ORDER
Phool Singh, J.M.
All the aforesaid eight appeals arise out of different orders passed by the learned Commissioner (Appeals) in this group of cases and as most of the issues are common, these appeals were heard together and are being disposed of by a common order for the sake of convenience.
2. Relevant facts giving rise to this group of appeals are that search and seizure operation under section 132 of the Income Tax Act, 1961 (hereinafter referred to as the 'Act'), was conducted in group cases of Ajanta Service Station, Delhi Road, Meerut on 22-2-1999, including two residential premises known as 68/3, Kamal Nagar, Meerut where Prem Chand Jain resides and at 127, Mahavir Ji Nagar, Meerut, where Subhash Chand along with family members resides. During search several incriminating documents, said to have been found and seized. It appears that proceedings under section 158A of the Act were initiated in cases of all these assessed's as assessing officer issued separate notices to each of the assessed's calling upon them to file returns as per requirement of law. Each of the assessed's filed return and after that assessing officer completed the assessments in cases of all the assessed's, making different additions against which each of the assessed's preferred appeals before Commissioner (Appeals) who had decided appeals of each of the assessed's by separate orders passed on 22-4-2001, and in some cases the assessed's are in appeal and department is also in appeal in cases of Rakesh Kumar Jain, Subhash Chand Jain and Pawan Kumar Jain.
3. First of all we are taking up the appeal of Smt. Astha Jain. While completing the assessment under section 158BC read with section 158BD of the Act the assessing officer noted that assessed had filed return for the block period containing assessment year 1989-90 to 1998-99 and up to 22-2-1999, the date of search, in Form No. 2 and it revealed from the return so filed that assessed had filed return of income for assessment year 1992-93 only and stands assessed but for remaining assessment years 1989-90 to 1991-92 and 1993-94 to 1998-99 no return was filed. The contention of the assessed was that the income of the assessed was below taxable limit that is why she had not filed the return. This contention of the assessed was rejected by the assessing officer on the ground that assessed had increased her capital with the help of getting fictitious gifts of Rs. twenty thousand to thirty thousand in different years and also invested the amount in 700 units of UTI and Master Gains and thus her income could not be said to be disclosed income and assessing officer treated all the amount disclosed by the assessed for assessment years 1989-90 to 1991-92 and 1993-94 to 1998-99 returned by the assessed as undisclosed income and completed the assessment order under section 158BC read with section 158BD of the Act.
4. Before Commissioner (Appeals) the first plea of the learned counsel for the assessed was that assessing officer had completed assessment under section 158BC read with section 158BD of the Act without ascertaining as to whether assessed was covered under the provisions of section 158BD or not. The contention was that before proceeding under section 158BD, the assessing officer was supposed to arrive at a satisfaction that some undisclosed income belonged to the assessed and that was on the basis of seized material and other evidence found as a result of search operation. The assessing officer had not mentioned any evidence resulting into undisclosed income, The other contention of the assessed was that assessing officer had issued notice under section 158BC and not under section 158BC read with section 158BD and during assessment proceedings alone assessing officer came to the conclusion that assessed was not covered under section 158BC and, thereforee, he mentioned section 158BD also. This contention of the assessed could not find favor with the Commissioner (Appeals) who noted that assessed was a family member of Jain group which was searched under section 132 of the Act. The assessing officer had discussed in the assessment order that capital of the assessed was built up by way of gift, etc. which was not fully verifiable. Same was the case with certain investments in UTI shares, etc.
5. Next plea of the assessed was that returned income of the assessed was below taxable limit for assessment years 1989-90 to 1991-92 and 1993-94 to 1998-99 and thus said income shown by the assessed could no be treated as undisclosed income under section 158BB(1)(c). The Commissioner (Appeals) considered this aspect also as well as the cases of different Benches of the Tribunal cited before him and concluded that assessed was not earning any income but after search had filed return showing earning income from trading, etc. which is not proved on record and gifts were also not found verifiable and thus this contention was also rejected on the ground that provisions of section 158BB(1)(c) of the Act were found applicable. Aggrieved, the assessed is in appeal before the Tribunal.
6. The first plea of the learned counsel for the assessed is that no search was carried out on the assessed as she was residing at 127, Mahavir Ji Nagar, Meerut, and no warrant of authorization was in the name of present assessed Subhash Chand Jain was occupying that house and warrant of authorization was in the name of that man as is evident from pp. 16 to 24 of paper book 11 (copy of Panchnama), and once there is no search at the assessed then no assessment could be completed under section 158BC of the Act.
7. Second point argued by the learned counsel is that even if the assessment is taken as it stands to be under section 158BC read with section 158BD, the assessing officer has not issued any notice under section 158BD of the Act. Copy of notice dated 1-7-1999, issued to the assessed is appearing at p. 7 of paper book-II which is under section 158BC only. This notice was corrected by another notice dated 26-7-1999, copy appearing at p. 26 of paper book-II and in that also the assessing officer has referred to the earlier notice under section 158BC and amendment the relevant assessment order and nothing more. The contention is that no notice under section 158BD is issued which is pre-condition for completing the assessment.
8. It is also submitted that before proceeding under section 158BD, the assessing officer who was dealing with the search case was also to record the satisfaction with certain material seized in the search related to some other person and that too about his undisclosed income. There is no satisfaction recorded in the case and no such information had been given by the assessing officer seized with the search case to the assessing officer having jurisdiction over the assessed. It is laid down in different cases that assessing officer cannot assume jurisdiction under section 158BD of the Act merely on the basis of his specific satisfaction as a result of search conducted on Ajanta group of cases and no valid proceedings could be initiated against the present assessed without reaching to the satisfaction. The assessing officer has to come to a definite conclusion that assessed had undisclosed income and merely relying on material found during the search which may relate to the assessed will not be sufficient. For this contention the learned counsel placed reliance on the decision of Ved Prakash Sanjay Kumar v. Asstt. CIT (2001) 76 ITD 107 (Chd) in which the Bench had concluded that before completing assessment under section 158BD the satisfaction must be reached by the assessing officer on the basis of material disclosing the undisclosed income of the assessed (other person) and that satisfaction has to be duly recorded. If assessing officer wants to proceed under section 158BD then he has to issue notice under that very section before issue of notice under section 158BC. In case there is any omission on both the counts then it is not mere irregularity but illegality and the result will be that assessment will be quashed. The same is the view laid down in the case of Suman Dhanji Zalte v. Asstt. CIT ; in which absence of recording such satisfaction before invoking section 158BD was taken as rendering the assessment order illegal and void ab initio. The other case law is in the case of Chabbaria Marketing Ltd. v. Dy. CIT and in the case of Smt. Jatan Bai Baid v. Asstt. CIT (1998) 96 Taxman 24 (Nag). On the basis of above, the contention is that assessment framed on Smt. Astha Jain is liable to be quashed.
9. The learned counsel on merit also pointed out that addition of Rs. 2,48,710 was made in respect of income for assessment years 1989-90 to 1991-92 and 1993-94 to assessment year 1998-99 treating the returned income of the assessed as undisclosed. The contention is that whatever income returned by the assessed was below taxable limit and there is no dispute about the same. Once income was below taxable limit, the assessed was not under obligation to file the return and assessing officer cannot treat such income as undisclosed income merely because the assessed had not filed return of income. For this the learned counsel for the assessed placed reliance on the decision of Smt. Sita Devi Daga v. Asstt. CIT (1998) 67 ITD 151 (Ind) in which Indore Bench of the Tribunal had concluded that income below taxable limit in assessment years 1987-88 to 1991-92 would not form part of undisclosed income and, thereforee, addition on this count was unwarranted and uncalled for. Same is the view taken in the case of Satpal Singh v. Asstt. CIT (2000) 67 M (Chd) 602, in which Bench concluded that if income for year in block period is below taxable limit it cannot be treated as undisclosed income but if after additions, disallowances, it goes above taxable limit, the entire income would be taxable at 60 per cent tax. The contention is that in the case of Smt. Astha Jain admittedly the assessing officer has not made any addition in any of the income returned for the block period and thus addition was unwarranted. Reference of section 158BB(M)(1)(c) was also made and it was submitted that Finance (No. 2) Act, 2002 had substituted sub-clause (c) of section 158BB(1) with effect from 1-8-1995 and new substituted clause (c) consisted of two sub-clause (a) and (b) and sub-clause (b) makes it clear that where no return has been filed within the due date because the income was below the taxable limit then the basis of entries as recorded in the documents maintained in the normal course on or before the date of search will be taken out from the undisclosed income and will be deducted from the total undisclosed income for the block period. On the basis of all these facts the contention of the learned counsel for the assessed is that assessment of block period in case of Smt. Astha Jain be quashed.
10. As against it the learned Departmental Representative read over the order of the learned Commissioner (Appeals) and submitted that same assessing officer who was dealing with the cases of Prem Chand Jain and Subhash Chend Jain in whose name Panchnama was prepared was having jurisdiction over the present assessed and there was no need to record satisfaction as sufficient material was recovered from the possession of Prem Chand Jain and Subhash Chand Jain. In the same way the learned Departmental Representative submitted that there was no need for recording satisfaction under section 158BD. About notice the learned departmental Representative submitted that it is due to mistake that assessing officer did not mention the correct section 158BD and wrote 158BC and this is curable defect under section 298 of the Act.
11. About the second plea of the assessed that the returned income for the block period except assessment year 1992-93 the income was below taxable limit and the same could not be treated as undisclosed income, the learned departmental Representative pointed out that no doubt provision of sub-clause (c) of section 158BB(1) of the Act stands amended but the phrase is 'normal course' and if we look into the factual position of the assessed then it is not the normal business. The assessed was not maintaining any books nor she had shown as to how that was going to form capital. The amount was rightly treated as undisclosed income by the authorities below. Reliance was placed on the decision of Honble, Kerala High Court in the case of CIT v. M.M. George : [2002]254ITR45(Ker) in which Their Lordships have taken into consideration the decision of Honble Gujarat High Court in the case of Khandubhai Vasanji Desai v. Dy. CIT : [1999]236ITR73(Guj) . Learned Departmental Representative also placed reliance on the decision of Honble Gujarat High Court in the case of Rushil Industries Ltd. v. Harsh Prakash : [2001]251ITR608(Guj) to canvas the preposition that even if the assessed was having income below taxable limit that is to be included in the undisclosed income for the block period.
12. We have considered the rival submissions and perused the record carefully. At the very outset it is to be pointed out that admittedly there is no warrant of authorization for search in the name of the assessed nor any Panchnama was prepared in her name. In view of this, no block assessment under section 158BC of the Act could be completed in the name of the assessed and for this we draw support from Tribunal, Delhi 'C' Bench order dated 29-11-2000 in ITA No. 5269/Del/1996 which was followed in ITA(SS) No. 279/Del/1997, A.L. Ahuja v. Dy. CIT dated 26-12-2002.
13. Now coming to the second aspect, once assessing officer who is dealing with the search case arrived at his satisfaction that seized material revealed the undisclosed income of any third party, the said assessing officer is under obligation to record such satisfaction as held in the case referred to by the learned counsel and we have already given reference in the earlier part that requirement of recording satisfaction is not mere formality. It is with specific purpose that satisfaction is to be recorded. No specific words are required but at least the assessing officer has to give out the broad outlines on the basis of which he came to the conclusion that seized material was going to prove prima case that third person who is not subject of such operation has undisclosed income. It is also undisputed fact that provisions of block assessment are specific provisions and even rate of tax is much higher than to the normal rate of tax. Special provision requires special scrutiny and in case assessing officer commits any mistake, the same cannot be excused. In this case no satisfaction had been recorded by the assessing officer who was dealing with the cases of Prem Chand Jain and Subhash Chand Jain in whose names warrant of authorization was issued. The department has not brought out any material before the Bench to show as to what was the document on the basis of which assessing officer or those persons recorded satisfaction even on file that the present assessed had undisclosed income. Not only this the assessed was issued notice under section 158BC and no notice under section 158BD was issued which was primary requirement. As the case referred to by the learned counsel revealed, the assessment framed against the present assessed is liable to be quashed on this very ground that no notice under section 158BD was given to the assessed. The contention of the learned Departmental Representative that assessing officer committed clerical mistake by not mentioning section 158BD is not palatable because paper No. 27 of paper book-II is copy of notice dated 1-7-1999 and that was specifically under section 158BC and this notice was subsequently amended vide another notice dated 26-7-1999 (paper No. 26) and in that assessing officer has mentioned notice under section 158BC. It shows that assessing officer was proceeding with the matter as that of under section 158BC.
14. In view of the case law and shortcomings it is concluded that the assessing officer had not issued any notice under section 158BD and he was under section 158BC which was not the correct provision under which was undisclosed income of the assessed was to be assessed and thus matter cannot be restored back to the file of assessing officer as it is serious matter of jurisdiction as assessing officer did not issue notice under section 158BD and that too without recording any satisfaction.
15. The next plea of the assessed is also to prevail that in all the assessment period of block assessment the assessed has returned income and the assessing officer had not made any addition to the returned income for all the assessment years 1989-90 to 1998-99 except assessment year 1992-93 for which assessed had already filed the return. The law as referred to by the learned counsel for the assessed in the cases of Smt. Sita Devi Daga v. Asstt. CIT (supra); Vaidya Madan Lal Malani (infra); and Satpal Singh v. Asstt. CIT (supra) is quite clear. The income of the assessed as returned for all the assessment years of other period was below taxable limit. No addition has been made by the assessing officer. Under these circumstances the income so treated as undisclosed was not to be included in the block assessment particularly in view of the amended clause (c) of section 158BB(1) of Income Tax Act which is made applicable with effect from 1-7-1995.
16. The result of the above is that grounds of the assessed are allowed and assessment stands quashed.
ITA(SS) No. 187/Del 2001 (assessed's appeal in the case of Prem Chand Jain)
18. The only ground involved in this appeal of assessed is that assessing officer made additions of Rs. 92,705 and Rs. 1,58,890 for assessment years 1997-98 and 1998-99, respectively, under section 158BB(1)(c) of the Income Tax Act. As assessed had filed the return for these assessment years 1997-98 and 1998-99 on 26-2-1999, i.e., after the due date for filing the return, he treated the income of these two assessment years as undisclosed income under section 158BB(1)(c) of the Act. Before Commissioner (Appeals) it was submitted that action of the assessing officer was not justified. assessed was a regular income-tax assessed for the last several years and only source of income was M/s. Ajanta Service Station and Prakash Chand Pawan Kumar and both these sources were well known to the department as necessary evidence was on record. The next plea of the assessed was that assessed had paid advance tax before the date of search and that amount of advance tax as.well as TDS was more than sufficient to cover the total taxable income for both the assessment years and even the assessed got refund of Rs. 10,054 and Rs. 7,300 for both the assessment years respectively. The only mistake committed by the assessed was that it could not file return in time and assessed has to suffer the consequences. The income declared in the two belated returns could not be termed as income not intended to be disclosed to the department and thus the same cannot be treated as undisclosed. Reliance was placed on the ratio of decisions in the cases of Smt. Sita Devi Daga v. Asstt. CIT (supra); Vaidya Madan Lal Malani v. Asstt. CIT and Parakh Foods Ltd. v. Dy. CIT .
19. Learned Commissioner (Appeals) considered all the factual position as well as gone through the case law and noted that during the course of search at the premises of various family members of the assessed, lots of investment in the form of NSC, FDRs, KVPs, jewellery as well as disclosure made under VDIS were found. The family members of the assessed had not filed return for assessment years 1997-98 and 1998-99 and could not furnish their capital account and balance sheet for the last ten years when called upon by the ADIT (Inv.). Under these circumstances the learned Commissioner (Appeals) was of the view that there was substantial delay and assessed was not entitled for any benefit and provisions of section 158BB(1)(c) were very clear and assessed could not be given benefit.
20. Learned counsel for the assessed pointed out that assessed committed default in filing the return for assessment years 1997-98 and 1998-99 but advance tax for both the assessment years were paid on 15-9-1996, for assessment year 1997-98 and on 15-9-1997 as well as on 15-12-1997 for assessment year 1998-99 as is evident from pages 34 and 32 of paper book-II. assessed got refund of Rs. 10,054 and Rs. 7,302 for both the assessment years as is evident from copies of return appearing at pages 38 and 36 of paper book-II. On the basis of these facts the learned counsel submitted that assessed, a regular income-tax assessed, was having source of income from two firms which had already filed their returns before the due date. The assessed had also paid sufficient tax in advance to cover the total income. The return was filed after the date of search though under section 139(4) and assessed can suffer the tax for late filing of return but the said income of belated return could not be treated as undisclosed income. Reliance is placed on the ratio of decisions cited before the Commissioner (Appeals) as well as on the decisions in cases of Ramakant Umashankar Khetan v. Asstt. CIT ; Nilesh R. Shah v. Asstt. CIT (2002) 253 ITR 34 ; P.R. Patel v. Dy. CIT and that of Satpal Singh v. Asstt CIT (supra). On the basis of these facts the contention is that case law favors the assessed and there wad no undisclosed income.
21. Learned Departmental Representative placed reliance on the orders of assessing officer and Commissioner (Appeals).
22. We have considered the rival submissions and perused the record carefully. It is to be noted that assessed was having known source of income and that was salary and interest from M/s Prem Chand Pawan Kumar Jain and M/s Ajanta Service Station and both the firms have filed returns on 28-10-1997 and 30-10-1998, much before the date of search. The assessed had also paid the amount of advance tax much before the date of search and even got the refund which is not disputed by the learned Departmental Representative. It is also on record that no addition to the returned income is made by the assessing officer while completing block assessment and he simply treated the returned income as undisclosed income. The law as relied upon by the learned counsel for the assessed is in favor of the assessed as in the case of Smt. Sita Devi Daga v. Asstt. CIT (supra) wherein it was concluded that if assessed filed return under section 139(4) of the Act declaring interest income as per regularly maintained books of account and revenue accepted the returned income then the said income cannot be treated as undisclosed. In the case of Prakash Food Ltd. v. Dy. CIT (supra) it was observed that where assessed had disclosed preliminary facts relating to particulars of receipts, such income could not be assessed as undisclosed income within scope of section 158BB. This ratio is applicable as the assessed has already paid the advance tax and while doing so he must have given the source of income and the estimate of the income to be earned by him. If these were the facts then how the assessed who returned income through belated return can be treated as defaulter and put to peril of suffering consequences of special provisions of block assessment and to order to pay 60 per cent tax. The case law cited by the assessed is in favor of the assessed and we are of the considered view that the amount which was returned by the assessed in the belated return and accepted by the department as income cannot be called as undisclosed income for the block period. The ground is allowed and so the appeal.
ITA(SS) Nos. 181/Del/2001; 214/Del/2001; 214/Del/2001; 184/Del/2001 & 215/Del/2001 (Cross-appeals in the cases of R.K. Jain and Subhash Chand Jain) :
23. These four appeals are taken up together as one of the common issue is involved. The main ground involved in the revenue's appeal relates to addition of Rs. 56,14,500 under section 69 of the Act on account of 30 per cent share of unexplained investment in purchase of property by R.K. Jain made by assessing officer and deleted by the Commissioner (Appeals). In the case of Subhash Chand the amount is Rs. 37,37,001. During search Annexure A-39, sale deed of land executed by P.P. Motors was seized from the premises of M/s Prem Chand Pawan Kumar. A perusal thereof revealed that a petrol pump in the name of P.P. Motors was found in the said land of 1611 sq. yds. which was situated at 82, H. Street, Delhi-Hapur Road, Meerut. One of the properties was purchased for a sum of Rs. 15 lacs and Rakesh Kumar had shown 30 per cent share of investment and disclosed Rs. 5,10,000 including other expenses which has been duly reflected in the statement of affairs as on 31-3-1997 and assessed Subhash Chand had shown his share as Rs. 1,50,000 and had explained the source of that investment. Further, the search revealed one valuer's report LP 10 which was dated 22-3-1997, by which both the assessed and other co-sharer got the land valued and registered valuer gave the valuation at Rs. 2,04,15,000 and this report of valuation was seized from M/s Prem Chand Pawan Kumar. Both the assessed's were specifically confronted with the said valuer's report vide notice dated 14-11-2000, as to why they purchased the said prime land as such a low rate. The assessed vide reply dated 29-11-2000, submitted that market value of the land was the same as mentioned in the sale deed at Rs. 15 lacs and the same was in conformity with the circle rate, a copy of which was also enclosed. The assessing officer was of the view that said plea was not acceptable as chart showing circle rate could not be said to be authentic. The assessing officer was of the view that assessed had paid the amount more than the amount what was shown in the sale deed. He was of the view that report of valuer found during the search was authentic document and he treated the value of the land arrived at by registered valuer at Rs. 2,04,15,000 as the amount which had been paid by each of the purchasers and the amount was added. According to assessing officer the assessed Rakesh Kumar Jain must have paid the amount of Rs. 61,24,500 as against the amount of Rs. 5,10,000 disclosed by the assessed. The difference of Rs. 56,14,500 was considered as undisclosed income for assessment year 1997-98 and the amount in respect of Subhash Chand Jain was taken at Rs. 37,33,000.
24. Before Commissioner (Appeals) both the assessed's raised identical pleas. It was submitted that no evidence or material except the registered valuer's report was seized for the imagination/conclusion that any unaccounted payment over and above the sale consideration of Rs. 15 lacs as mentioned in the sale deed was paid by the assessed or other co-owners for the purchase of land. The valuer's report of Rs. 2,04,15,000 and another valuer's report giving out the value at Rs. 2,22,00,000 could not be as money, bullion, valuable article, thing or an entry in the books of account and the same cannot form part of block assessment proceedings in the absence of any corroborative material or evidence suggesting any undisclosed investment/payment over and above the disclosed total investment of Rs. 15 lacs. About the seized valuer report it was contended that these were highly excessive and defective as the land therein had been valued as freehold land instead of valuing the same as leasehold land and the rates applied by the registered valuer who arrived at the value at Rs. 2.22 crores of the land in question and said Mr. Y. Chandra had given the correct valuation report which was also filed before him. Another report of Mr. Karan Arora, approved government valuer, was also filed which indicated the market value at Rs. 15.49 lacs as on 15-3-1997. Copy of that report was also filed. The next plea of the learned counsel for the assessed before the Commissioner (Appeals) was that circle rate of land in old grant area at Hill Street, Meerut where the property was located was Rs. 1,000 and Rs. 500 per sq. meter for commercial and residential land, respectively, which was increased further at Rs. 1,400 and Rs. 700 with effect from 31-9-1997. Copies of circle rates were filed before the Commissioner (Appeals) as filed before the assessing officer. A comparable case was also referred by which property situated at 80, Hill Street, Meerut was sold at the relevant period and that was for Rs. 16 lacs only while this land was 11,500 sq. yard and the rate in the sale deed was even lower than the consideration paid by the assessed. The assessed also filed photo copy of extract from general land register as issued from the office of defense Estate Officer, Meerut Circle, and the general order as issued by the Governor General on 12-9-1936 in which the land in question was shown as old grant leasehold land and ownership thereof vests in Government of India. The contention was that valuation of the property could not be more than the agreed consideration. Other plea was that property in question was under the occupancy of different tenants and litigations for eviction of occupants were pending in the Courts and some evidence of litigation, etc. were filed before the learned Commissioner (Appeals).
25. The learned Commissioner (Appeals) considered the submissions and noted that assessed group wanted to buy the petrol pump and for transfer of license of petrol pump in their favor, the assessed applied to M/s. Indian Oil Corporation in which the value of land and property was shown at a very high figure of Rs. 2.04 crores and for this very purpose the assessed obtained the valuation report from A.K. Jain, registered valuer, who valued the land at Rs. 12,500, per sq. yard, treating the same as freehold land while the land was situated in Cantonment area of Meerut and it was old grant leasehold land. It was also noted by the Commissioner (Appeals) that ownership of land was of Government of India and assessed as well as other co-owners were only the lessees having limited rights. The Commissioner (Appeals) also took into consideration the other two valuation reports submitted by the assessed in which the land was shown at the same value as shown in the sale deed and those of reports of Y. Chandra and Karan Arora and those were the correct reports. Commissioner (Appeals) also noted that except the valuation reports seized during the search operation, there was no other evidence available with the department in the shape of any document or evidence by which it could be said that any unaccounted money was paid to the sellers for purchase of this land. The learned Commissioner (Appeals) took into consideration the ratio of decision of Hon'ble Supreme Court in the case of K.P. Verghese v. ITO & Anr. : [1981]131ITR597(SC) in which Their Lordships had laid down that in case revenue seeks to bring a case within sub-section (2) of section 52 then it must show not only that fair market value of the capital asset as on the date of transfer exceeded the full value of the consideration declared by the assessed by not less than 15 per cent of the value so declared, but also that the consideration had been understated and the assessed had actually received/paid more than what was declared by him. Both the conditions are to be satisfied before invoking the provisions of sub-section (2) of section 52 and without that revenue cannot succeed. On the basis of this, the learned Commissioner (Appeals) concluded that no material was found to show that any unaccounted money was found over and above Rs. 15 lacs, the sale consideration and he accordingly deleted the addition. Aggrieved, the revenue is in appeal against such deletion in both the cases of the assessed's.
26. The learned Departmental Representative pointed out that paper Nos. 63 to 70 are the report of valuer, seized at the time of search, valuing the property at Rs. 2.12 crores. The contention of the learned Departmental Representative is that this report was obtained by the assesseds and is binding upon them which is depicting the correct figures. It is also pointed out that paper Nos. 54 to 62 are the copy of said sale deed and it is wrong to allege that the land was encumbrance. The seller was declared the individual owner of the property as recital of sale deed appearing at p. 56 reverse of page No. 57 the property was shown free from all encumbrance and Commissioner (Appeals) wrongly noted that property as suffering from encumbrance. Next plea of the learned Departmental Representative is that property in question was old grant leasehold land but that does not make any difference and the date of valuation report is near to the date of sale deed. Second valuation report detected at the time of search is appearing at pp. 71 to 76 of the paper book which also gives the value of the property at Rs. 2,01,46,500 and that again corroborated the earlier report. The other plea advanced by the learned Departmental Representative was that certain documents were admitted by the learned Commissioner (Appeals) without affording opportunity to assessing officer. These documents were said to be affidavits of other co owners as well as affidavit of one of the valuer Mr Y. Chandra, appearing at p. 84 of the paper book. The contention is that third valuation report of Mr. Karan Arora is also of no consequence as it is procured report. No credence can be given to subsequent valuation report nor any benefit can be extended to the assessed out of the circle rate, copies of which were filed by the assessed. About comparable case, the learned Departmental Representative pointed out that copy thereof is appearing at p. 113 onwards and at p. 119 the seller has given out the name of the tenant in the said property and thus said comparable case is not going to help the assessed. The contention is that assessing officer was justified in making the addition which has wrongly been deleted by the Commissioner (Appeals) as it is block assessment and assessing officer made the addition on the basis of seized material.
27. As against it the learned counsel for the assessed reiterated the same submissions as were taken before the assessing officer and before the learned Commissioner (Appeals). It was submitted that department had not taken any specific ground that Commissioner (Appeals) had admitted any additional evidence. Further, the assessing officer was given all opportunity by the learned Commissioner (Appeals) before deciding the issue. The assessed had invested the amount as shown in the sale deed and burden was on the revenue to rebut the said presumption. It was submitted by the learned counsel that property in question was old grant leasehold land and to substantiate this the learned counsel pointed out that even copy of sale deed appearing at page 54 onwards is indicative of the said thing. Page No. 55 is relevant for that purpose in which it was mentioned that land was old grant leasehold and owned by Government of India. The next plea was that pages 94 and 95 of the paper book is the extract from general land register and the land belonged to Government of India and being managed by defense Estate Officer. The nature of land is 'old grant'. Landlord is shown in column No. 8 as Government of India. Further, pages 96 and 97 are the copies of circle rates available in the Hill Street area in the year under consideration and as amended subsequently. The contention is that valuation report obtained by the assessed and seized during the search was for other purposes but it did not really prove that assessed had invested the amount. Valuation report cannot be made basis for making addition on account of undisclosed income. The report was obtained merely to get benefit from India Oil Corporation. About additional evidence, as argued by the learned Departmental Representative, it was submitted that all the evidence was supporting evidence. About comparable case the learned counsel submitted that all the factual position was identical to the facts of the assessed. No doubt the land sold by Smt. Prem Lata Devi regarding 82, Hill Street, Meerut, there were tenants but there were also some tenants and unauthorized occupants over the property in question also. About extra consideration paid, the learned counsel submitted that statement of seller was not recorded. In the various cases, the learned counsel argued, the amount, if any, paid will be treated as deemed gift and not in any other way. The reasonable inference is to be drawn in favor of assessed and there was no case for making addition on account of undisclosed income.
28. In rejoinder the learned Departmental Representative argued that there was no evidence to show that higher value was required for Indian Oil Corporation. There were two valuation reports and that was the best evidence available with the department which was found at the time of search.
29. We have considered the rival submissions and perused the record carefully. It is to be noted that land is shown to be owned by the Government of India and the nature of the same was old grant leasehold land. The assessed was simply lessee on behalf of Government of India. This fact has not been controverter and even finds mention in the sale deed executed by the seller. It is also an important fact to take note that valuer's reports seized at the time of search had not taken this fact into consideration as is evident from page No. 63 in which it is simply taken as commercial property and column No. 14 which gives the nature of the land as freehold or leasehold land, the valuer has mentioned to be not applicable. The valuer has taken the land and later on affidavit was also filed giving out the fact that the actual rate of land was Rs. 1,300 per sq. yd. and they had wrongly taken at Rs. 13,000 per sq. yd. The reason was that land was treated as freehold land. It is also to be noted that the report of Y. Chandra is further obtained along with another report of valuer which had given the valuation which is in conformity with the amount of sale deed. In these circumstances the assessed was able to give out the reasons why the valuer reports seized at the time of search were obtained and that was with specific purpose to get benefit from Indian Oil Corporation but department except from these two valuer's reports, was not in possession of any material to indicate that any amount over and above the amount shown in the sale deed was paid by the assessed or received by the seller nor any addition had been said to have been made in the case of seller.
30. Lastly, it is to be noted that circle rate, copy of which is on record, also indicated that rate of land was in conformity with the rate shown in the sale deed. Under these circumstances there was no basis for making addition and learned Commissioner (Appeals) was justified in deleting the addition and we agree with the reasoning given by the learned Commissioner (Appeals) for deleting the addition in addition to the reasoning noted above. Accordingly, the ground of the department fails.
31. In the case of Rakesh Kumar Jain another plea is also relevant to be taken note of. Admittedly, there was no search conducted in the case of Rakesh Kumar Jain. The learned counsel pointed out that no Panchnama was drawn in the name of the assessed and thus no assessment could be framed under Chapter XIV-B of the Act. The learned counsel for the assessed has referred the same argument as in the case of Smt. Astha Jain and the view taken by us in that case shall be applicable here also. The issue is decided accordingly.
32. The second ground involved in the case of the department in the case of Rakesh Kumar Jain relates to addition of Rs. 19,45,200 made by the assessing officer on account of unexplained investment in purchase of house property at Chitranjan Park which stands deleted by the learned Commissioner (Appeals). The assessing officer noted that page 14 of Annexure A-39 was said to be the purchase receipt of flat at Chitranjan Park, New Delhi, which was purchased by the assessed for an amount of Rs. 4.50 lacs. The amount was withdrawn from bank account No. 752 MVCB which showed an amount of Rs. 6.25 lacs withdrawn on 26-8-1998, out of which cost of the property was made in compliance of the appraisal report. The assessing officer referred the matter to the AVO under section 131(1)(d) of the Act to work out/estimate the value of the said property which was submitted on 20-11-2000 and value thereof was given at Rs. 23,95,200. The assessed was confronted with the said report and called upon to explain the reason as to why difference of both the valuations be not treated as met out of undisclosed income. The assessed submitted that no construction work was carried out by the assessed. The valuation arrived at by the AVO was highly excessive. No incriminating document was found at the time of search indicating any investment except the amount shown in the sale deed. The assessing officer considered all the facts and did not agree and he made the addition of Rs. 19,45,200, being the amount of difference between the returned value and the estimated valuation as arrived at by the AVO.
33. Before Commissioner (Appeals) the learned counsel for the assessed had reiterated the submissions which were taken before the assessing officer and reliance was placed on different Benches of the Tribunal, particularly in the cases of Atul Kumar Jain v. Dy. CIT (1999) 64 TTJ (DelHI) 786; Vaishali Hotels (P) Ltd. v. Asstt. CIT ; Pioneer Publicity Corpn. & Ors. v. Dy. CIT (2000) 67 TTJ (DelHI) 471; Jaya S. Shetty v. Assistant Commissioner (supra); Indore Construction (P) Ltd. v. Asstt. CIT (2000) 66 TTJ (Ind) 420; Pooja Bhatt v. Asstt. CIT (2000) 66 TTJ (Bom) 817 as also in the case of CIT v. Vinod Danchand Godavat (2000) 163 CTR (Bom) 432. Learned Commissioner (Appeals) considered all the facts and agreed with the contention of the assessed. According to learned Commissioner (Appeals) the assessed had not raised any construction but only purchased a ready-built flat on first floor of G-1415, Chitranjan Park, New Delhi, for Rs. 4.5 lacs and during search no adverse material whatsoever was found to suggest any payment out of books. The AVO had quoted a comparable case of Kalkaji which had freehold land whereas the land of assessed was leasehold and hence two were not comparable. The case law cited by the assessed was in favor of the assessed. Accordingly, the Commissioner (Appeals) deleted the addition.
34. Learned Departmental Representative placed reliance on the order of assessing officer and learned counsel for the assessed reiterated the same submissions and reliance was placed on the case law reproduced in the order of Commissioner (Appeals).
35. We have considered the rival submissions and perused the case law referred before the Commissioner (Appeals) as reproduced in preceding paragraph. It is well settled that no addition can be made on the basis of mere report of AVO in block assessment year unless any incriminating document suggesting any investment except what is shown in the sale deed was detected during the search. Admittedly, here in the case of assessed, no such material was found and thus addition was rightly deleted by the learned Commissioner (Appeals), Ground fails.
36. Another ground in the case of Subhash Chand Jain being ITA(SS) No. 184/Del/2001 relates to addition of Rs. 9,625 made by assessing officer which stands confirmed by Commissioner (Appeals). During search a receipt issued by Customs department in the name of Sunil Mishra for payment of customs duty of Rs. 9,625 for import of VCR on 19-10-1989 was found and seized. The assessed was called upon to explain and he submitted that he never purchased any VCR nor the said VCR was found during the course of search. The assessing officer was not satisfied on the ground that document in question was duly found at the residential premises of the assessed. The other plea was rejected on the ground that no inventory of household goods was made at the time of search and it could not be said that no VCR was found at the time of search. He made the addition of Rs. 9,625 under section 69 of the Act which also stands confirmed by Commissioner (Appeals) for the same reasons as noted by assessing officer.
37. Learned counsel for the assessed placed reliance on the same submissions which were raised before the assessing officer and Commissioner (Appeals). Learned Departmental Representative placed reliance on the orders of authorities below.
38. We have considered the rival submissions and perused the record. Admittedly, the document was found at the time of search. The assessed was supposed to explain the circumstances under which the said document was found. He could not produce Sunil, Mishra in whose name the receipt issued by Customs department was found. assessed failed to discharge the burden and view taken by assessing officer was justified and Commissioner (Appeals) rightly rejected the ground. Ground fails.
39. Rest of the grounds of other assesseds are identical to the grounds decided in the case of Shri Prem Chand Jain and that of Shri Rakesh Kumar Jain. Common ground relates to addition made by assessing officer in respect of the income declared by each of the assesses for assessment years 1997-98 and 1998-99 after the date of search.
40. We have already decided this issue in the case of Prem Chand Jain. Facts are much less identical as admittedly each of the assesseds filed return under section 139(4) of the Act. Source of income in cases of each of the assesseds was known to the department and those concerns from each of the assesseds was receiving income, filed return prior to the date of search. All the assesseds have paid necessary advance tax much before the date of search and necessary evidence of all these facts was referred to by the learned counsel by way of chart filed in the case of Prem Chand Jain, Rakesh Kumar Jain, Subhash Chand Jain and Pawan Kumar Jain and thus the view taken by us in the case of Prem Chand Jam will be fully applicable and each of the grounds is decided in favor of the assessed.
41. Next common ground in case of Subhash Chand Jain and Pawan Kumar Jain is relating to the addition on account of unexplained investment in the purchase of property No. 82, Hill Street, Meerut, along with Rakesh Kumar Jain and assessing officer made the addition which stands deleted by the learned Commissioner (Appeals) after following his order in the case of Rakesh Kumar Jain. In. the case of Rakesh Kumar Jain we have already confirmed the finding of learned Commissioner (Appeals) and in view of same, we confirm the finding of the Commissioner (Appeals) in the cases of Pawan Kumar Jain and Subhash Chand Jain.
42. In the result all the appeals preferred by the assesseds and the department are disposed of in the manner as stated in the body of order.