the document being Annex. 8 seized in the course of search was owned by the husband of the assessee. In the petition before the Settlement Commission, the stand was reiterated by Shri Manjit Singh, husband of the assessee. Copy of the order of the Settlement Commission has been made available to us and the issue pertaining to kitties has been specifically dealt with by the Settlement Commission vide paras 14, 15 and 19 of the order. These are reproduced hereunder for the sake of ready reference :
“14. The third issue raised by the CIT on loans and interests alleging that there was concealment of Rs. 3.35 crores on the basis of two loose papers at A-8 was claimed to be misconceived. It was stated that pp. 46 to 48 of applicant IInd paper book do not leave any doubt about the matter being related to kitties. It was pointed out that these documents do have names, e.g. Dimpy, Lovely, mummy, daddy, Rompy, etc. and there is mention of express ‘kist, lena hai’. Similarly, pp. 45 and 49 of IInd APB were cited wherein ‘ghata’ has been clearly written. It was stated that certain contributions were made by Manjit Singh, his wife or family members towards kitties and the funds of such contributions had been found during the course of search. Certain payments were also claimed to have been received during the start or during the course of running of kitties depending upon the requirements and there was rotation of funds. CIT(A)’s order dt. 30th March, 2001 – p. 11 of IInd APB – where factual position had been detailed was cited in support of the claim that Shri Manjit Singh’s wife, Parbhjot Kaur, used to. keep the accounts of various members of kitties. It was further stated that there were certain members who used to invest their funds by way of loans and for them, Smt. Parbhjot Kaur who is not an educated lady was not able to maintain proper accounts. In any case, it was stated that the unaccounted money in the kitties has been offered in the offer of the applicant. 15. Regarding CIT’s allegations that the household drawings were not adequate, it was stated that Rs. 8,64,000 had been drawn by Shri Manjit Singh for the period, whereas Shri Jatinder Singh had withdrawn Rs. 4,91,000. It was stated that the children were studying only in local Ludhiana schools and in any case Rs. 1,50,000 extra for household expenses and Rs. 1,10,000 extra for household items of Jatinder Singh. Pages 15-20 of IInd APB were claimed to be proof of certain expenses being of Shri Balwinder Singh, an NRI. One of the documents out of these shows that Shri Balwinder Singh was an NRI staying in New York for the last 18 years and had solemnized the marriage of his sister at his friend Shri Manjit Singh’s place at Ludhiana. He has clearly stated that those expenses had nothing to do with Shri Manjit Sigh or his family. 19. … He stated that these were small gifts for kitties. We have noticed that this page talks of expenditure of Rs. 2,50,500 bed-sheets and other small items for Rs. 100, Rs. 200, Rs. 250 and Rs. 400, etc. On being enquired, the applicant’s Authorised Representative mentioned that this Balbir Kaur was a different person than the NRI family.”
It is evident from the evidence on record as also from the order of Settlement Commission that document being Annex. 8 seized in the course of search has been owned by the respondent’s husband and the same has also been considered by the Settlement Commission in the case of her husband. In the light of these facts and circumstances of the case, we are of the considered view that the CIT(A) was justified in deleting the addition from the assessment of the respondent. Finding no infirmity in the order of the CIT(A), we decline to interfere.
7. The cross-objection of the assessee is merely supportive of the order of the CIT(A) and no relief has been sought. The same is accordingly dismissed having become infructuous.
8. In the result, the appeal of the Revenue as well as the cross-objection of the assessee are dismissed.