1. These two cross-appeals are directed against the order of the learned CIT(A), dt. 10th March, 2000, for the block period 1st April, 1986 to 6th March, 1997.
2. Since the appeals were heard together, so, are being disposed of by this common order for the sake of convenience.
2. That on the facts and in the circumstances of the case, learned CIT(A) has erred by not allowing deduction for rebate available in different years in respect of interest income of the block period in terms of Section 80L of the IT Act, 1961.
3. That on the facts and in the circumstances of the case, learned CIT(A) has erred in sustaining the addition of Rs. 1 lakh on account of household expenses.
4. That on the facts and in the circumstances of the case, learned CIT(A) has erred in sustaining the addition of Rs. 75,000 on account of jewellery.
5. The assessing authority is not justified in initiating penalty proceedings, because all the amounts assessed stand disclosed in various letters and explanations given by the assessee in the course of assessment proceedings.
6. The appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed of." 4. Ground Nos. 1 and 6 are general in nature while ground No. 5 does not arise from the impugned order, as such, no comments on our part are required for these grounds.
5. The grievance of the assessee in ground No. 2 relates to deduction under Section 80L of IT Act from the income computed in the block period.
6. The facts related to this issue in brief are that in the block period some of the income in the hands of the assessee pertained to the interest earned/accrued from NSC, dividend, etc. It was the contention of the assessee that the year-wise income was below the year-wise taxable limit under Section 80L and Section 10(32) of the IT Act, therefore, required no specific disclosure for the purpose of assessment, and as such, could not be treated as undisclosed income.
7. Since the deduction was not allowed by the AO, the assessee carried the matter to the learned CIT(A) who also did not accept the contention of the assessee by stating that no such deduction under Chapter VI-A of IT Act is available for computing the income of the block period.
Accordingly, addition of Rs. 60,430 was sustained.
8. Before us, learned counsel for the assessee submitted that in the block assessment only undisclosed income should be computed as per Section 158BB of IT Act but the deductions, under Chapter IV are allowable as per Expln. (a) to Sub-section (1) of Section 158BB.Reliance was placed on the decision of Tribunal, Mumbai Bench 'A', in the case of Devang S. Desai v. Dy. CIT (2004) 84 TTJ (Mumbai) 117 : (2004) 90 ITD 107 (Mumbai).
9. In his rival submissions, learned Departmental Representative for the Revenue supported the order of AO.10. We have heard both the parties, perused the record and gone through the material available on record. It is relevant to reproduce the provisions of Section 158BB of IT Act, 1961, which read as under : (1) The undisclosed income of the block period shall be the aggregate of the total income of the previous years falling within the block period computed in accordance with the provisions of this Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the AO and relatable to such evidence, as reduced by the aggregate of the total income, or as the case may be, as increased by the aggregate of the losses of such previous years, determined,-- (a) where assessments under Section 143 or Section 144 or Section 147 have been concluded prior to the date of commencement of the search or the date of requisition, on the basis of such assessments; (b) where returns of income have been filed under Section 139 or in response to a notice issued under Sub-section (1) of Section 142 or Section 148, but assessments have not been made till the date of search or requisition, on the basis of the income disclosed in such returns; (c) where the due date for filing a return of income has expired, but return of income has been filed,-- (A) On the basis of entries as recorded in the books of account and other documents maintained in the normal course on or before the date of search or requisition where such entries result in computation of loss for any previous year falling in the block period; or (B) On the basis of entries as recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition where such income does not exceed the maximum amount not chargeable to tax for any previous year falling in the block period; (ca) where the due date for filing a return of income has expired, but no return of income has been filed, as nil, in cases not falling under Clause (c);........
Explanation : For the purpose of determination of undisclosed income,-- (a) the total income or loss of each previous year shall, for the purpose of aggregation, be taken as the total income or loss computed in accordance with the provisions of this Act without giving effect to set off of brought forward losses under Chapter VI or unabsorbed depreciation under Sub-section (2) of Section 32:.........
(2) In computing the undisclosed income of the block period, the provisions of Sections 68, 69, 69A, 69B and 69C shall, so far as may be, apply and reference to 'financial year' in those sections shall be construed as reference to the relevant previous year falling in block period including the previous year ending with the date of search or of the requisition.
(3) The burden of proving to the satisfaction of the AO that any undisclosed income had already been disclosed in any return of income filed by the assessee before the commencement of search or of the requisition, as the case may be, shall be on the assessee.
(4) For the purpose of assessment under this chapter, losses brought forward from the previous year under Chapter VI or unabsorbed depreciation under Sub-section (2) of Section 32 shall not be set off against the undisclosed income determined in the block assessment under this chapter, but may be carried forward for being set off in the regular assessments.
From the above provisions of IT Act, it would be clear that total income of each previous year for the purpose of aggregation be taken as total income in accordance with the provisions of this Act.
Earlier in place of "Act", the word used was "Chapter IV" and the amendment had been inserted by the Finance Act, 2002, with retrospective effect from 1st July, 1995. Therefore, combined reading of the entire Section 158BB definitely leads to an impression that the intention of the legislature was to compute total income in accordance with the provisions of Chapter IV, now substituted with the words "in accordance with the provisions of this Act". As regards to the deduction in the block assessment is concerned, we have to consider the effect of the amendment in the definition of undisclosed income provided in Section 158B(b) of IT Act. Therein also, the words, "or any expense, deduction or allowance claimed under this Act which is found to be false" had been inserted by the Finance Act, 2002, with retrospective effect from 1st July, 1995. The provisions of Clause (b) of Section 158B read as under : "undisclosed income" includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act or any expense, deduction or allowance claimed under this Act which is found to be false.
From the above, it would be clear that any expenses, disallowance (sic-deduction), claimed under this Act, if found to be false, then should be treated as undisclosed income; otherwise, if the AO had not found any expense, deduction or allowance, false, then he has to allow the same while computing total income for the purpose of Section 158BB. In the instant case, the AO nowhere had doubted that the claim of the deduction under Section 80L was not genuine or the same was false. Learned CIT(A) had also not stated that the claim of the assessee under Section 80L was false. He only confirmed the action of the AO by stating that no such deductions under Chapter VI-A of IT Act are available for computing income of the block period. It seems that learned CIT(A) had not considered the provisions of the Act in right perspective. In our opinion, cumulative effect of the language of Section 158BB, Explanation thereto, and the definition of undisclosed income as per Section 158B inserted with retrospective effect by the Finance Act, 2002, (is that) the total undisclosed income has to be computed in accordance with the provisions of Act, i.e., after allowing deductions provided therein if such deductions or allowances are not found to be false. Section 158BH also affirms intention of the legislature, which reads as under : "Save as otherwise provided in this Chapter, all other provisions of this Act shall apply to assessment made under this Chapter." In our opinion, conclusion can be drawn that the provisions of the Act shall apply to make an assessment under this Chapter, i.e., Chapter XIV-B and safely a view can be taken that the total income of the block period has to be computed after taking into account the method and the manner laid down in Chapter VI-A of IT Act and since deduction under Section 80L also falls in Chapter VI-A of the IT Act, therefore, considering the totality of the facts, we set aside the order of learned CIT(A) and direct the AO to allow deduction to the assessee in accordance with law.
11. The next issue in this appeal relates to the sustenance of addition of Rs. 1 lakh on account of household expenses.
12. During block assessment proceedings, the AO asked the assessee to furnish details of the household expenses. The assessee stated that he did not maintain any personal set of books of account. The AO scrutinised the regular returns of the assessee but information could not be found regarding withdrawals made by him. According to the AO, some unaccounted money must have gone in his conspicuous living standard and other personal expenses. He opined that the assessee had not adequately withdrawn for the purpose of household and allied expenses. He, therefore, added a sum of Rs. 1 lakh to the undisclosed income of the assessee.
13. The assessee carried the matter to the learned CIT(A) and submitted that the AO had made an ad hoc and arbitrary addition of Rs. 1 lakh, and ignored the actual drawings made by the assessee, the detail of which was as under : It was further stated that the assessee was living in joint family in the ancestral house and having two sons who were born 15 years after the marriage and were studying in local DAV School which was at a walking distance from the home and their annual school expenses including fee, books, etc. did not exceed Rs. 7,000 per annum per child. It was also stated that the assessee was not a member of any club and maintained an average living standard which was evident from the facts that no worth mentioning costly household items were found during the course of search. It was stated that year-wise household expenses were more than reasonable and the contention of the AO was only imaginary and not supported by any evidence.
14. Learned CIT(A), after considering the submissions of the assessee, observed that the assessee had made substantial withdrawal from the accounting year 1993-94, onwards but for the earlier period the withdrawals were running between Rs. 33,000 to Rs. 73,940 per annum only. According to him, household annual expenditure was to be more or less uniform and could be increased only when there was some special function in the family but there was no such special function as admitted by the assessee, therefore, it was to be presumed that annual household expenses of the assessee were in the range of over Rs. 1 lakh per year, as such, withdrawals for household purposes for the financial years 1986-87 to 1990-91 and 1992-93 were on the lower side.
Accordingly, it was held that the AO was justified in making the addition of Rs. 1 lakh. Now, the assessee is in appeal.
15. Learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that in the earlier years the assessee had disclosed the expenses for household and no addition had been made in the regular assessments. It was also stated that during the search, nothing incriminating was found that the assessee had incurred the expenses more than those which were disclosed regularly while filing the return of income in due course. Therefore, there was no occasion to sustain the addition of Rs. 1 lakh by the learned CIT(A). He also relied on the decision of Tribunal, Chandigarh Bench 'B', in the case of Smt. Shashi Rani v. Asstt. CIT in ITA No.1241/Chandi/1996 for the block period 1st April, 1985 to 16th Oct., 1995, order dt. 26th April, 2004 [reported at (2004) 90 TTJ (Chd) 726--Ed].
15.1. In his rival submissions learned Departmental Representative for the Revenue supported the order of learned CIT(A).
16. We have considered the rival submissions and the material available on record. In the present case, it is true that the AO estimated the household expenses, however (he) has not given the basis for making ad hoc addition of Rs. 1 lakh. It is well-settled that the presumption, howsoever strong, cannot substitute the evidence. It is also true that in block assessment the addition can be made on the basis of evidence found as a result of search or requisition of books of account or documents and such other material or evidence which are available with the AO. In the present case, the AO while making estimated addition of Rs. 1 lakh on account of household expenses had not pointed out any instance where the expenses incurred by the assessee and declared in the returns of income already filed, were on lower side. In other words, the AO had not brought any material on record in support of his estimation.
Learned CIT(A) also, while confirming the action of the AO, simply stated that the withdrawal for household purpose for the financial years 1986-87 to 1990-91 and 1992-93 were on lower side and, therefore, the addition of Rs. 1 lakh made by the AO covered such low withdrawals for the household expenses. However, learned CIT(A) had not given any concrete findings how and in what manner the ad hoc addition made by the AO was justified. We, therefore, considering the totality of the facts, are of the opinion that the impugned addition was made without any basis and that is not sustainable in the assessment framed under Section 158BC. For the aforesaid view, we are also fortified by the decision of Tribunal, Chandigarh Bench 'B', in the case of Smt. Shashi Rani v. Asstt. CIT (supra), wherein at para 9.2 of the order dt. 26th April, 2004, following observations had been made : "9.2 We have heard the parties. On plain reading of the assessment order, it is evident that the AO while treating Rs. 3 lakhs as household expenses has not brought any material on record to suggest understated household withdrawals. Since the assessment was framed under Section 158BC, the estimation by the AO without having any seized material was not justified, as held in the cases of Pooja Bhatt and Chander Mohan (supra)." 17. The next ground relates to sustenance of addition of Rs. 75,000 on account of jewellery.
18. During the course of search proceedings, jewellery amounting to Rs. 3,01,678 was found. When the assessee was asked to explain the acquisition of this jewellery, following line of arguments was taken : "(i) Jewellery of 235.75 gms., approximately value of Rs. 2,500 inherited before the block period at the time of demise of mother in 1978. This jewellery is the common property of myself. My three brothers and married sister have been living in my custody as the eldest member of the family eversince her death.
(ii) Jewellery of 346.70 gms., approximately of Rs. 6,000 belonging to my wife received by her at the time of our marriage in 1965 from her parents., approximately 185.50 gms. and my parents 161.20 gms.
(iii) Jewellery of approximately 50 gms. approximately value of Rs. 2,500 gifted to my wife in 1976 and 1978 at the time of marriage of brother of my wife.
You will appreciate this jewellery is old and actual value of this jewellery based on the acquisition date is approximately Rs. 11,000 only as against Rs. 3,01,678 shown by you." The AO did not accept the aforesaid contention of the assessee, however (he) mentioned that it could not be denied that the assessee and his wife received some jewellery during marriage by way of inheritance but the quantity stated by them could not be accepted in the absence of any positive evidence. He, therefore, made an ad hoc addition of Rs. 75,000.
19. Before the learned CIT(A), it was stated that the total jewellery available had been properly explained and considering the background and status of assessee, quantum available was not excessive. It was further stated that no basis or evidence had been provided by the AO while making the addition of Rs. 75,000. It was also stated that the AO had not disregarded the explanation provided by the assessee. Learned CIT(A), after considering the submissions of the assessee, confirmed the addition made by the AO by stating that the assessee had failed to furnish any concrete evidence in support of his contention. Now, the assessee is in appeal.
20. We have considered the rival submissions and the material available on record. It appears that the AO as well as the learned CIT(A) for the aforesaid addition had not given any basis. The AO had not rebutted the explanation of the assessee. He had not stated the basis for making addition of Rs. 75,000. He had also not pointed out that any jewellery found during the course of search was unexplained but made the addition. We, therefore, do not see any justification for the impugned addition and delete the same.
21. Now, we will deal with IT(SS)A No. 14/Chandi/2000, i.e., the appeal filed by the Department.
"1. On the facts and in the circumstances of the case the learned CIT(A) has erred in deleting the addition of Rs. 45,000 made on account of cash in hand found at the time of search.
2. Learned CIT(A) has further erred in deleting the addition of Rs. 35,617 made on account of FDR and Rs. 13,400 made on account of petty investment pertaining to his wife.
3. Learned CIT(A) has erred in deleting the addition of Rs. 23,832 made on account of petty investment pertaining to minor child. 4. Learned CIT(A) has further erred in deleting the addition of Rs. 2,68,465 made on account of investment in UTI, FDR, NSC and savings account, etc.
5. It is prayed that the order of the learned CIT(A) be set aside and that of the AO restored.
6. The appellant craves leave to add or to amend the grounds of appeal before the appeal is heard and disposed of." 22.1. Ground Nos. 5 and 6 are general in nature so, do not require any comments on our part.
23. Ground No. 1 relates to deletion of addition of Rs. 45,000 made on account of cash found during the course of search.
24. Facts of the case in brief are that during the course of search a sum of Rs. 53,785 was found, out of which Rs. 45,000 were seized. The assessee contended that the aforesaid amount was out of a sum of Rs. 60,000 withdrawn from M/s Partap Singh & Co. on 4th March, 1997. The AO pointed out that books of account of M/s Partap Singh & Co. were not complete on the date of search. He, therefore, did not accept the contention of the assessee and stated that a sum of Rs. 8,375 could have been considered as withdrawals for the household, etc., and the remaining amount of Rs. 45,000 was to be treated as unexplained and accordingly, addition of Rs. 45,000 was made.
24. When the matter was taken to the learned CIT(A) by the assessee, it was explained that the amount was withdrawn two days before the search from M/s Partap Singh & Co. and all the withdrawals totalling to Rs. 4,70,000 as per statement of M/s Partap Singh & Co. had been accepted in toto so, there was no justification not to accept the explanation of the assessee. It was stated that the amount of Rs. 60,000 was withdrawn on 4th March, 1997, from M/s Partap Singh & Co. in which the assessee was a partner and the supporting documents, i.e., copy of account of the assessee with the partnership firm was submitted to the AO which had been turned down arbitrarily without any justification.
25. Learned CIT(A) after considering the submissions of the assessee, observed that the assessee was having opening cash balance of Rs. 82,615 as per cash flow statement and a sum of Rs. 60,000 was withdrawn on 4th March, 1997, from M/s Partap Singh & Co., withdrawal of which had been accepted by the AO. He, therefore, deleted the addition made by the AO.26. After considering the submissions of both the parties, we are of the opinion that no interference is called for in the observations of learned CIT(A) because the AO had not rebutted this explanation of the assessee that a sum of Rs. 60,000 had been withdrawn on 4th March, 1997, from M/s Partap Singh & Co. whose total withdrawals amounting to Rs. 4,70,000 had been accepted by the AO. Accordingly, this ground of Departmental appeal fails.
27. Ground Nos. 2 to 4 relate to deletion of various additions made by the AO amounting to Rs. 3,41,314.
28. Facts relating to these issues in brief are that the AO pointed out that during the course of search, it was found that the assessee and his family members had invested in UTIs, FDRs, NSCs and savings accounts, etc., and total amount of investment was Rs. 6,86,558. The AO considered a sum of Rs, 3,45,244 as explained for the reasons stated at paras 5 and 6 of the assessment order dt. 31st Dec., 1998, and made the addition of the remaining amount of Rs. 3,41,314. The break-up of the above addition was following :(i) Investment pertaining to the period prior to the block period 35,617(ii) Petty investments pertaining to wife 13,400(iii) Petty investments pertaining to minor children 23,832(iv) Investments made by the assessee 2,68,465 --------- 29. Before the learned CIT(A), it was stated that the impugned addition representing the investments in UTIs, FDRs, NSCs and saving accounts, etc. in the names of the assessee and his family members were properly explained as having been received and available out of savings and gifts received during the relevant periods. It was explained that the assessee was running transport business of plying trucks in his personal capacity apart from partnership business of running a general merchant shop/truck/country liquor business and in view of the nature and place of business, regular accounts for truck business, personal investment and expenditure were not maintained. It was also stated that the truck income had been regularly assessed under Section 44AE of IT Act, 1961. Therefore, the only correct way to arrive at the sources of funds would be to appreciate overall cash flow of the assessee based upon total receipts/ income assessed and investment made/household expenses over the block period. It was stated that the AO while completing the assessment had ignored this basic aspect without considering assessee's overall sources of income and had wrongly treated all investments, cash, jewellery, etc. in possession of the assessee, as undisclosed income. It was further stated that a summary of the cash flow year-wise clearly proved that the assessee had adequate source out of assessed income/receipts to make these investments. It was pointed out that FDRs amounting to Rs. 22,270 in the name of Shri Ashish Vij and of Rs. 13,347 in the name of Shri Karan Vij were invested on 28th Jan., 1986, and 30th Jan., 1986, respectively, which were before the block period.
30. Learned CIT(A), after considering the submissions of the assessee, deleted the addition of Rs. 35,670 by stating that those investments were made before the block period, therefore, the addition could not be sustained. Learned CIT(A) further stated that the petty investments amounting to Rs. 13,400 (details of which had been given at pp. 2 and 3 of the impugned order) represented investments made by the wife of the assessee out of her personal savings, gifts and pin money, etc. over the years. Considering the status and background of assessee's wife, learned CIT(A) observed that those investments out of personal savings and gifts were acceptable. Accordingly, addition of Rs. 13,400 was deleted. Learned CIT(A) further pointed out that there were investments amounting to Rs. 12,832 in the name of Shri Ashish Vij comprising of Rs. 5,000 in UTI Master Gain and Rs. 7,832 in UTI, CGGF-86 and the investment of Rs. 11,000 in the name of Shri Karan Vij for UTI CGGF-1986 and Master Gain, were out of petty amounts' investment made by them over the years out of cash and gifts received from the relatives and personal savings on various occasions from time-to-time.
It was also pointed out that the assessee belonged to a large joint family and it is customary for children to receive small cash gifts from time-to-time on various occasions like birthdays, marriages, visit to relations, etc. It was also observed that the above investments had been made in the year 1992 and considering the fact that children were born to the assessee after 15 years of marriage and considering the investment in the name of each child amounting to Rs. 12,832 and Rs. 11,000, it could not be stated that the same were out of undisclosed income of the assessee. Accordingly, addition of Rs. 23,832 was deleted.
As regards to the remaining addition on account of investment, learned CIT(A) discussed those at pp. 4 and 5 of the impugned order. He observed that the assessee's explanation that he had considerable cash from his truck income and other business as well as withdrawals from the firm, could not be brushed aside in a summary manner. He pointed out that to determine the overall cash with the assessee from other sources of income, it was necessary to prepare the cash flow statement for the block period and thereafter consider each investment with reference to the available funds as per the cash flow statement. The learned CIT(A) stated that the cash flow statement had been prepared by the assessee for the block period 1986-87 to 1996-97 and his share of income from various firms during this period along with withdrawals from all those firms had been reflected in that cash flow statement.
Similarly, withdrawals and deposits in the various bank accounts and the investments in the FDRs/UTIs, etc. stood reflected therein. He further stated that the investment of Rs. 10,000 in the UTI Master Gain by Smt. Santosh Vij on 2nd March, 1992, was made out of opening cash balance of Rs. 1,62,761.77 available with the assessee on 2nd March, 1992. Therefore, this investment was fully explained. He further pointed out that investments of Rs. 6,000, Rs. 4,000 and Rs. 20,000 in UTI Master Gain, 1992 in the names of the assessee and his wife were reflected at p. 19 of the cash flow statement and the assessee on that date was having opening cash balance of Rs. 90,402.97. Thus, the addition of Rs. 30,000 could (sic) opening cash balance of Rs. 50,407.97 on 15th Sept., 1992, out of that investment of Rs. 25,000 had been made in the name of assessee's wife in UTI GMISB-1992 and this investment had been reflected at p. 19 so, this investment of Rs. 25,000 was also covered. Learned CIT(A) further stated that on 12th Dec., 1994, opening cash balance with the assessee was Rs. 1,21,672.13 and the investment on that date was of Rs. 10,000. So, no addition was called for. He further pointed out that the monthly deposits in RD account Nos. 1599-1602 had been reflected in the cash flow statement and thus investment of Rs. 30,000 could not be sustained.
Learned CIT(A) further pointed out that two FDRs in the names of the assessee and his wife, Smt. Santosh Vij, purchased on 23rd. June, 1996, for Rs. 25,200 and Rs. 20,000, respectively were reflected at p. 43 of the cash flow statement and the assessee was having cash balance of Rs. 1,82,967.18 on that date which was sufficient to explain the investment of Rs. 45,200. Thus, the investment to that extent was fully explained.
He further pointed out that two FDRs of Rs. 15,000 each were purchased on 29th May, 1990, and another of Rs. 15,000 on 29th Dec., 1988, but the AO had taken the amount along with accrued interest. According to the learned CIT(A), the accrued interest of Rs. 37,415 could not be treated as undisclosed investment and he opined that the addition to the extent of Rs. 37,415 being accrued interest on the FDRs could not be sustained. Learned CIT(A) further pointed out that the assessee had cash balance of Rs. 86,951.79 on 29th May, 1990, which was sufficient to make the investment of Rs. 30,000 in two FDRs and similarly opening cash balance was Rs. 1,79,936.31 on 29th Dec., 1988, which was sufficient to cover the FDR of Rs. 15,000. He, therefore, held that the addition to the extent of Rs. 82,415 (Rs. 45,000 + Rs. 37,415) could not be sustained and was to be deleted. Learned CIT(A) pointed out that two FDRs were purchased on 1st June, 1995, for Rs. 17,370 each in the names of Shri Ashish Vij and Shri Karan Vij which were reflected at p.
11 of the cash flow statement and as per bank certificates, those two FDRs were initially purchased on 29th May, 1990, for Rs. 10,000 which were renewed on 1st June, 1992, with accumulated interest at Rs. 12,184 each and those were subsequently renewed. He pointed out that the assessee had opening balance of Rs. 91,951.79, therefore, investment of Rs. 10,000 each in the two FDRs was fully explained. Accordingly, addition was deleted.
Learned CIT(A) further stated that the FDRs for Rs. 1,000 purchased on 14th Dec., 1994, by the assessee was explained to have been made out of cash in hand available and reflected at p. 31 of cash flow statement.
That addition was also deleted. In the aforesaid manner, total addition of Rs. 3,41,314 was deleted by the learned CIT(A) on the basis of cash flow statement and the aforesaid discussion. Now, the Department is in appeal.
31. Learned Departmental Representative for the Revenue supported the order of AO but was not in a position to rebut the finding given by the learned CIT(A) in the well reasoned order.
32. In his rival submissions, learned counsel for the assessee reiterated the submissions made before the learned CIT(A) and pointed out that Shri Ramesh Chand (Dy. CIT), AO, was present on behalf of the Department before the learned CIT(A) and in his presence cash flow vis-a-vis investments were discussed and co-related. It was also stated that the block assessment was framed under Section 158BC r/w Section 144 of IT Act which shows that the assessment was framed ex parte.
However, learned CIT(A) in the presence of both the parties, after appreciating the facts in right perspective and verifying the investments with cash flow statement, deleted the addition. He therefore, strongly supported the impugned order on this issue.
33. We have considered the rival submissions and the material available on record. On perusing the impugned order, it is noticed that the AO was present before the learned CIT(A) and the learned CIT(A) dealt with each and every entry and after satisfying himself that the assessee was in a position to make the investments out of cash available with him, deleted the impugned additions. From the facts discussed above, it is gathered that the learned CIT(A) after making proper verification in the presence of AO who had passed the assessment order under Section 144, had deleted the impugned additions. In view of the above facts, we do not see any valid ground to interfere with the findings of the learned CIT(A) and accordingly, do not see any merit in these grounds of Departmental appeal.
34. In the result, appeal filed by the assessee is allowed and that of the Department is dismissed.