Shri Nagnath Hanumantrao Jalkote … vs The Asstt. Commissioner Of … on 27 July, 2006

ORDER

K.G. Bansal, Accountant Member

1. These appeals of two assessees involve common ground’s and, therefore, the appeals were argued in a consolidated manner by the learned Counsel of the assessee and the learned DR. Therefore, the appeals are disposed off by way of a consolidated order.

ITA NO. 625/PN/04 in the case of Shri Naqanath Hanumanth Rao JaIkote

2. The assessee had taken seven grounds of appeal, out of which ground nos. 6 & 7 are general and residuary in nature, which do not require any decision from us. The other 5 grounds are reproduced below for the sake of ready reference:

1. On the facts and circumstances of the case, as per the statement of facts separately enclosed, the learned Commissioner of Income-tax (Central), Nagpur has erred in considering the assessment order passed by the learned ACIT (Central) Aurangabad Under Section 158 BC(c) r.w. Section 143(3) of the income-tax Act, 1961 as erroneous and prejudicial to the interests of revenue and wrongly presumed that an amount of Rs. 1.00 crore has escaped assessment.

2. On the facts and circumstances of the case, the learned CIT(Central), Nagpur also erred in ignoring the fact that the contentious issue of “the ownership” of the seized diaries, on the basis of which the learned CIT(Central), Nagpur has made his presumption, is already subject matter of an appeal before the Hon’ble CIT(A)-I, Nagpur and is under his consideration. And therefore according to the provisions of Section 263(1)(c) the order passed by the learned CIT(Central), Nagpur is without jurisdiction and bad in law.

3. The learned CIT(Central), Nagpur has erred in making an addition of Rs. 1.00 crore to the assessed undisclosed income of the appellant on the basis of his presumptions.

4. The order passed Under Section 263 be quashed and the appellant be granted appropriate relief.

5. The additions of Rs. 1,00,00,000/- made as above be deleted and the income of the appellant be reduced to that extent.

Ground no. 2, is to the effect that the order of the AO was subject matter of appeal before the learned CIT(Central), Nagpur and, therefore, his order had merged with the order of the learned CIT(A). Consequently, the CIT(Central), Nagpur had no jurisdiction to pass the order. This ground was Hot pressed before us by the learned Counsel in view of the provision contained in Clause (c) of the Explanation below Section 263(1). It may be mentioned that revisionary order was passed prior to the passing of the appellate order. Therefore, there is no merit in the ground.

3.1 In the revisionary order Under Section 263, it is mentioned that block assessment for the period 01.04.1995 to 20.11.2001 was completed on 27.11.2003, determining the undisclosed income of the assessee at Rs. 11,74,10,622/- In framing the aforesaid assessment, the AO relied on three diaries seized from the assessee. In these diaries, various transactions were noted by the assessee in his own handwriting. Against some entries, initials of the other parties were taken. On the basis of the entries in the diaries, the AO concluded that the entries were made in respect of money lending transactions undertaken by the assessee, which were not disclosed for the purpose of levy of income-tax. The learned CIT has narrated four entries from the diaries regarding the amount becoming double over certain period of time. These entries, as narrated by the learned CIT, are reproduced overleaf:

1) On page 5(0L) of A-67, in the assurance signed by Shri M.H. Andure, the amount of Rs. 5.00 lakhs was treated as “Fixed” and it was to double to Rs. 10 lakhs by 16.10.2003 and it was decided to repay Rs. 10 lakhs by 16.10.2003. The assurance for repayment is signed by Shri Andure.

2) On page 13 of A-67 in the running account of Shri B.B. Mahajan, the amounts of Rs. 50 00 lakhs was kept as “Fix” for the period from 11.11.1996 to 10.11.2001 and as per specific noting it was to get doubled i.e. Duppat and to become Rs. 1.00 crore by 10.11.2001.

3) On page 23 of A-67 in the account of Shri Andure, the amount of Rs. 10.00 lakhs is added on 25.04.1991 with the narration “Fixed” and Duppat Scheme Bank.

4) On page 22 of A-67, in the running account of Shri M.H. Andure, the amount of Rs. 5.00 lakhs is kept as “Fix” on 16.10.1998 and the narration is written as it will be 10.00 – 16.10.2003 meaning it will double and become Rs. 10.00 lakhs by 16.10.2003.

3.2 After completion of the assessment of the undisclosed income by the AO, it came to his notice that while entries at Sl. No. 1, 3 & 4 were considered by the AO, the entry at SI. No. 2 on page 13 of diary no A-67 was not Considered by him for the purpose of framing the assessment for the block period. The entry was again reproduced by the learned CIT in his order on page 2 as under:

50.00 lakhs 11.11.96 to 10.11.2001 -Fix

Double

1.0 crore

2.0 This entry is in respect of Shri B.B. Mahajan, father in law of Shri N.H. Jalkote

Therefore, notices Under Section 263 dated 04.02.2004 and 09.02.2004 were issued to the assessee seeking his explanation as to why the amount of Rs. 1.00 crore may not be assessed in his hands, being the amount which had been omitted by the AO for the purpose of assessment in his order. It was represented before him that the impugned entry was merely a hypothetical entry. No money was invested or received in respect of the aforesaid entry. It was further represented that the entry has been circumscribed by a rectangular box and it is followed by several other entries in the form of a running account. It was also represented that the entry was not considered by Shri P.B. Mahajan while making declaration of undisclosed income in his return for the block period for the reason that the aforesaid entry was merely a hypothetical entry. This entry was not verified, examined or explained. It was also represented that during the course of search, no investment of such a huge amount was found, which also leads to the conclusion that the entry was merely a hypothetical entry.

3.3 The learned CIT examined the entries and the arguments of the assessee. He pointed out that the concept of the “damduppat” is used in money-lending transactions regarding lending of certain amount, which doubles over a period of time, in this case five years. The diaries of the assessee consisted not only the impugned entry of such type but also other entries. The entry is similar to another entry of Rs. 5.00 lakh in the same diary on page 5, in which there is an assurance by Shri M.H. Andure of taking Rs. 5.00 lakh as “fixed” which will double to Rs. 10.00 lakh on 16.10.2003. There is also another entry of similar nature on page 23 of the same diary by which Rs. 10.00 lakh were placed as ‘fixed’ becoming the double on 25.04.2001. The third entry of similar nature existed on page 22 of the same diary, which shows that the aforesaid Shri M.H. Andure took Rs. 5.00 lakh as ‘fixed’ on 16.10.1998, which will become double to Rs. 10.00 lakh on 16.10.2003. The impugned entry of Rs. 50.00 lakh, relating to Shri B.B. Mahajan and Shri P.B. Miahajan, on page 13 of the same diary, refers to an amount of Rs. 50.00 lakh being treated as fixed’ for a period of five years from 11.10.1996 to 10.11.2001. The same entry also appears on page 20 of diary no. A-71 in the rectangular box followed by other entries in respect of aforesaid S/Shri B.B. Miahajan and P.B Mahajan. The aforesaid entry is succeeded by other entries starting from 23.04.1997 of an amount of Rs. 35.70 lakh. That entry shows that an amount of Rs. 37.50 lakh was advanced by the assessee to Shri P.B. Mahajan on 23.04.1997. That entry has been admitted and explained by Shri P.B. Mahajan in answer to question no. 21 of his statement recorded under the provisions of Section 132(4) on 22.11.2001. In view thereof, the conclusion of the learned CIT was that the aforesaid entry was not merely a hypothetical entry, but it showed that a sum of Rs. 50.00 lakh was advanced on 11.11.1996 on ‘fixed’ term basis to Shri B.B. Mahajan, which became double to Rs. 1.00 crore on 10.11.2001.

3.4 Coming to the argument of the assessee that the impugned entry was not verified, examined or explained in search proceedings, post search proceedings or in the proceedings of block assessment, it was pointed out by the learned CIT that the aforesaid failure was the reason for invoking provisions of Section 263. He also referred to the fact that the aforesaid entry tvas repeated on page 20 of diary no. A-71, where running entries stopped at Rs. 52.00 lakh while on page 13 of diary no. A-67, these running entries were recorded upto Rs. 64.00 lakh. Therefore, his finding was that repetition of the entries at two different places shows that the entry was not merely a hypothetical entry but it represented a real transaction of placing an amount of Rs. 50.00 lakh as a deposit for a fixed period, doubling to Rs. 1.00 crore in a period of five years.

3.5 Coming to the argument that the search and seizure operation did not lead to any evidence about huge investment of Rs. 50.00 lakh, the learned CIT pointed out that the assessment in this case had been made solely and entirely on the basis of entries recorded in diaries by the assessee in his own handwriting. The diaries were in possession of the assessee and were seized from him. It was the case of the assessee that the entries in these diaries were made on the directions of Shri M.B. Patil, a contractor and Shri B.B. Mahajan, father-in-law. This contention had also been considered by the AO and he came to the conclusion that entries were in respect of advances made by the assessee to Shri M.B. Patil, Shri P.B. Mahajan and others. However, he failed to take cognizance of the aforesaid entry to Rs. 50.00 lakh doubling to Rs. 1.00 crore. Such failure resulted into an erroneous order by him, which was also prejudicial to the interests of the revenue. Therefore, he enhanced the undisclosed income of the assessee by an amount of Rs. 1.00 crore and directed the AO to compute tax accordingly and issue demand notice and challan.

3.6 Aggrieved by this order, the assessee is in appeal before us.

4.1 In the course of hearing before us, the learned Counsel mentioned that ground No. 1 contains the substantive grievance of the assessee, in which it was mentioned that the learned CIT(A) erred in holding that the assessment order passed by the AO was erroneous and prejudicial to the interests of the revenue; and that he wrongly presumed that the amount of Rs. 1.00 crore had escaped assessment. Giving a brief background of the case, he pointed out that the assessee is an executive engineer, employed with Government of Maharashtra. He was searched on 21.1.2001 under the provisions of Section 132(1) of the Act. In the course of search, diaries were found from his residence, which had been written in his hand. Such diaries were seized. The diaries contained accounts in the names of various persons. Such persons deposed Under Section 132(4) that the accounts in the diaries belonged to them. Shri Prashant Mahajan is brother-in-law of the assessee. The diaries contained account in his name also. The AO assessed amounts in this account in the hands of the assessee and made protective assessment in the case of Shri Prashant Mahajan. Order Under Section 158BC(c) read with Section 143(3) of the Act was passed in the case of the assessee on 27.11.2003. Order Under Section 158BC read with Section 143(3) was also passed in the case of Shri Prashant Mahajan on 27.11.2003. Thereafter, the CIT issued notices Under Section 263 to the assessee as well as to Shri Prashant Mahajan. He passed revisionary orders on 25.03.2004 and 21.07.2004 respectively. These orders were based upon Annexure – A-67 and Annexure A-71. Copies of these Annexures were placed on page 1 & 3 of the paper book. The learned Counsel pointed out that annexure A-71 contained some entries, totaling upto Rs. 52.00 lakhs. These entries were reproduced on Annexure A-67 and there were some more entries on A-67, which totaled to Rs. 64.00 lakh. Both these annexures, on the top, contained certain entries, placed in a rectangular box. For the sake of ready reference, the entries in the box are reproduced below:

A-67
B.B. Mahajan
50.00 lakh 11.11.96 to
10.11.2001 Fix
Duppat
1.00 crore
A-71
B.B. Mahajan
50,00 lakh 11.11.96 to
10.11.2001 Fix
1.00 crore

The amount of Rs. 64.00 lakh, at which entries on A-67 ended on 18.09.2001, was declared as undisclosed income in the block return of Shri P. Mahajan as per his deposition Under Section 132(4) of the Act. The learned Counsel farther pointed out that in the course of search and in post search enquiry no evidence was found that the aforesaid amount of Rs. 50.00 lakh was advanced by the assessee to anyone, received by anyone or returned by anyone to the assessee. In the course of assessment proceedings, the AO directed the assessee to explain the entry by issue of a notice on 23.09.2003. First and last page of this notice were placed on pages 153 & 155. Page 155 contains the details of the impugned entry, finding place at the top of Annexures A-67 & A-71. The assessee replied to this notice by his letter dated 04.11.2003. Relevant portion of the reply was placed in the paper book on pages 177 to 183. It was inter-alia pointed out that the aforesaid entry was noted by him on the instructions of S/Shri B.B. Mahajan, P.B. Mahajan and M.H. Andure and that he had nothing to do with the financial aspect of the transactions. Noting on such pages might have been repeated on other pages also. An amount of Rs. 50.00 lakh has been noted as ‘fixed’ 11.11.1996 to 10.01.2001. This was a casual noting made in the discussion held in the meeting of Mahajan family. He remembered that noting was specifically made as Mr. B.B. Mahajan was telling to his sons that they should carry out the business efficiently to maximize the profit. He was illustrating that if Rs. 50.00 lakh is kept in bank for fixed time of five years, the same can be Rs. 1.00 crore. This was only an illustration and he remembered that there was no financial implication of such a noting. Shri B.B. Mahajan also expected from his sons that an amount of Rs. 50.00 lakh, invested in the business, should fetch Rs. 102 lakh at the end of five years. This was an illustration given by Shri B.B. Mahajan to his sons. The said illustration was only noted in the captioned diary. The learned Counsel also drew our attention to a letter dated 05.11.2003 written by the assessee to the AO. Relevant portions were placed in the paper book on pages 185 to 191. In this letter, it was inter-alia clarified that the entries in the diaries basically pertained to S/Shri M.H. Andure, P.B. Mahajan and M.B. Patil. It was further stated that the transactions relating to Shri P.B. Mahajan were reflected in his block return. Rough noting was also made regarding the amount of Rs. 50.00 lakh becoming double over a period of five years if kept by way of a fixed deposit with a co-operative bank and the business should be conducted keeping in mind the aforesaid doubling of the amount in five years if kept by way of fixed deposit. There was also a rough noting regarding two godowns owned by Mrs. Rajshree Jalkote and Shri Vijay Jalkote. These notings had been recorded for the reason that Shri B.B. Mahajan had shown interest in purchasing these godowns. The import of the entry was that if Shri B.B. Mahajan intends to purchase the same, the consideration thereof would be to the tune of Rs. 2.60 lakh. The deal did not materialize and the property still stood in the names of Mrs. Rajsree Jalkote and Shri Vijay Jalkote. The learned Counsel also pointed out that Shri B.B. Mahajan declared the income in respect of entries on A-67 made below the box. However, no undisclosed income was offered by him to tax on the basis of the entries in the box. The learned Counsel also pointed out that the learned CIT referred to certain other entries, namely, Rs. 5.00 lakh becoming Rs. 10.00 lakh, which was accepted by Shri M.H. Andure and declared such amount as his income. It was pointed out by him that the impugned entry and the other entries were qualitatively different in nature in the sense that the other entries were considered subsequently in the running account while the impugned entry was not taken into account anywhere subsequently. This issue was also considered by the learned CIT(A) – I, Nagpur in his order dated 28.01.2005 in paragraphs 3.105 & 3.106. Relevant portions of the order were placed in the paper book on pages 221 to 227.The paragraphs are reproduced below for the sake of ready reference:

3.105 The AO in his remand report has also referred to the issue of doubling of loan amount (dam duppat) which appears at some pages of the diaries. The AO was of the view that such doubling of the amount pertains to the loan which tends to double after a fixed period of time. The instances of such doubling of loan have been mentioned in the remand report submitted before me. The specific entry of such doubling of the amount was examined and it is seen that these are not part of the running account appearing in the name of various parties and, therefore, the said entries reflected separately duly outlined in boxes have no correlation with the running accounts. Further, I find that the AO has not considered such entry of doubling while determining the UDI in the hands of the appellant. The instances of such “Dam Duppat” does not clarify as to who has advanced the loan and who is the recipient and, therefore, these are hypothetical figures which does not emanate from the running account of the respective persons mentioned in the said diaries. I may also point out here that the entry of “Dam Duppat” was duly inquired during the course of post search statements of Shri Andure and Shri Prashant Mahajan who have stated these entries as hypothetical since it does not emanate from their running account admitted as undisclosed income in their hands (Refer to Que. No. 40 of statement Under Section 131 in respect of Shri M.H. Andure & Que. No. 35 of statement Under Section 131 in respect of Shri Prashant Mahajan.

3.106 Further I am of the view that the AO has not considered the following facts while referring to “Dam Duppat” inferred as loans advanced by the appellant, (i) In money lending business, security in the form of promissory notes, blank cheques, mortgage deeds, property documents is taken but no such security is found in this case, ii) In money lending business, money is lent at certain rate of interest. In this case no such interest is charged anywhere, iii) Money lender keeps the record from where the funds are coming & where they are going. In this case, nowhere it is found from where the funds are coming, iv) Mr. M.H. Andure, Mr. M.B. Patil, Mr. Mahajan have signed the diaries as acknowledgment of transactions amongst themselves and not with the appellant. Thus, inference drawn by the AO about the money lending transaction of the appellant is not based on correct appreciation of facts and evidences on record.

It may be mentioned here that the learned DR objected to the fact that various documents such as notices, replies and the order of the learned CIT(A) were not placed in the paper book in full form. He pointed out that production of part evidence may not give a correct picture. In view thereof, the learned DR was requested to file complete copies from revenue’s record and state his case on the basis of such complete evidence.

4.2 The learned Counsel referred to statement of Shri P.B. Mahajan, placed in the paper book on pages 61 to 127 The English version of the relevant questions and answers were also placed in the paper book on pages 129 to 149. The aforesaid statement was recorded in Marathi on 21.11.2001 under the provisions of Section 132(4). In answer to question no. 21, it was deposed that he did not have any business or financial relations with the assessee. In answer to question no. 21, it was stated that he, his family members i.e. his mother, father and brother had taken hand loans from the assessee, who was his brother-in-law, being husband of his sister, Mrs. Rajshree, from time to time from April’98 to 21.11.2001, totalling to Rs. 64 lakh. The details of these loans were furnished. In answer to question no. 22, it was deposed that he tpok loan of Rs. 35.70 lakh initially on 23.04.1997 from the assessee and the remaining amount was taken from the sister, the wife of the assessee. In reply to question no. 23, it was deposed that he took loan amount from Mr. Jalkote from time to time and the dates and amounts are written on page 13. On the beginning of page 13, 35.70 is written, which means Rs. 35.70 lakh. In reply to question no. 41, it was deposed that the documentary evidence, being receipts of the FDR, purchase deed of agricultural land will be submitted. Income of the aforesaid investment is Rs. 64 lakh, which was declared as additional income. The learned Counsel pointed out that there are obvious contradictions in this statement when it was deposed that monies were taken as loan from the assessee and his wife and when the impugned amount was offered for taxation by Shri Mahajan.

4.3 The learned Counsel referred to the statement of the assessee recorded in the course of search under the provisions of Section 132(4) on 2111.2001. This statement has been placed in the paper book on pages 5 to 60. In the course of recording this statement, the assessee was made aware of the deposition of Shri P.B. Mahajan, in which it was deposed that latter’s family members including himself had taken loans of Rs. -64 lakh from the assessee and his wife. After going through the statement, it was deposed that he(the assessee) did not agree with the statement of Shri P. Mahajan. It was further deposed that neither he nor his wife had given any such loan to Shri P. Mahajan. The assessee was also questioned about the impugned entry whereby Rs. 50 lakh became Rs. 1.00 crore in period 11.11.1996 to 10.11.2001. It was deposed that he has gone through all the entries on ahnexure A-67, which had been written in his hand and the impugned entry had been placed in a box. There are entries below the box also starting from 23.04.1997 and ending with 18.09.2001. It was reiterated that even after reading of the statement of Shri P. Mahajan, his answer remains the same as given earlier.

4.4 On the basis of the aforesaid evidence, statements, notices and the orders, the learned Counsel pointed out that both the AO and the learned CIT(A) had applied their minds to the impugned entry placed in the box. It was further pointed out that the learned CIT had issued notice to the assessee before passing of the order by the learned CIT(A). The notice Under Section 263 was issued on 09.02.2004, and the revisionary order was passed on 25.03.2004, while the learned CIT(A) passed the order on 28.01.2005. He referred to the explanation of the assessee regarding the impugned entries recorded by the learned CIT in paragraph 7 of the order. It was pointed out that the impugned entry was not considered by Shri P. Mahajan when he declared his undisclosed income for the block period because the entry was hypothetical in nature. The entry was neither verified, examined nor explained during the course of search proceedings, post search proceedings or even the block assessment proceedings. It was pointed out that there is an error in this part of the order in as much as the AO had specifically asked questions about these entries in the course of assessment proceedings. Questions were also asked from the assessee in the course of search about the entry. On both the occasions, the impugned entry was distinguished from other entries. The Iearned CIT had also discussed various entries of this nature in paragraph 8 of his order, whereby the amount becomes double when kept by way of fixed deposit for a period of five years. In paragraph 9, he had referred to the impugned entry and pointed out that the date of keeping the amount as fixed as well as the maturity date fell in the block period. The entry was repeated in A-67 and A-71. In paragraph 10, it was recorded that the stand taken by the assessee in reply to the show cause notice was incorrect and that the aforesaid entry represented real money transactions In paragraph 11, it was recorded that Shri P. Mahajan accepted undisclosed income of Rs. 64.00 lakh on the basis of the entries in the annexure. In paragraph 12, the learned CIT recorded a finding of fact that the AO failed to refer to and to take cognizance of the entry of the said Rs. 50.00 lakh found in A-67. The learned Counsel pointed out that there are inherent contradictions in the order of the learned CIT. In the first place, the assessee was required to explain the entries both in the course of search and in the assessment proceedings. It was stated in a consistent manner by the assessee that the impugned entry was different from the other entries in nature and character and that the impugned entry was hypothetical in nature. The AO asked questions about the entry and after considering the explanation of the assessee, he came to the conclusion that the entry was not in respect of any actual financial transaction undertaken and, therefore, no amount was added to the income of the assessee in respect of the entry. Therefore, the finding of the learned CIT that the entry was not referred to or taken cognizance by the AO was contrary to the facts on record. Having come to the conclusion that the order was erroneous and prejudicial to the interests of the revenue in the case of the assessee, the learned CIT issued notice Under Section 263 in the case of Shri P. Mahajan also and added identical amount in his case in revisionary order passed on 21.07.2004. Thus, the learned CIT was also not sure whether the income belonged to the assessee or Shri P. Mahajan.

4.5 Coming to the legal issue, the learned Counsel relied on the decision of Mon’ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83, in which it was inter-alia pointed out that the words “prejudicial to the revenue” should be read in conjunction of the word “erroneous”, finding place in Section 263. Though the case was decided in favour of the revenue, it was held that where two views are possible and the ITO has taken one view with which the CIT does not agree, the order of the AO cannot be treated as erroneous or prejudicial to the interests of the revenue, unless the view taken by the ITO is unsustainable in law Having summarized the ratio of the decision, we would like to reproduce two paragraphs of this order on pages 88 & 89 to appreciate fully the ratio of the decision, as under:

The phrase “prejudicial to the interests of the revenue” has to be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue, unless the view taken by the Income-tax Officer is unsustainable in law. It has been held by this court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the AO accepting the same as such will be erroneous and prejudicial to the interests of the revenue. Rampyari Devi Saraogi v. CIT and in Smt Tara Devi Aggarwal v. CIT .

In the instant case, the Commissioner noted that the Income-tax Officer passed the order of nil assessment without application of mind. Indeed, the High Court recorded the finding that the Income-tax Officer failed to apply his mind to the case in all perspective and the order passed by him was erroneous. It appears that the resolution passed by the board of the appellant-company was not placed before the AO. Thus, there was no material to support the claim of the appellant that the said amount represented compensation for loss of agricultural income. He accepted the entry in the statement of the account filed by the appellant in the absence of any supporting material and without making any inquiry. On these facts the conclusion that the order of the Income-tax Officer was erroneous is irresistible. We are, therefore, of the opinion that the High Court has rightly held that the exercise of the jurisdiction by the Commissioner under Section 263(1) was justified.

4.6 He further relied on the decision of Hon’ble Bombay High Court in the ease of CIT v. Gabriel India Ltd. , in which it was inter-alia pointed out that the order Under Section 263 amounts to discharge of quasi-judicial function, which cannot be based on the whims or caprice of revising authority. There must be material available from record called for by the CIT. The Court further pointed out that an order cannot be held to be erroneous simply because in the order, the ITO did not make elaborate discussion in regard to the matter at hand. In order to appreciate the ratio of this case fully, we Consider it necessary to produce one paragraph from page 117 of the order, which dealt with the facts of that case and enunciation of law:

We may now examine the facts of the present case in the light of the powers of the Commissioner set out above. The Income-tax Officer in this case made made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer cannot be held to be ‘erroneous’ simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the Income-tax Officer to reexamine the matter. That, in our opinion, is not permissible. Further inquiry and/or fresh determination can be directed by the Commissioner only after coming to the conclusion that the earlier finding of the Income-tax Officer was erroneous and prejudicial to the interests of the revenue. Without doing so, he does not get the power to set aside the assessment. In the instant case, the Commissioner did so and it is for that reason that the Tribunal did not approve his action and sot aside his order. We do not find any infirmity in the above conclusion of the Tribunal.

4.7 He also relied on the decision of Hon’ble ITAT, Allahabad “A” Bench in the case of Monga Metals (P) Ltd. v. ACIT (2000) 67 TTJ (All) 247, in which it was inter-alia held that for computing the undisclosed income, the burden is on revenue to establish that figures appearing in the loose papers found in search constituted undisclosed income of the assessee. In that case, certain arithmetical figures appeared on two loose papers, which were held to be in the nature of sale of Ingots and amounted to undisclosed income of the assessee. The Hon’ble Tribunal pointed out that there was no evidence to sihow that the figures on the loose papers actually represented the sale of Ingots and consequently amounted to undisclosed income. Thus, there was no evidence on record to support the order of the AO except that the figures raised suspicion in his mind about undisclosed sales. The Hon’ble Tribunal pointed out that the decision of the quasi-judicial authority cannot be based on suspicion, conjecture or surmise.

4.8 The learned Counsel also relied on the decision of Hon’ble ITAT, Ahmedabad “B” Bench, in the case of Amar Natvarlal Shah v. ACIT (1997) 60 ITD 560. In that case, certain loose papers were found containing some entries. The assessee explained that the loose papers contained names of three or four persons from whom some money was taken for booking of flats constructed by the assessee firm and some other figures represented income/expenditure in respect of transactions in sarees and cut-pieces. The AO rejected the explanation and made addition by decoding the entries by multiplying the figures by one thousand or one lakh. The Hon’ble Tribunal pointed out that where seized papers mentioned only dates and months and not the year and the AO mentioned the year 1988 thereon, there could be no basis for addition in the proceedings of AY. 1989-90, especially when no tangible assets in the form of unexplained investments were found at the time of search which could justify huge additions made.

4.9. He also relied on the decision of Hon’ble ITAT, Nagpur Bench, in the case of Elite Developers v. DCIT (2000) 73 ITD 379. In that case, the AO assessed undisclosed income of the assessee at Rs. 71.32 lakh against nil income returned. The AO assessed the gifts received by the fathers of three partners from NRI purchasers of flats and amount declared by way of receipt of “on-money” in statement recorded from one partner under the provisions of Section 132(4), which was subsequently retracted. The Hon’ble Tribunal pointed out that the assessment of gifts was based upon wrong facts and, therefore, such assessment was bound to be wrong for the reason that the AO failed to discharge his onus of proving that the gifted amount belonged to the assessee. The assessee had otherwise proved the identity, creditworthiness of the donors and genuineness of the transactions. Therefore, the amount could not have been assessed in the hands of the assessee. Coming to the issue of taxation of “on-money” on the basis of statement recorded Under Section 132(4), the Hon’ble Tribunal pointed out that the AO failed to bring any material on record to corroborate the receipt of “on-money”. The statement made by the assessee was retracted. Therefore, assessment of such money, in absence of any evidence, was not justified.

4.10 The learned Counsel referred to the statements of the assessee in which the impugned entry was clearly stated to be hypothetical entry. He also referred to the statement of Shri P. Mahajan recorded Under Section 132(4), in which he surrendered the undisclosed income of about Rs. 64.00 lakh and not Rs. 1.64 crore, meaning thereby that the impugned entry in the annexures, recorded under his name, was not considered by him also as undisclosed income. It has been pointed out earlier that the learned DR objected to the filing of only a part of the notice issued to the assessee. In order to get over this objection, the learned Counsel filed full text of letter dated 26.09.2003 addressed to Shri P. Mahajan and the reply given by Shri P. Mahajan to the AO on 16.10.2003. Page 5 of the notice shows that Shri P. Mahajan was questioned about A-67 to A-69, A-71 and A-74 to A-76. In reply, it was pointed out that page 7 related to him in which explanation and calculations were made in respect of proposed deposit and its benefit on maturity, say, if Rs. 5.00 is fixed it will be Rs. 10.00 for the mentioned period but the same was not effected in actuality. Page 11 contained the summary of transactions giving the final figure of Rs. 52.00 lakh, which has been offered to tax in the return for the block period. On the upper side of the page, the explanation is same as explained in respect of proposed deposit mentioned on page 7.

5.1 Coming to the arguments of the revenue, the learned DR referred to pages 16,17 & 18 of paper book No. V, being letter dated 23.09.2003 addressed by the AO to the assessee. The assessee was required to explain the import of entries in respect of A-67/page 1 to 27, A-68, A-71 /pages 1 to 24, A-72/pages 1 to 16, A-73/pages 1 to 11, A-74/pages 1 to 12 and A-76/pages 1 to 32. Page 18 of the notice mentions about page no. 13 of A-67, being the impugned entry of Rs. 50.00 lakh doubling to Rs. 1.00 crore between 11.11.1996 to 10.11.2001. He pointed out that though the impugned entry formed part of the notice, the AO did not make any specific enquiry in respect of the noting and, therefore, the assessee was not fully questioned about the import of the entry. Thereafter, he referred to volume No. VII of the paper book, which contained various replies given by the assessee and Shri P, B. Mahajan in respect of the impugned entry. In regard to entries at page 13 of A-67, which also included the impugned entry. The assessee replied vide his letter dated 23.09.2003 that the entries related to Shri B.B. Mahajan. It was explained that these transactions had been offered for taxation in the block assessment of Shri P.B. Mahajan as ascertained by him on enquiries from Shri B.B. Mahajan and Shri P.B. Mahajan. In regard to entries in A-71, it was explained that the transactions written on pages 1 to 24 pertained to S/Shri M.H. Andure, M.B. Patil, and P.B. Mahajan and that they will be in better position to give reply in respect of these entries. In regard to the entry on page 20, it was reiterated that the transactions related to Shri P.B. Mahajan and Shri B.B. Mahajan and that the assessee did not have any connection with these transactions. It was also pointed out that Shri P.B. Mahajan will explain the financial implications of these transactions. The assessee also made elaboration of his role by stating that Shri B.B. Mahajan was literally a member of the family and he had jotted down transactions at his instructions relating to S/Shri B.B Mahajan, P.B. Mahajan, and M.H. Andure. It is further mentioned that this was only clerkage and the assessee had nothing to do with the financial aspects of the transactions. It was also mentioned that some entries have been repeated, for which due consideration may be given. Coming to the impugned entry, it was explained that this was a casual noting made in the discussion held in the meeting of the Mahajan family. He remembered that noting was specifically made as Mr. B.B. Mahajan was telling his sons that they should carryout the business efficiently to maximize the profit. He was illustrating that if Rs. 50.00 lakh is kept in fixed bank deposit for five years time the same can become Rs. 1.00 crore. This was only the illustration and the entry had no financial implication. Shri Mahajan expected from his sons that an amount of Rs. 50.00 lakh invested in business should fetch Rs. 102 lakh at the end of the five years. This was an illustration given by him to his sons, which was noted in the diary. The case of the learned DR was that there was a large number of entries including the impugned entry and it will be impossible to expect that a high Government official will make entries in his hands in his diaries over a period of time only by way of clerkage. It will also be hard to swallow that the impugned entry was merely hypothetical entry while other entries of similar nature represented substantive financial transactions. Therefore, his case was that the AO accepted the explanation of the assessee on impugned entry without fully examining the matter.

5.2 Coming to the legal arguments, the learned DR referred to the decision of Hon’ble ITAT, Nagpur Bench, in the case of Indo Lahari Bio Power Ltd. v. ACIT (2005) 96 TTJ (Nag.) 985. The decision of that case was in favour of the assessee and it was pointed out that the assessee had given detailed explanation and requisite information to the AO on the issues which were raised by the CIT in revisionary proceedings. The view taken by the AO was also a possible view and, therefore, his order could not be considered as erroneous or prejudicial to the interests of the revenue. The learned DR pointed out that while the proposition of law that if the AO has taken one of the possible views, then, the order cannot be revised Under Section 263 represents the correct state of law. But that will be the case when the matter had been fully examined by the AO and he took a reasonable decision in the matter. However/the AO had not considered the matter fully in the instant case.

5.3 He relied on the decision of V. Narayanan v. DCIT (2004) 89 TTJ (Chennai) 628. In that case, some cash and a car were given by the company to his representative in India, who was honorary head of the company’s representative office in India. The car was imported for assessee’s use and later it was transferred to his name. The gift of car was in the nature of termination benefit though it was termed as a goodwill gesture. The Information about receipt of the car was not examined by the AO and, therefore, the Commissioner was right in concluding that the assessment was prejudicial to the interests of the revenue as it was framed without any scrutiny.

5.4 The learned DR relied on the decision in the case of Jewel of India v. ACIT (2003) 87 ITD 527 (Mumbai). In that case, the AO had called for details pf the agreements, which were furnished, but without making any further enquiries about nature of payments, he accepted the contention of the assessee. It also appeared that the assessment was made in undue haste. The Hon’ble Tribunal came to the conclusion that such order is erroneous and prejudicial to the interests of the revenue.

5.5 He also relied on the decision in the case of Ambica Agro Suppliers v. ITO (2005) 95 ITD 326(Pune), a case in which no enquiry was made regarding claims of bad debt, cash payments exceeding Rs. 10,000/-, genuineness of credits, and abnormal increase in expenses. The Hon’ble Tribunal came to the conclusion that even though explanation of these matters was filed, the AO accepted the explanation without making any enquiries into the claim or explanation. There was no application of mind on the part of the AO. Therefore, the order was held to be erroneous and prejudicial to the interests of the revenue.

5.6 He also relied on the decision in the case of Bharat Petroleum Corporation Ltd. v. JCIT (2004) 3 SOT 44 (Mum.). In that case, the AO allowed deduction Under Section 80-IA without considering the nature of interest income earned on inter-corporate deposits made out of surplus funds and rental income, which was claimed to be profits of the industrial unit. The CIT set aside the assessment to consider these matters again. The Hon’ble Tribunal pointed out that the AO had not examined the matter in detail in the light of the pronouncements of jurisdictional Tribunal and, therefore, the Commissioner was right in invoking his jurisdiction Under Section 263 for the purpose of the revision of the order.

5.7 He also relied on the decision in the case of Anil Kumar v. ACIT 147 Taxman 5 (Delhi). In that case, the assessee had received NRI gifts. The AO accepted the explanation of the assessee. However, the CIT pointed out that the claim of gifts had been accepted without making proper enquiries in respect of creditworthiness of the donors. The onus of proving genuineness of the gifts was on the assessee, which was not discharged by the assessee. therefore, the order accepting the gifts was erroneous and prejudicial to the interests of the revenue.

5.8 He also relied on the decision in the case of Super Cloth v. ACIT (2006) 100 TTJ (Chennai) 944, in which it was pointed out that lack of proper enquiry is sufficient to come to the conclusion that the order passed by the AO was erroneous and prejudicial to the interests of the revenue.

5.9 He also relied on the decision in the case of CIT v. South India Shipping Corporation Ltd. , in which the AO allowed weighted deduction Under Section 35B on certain expenditure without verifying the claim with reference to statutory language of the relevant sub-clause. The Hon’ble Court pointed out that on a reading of the order of the Commissioner, It was clear that the ITO allowed weighted deduction on commission paid to brokers, Charters and their brokers, while it was explained to the AO that the commission had been paid to foreign brokers through whom the information had been obtained. The assessee took conflicting stands before the AO and the Commissioner. It was held that the order of the AO was erroneous and prejudicial to the interests of the revenue as the deduction was granted without considering the full facts in the context of statutory language.

5.10 Reliance was also placed on the decision of Gee Vee Enterprises v. Addl. CIT , in which the AO granted registration to the firm Without making prior enquiries. However, in that case, the issue before the Court was whether constitutional remedy under Articles 226 & 227 was available to the assessee against the show cause notice issued by the CIT when alternative remedy was available. The Hon’ble Court pointed out that the ITO is not merely an adjudicator but he is also an investigator and, therefore, he cannot remain passive when the return apparently calls for further enquiry. Thus, the order of assessment was held to be erroneous and prejudicial to the interests of the revenue.

5.11 Reliance was also placed on the decision in the case of Pandit tashkari Ram v. CIT . In that case, the AO passed an order which could not be termed as a speaking order. He called for certain details and the assessee furnished those details by filing revised return. Thereafter, the assessment was completed. The Hon’ble Court held that a cryptic and non-speaking order is an order erroneous and prejudicial to the interests of the revenue.

5.12 He also relied on the decision of Hon’ble Supreme Court in the case of Rampyari Devi Saraogi v. CIT . In that case, the ITO had accepted the initial capital, the gifts received by the assessee, sale of jewellery and income from business without making any enquiry. The Commissioner cancelled the order and directed the ITO to make fresh assessment after making proper enquiries. In the notice Under Section 33B of the 1922 Act, the Commissioner also made averments to certain facts, namely, that the ITO had no jurisdiction over the assessee, she never carried any business of food grains from the place indicated etc. There was ample evidence on record to show that the assessments was made in undue haste without calling for any evidence or making any enquiry. The Hon’ble Court came to the conclusion that additional material of which averment was made in the order of Commissioner was not the basic reason for exercising revisionary jurisdiction. However, in view of the fact that there was ample material to show that the assessment was made without collecting any evidence or making any proper enquiry and it was also made in undue haste, the CIT was within his jurisdiction to pass the revisionery order.

5.13 He also relied on the decision in the case of Tarajan Tea Co. Pvt. Ltd. v. CIT , a case in which assessment was made Under Section 143(3) read with Section 144B. The decision of the Court was that in spite of directions given by the IAC, it was the order of the AO. The order was made without making due and proper enquiry, which was erroneous and prejudicial to the interests of the revenue.

5.14 He also relied on the decision of Hon’ble Supreme Court in the case of Smt. Taradevi Agarwal v. CIT . The facts of that case do not have any bearing on the instant case, however, the same may be stated. The assessee was assessed on the income voluntarily returned by her. However, it was found that she had not earned the income and, therefore, she was not assessable on that income. The Commissioner revised the order Under Section 33B of the 1922 of the Act, canceling the order and directing that the proceedings for assessment may be initiated against the some other assessee, who had earned that income. The Hon’ble Court held that the Commissioner was within his jurisdiction in passing such an order.

5.15 It was agitated by the learned Counsel that even in revisionary proceedings, the Commissioner could not come to a conclusion whether the income should be assessed in the hands of the assessee or in the hands of Shri P. Mahajan and, thus, the Commisisoner was not able to show clearly where the income was assessable. In absence of such finding the order of the AO could not have been held to be erroneous and prejudicial to the interests of the revenue. In this connection, the learned DR relied on the decision of Supreme Court in the case of Lalji Haridas v. ITO . In that case, the question was whether the income was received by A or by B. Precautionary assessments were made in both the cases. The Hon’ble Court pointed out that such precautionary or protective assessments were permissible under the 1922 Act.

5.16 The learned Counsel had raised a plea that in respect of the impugned entry, the AO and the learned CIT(A) had come to the same conclusion, namely, that the impugned entry had no financial implication and, therefore, such an order of the AO cannot be termed as erroneous and prejudicial to the interests of the revenue. In this connection, the learned DR referred to the assessment order, placed in the assessee’s paper book from pages 253 to 331. In particular, attention was drawn towards the fact that entries in A-68 and A-71 were written in the handwriting of the assessee, containing accounts of S/Shri M.H. Andure, P.B. Mahajan, B.B. Mahajan, and M.B. Patil and other persons. The learned DR filed paper book IV containing all these entries. In paper book V, as mentioned earlier, questions were raised about the relevant entries from the assessee and paper book VII contained the explanation of the assessee. On the basis of these materials, his case was that though preliminary questions were raised, but no detailed and proper enquiries were made by the AO It was pointed out that many entries were signed by the corresponding parties and, therefore, it was clear that the entries were in relation to money-lending activity carried on by the assessee.

5.17 The learned Counsel had also raised argument that the impugned entry does not show who lent the money, who received the money, and how the money was utilized. Therefore, his case was that the impugned entry could not be relied upon for coming to conclusion about undisclosed income in the case of the assessee. The learned DR vehemently contradicted this argument by stating that the entry was loud and clear. The entry was not made on any loose papers but it was made by the assessee in the diaries in his own handwriting. The impugned transaction along with certain other transactions were carried from one diary to another diary, which clearly established that the assessee was not doing any arithmetical exercise while writing the entry. In this connection he particularly relied on the decisions in the case of Tarachand Tea Co. Pvt. Ltd. and Smt. Taradevi Agrawal (supra). In the case of the aforesaid Tarachand, it was inter-alia pointed out that the order was initially passed by the AO although directions were given by the IAC Under Section 144B. Such an order is the order of the AO, amenable to revisionary jurisdiction of the CIT. In the instant case, the AO had accepted at the very first instance, the case of the assessee in respect of impugned entries and, therefore, there was no question of any controversy before the CIT(A) in respect of the aforesaid matter. The Commissioner had issued notice and passed revisionary order before passing of the appellate order. Therefore, there was no question of the merger of the order of the AO into the order of the CIT(A) when the revisionary order had already been passed. It was also his case that the basic matter to be decided is whether the income in the impugned entry was earned by the assessee or by Shri P. Mahajan. Shri P. Mahajan had made certain declarations and filed return for the block period on the basis of entries made by the assessee in his diaries. However, that will hot preclude the revenue for making proper assessment in the case of the assessee on the basis of evidence found from him and enquiries made on such material.

5.18. Finally, in summing up his arguments, the learned DR pointed out that the assessments were made in the hands of the assessee on the substantive basis and in the case of Shri P. Mahajan on protective basis. Notices were issued Under Section 263 to both these persons. It was his case that the Commissioner can conduct enquiries himself and give directions for adding certain amounts to the income in the revisionary order or after coming to the conclusion that the order of the AO was erroneous and prejudicial etc., he can direct the AO to make further enquiries and frame assessment as per law. He controverted the argument of the learned Counsel in regard to impugned entry being placed in a rectangular box and in absence of linkage between the entry in the box and other entries on the page by pointing that entries have been carried form A-71 to A-67. Such carry forward includes the entry in rectangular box. It was also his case that entries were signed by Shri Mahajan and, therefore, they represented monies lent by the assessee to Shri Mahajan. Shri Mahajan had given contradictory statement in regard to the import of the entries. However, In the earlier part of the statement, it was deposed by him that he had taken loan of Rs. 64.00 lakh from the assessee and his wife. From the aforesaid facts, it is clear that the entries in the box represented income of the assessee end in the alternative the income of Shri P. Mahajan. It was also his case that if the Tribunal finds that further enquiries are required to be made in the matter to come to the correct conclusion, such direction may be issued either to the Commissioner or to the AO. A reference was also made to the affidavit filed by the assessee in the course of assessment proceedings, in which it was inter-alia mentioned that the transactions in the diaries and documents seized in the course of search and seizure operation were not those of the assessee but those of Shri P. Mahajan, M.H. Andure or M.B. Patil. His Statement in the course of search and seizure proceedings was also referred to, in which it was clearly stated that the diaries were written by him. He referred to the decision in the case of Hotel Kiran v. ACIY (2002) 82 ITD 453(Pune.), in which it was inter-alia held that where a statement has been made Under Section 132(4) voluntarily without coercion or threat and the contents of the statement are clear and unambiguous, the same are binding on the assessee even if retracted subsequently by him.

6.1 In the rejoinder, the learned Counsel of the assessee pointed out that there is no dispute about the fact that the diaries were found from the assessee and they were written in his handwriting. The issue in the instant appeal is whether entries in the rectangular box in A-67 and A-71 have any financial implication. All entries in diaries except entries in the box, were owned up by one person or the other and returns of block assessments were filed accordingly by them. He referred to pages 820 and 821 of paper book No. Ill filed by the revenue, which is the account of Shri M.H. Anudre. These pages contain the name of Shri P. Mahajan also apart from that of Shri M.B. Patil etc., which showed that transactions were in relation to certain contracts, which were not entered in the books of account, but relating to Shri M.B. Patil and Shri P. Mahajan. He also referred to pages 845 and 862 of the paper book III of the revenue, which shows that jottings were in respect of transactions, which were not necessary in the nature of advances.

6.2. He again drew our attention towards paragraph 3 & 4 of the order of the AO, in which the assessee was required to explain various entries in the diaries. In particular, paragraph 4.4 refers to the diaries seized from the ajssessee, analysis thereof and summary made on tally software.

6.3 He referred to volume V of the revenue’s paper book, being a notice dated 23.09.2003 issued by the AO to the assessee. It was pointed out that on perusal of pages 40 to 43, it will be seen that specific enquiries were made by the AO in respect of the transactions recorded in the diaries, including the impugned transaction of Rs. 50.00 lakh becoming Rs. 1.00 crore in a period of five years. In the course of search and also in the course of assessment, the assessee had explained the entries by way of deposition and written submissions. The consistent stand of the assessee was that the transactions noted in the diaries did not pertain to him and that the impugned entry was merely a hypothetical entry. Shri P. Mahajan was also questioned about the contents of the diaries. Initially, he stated that he had taken loan from the assessee and his wife but later on stated and maintained that transactions to the extent of about Rs. 64.00 lakh pertained to him. The impugned transaction of Rs. 50.00 lakh becoming Rs. 1.00 crore was not owned up by him also. In spite of clear statement of the assessee that the transactions in the diaries did not belong to him, he was assessed at undisclosed income of about Rs. 11.00 crore. At no point of time, there was any deviation in the statement of the assessee and, thus, there was no retraction by him. In so far as Shri P. Mahajan is concerned, he initially deposed to the effect that he had taken loan from the assessee and his wife, but later on explained that the transactions were his transactions. This change in his stance does not amount to retraction in respect of impugned entry.

6.4 The learned Counsel also referred to the impugned transaction mentioned in the diaries. According to him, even if the transaction is presumed to have taken place, the notings do not show who advanced the money and who took the money. No security was furnished in respect of transaction. In view thereof, no court will consider such an evidence for enforcement of the liability in case of dispute between the transacting parties. Thus, such an entry cannot be relied upon for making assessment in the case of the assessee especially when none has owned up the transaction. In any case, non-taxation of the amount after obtaining explanation of the assessee cannot be said to constitute an order, which is erroneous and prejudicial to the interests of the revenue.

6.5 The learned Counsel also pointed out that after passing the order Under Section 263 in case of assessee and adding the impugned amount of Rs. 1.00 crore in his hands, the learned Commissioner issued show cause notice to Shri P. Mahajan and made addition in his hands also. Both these assessments were substantive assessments. It was not a case where one assessee was assessed on a substantive basis and the other on protective basis. Taxing both the persons substantively in respect of the same transaction shows that even the learned Commissioner was not clear whether the amount is to be taxed in the hands of the assessee or in the hands of Shri P. Mahajan. Therefore, it was not shown clearly by him that the order was erroneous and prejudicial to the interests of the revenue.

6.6 The learned DR had cited a number of cases that the AO ought to have made further enquiries. In this connection, it was pointed out that extensive enquiries were made to locate the funds and such enquiries were made with a large number of banks. However, in spite of extensive searches and subsequent enquiries, no evidence was found regarding the money involved in the transaction. In fact, no enquiry was made by the AO in regard to addition of about Rs. 64.00 lakh made in respect of other transactions noted on the same page on which the impugned transactions are recorded. Therefore, it is not conceivable as to what kind of further inquiry was expected from the AO.

6.7 He also referred to the finding of the learned CIT(A) in the appeal against the original assessment order. It was held by him that the transactions were either in respect of loans advanced to Shri M.B. Patil by Shri P. Mahajan or in respect of contract receipts of Shri M.B. Patil. Thus, even in respect of other entries there was a difference of opinion between the AO and the learned CIT(A) in regard to their nature and contents. Such difference of opinion also exists in respect of impugned entry. Thereafter, the learned Counsel dealt with all the cases cited by the learned DR and pointed out that facts in those cases were entirely different. We shall revert to these matters while deciding the appeal (infra). His case was that the AO had examined the entries including the impugned entry and in respect of impugned entry he came to the conclusion that no addition could be made in the hands of the assessee or in the hands of Shri P. Mahajan. Thus, it is a case of mere change of opinion and the learned Commissioner could not have revised the order merely on change of opinion.

7.1 We have considered the facts of the case and rival submissions. On examination of the arguments of the rival parties, we find that they have gone far beyond the ambit of appeal before us The question before us is whether the learned Commissioner was right in invoking jurisdiction Under Section 263 of the Act and hold that the order of the AO was erroneous and prejudicial to the interests of the revenue; and whether he was justified in enhancing the income of the assessee by a sum of Rs. 1.00 crore. We are not concerned in this appeal with merits and demerits of additions made by the AO in respect of other entries. Therefore, we consider it appropriate to confine ourselves to the grounds of appeal and in doing so, we find support from the decision of the Hon’ble Punjab & Haryana High Court in the case of CIT v. Jagadhari Electrical Co. . In that case, it was pointed out that the power to revise an order vests in the Commissioner. In respect of such an order, if the assessee can satisfy the Tribunal that the grounds for the decision given in the order of Commissioner are wrong on facts or not tenable in law, the Tribunal has no option but to accept the appeal and to set aside the order of Commissioner. The Tribunal cannot uphold the order of the Commissioner on any other ground, which in the opinion of the Tribunal, was available with the Commissioner. If such recourse is allowed to the Tribunal, then, it will amount to exercise of the revisionary power by the Tribunal, which is vested only in the Commissioner. The aforesaid conclusion gets further strengthened by the fact that only the assessee has right to appeal against the order of the Commissioner and such right is not vested in the revenue. Therefore, if other grounds were available to the Commissioner, but not mentioned by him in the order, then, the inference would be that the Commissioner did not find those grounds good enough to hold the order to be erroneous and prejudicial to the interests of the revenue.

7.2 In the light of the aforesaid decision, the facts of the case can be stated here briefly. The facts are that in the course of search of the residence of the assessee, certain diaries were found, which were written in his hand and contained record of financial transactions. The diaries also contained the impugned transaction at two places. All other transactions except the impugned transaction were accepted by one or the other party, other than the assessee and returns for the block period were filed accordingly. The unequivocal statement of the assessee in the course of search was that the transactions do not pertain to him; the transactions were recorded by him at the instance of his father-in-law Shri B.B. Mahajan. It was also his stand that the impugned transaction was merely an example of certain sum of money becoming double in a period of five years, if the money is kept in fixed deposit with the bank. This transaction was recorded as Shri B.B. Mahajan wanted to tell his sons that the business should be conducted in a manner that profit from certain amount of capital should be more than the capital in a period of about five years. Shri P. Mahajan, in the course of search, initially deposed that he had taken loans aggregating to about Rs. 64.00 lakh from the assessee and his wife. When this part of the statement was shown to the assessee, he again reiterated that such a statement of Shri P. Mahajan is not correct. Neither Shri P. Mahajan nor the assessee ever deposed that the impugned entry was backed up by any financial transaction. The revenue could not find out the money involved in the transaction in spite of extensive searches and enquiries made thereafter. While the entries are clear with reference to dates and amounts and they found place in two different diaries, the entries do not clearly show who lent the money and who borrowed the money. Subsequent entries on A-67 have been signed by Shri P. Mahajan but the impugned entry placed in the box on the top of the diary page has not been signed by anyone. During the course of assessment, the AO sought explanation about the impugned entry in questionnaire issued to the assessee on 23.09.2003. The assessee maintained his earlier stand that the entry was a hypothetical entry. In regard to other entries, he maintained the stand that they pertained to other parties but recorded in his handwriting on the instructions of Shri B.B. Mahajan, his father-in-law. His stand was that recording of entries was in the nature of clerkage, otherwise, these entries do not relate to him.

7.3 Coming to the factual aspect, the learned Counsel repeated what has been described in the earlier paragraphs. On legal issue, his case was that the entries have been examined in the course of assessment and the AO Came to the conclusion that the impugned entry has no financial implication. However, the learned Commissioner proceeded to issue the notice Under Section 263 and held that the order of the AO was erroneous and prejudicial to the interests of the revenue. This finding of the learned Commissioner was not correct in terms of various case laws on the issue of “change of opinion”. This conclusion is also borne out by the order of the learned CIT(A), albeit passed subsequently, i.e., after passing revisionary order. He came to the conclusion that the entry in the diaries did not pertain to the assessee but pertain to loans and contract works in regard to other parties, whose names were mentioned in the diaries.

8.1 We may now examine the rival arguments on the issue whether the order of the AO was erroneous and prejudicial to the interests of the revenue. In this connection, arguments were made by both the parties as to whether enquiries were made properly by the AO into this matter. On the basis of various paper books filed before us, it is clear that the assessee was questioned about this matter during the course of search and seizure operation as well as in the course of making assessment of undisclosed income for the block period. A detailed statement of the assessee was recorded on 21.11.2001, which continued up to 23.11.2001. Substantial portion of the deposition is in regard to the contents of the diaries. Deposition of Shri P.B. Mahajan was also recorded concurrently by another set of authorized officers. Shri P. Mahajan initially deposed that he had taken loans from the assessee and his wife amounting to about Rs. 64.00 lakh. The assessee was confronted with this statement. After perusing the answers given by Shri P. Mahajan, he stated that he does not agree with the statement of Shri P. Mahajan and that he or his wife has not given such amount of loan to Shri P. Mahajan. The assessee was also questioned about the impugned entry. It was deposed that after going through all these entries, his explanation remains the same as given earlier and the earlier reply was that the entry is hypothetical in nature. It appears that after the conclusion of the search, Investigation Directorate made enquiries regarding the location of money involved in the impugned entry, but such enquiries remained infructuous. The AO made enquiry into this and other entries and a specific questionnaire dated 23.09.2003 was issued to the assessee. In this questionnaire, on page 18, the impugned entry was specifically reproduced. The assessee submitted his explanation in letter dated 04.11.2003. It was explained that it was a casual noting made during the course of discussion held by Mahajan family and that he specifically remembered that Shri B.B. Mahajan was telling his sons that they should carry out the business efficiently to maximize profits. He was illustrating that if Rs. 50.00 lakh are kept in fixed deposit for five years, it can become Rs. 1.00 crore. From the aforesaid, it is clear that enquiry was made into the matter at the time of search and also in assessment proceedings. In paragraph 12 of his order, the learned bommissioner gave a finding that having discussed all these things, the AO failed to refer to and take cognizance of the impugned entry and that this failure resulted in the assessment which was erroneous as well as prejudicial to the interests of the revenue. In paragraph 7, his finding on verification, examination or explanation of the impugned entry was that this was the error committed by the AO for which proposal was made Under Section 263. it was further mentioned that the failure on the part of the AO to examine the nature of the said entry resulted into erroneous assessment. Having gone through the statement of the assessee and Shri P. Mahajan as well as the questionnaire issued by the AO, we are of the view that enquiry had been made into the matter by the AO. Such enquiry had also been made earlier in the course of search and seizure operation. Thus, we are of the view that it is not a case where enquiry was not made by the AO.

8.2 The main thrust of the arguments of the learned DR was that having raised the issue, the AO should have made further enquiry to come to a proper conclusion. In this connection, he referred to a large number of cases decided by the Courts and Tribunal that an order can be held to be erroneous and prejudicial to the interests of the revenue if proper enquiries are not made. We find that the cases referred to by the learned DR can be classified in two categories, namely, i) where the issue was with regard to some deduction to be allowed under the statute, and ii) where factual verification was to be made to come to proper conclusion. We have mentioned earlier that the learned Counsel had given rebuttal to all the cases cited by the learned DR. It was also mentioned that such a rebuttal will be discussed subsequently when deciding the issue at hand. We consider it proper to discuss such rebuttal here.

In the case of Indo Lahari Bio Power Ltd.(supra), the issue raised in regard to fact, i.e., whether the enquiries were conducted into the issue of share capital raised by the company and purchase of electrical equipment by it. The finding of the Tribunal was that requisite information on the issues raised in notice Under Section 263 had been furnished in the assessment proceedings and, therefore, such order could not be held to be erroneous and prejudicial to the interests of the revenue We find that in the instant case also, the diaries lad been seized by the authorities in the course of search and seizure proceedings. The assessee was also required to furnish explanation about the impugned entry and other entries, which was given to the AO. Thus, we are of the view that this decision supports the case of the assessee.

The learned DR relied on the decision in the case of V. Narayanan (supra). In that case, return filed by the assessee was accepted Under Section 143(1) without carrying out any scrutiny. Foreign company had sent USD $1,00,000 and also a Benz car, which was later allowed to be retained by the assessee. However, this amount and the value of the car was not shown as income and was also not assessed to tax. The Commissioner held these receipts to be in the nature of termination benefits and also pointed out that no enquiry whatsoever was made by the AO. The order was upheld by the Hon’ble Tribunal. The facts of instant case are entirely different in as much as the order for the block period was made by the AO after considering all the facts, which included the explanation of the assessee on the impugned entry.

The learned DR relied on the order in the case of Jewel of India (supra). In that case, two agreements were entered into the assessee and non-resident company leading to payments in respect of amounts designated as “compensation charges” and goodwill. The AO called for the details, which were furnished but no further enquiry was made into the nature of payments. The case of the learned DR was that white explanation was sought in this case, which was quite vague, the AO did not make any further enquiry as in the case of Jewel India (supra). The further facts of that case are that the assessment was made in undue haste without any regard to real intent and purpose of the payments of the amounts. Thus, the issue was a mixed question of fact and law i.e. in coming to proper conclusion about the nature of payment, without which the claim of the assessee could not have been adjudicated. Such is not the case here. The entries were known to revenue authorities right from the day of search. Detailed explanations were furnished in the statement recorded during the course of search as well as in the assessment proceedings. The question here is purely a question of fact, namely, whether the impugned entry was hypothetical entry or whether the entry was backed by financial transaction. We have seen that in the course of recording statement, post search enquiry and in assessment proceedings, no evidence could be brought on record to show that the impugned entry was backed by actual financial transaction, as against the fact that other entries on the same page were supported by corresponding investment by Shri P. Mahajan. Therefore, we are of the view that the facts of the instant case are quite distinguishable from the facts of that case.

The learned DR also relied on the decision of Ambica Agro Suppliers (supra). The assessee had furnished details of bad debts, cash payments exceeding Rs. 10,000/-, genuineness of loans and creditors, and abnormal increase in expenses as compared with the preceding year. The AO accepted these details without making any enquiry into the matter. The Hon’ble Tribunal came to the conclusion that failure to make enquiry by the AO rendered his order erroneous and prejudicial to the interests of the revenue. It may be noted that that case was one of failure to make enquiry into the explanation filed by the assessee. The AO had to satisfy himself whether conditions prescribed in Sections 36(1)(vii), 40A(3), 68 etc. were satisfied or not. In other words, the explanation of the assessee had to be tested with regard to the statutory provisions on the issues involved, which was not done. However, the instant case is one where diaries were discovered by the revenue and the question was whether impugned entry represented any real and substantive financial transaction undertaken by the assessee. Therefore, we are of the view that the facts of that case are also distinguishable.

Coming to the case of Bharat Petroleum Corporation Ltd. (supra), the issue was purely legal, namely, whether the assessee was entitled to get deduction Under Section 80-IA on the amount of interest earned by it in respect of intercorporate deposits. The claim was allowed without considering the decision of territorial High Court. We do not have the case of allow ability of any deduction before us. Therefore, the facts of that case are totally different from the facts of the instant case.

The question in the case of Anil Kumar (supra) was whether the gifts received by the assessee from a non-resident person were genuine or not. The AO accepted the gifts without making enquiry into financial capacity of the alleged donor. Therefore, primary requisite of acceptance of entry in the books of account was not even examined. In the instant case, there is no entry in the books of account. Thus, the question of capacity etc. of the lender does not arise.

The issue in the case of Super Cloth(supra) was regarding charging of interest on loans and advances, which was decided without going into the facts whether such loans and advances were made in the course of business or not. Therefore, that was the case where primary facts for deciding the issue did not exist in the record, which is not the case here.

The issue in the case of South India Shipping Corporation Ltd. (supra) was regarding allowance of weighted deduction Under Section 35B, which was allowed on certain items without regard to statutory provision contained in Section 35B(i)(b). Thus, the issue in that case was whether the allowance was granted after examining the nature of expenditure, which was not done.

The issue of Gee Vee Enterprises (supra) was totally different, where in stead of filing appeal against cancellation of registration made by the Commissioner Under Section 263, the assessee filed writ petition without giving reasons as to why the appeal was not preferred. The Hon’ble Court pointed out that there was no jurisdictional or any other fundamental objection to the order Under Section 263 and, therefore, the writ petition was not maintainable. It was further pointed out that the AO is not merely an adjudicator but also an investigator and, therefore, he cannot remain passive when apparently the case calls for further enquiry. Thus, this case leads to a conclusion that where prima-facie a further enquiry is called for and such enquiry is not made, then, the order is erroneous and prejudicial to the interests of the revenue. The learned Counsel pointed out that all the facts were there before the AO and there was no scope of making any further enquiry. It was further pointed out that other additions of about Rs. 11.00 crore were made by the AO on the basis of diaries without making any further enquiries. Therefore, his case was that no further enquiry was feasible on the facts of the case and, thus, the ratio of that case is distinguishable from the facts of this case. We have examined this matter. We find that the learned Commissioner did not make any further enquiry while making addition of a sum of Rs. 1.00 crore to the undisclosed income of the assessee. His conclusion was based on the same facts which were there before the AO. Therefore, we are of the view that facts of that and this case are distinguishable in the sense that no further enquiry was required prima-facie or seemed feasible after searching the assessee, making post search enquiry and questioning the assessee about the impugned entry in the course of assessment.

The issue in the Pandit Lashkari Ram (supra) was that revised return was accepted without making any enquiry into such return, which is not the issue in the case before us.

The learned DR had also relied on the decision of Hon’ble Supreme Court in the case of Rampyari Devi Saraogi (supra). In that case initial capital, gift and sale of jewellery were accepted without making any enquiry. The AO also did not find out whether the assessee was carrying on business from the given address. There was ample evidence to show that the assessment was made in undue haste. The Commissioner found that the assessee had not carried out business from the given address. Therefore, he exercised revisionary jurisdiction and directed to make assessment in the hands of the person who actually earned the income. The case before us does not involve any such consideration that income of somebody else has been assessed in the hands of the assessee or vice-versa and that such assessment has been made without making any enquiry.

The issue in the case of Tarajan Tea Company Ltd. (supra) was that proper enquiry was not made regarding the claim of the assessee about spontaneous growth of the trees. The decision of Hon’ble High Court was that a revisionary order can be made directing the AO to make further enquiry. However, the facts of that case justified such further enquiry and such further enquiry was feasible, which is not the case here. The facts of the case of Taradevi Agarwal (supra) were similar to the facts of the case of Rampyari Devi Saraogi (supra).

8.3 Having considered various cases cited by the learned DR, we are of the view that an order can be held to be erroneous and prejudicial to the interests of the revenue if the AO failed to make enquiry or after making initial enquiry he failed to make further enquiry which ought to have been made to find the correct facts. However, if due enquiry has been made and no further inquiry is feasible or required, the revisionary jurisdiction cannot be exercised on the ground that the other view was also possible on the facts of the case.

8.4 In the aforesaid connection, we may refer to the ratio of the decision in the case of Gabriel India (supra), in which the claim of the assessee was allowed after detailed examination. The Hon’ble Court held that such an order cannot be said to be erroneous simply because an elaborate discussion was not made in the matter. We are of the view that the facts of instant case are in pari-material with the facts of that case. Detailed enquiries had been made by referring to the impugned entry. Having come to the conclusion that the entry was a hypothetical entry, the AO came to the conclusion that the amount mentioned in the entry was not taxable in the hands of the assessee. In such a situation, there was no need to make elaborate discussion in the matter as that would not have led to any adverse conclusion against the assessee. Coming to the decision of Hon’ble Supreme Court in the case of Malabar Industrial Company (supra), the facts were that there was no application of mind by the AO. There was no material to support the claim of the assessee that receipt was in-lieu of loss of agricultural income. Therefore, the conclusion of order being erroneous was held to be justifed. However in the instant case, all the facts were on record and the AO had applied his mind. Therefore, we are of the view that it is a case of change of opinion about the interpretation of the impugned entry and not a case where the AO had not examined the matter.

8.5 The question still remains whether further enquiries were called for as the learned DR repeatedly hammered this point. We have considered this matter also. We have already pointed out that department had made whatever enquiry it could make to locate the corresponding assets. Neither cash nor any other investment relatable to the impugned entry was found. We have also seen that other three entries of Damduppat stand on somewhat different footing from these entries in the sense that those entries became parts of subsequent running entries, which was not the case here. Therefore, the impugned amount could not have been taxed merely on giving analogy of other entries. The assessee’s explanation was that the impugned entry was a hypothetical entry. We find that the learned Commissioner added the amount involved in the impugned entry without making any further enquiry, which completely frustrates the case of the learned DR that further enquiries were required to be made by the AO. He did not indicate in any manner as to what kind of enquiry was required to be made further. As pointed out earlier, the learned Commissioner did not make any further enquiry before adding the amount. Therefore, we are of the view that further enquiry was not feasible or in any case that was not the basis on which the order was passed by the learned Commissioner. In other words, as the learned Commissioner did not think that any further enquiry was possible, the order of the AO cannot be held to be erroneous merely on that ground.

8.6 The issue still remains whether the order of the AO was made on applying mind to the facts of the case. The reason is that an order passed without an application of mind is an order erroneous and prejudicial to the interests of the revenue. In this connection, it has already been pointed out that the impugned entry is not analogous to the other entries of Damduppat, which were subsequently taken into running account. That is not the case in respect of the impugned entry as no corresponding investment was found in spite of search and seizure operation conducted at the premises of the assessee and Shri P. Mahajan. Subsequent enquiry also did not yield any evidence of such investment. In the case of Elite Developers (supra), the issue was regarding taxability of gifts received by fathers of three partners from NRI purchasers of flats. The Hon’ble Tribunal pointed out that the conclusion of the AO was based upon wrong facts that partners had received gifts from NRIs who purchased flats from the assessee firm. A number of assumptions were feasible on the basis of facts found in the course of search. However, the Hon’ble Tribunal pointed out that onus -to prove that the apparent is not real was on the revenue, which had not been discharged. In the case of Amar Natvarlal Shah(supra), the AO sought to make addition on the basis of certain loose papers found from the assessee after decoding the figures. The Hon’ble Tribunal pointed out that the seized paper did not mention the year, where as the AO took the year to be 1988 and made addition in AY 1989-90. The AO did not examine the important witnesses to come to a proper conclusion in the matter. No tangible asset was found at the time of search, which could have justified the addition. Thus, there was no evidence that the assessee had in fact received “on-money” Coming to the facts of this case, no asset has been found, it is not known who advanced money and who received the money. The assessee had deposed that the contents of the diary did not pertain to him. Shri P. Mahajan owned up the transactions below the box but not the transactions mentioned in the box. Thus, the learned CIT has not brought any fact on record to establish that the entries in the box represented any substantial financial transaction. In any case, there is substantial scope of difference of opinion in conning to proper conclusion in the matter. There is nothing to show that the decision of the learned Commissioner was more considered decision than the decision of the AO. In this view of the matter also, we find that this is a case of change of opinion and not a case where assessment of the undisclosed income was made without application of mind to the impugned entry. Incidentally, that was also the decision of the learned CIT(A), Nagpur, though arrived at after passing of the order by the learned Commissioner.

9.1 The learned Counsel had argued that even the Commissioner of Income-tax was not sure whether the addition ought to have been made in the hands of the assessee or Shri P. Mahajan. We find that the decision of Hon’ble Supreme Court in the case of Lalji Haridas (supra) is against the assessee, in which it was held that where it is not clear who received the income and, prima-facie, it appears that income might have been received either by ‘X’ or by ‘Y’ or by both together, it would be open to the revenue authorities to determine the question by taking assessment proceedings both against ‘X’ and ‘Y’.

9.2 It was also the case of the learned Counsel that no civil suit will be maintainable for recovery of the amount involved in the impugned entry against any person. It may be pointed out here that income-tax proceedings, though quasi-judicial proceedings, are not in the nature of proceedings in a Civil court. In the civil court, the claimant has to prove his case by adducing evidence in his possession, while assessment has to be made by taking all facts and circumstances into account and after giving due opportunity of being heard to the assessee. To give a hypothetical example here, if the assessee or Shri P. Mahajan had accepted that impugned entry was backed by financial transaction, the department could have had a good case for making assessment of the amount either in the hands of the assessee or in the hands of Shri P. Mahajan even without existence of securities or any other material. To that extent, we difer with the decision of the learned CIT(A) that additions dan only be made if all the trappings of money-lending business are found in possession of the assessee.

9.3 The assessee had also taken up a ground to the effect that this very issue was subject matter of appeal before the learned CIT(A)-I, Nagpur and it was under his consideration. Therefore, the learned Commissioner did not have jurisdiction to pass order on this issue. We have already seen that the AO had not made any addition on the impugned entry. Therefore, there was no question of this issue becoming subject matter of appeal before the learned CIT(A). We have also seen that the learned Commissioner had passed the order before passing of the appellate order by the learned CIT(A). Section 246 of the Act does not provide for any appeal to the CIT(A) against the order of the Commissioner of Income-tax, passed Under Section 263 of the Act. It appears that it is for this reason that the learned Counsel did not press this ground. Nonetheless, we are of the view that there is no force in the ground of appeal that this issue was subject matter of appeal before the learned CIT(A). Since this issue was decided by the learned CIT in the revisionary order, it becomes clear that the learned CIT(A) erred in dealing with this issue and exceeded his appellate jurisdiction Under Section 246.

9.4 In a nutshell, it is held that the order passed by the AO was not erroneous and prejudicial to the interests of the revenue as contemplated Under Section 263 of the Act. Therefore, the addition made by the learned CIT in his revisionary order, passed on 25.03.2004, is deleted.

ITA NO. 1407/PN/04 IN THE CASE OF SHRI P.B. MAHAJAN

10. The facts of this care similar to the facts in the appeal No. 625/PN/04(supra). There are some distinctions, which may be discussed here.

11.1 Shri Jalkote had denied any connection with the financial transactions recorded in the diaries found in his possession and written in his handwriting. However, the assessee owned up transactions recorded A-67 and A-71 to the extent that the entries were recorded outside the rectangular box. Initially, his deposition was that he obtained loans aggregating to Rs. 64.00 lakh from Srhi Jalkote and his wife. However, this version was changed and it was deposed later on that the amount of Rs. 64.00 lakh represented his unaccounted income, which was used for various investments made by him. The narration of investments was also given. However, his stand in the course of deposition and also in the block return was that his undisclosed income amounted to Rs. 64.00 lakh in respect of aforesaid entries. It may be mentioned that the impugned diaries were written in the hand of Shri Jalkote and the diaries were found from his possession and not from the possession of the assessee. In the course of search and seizure operation, Shri Jalkote was shown the statement of Shri Mahajan, but he denied the averment made in the initial part for the deposition of the assessee. He also maintained that the impugned entry, which was not backed by any financial transaction. This matter has also been discussed in detail in appeal No. 625/PN/04(supra). Thus, the position which emerged on conclusion of search and seizure operation was that the assessee admitted the unaccounted income of Rs. 64.00 lakh on the basis of diaries found in possession of Shri Jalkote. This income was correlated with the investments made by the assessee. However, no asset was found in respect of the impugned entry placed in the box. The assessee was also not given any opportunity to cross-examine Shri Jalkote and for that matter no useful purpose could have been served by granting such an opportunity for the simple reason that Shri Jalkote consistently maintained that the impugned entry was a hypothetical entry.

11.2 It is also worthwhile to note that the lower portion of the running entries has been signed by Shri P. Mahajan below the figure of Rs. 64 lakh mentioning the date as 18.09.2001. The entries in the box pertained to Rs. 50.00 lakh becoming Rs. 1.00 crore between 11.11.1996 to 10.11.2001. The later date is subsequent to 18.09.2001. The impugned entry in the box has not been signed by Shri P. Mahajan.

12. The arguments of the learned Counsel and the learned DR were the same as in the case of Shri Jalkote. In fact separate arguments were not made by anyone of them before us and they relied in the overall arguments made in the case of Shri Jalkote. It is for this reason that we have pointed out some dissimilarities in the case of the assessee and Shri Jalkote in the opening part of this order. However, we are of the view that such distinction does not make any difference to the overall conclusion that the matter had been examined by the AO and the learned Commissioner made addition of Rs. 1.00 crore without making any further enquiry. Thus, it was a case of mere change of opinion. Therefore, relying on our order in appeal No. 625/PN/04, the addition of Rs. 1.00 crore made by the learned Commissioner in this case is deleted. In view of this finding, the without prejudice ground of appeal regarding addition of Rs. 50.00 lakh only does not survive for adjudication.

13. In result, both the appeals of the assessees are allowed.