Delhi High Court

Atul Kumar Jain vs Deputy Commissioner Of ... on 21 September, 1998

Equivalent citations: (1999) 64 TTJ Del 786

ORDER

Nathu Ram, AM:

The appeal preferred by the assessee is directed against the order of the assessing officer passed under s. 158BC of the Income Tax Act for the block period relevant to the assessment year 1985-86 to 1996-97.

2. The facts, in brief, are that this is the case of an individual who derived income from house property, share income from M/s Mahavir Spinning Mills and income from other sources. A search was conducted in the business and residential premises of various assessees of this group including the assessee on 16-11-1995, and during the course of search certain books of account, documents, share certificates, etc. were seized. The assessing officer issued a notice under s. 158BC on 15th March, 1996, requiring the assessee to file return of income in Form No. 213 and in response the assessee filed a return on 8-11-1996, showing Nil undisclosed income. Subsequently the assessing officer issued a notice along with a questionnaire requiring the details and explanations.

2.1. The assessing officer noted that among the documents found and seized there was a document No. 7 of Annexure A/17 which contained figures of certain receipts and expenses as per details below

80 Pusa Road

1050 marriage

550 flat

395 Pitam Pura

4000 IOC rent

1000 Anil

250 interest

36.60 house expenses

5000 Advance rent IOC

The figures given in the seized document were deciphered by assessing officer as under Receipt

Receipt

Expenditure

8,00,000

10,50,000

39,500,000

5,50,000

4,00,000

10,00,000

2,50,000

35,60,000

5,00,000

59,00,000

61,60,000

2.2. When required it was explained that it was a very old document and the same also did not prove any business transactions. The document was also not claimed to have been written by the assessee. According to the assessing officer the assessee received an amount of Rs. 59 lakhs and made payments of Rs. 61,60,000. This document also related to more than one assessee of the group and the assessee gave a common reply. As regards the receipt amount of Rs. 39,50,000 relating to Pitampura, the assessing officer noted that Rs. 39,50 lakhs represented the sale proceeds of Pitampura property owned by the assessee and Shri Avinash Jain. The amount was deciphered from the figure of "395" found recorded in the document seized. It was explained that the deciphering of the figure is not correct. If "39W' is deciphered as 39.50 lakhs then how could "4000" figure be deciphered as 4,00,000 and "5000" as 5,00,000. The sale proceeds of Pitampura property, therefore, taken at Rs. 39.50 lakhs on the basis of the deciphering of the figure "395" is not correct. The assessee also denied having advanced Rs. 10 lakhs to P.K. Jain and expenses on marriage of Prayaga at Rs. 10.50 lakhs and also expenses of Rs. 9.09 lakhs. It was also submitted on behalf of the assessee that in case the sale consideration of Pitampura property is taken at Rs. 39.50 lakhs which in fact was sold only for Rs. 18. 11 lakhs the excess unaccounted amount available with the assessee would be Rs. 21.39 lakhs and the same should be adjusted against outgoing shown at Rs. 10 lakhs on marriage expenses, etc. and no separate addition on that account be made to avoid double taxation.

2.3. The assessing officer noted that though the assessee's reply is evasive but he has admitted the entry relating to Pitampura property. Pitampura property was purchased by the assessee along with his brother Shri Avinash Jain on 3rd July, 1986, and the same was sold on 31st March, 1994, as per the agreement to sell executed. The sale consideration shown in the books of account was at Rs. 18.11 lakhs. The assessee having 50 per cent share in the property was in receipt of Rs. 9. 11 lakhs. However, as per the aforesaid document the assessee and his brother received premium on sale of the Pitampura property at Rs. 21.39 lakhs (Rs. 39.50 lakhs minus Rs. 18.11 lakhs). The assessing officer thus treated the receipt amount by the assessee of Rs. 10.69,500 as undisclosed income of the assessee for the block period.

2.4. The assessing officer deciphered the figure of "55W to Rs. 5,50,000 relating to the flat. According to the assessing officer the assessee acquired membership of Samantbhadra Cooperative Group Housing Society, Rohini, in 1994 and made initial payment for acquisition of membership at Rs. 2,81,110 on 6th April, 1994. Three instalments of Rs. 35,000 each were subsequently made for the flat. The total investment in the flat as recorded in the books of account was Rs. 3.86 lakhs. According to the assessing officer the flat is situated in a posh locality and membership of the society commanded premium. The assessee was not the original member of the society. Original member was one Shri Satish Kumar Jain who acquired membership in the society in 1988. The assessee in fact purchased the membership from Satish Kumar Jam after a gap of six years in 1994. Value of the membership had gone up substantially by that time as this became sought after location. The assessing officer, therefore, treated the said amount of Rs. 5.50 lakhs as per the document paid as premium to Satish Kumar Jain for acquisition of membership of the society for a flat. The premium so paid was not accounted for in the books of account. Local enquiries made according to the assessing officer, revealed that there was huge premium going on for membership of the societies in that locality including Samant Bhadra Cooperative Group Housing Society. On these facts the assessing officer treated the said amount of Rs. 5,50,000 as assessee's undisclosed income for the block period.

2.5. The assessing officer noted that during the course of search certain documents were found pertaining to the construction of a house property at N.S. Park, Panipat. One of the documents seized No. 7 of Annexure A-17 contained entries of Rs. 35.60 lakhs against house expenses. These documents run into pages from 51 to 83 of Annexure 1 and total of entries in these documents given is at Rs. 35,34,456. When required it was explained that the expenses recorded related to construction of two houses-one at N.S. Park and the other at Model Town, Panipat. According to the assessing officer the assessee has not furnished any evidence to show that the expenses recorded pertained to two houses. The facts on record otherwise show that these documents relate to the construction of house of N.S. Park. According to the assessing officer these documents contained day-to-day expenditure for construction. The assessing officer also noted from the date and months given against such entries that the first entry starts from the month of March, 1992. The construction period of the house at N.S. Park was from 1993 to 1995 as admitted by the assessee while the period of construction of Model Town house is from 1991 to 1993. Thus, by March 1993, construction of Model Town house was complete. The assessing officer, however, noted that the entries made on p. 78 total to Rs. 7,11,461 and there against he found a mention of ("M7) which indicated that these pertained to the Model Town house. The balance amount spent of Rs. 28,22,995 was, therefore, taken as pertaining to N.S. Park house.

2.6. The assessing officer noted that the actual investment made in the N.S. Park house as accounted for in the books is of Rs. 20,70,000 as per details below :

Rs.

Atul Jam (assessee)

7,90,000

Avinash Jain

7,90,000

Urmila Jain

4,90,000

20,70,000

2.7. The assessing officer further noted that the plot of land on which this house was constructed belonged to Smt. Urmila Jain, Smt. Sneh Jain, Smt. Kusurn Jain and Shri Avinash Jain. Smt. Kusum Jain has given her 1/4th share in the plot on lease to the assessee Shri Atul Jain. The property has been constructed on the plot by three persons namely, Atul Jain, Avinash Jain and Urmila Jam. As against this the actual investment as per the documents seized is of Rs. 28,22,995 (Rs. 35,34,456-7,11,461). '

2.8. Since the value shown in the seized document was more than what was declared by the assessee the assessing officer made a reference to the DVO for estimating the cost of construction. The DVO in his report gave the estimate of cost of construction at Rs. 28,61,452 excluding cost of furniture, fittings and woodwork, etc. A copy of the valuation report was given to the assessee to seek his reaction and the assessee in response made submissions in the letter dt. 27-11-1996. According to the assessing officer gist of the submissions made was that the assessee used cheap and inferior quality material which aspect was not considered by the DVO. It was also claimed that the construction was supervised by the assessee and his family members and, therefore, the DVO should have allowed 10 per cent deduction for personal supervision instead of 5 per cent given by him. It was also claimed that the assessee saved substantial amount in cartage and cement purchase, etc. as also in respect of labour expenses. The assessing officer was not satisfied with the explanation so offered. According to the assessing officer the assessee has not furnished any evidence in support of his submissions either before the DVO or before him and in the absence of any evidence the submission made cannot be accepted. The assessing officer had also noted that the bank withdrawals made by the co-owners during the relevant period and found that the construction expenses recorded in the seized documents are not fully explainable from the withdrawals made from the bank. The assessing officer also noted that the bank withdrawals shown by S/Shri Anil Jain, Arvind Jain and N.C. Jam amounted to Rs. 6,40,000 but they were involved in construction of the house at Model Town and the same had since been completed. They had also not given any money for construction of the house at N.S. Park to other brothers as is reflecting from the respective balance sheets. They obviously withdrew the amount from their respective bank account for some other purpose. If it was so there was no surplus funds available for 1994-95 when the expenses incurred on house as per the seized document is at Rs. 13,91,052 as against the bank withdrawals of Rs. 10,84,900 by assessee Atul Jain. Having regard to these facts the assessing officer held the view that the cost of construction shown is not correct. The assessing officer, therefore, relying upon the report of the DVO held that the difference in cost of construction as estimated by the DVO and that declared by the assessee represented his undisclosed income on account of unaccounted expenditure in the house construction at N.S. Park, Panipat for the block period. Such difference worked out to Rs. 7,91,500 (Rs. 28,61,500-Rs. 20,70,000). The assessing officer also noted that as per the seized documents the cost of water-fall installed in the newly constructed house as per the seized documents was at Rs. 95,000 whereas the DVO estimated its cost at Rs. 40,000. The difference of Rs. 55,000 was also added in the unexplained investment in the property resulting in total unaccounted investment at Rs. 8.46,500 (Rs. 7,91,500 + 55,000).

2.9. The assessing officer also noted from the seized documents that wood worth Rs. 3.75 lakhs was purchased for use in both the houses at Model Town and N.S. Park. Fifty per cent of the amount which zomex to Rs. 1,87,500 was taken for N.S. Park house. The assessing officer estimated the labour charges on woodwork involved in furnishing of the house at Rs. 50,000. The total unaccounted expenditure on woodwork was, therefore, taken by the assessing officer at Rs. 2,37,000 (Rs. 1,87,000 + Rs. 50,000). The total unexplained investment in the house was thus worked out by the assessing officer at Rs. 10,83,500 (Rs. 8,46,500 + Rs. 2,37,000). Since the assessee had 1/3rd share in the property constructed, his share in the unaccounted investment in the property was taken at Rs. 3,61,166 as representing the undisclosed income of the assessee for the block period.

2.10. Seized documents also indicated investment in the following

Reliance Polythene 100 debentures @ 50 dt. 25-4-94

5,000

Reliance Petroleum Ltd. 300 debentures @ 26, dt. 18-2-1995

7,800

Rajlaxmi Unit of UTI dt. 3-12-1993 in the name of Megima 3,500 x100 d/o Sh. Atul. Jain

35,000

Rajlaxmi Unit of UTI dt. 28-4-93, in the name of Sakshi 2,000 x 100 d/o Sh. Atul Jain

20,000

67,800

2.10A. When required it was explained that debentures of Rs. 12,800 were taken from unaccounted income and investment in units of UTI in the names of daughters were out of gifts received by them on their birthdays. Daughters

received gifts from maternal grandfather., maternal grandmother; material uncle, aunty and other relatives. The assessee was required to give the details of the amount received in gifts from relatives with their complete names and addresses. Learned counsel of the assessee Shri S. K. Gupta, who appeared before the assessing officer, expressed his inability to give name and addresses of the donors. The assessing officer, therefore, treated the total amount of Rs. 67,800 investment in debentures and units of UTI as representing the undisclosed income of the assessee for the block period.

2.11. The assessing officer noted that during the course of search movable assets like TV, VCR, furniture, etc. were found at the residence of the assessee and inventory thereof was prepared. The assessee was required to explain the source of acquisition of these items. In response it was explained that the assessee is an old taxpayer and these items were acquired out of withdrawals made over a period of time and the same are from accounted sources. The assessing officer then required the assessee to give details of the withdrawals made in household for the last ten years. The assessee furnished the required details in respect of whole family. It was also explained that the entire family was living in the rented house in Model Town upto December, 1993, which was taken on a monthly rent of Rs. 475. Since the entire business activity of the family was concentrated at Panipat the family was living jointly at Panipat. After December, 1993, the family shifted to its new house at L-494, Model Town, Panipat, and jointly lived there upto March, 1995. In March, 1995, part of the family shifted to the another house constructed in Narain Singh Park, Panipat. Thereafter, though the family was living in two houses but household expenses were common for the family. The assessing officer on perusal of the details of withdrawals shown for household expenses found that withdrawals shown were hardly sufficient to meet the day-to-day expenses of the family and, therefore, there would not be any surplus funds available out of that for making the investment in assets like TV, washing machine, etc. The assessing officer further noted that withdrawal shown by the assessee for the family from 1985-86 to 1995-96 is only Rs. 82,041 and obviously the acquisition of the said items could not be made from the withdrawal shown. The assessing officer estimated the total cost of the various items at Rs. 91,000 and the same was treated as acquired out of undisclosed income of the block period.

2.12. The assessing officer noted that the unaccounted receipt from premium taken on sale of Pitampura property was at Rs. 10,69,500 and the unaccounted expenditure on account of premium paid for flat at Rs. 5,50,000, investment in the house construction at Rs. 3,61,166, movable assets of Rs. 91,000 and acquisition of debentures of R. 12,800 comes to Rs. 10, 14,966. The assessing officer treated the unexplained investment of Rs. 10, 14,966 on the 'acquisition of various assets as covered by the premium taken on sale of Pitampura property of Rs. 10,69,500 and accordingly no separate addition was made. The assessing officer, therefore, assessed the undisclosed income only on account of premium received on Pitampura property at Rs. 10,69,500 and investments in units of UTI at Rs. 55,000 totalling to Rs. 11,24,500 for the block period and charged tax thereon @ 60 per cent.

2.13. The assessee has raised as many as nine grounds in this appeal and the same are reproduced hereunder :

1. That, on the facts and circumstances of the case, the assessment made under s. 158BC on 29-11-1996, determining the undisclosed income at Rs. 11,24,500 is illegal, unjust and unfair and is vitiated being contrary to the facts on record and the provisions of the Act.

2. That, on the facts and in the circumstances of the case, the learned assessing officer erred in making an addition of Rs. 10,69,500 as income from undisclosed sources.

3. That, on the facts and in the circumstances of the case, the learned assessing officer erred in holding that the property at pitampura was sold for a consideration of Rs. 39,500.

4. That, on the facts and in the circumstances of the case, and without prejudice to the preceding grounds of appeal, the learned assessing officer earned in not giving the full benefit of set off of the alleged surplus receipt on sale of the Pitampura house against the alleged unexplained expenditure/investment made by the assessee, his associates and family members.

5. That, on the facts and in the circumstances of the case, the learned assessing officer erred in making an addition of Rs. 55,000 on account of alleged unexplained investment on shares/UTI.

6. That, on the facts and circumstances of the case, the learned assessing officer erred in holding that there was an unexplained investment of Rs. 3,61,166 in the construction of house at 48-B, Narayan Singh Park, Panipat.

7. That, on the facts and in the circumstances of the case, the learned assessing officer erred in holding that the assessee paid a premium of Rs. 5,50,000 on purchase of a flat at Rohini.

8.That, on the facts and in the circumstances of the case, the learned assessing officer erred in holding that there was an alleged unexplained investment of Rs. 91,000 on movable assets.

9. That, on the facts and in the circumstances of the case, the learned assessing officer erred in holding that there was an unexplained investment of Rs. 12,800 in shares."

2.14. In the substantive grounds of appeal only the following additions have been challenged :

(a) Rs. 10,69,500 on account of premium received on sale of Pitampura property;

(b) Rs. 55,000 on account of investment in shares/UTI-, However, against the addition of Rs. 10,69,500 the assessing officer allowed set off to the extent of Rs. 10, 14,966 on account of Rs.

Rs.

(i)

5,50,000

Premium paid on purchase of land

(ii)

3,61,166

investment in house property at Narain Singh Park, Panipat;

(iii)

91,000

on acquisition of ample assets.,

(iv)

12,800

on investment in shares.

10,14,966

2.15. Though no separate addition has been made on account 'of investment from undisclosed sources in the aforesaid assets to the extent of Rs. 10,14,966 the same having been adjusted and set off against the premium received on Pitampura property, consequently these are also under challenge.

3. The first substantive ground taken is against addition of Rs. 10,69,500 as income from undisclosed sources on the said chit of paper seized during search. The learned counsel has submitted on behalf of the assessee that the aforesaid chit of paper did not constitute to be a document. In any case it was wholly uncorroborated. He further argued vehemently that the assessing officer has substituted the figures by adding a number of zeros at his whims and caprice. In some figures he has added "oo". For example, he has converted the figure of 4,000 into 4,00,000 and 5,000 into 5,00,000. In other figures the assessing officer has adding "000" or "00OU' such as the figure of Rs. 250 is converted into 2,50,000; by added 1,00011 and the figures of 80 and 395 are converted into figures of 8,00,000 and 39,50,000 respectively. The total of left hand side is thus worked out by the assessing officer at 59,00,000, as against meagre total amount of 9,725 as appearing in the original paper. The figures on the right side are presumed to be of expenditure. The said figures have been decoded by adding "0OW' and the total is worked out at Rs. 61,60,000 as against 2,635.60 (or 6,160 if 30.60 is read as 3,560) in the original paper. the learned counsel has contended that there was absolutely no material to support the finding of the assessing officer and that his conclusion and inferences are based on surmises and conjectures. The assessing officer has assumed certain transactions to have taken place of certain amounts imaginary without any corroborating evidence in his possession either oral or documentary. No papers in fact were found during the course of search and seizure operation to support his conclusion that there was a receipt of Rs. 59,00,000 on different counts as presumed by him. Similarly, there was no evidence that. expenditure of Rs. 61,60,000 was incurred. In other words there was no.'.' justification for substituting of petty figure of 9,225 by Rs. 59 lakhs as receipts and 2,635.60 by Rs. 61,60,000 as expenditure. In support of such submissions made the learned counsel placed reliance on the following judgments for the proposition that no addition could be made merely on the basis of uncorroborated chit of paper.

(a) Asstt. CIT v. Karori Lal Aggarwal (1994) 50 M (Jab) 393;

(b) Kantilal & Bros. v. Asstt. CIT (1995) 51 M (Pune) 513 .. (1995) 52 ITD 412 (Pune)

(d) M. V. Mathew v. Income Tax Officer (1993) 46 M 353 (Coch);

(e) Income Tax Officer v. WD. Estate (P) Ltd. (1993) 46 M (Bom) 143 : (1993) 45 ITD 473 (Bom); and

(f) CIT v. S. M. S. Investing en t Corpn. (P) L td. (1994) 20 7 ITR 364 (Raj).

3.1. The learned counsel has further placed reliance on M/s Raffial Singh Ram Anar v. Income Tax Officer (1991) 39 M (Del) 544, and Pushkar Narain Saraf v. CIT (1990) 86 CTR (All) 110 .. (1990) 183 1TR 388 (AD) for the proposition that the presumption contained in s. 132(4A) cannot be pressed into service in the present block assessment proceedings.

3.2. Reliance has also been placed by the learned counsel of the assessee on AlR 1981 SC 2085 para 16 and AlR 1965 Bom 112, para 42, in support of the proposition that even the mere proof of handwriting does not prove the contents of a document and such a document continues to remain only in the nature of hearsay evidence. He has further contended that in the present case even the handwriting is not proved not to speak of the contents. Reference was also made of the Hon'ble Delhi High Court decision in Crl. M.A. petition No. 265 of 1996 in the case of L. K. Adwani and also of the Hon'ble Supreme Court judgment in the case of V.C. Shukla JT (1988) 2 SC 172 is connection with the interpretation of the terms, documents and books of account.

3.3. The learned counsel has also placed reliance on the provisions of s. 91 and 92 of the Evidence Act in support of the proposition that in the face of duly executed document (the relevant agreements to sell as placed at pp. 40 and 42 of the paper book No. I), no uncorroborated evidence could be relied upon to discredit the original documentary evidence in relation to the sale price of a property. The learned counsel also sought support from the decision of the Hon'ble Supreme Court in the case of K. P. Vargese v. Income Tax Officer (1981) 24 CTR (SC) 358 : (1981) 131 1TR 597 (SC) for the proposition that fictional receipt cannot be deemed to be a receipt in the absence of any cogent material to support the factum of actual receipt.

3.4. The learned counsel has also made a reference to the definition of the term "document" as given in Black Law Dictionai3 Evidence Act and General Clauses Act along with the meaning of the words "describe" and "express" used in the definitions under the Indian Evidence Act and General Clauses Act to support the contention that the document should have graphic presentation and distinct manifestation leaving no room for guess, surmise and conjecture and it should be capable of being evidentiary use. It has also been contended that if a chit of paper is to be considered as document for the propose of s. 15813(b) of the Income Tax Act, it would create rather a'dangerous situation as any person having a little knowledge of the affairs of any person would create such a document and thereby create all kinds of problems as apparently seem to have been done in the present case.

3.5. The learned counsel has, therefore, concluded with the submission that the said chit of paper is not the document and the figures given therein as "395.00" cannot be read and adopted as "39,50,000" as representing the sale consideration of Pitampura property to assess the difference amount of Rs. 21,39,000 equally in the hands of the assessee and his brother Avinash Jain without any corroboration and accordingly the undisclosed income adopted in the hands of the assessee on this Court at Rs. 10,69,500 deserve to be deleted.

4. The learned departmental Representative, on the other hand, strongly relied upon the order of the assessing officer and has further submitted that the said document was found and seized from the premises of the assessee and the same is presumed to be belonging to the assessee and its contents are true within the meaning of s. 132(4A) of the Income Tax Act. Unless such presumption is rebutted by the assessee. The assessee has failed to rebut such presumption and has failed to show that the said document does not belong to the assessee or it belongs to certain other person and its contents are not correct. The assessee having failed to do so the assessing officer has rightly utilised the said document against the assessee. The learned departmental Representative has further submitted that the various figures given in the document have been deciphered by the assessing officer and according to such deciphering made an amount of Rs. 39,50,000 was received as sale consideration of Pitampura property whereas as per the sale agreement and the record of the transaction in the books, the apparent consideration is shown only at Rs. 18,11,000. The assessee, thus, received premium on sale of the Pitampura property at Rs. 21,39,000. The assessee being a co-owner of the property with 50 per cent share Rs. 10,69,500 was received by the assessee as share of premium and the same having neither been accounted in the books of account nor disclosed in the return filed the assessing officer was justified in adopting the said amount as undisclosed income for the block period.

4.1. The learned departmental Representative has also pointed out that the assessee has himself conceded and accepted the sale consideration received of Pitampura property at Rs. 39,50,000 and requested the assessing officer not to make any addition on account of unaccounted investment to that extent as the same would amount to double taxation.

5. Referring to the submissions made by the learned departmental Representative the learned counsel of the assessee invited our attention to the decision in the case of Pushkar Narain Saraf (supra) and Rajpal Singh Rarnautar (supra), according to which the presumption under s. 132(4A) is not available in the assessment proceedings. Hence .9. 132(4A) does not override the provisions of ss. 68 and 69. He also reiterated that before any paper can constitute a document it should be capable of being evidentiary use and should contain clear expression and description leaving no room for presumption, assumption and substitution as done in the present case. He also clarified that there was no question of any confession or admission on the part of the assessee. The assessee in fact without conceding to the interpretation of the document as proposed by the assessing officer raised only a question of law alternatively seeking set off of receipts against the expenditure in case the assessee's submission did not find favour with the assessing officer so that the assessee was protected from double taxation of the same amount.

6. We have carefully considered the stated facts, material evidence on record and the rival submissions made before us. We have also gone through the order of the assessing officer and various documents placed in the paper book to which our attention was invited during the course of hearing. We have also perused the various decisions cited before us for and against. It is evident from the facts given that the Revenue carried out search operations on 16-11-1995, at the residential and business premises of various persons relating to Mahabir Woollen Group and during the course of search the Revenue seized, among others, the paper at SI. No. 7 of Annexure A/17 of the Panchnama. We reproduce the contents of the document hereunder for proper appreciation even at the cost of repetition

80 Pusa Road

1,050 marriage

395 Pitam Pura

550 flat

4,000 lOC rent

1,000 Anil

250 interest

36.60 house expenses

5,000 Advance rent IOC

6.1. The total of left side figures comes to 9,725 and total of figures given on right hand side comes to 6,260 Against each figure, same narration is given such as Pusa Road, Pitampura, IOC rent, Flat, house expenses, etc. The assessing officer has deciphered the figures given by adding thereto "OW, "000" or "0000" and read the total of left hand side as the receipt of Rs. 59,00,000 and total of right hand side as expenditure of Rs. 59,00,000 and total of right hand side as expenditure of Rs. 61,60,000. While deciphering each figure the assessing officer has not given any basis nor he had brought on record any material in support for adding to the said figures "OW, "000" or "0000". The assessing officer has also not examined the assessee or the author of the said paper to ascertain the code if any, adopted in deciphering the said figures nor is there any clue found during the course of search in the shape of a document or evidence of any person recorded at the time of search to decipher the code figures recorded in the seized paper, if any.

6.2. According to the assessing officer the aforesaid paper was seized during the course of search but he has not shown as to whether the said paper was recovered and seized from the possession of the assessee or his brother Shri Avinash Jain. The assessee has denied this paper to be in his handwriting and he has denied that it contained the records of any transaction relating to him. We find that the assessing officer has not brought any material on record, oral or documentary to show that the said paper was recovered from the possession of the assessee and it contained among other transactions relating to the sale of Pitampura property. The presumption under s. 132(4A) is thus not available against the assessee. We further find that Pitampura property was sold by the assessee and his brother Avinash Jain through two agreements to sell placed at pp. 40 to 47 of the paper book and as per these agreements to sell the ground floor was sold for a consideration of Rs. 9, 11, 000 and the first floor for Rs. 9 lakhs and the property as a whole was thus agreed to be sold for a total consideration of Rs. 18, 11, 000 to Harish Chand Jain on 5th/31st May, 1994. The amount received has been recorded in the relevant books of account.

6.3. We find that the assessing officer has neither made any valid enquiry from purchaser of the property so as to prove that the assessee along with his brother Shri Avinash Jain did receive sale consideration of the property at Rs. 39.50 lakhs against the apparent consideration shown in the agreement to sell and that recorded in the books of account at Rs. 18.11 lakhs, nor the assessing officer has cited any comparable sale instance so as to establish that Pitampura property commanded at the relevant time market value of Rs. 39.50 lakhs. We also find that in the said paper on left hand side the entries made are also of rent and advance of the rent received from Indian Oil Corporation at 4,000 and 5,000, respectively. Indian Oil Corporation (IOC) is a Central Government undertaking and the transactions relating to the rent and advance of rent must have been recorded in the books of Indian Oil Corporation The assessing officer has not made any enquiries from the Indian Oil Corporation about the rent shown at 4,000 and advance of rent shown at 5,000 as mentioned in the said paper so as to ascertain as to whether the figures mentioned in the said paper represented the actual figures or the same have been mentioned in the coded form requiring its deciphering. The assessing officer in fact has taken the IOC rent figure at Rs. 4,00,000 in place of 4,000 and advance rent at Rs. 5,00,000 in place of 5,000 thereby adding "00" to each figure. There is no material evidence brought on record or basis given for adding "00" to each of these figures to come to the correct figure of IOC rent and advance rent IOC at Rs. 4,00,000 and Rs. 5,00,000 respectively. In the case of Pitampura property to figure "395" the assessing officer has added "0000" to read as 39,50,000. There is no basis given or material brought on record for reading the said figure of "395" as "39,50,000" by adding "0000". The assessing officer also has not given any justification as to why in the case of figures "395" he added "0000" whereas in the case of figures 4,000 and 5,000 relating to IOC he added only "00". The assessing officer appears to have deciphered the said figures at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support. The action of the assessing officer in adopting the actual sale consideration of the Pitampura property at Rs. 39,50,000 instead of apparent sale consideration shown at Rs. 18,11,000 is, therefore, not supported by any corroborative material evidence.

6.4. We find that the assessing officer has made out the case for making such addition based exclusively on the said piece of paper found and seized during the course of search. It is, therefore, to be examined whether the said paper found and seized is a document having evidentiary value to prove the fact of the transaction. The word "document" has been defined in s. 32 of the Indian Evidence Act to mean-any matter expressed or described upon any substance by means of letters, figures, or marks or by more than one of those means, intended to be used or which may be used, for the purpose of recording that matter. The word "document" has also been similarly defined in the General Clauses Act. The meaning of the word "describe" used in the definition as given in the New Shorter Oxford English Dictionary is "portray in words, recite the characteristics of, in a detailed or graphic account of. The meaning of the word "express" used in the definition as per the New Shorter English Dictionary is "A graphic representation as image; an act of expressing or representing by words, signs or actions, expressions, a mode of speech, of phrase,- an utterance. According to the Hon'ble Supreme Court in the case of Ramli Dayawala & Sons (P) Ltd. v. Invert Import AIR 1981 SC 2085, mere proof of the handwriting of a document would not tantamount to a proof of all the contents or the facts stated in the documents, it the truth of the facts stated in a document is in issue, mere proof of the handwriting and execution of the document is in issue, mere proof of the handwriting and execution of the document would not furnish evidence of the truth of the fact or contents of the document. The truth or otherwise of the fact or contents so stated would have to be proved by admissible evidence i.e., by the evidence of those persons who can vouchsafe for the truth of the facts in issue.

6.5. Further, the Hon'ble Supreme Court in the case of Mohd. Yusuf & An.r. v. D. & Anr. AIR 1968 Bom. 112 has observed that the evidence of the contents contained in document is hearsay evidence unless the writer thereof is examined before the Court. The Hon'ble Court, therefore, held that the attempt to prove the contents of the document by proving the signatures of the handwriting of the author thereof is to set at nought, the well-recognized rule that hearsay evidence cannot be admitted.

6.6. If we consider the said piece of paper seized during search in light of the definition of the word "document" as given in the Indian Evidence Act and General Clauses Act and truthfulness of the contents thereof in light of the aforecited decisions of the Hon'ble Supreme Court we find that the said paper contains jottings of certain figures by the same does not describe or express the substance of any transaction and even if the said paper has been seized from the possession of the assessee the contents thereof are not capable of describing the transactions the way the assessing officer has deciphered them without support of corroborative evidence of the parties attributed to the alleged transaction. The said paper, therefore, does not come within the campass of the definition of the word "document" to be used as an evidence. The paper seized, therefore, has no evidentiary value and accordingly the same cannot form the basis for assessing the undisclosed income.

6.7. The said piece of paper seized in search also does not represent the books of account. A book of account as per the Black's Law Dictionary means "A detailed statement, in the nature of elebits and credits between persons; an account or record of debits and credits kept in a book; a book in which a detailed history of business transaction is entered; a record of goods sold Dr. services rendered; statement in detail of the transactions between the parties. The book entry as per Black's Law Dictionary means "a notation, generally of figures or numbers, made in an accounting journal, consisting, in double entry book keeping, of debits and credits. Further, books, of account means "books in which merchants, traders and businessmen g6nerally keep their accounts. Entries made in the regular course of business; serial continuous and permanent memorials of business affairs.

6.8. The said piece of paper seized in search has not been proved to be written by the assessee relating to various business transactions in the normal course of business and, therefore, said paper also does not fall within the campass of the meaning of the books of account having credibility of its acceptance without support of corroborative evidence which is admittedly missing. This view is supported by the ratio of decisions of the Hon'ble Supreme Court in the case of VC. Shukla JT (1998) 2 SC 172; and L.K. Adwani in Crl. Revision petition No. 265 of 1996.

6.9 In the case of Rajpal Singh Ramautar v. Income Tax Officer (supra), the papers seized from the premises contained certain figures, rate and consequent calculation but they did not bear any name. The assessee categorically denied its ownership and also explained that it was not in the handwriting of any of the partners or employees or any connected person. The Tribunal held that the initial onus laying upon the assessee was thus discharged. Further during the search or even after that nothing was asked by the Revenue regarding the seized papers. The department thus completely failed to establish that the assessee made any unexplained investment during the relevant year and held that on the basis of the entries made in the paper no addition could be made.

6.10. In Dy. CIT v. Krorilal Aggarwal (supra). A diary seized during search contained certain jottings. The Tribunal held that the jottings in diary neither represented books of account nor any document and, therefore, presumption under s. 132(4A) was not available and the addition made on the basis of the said jottings was deleted.

6.11. In the case of M.V. Mathew v. Income Tax Officer (supra) Unaccounted sum found noted in a diary and the assessee claimed that the same represented deposits from certain parties. The parties denied having deposited the amount. The assessing officer treated the amount as advance made by the assessee and addition on that account was made. In the absence of clinching evidence to show that the impugned sum was advanced the amount was treated as deposited and the addition made was deleted.

6.12. In Income Tax Officer v. WD. Estate (P) Ltd. (supra) the assessing officer made addition on the basis of a file, a table diary belonging to a disgruntled employee found during search at his premises. This showed sales and sale amounts allegedly received as "on" money by the assessee. However, there was absolutely no evidence to show that the assessee in fact received "no" money payments. The assessee contended that such additions were liased on hearsay evidence, The Commissioner (Appeals) confirmed the additions partly after being influenced by a report published by the Ministry of Finance wherein truthfulness of notorious practice of payment of black money in real estate transactions in metropolitan city of Bombay was discussed. The Tribunal held that report of the Ministry of Finance which highlighted prevailing practice could not be an adequate substitute for tangible evidence and the additions made were not held justified.

6.13. In the case of CIT v. SMC Investinent Coiporation (P) Ltd. (supra) loan was advanced by assessee and thereon simple interest was calculated by the assessing officer and assessed on accrual basis whereas the assessee claimed that no interest income was received. A slip of paper was found in search showing calculation of interest and on that basis the assessing officer presumed that interest was calculated on compound interest basis and the assessment was reopened. Debtor had not credited interest in its accounts and declined to pay interest. Finding by Tribunal that on basis of seized paper ' in reference could be drawn that the assessee charged compound interest. Accordingly, reassessment proceedings were held invalid.

6.14. In the case of K. P. Varghese v. Income Tax Officer (supra) the Hon'ble apex Court held that the difference between the market value and consideration declared is not sufficient. The assessee must be shown to have received more than what is declared or disclosed by him as consideration. Only that income which is accrued or received is to be considered in computation and the burden of proof lies on the department.

6.15. The said paper seized, therefore, cannot be treated as a document and it also does not prove that the sale consideration for the Pitampura property as received by the assessee and the co-owner Avinash Jain was at Rs. 39,50,000 from the vendee.

6.16. Looking to the nature of the paper seized and ratio of various decisions cited and discussed we finally come to the conclusion that the receipt of Rs. 39.50 lakhs as sale consideration of Pitampura property against the apparent consideration of Rs. 18.11 lakhs has not been proved by the Revenue and accordingly 50 per cent of the difference treated as undisclosed income of the assessee at Rs. 10,69,500 is not considered justified and the same is directed to be deleted.

7. The next ground relates to the addition of Rs. 5,50,000. The assessing officer found that the assessee acquired membership of Samantbliadra Group Housing Society Sector 13, Rohini for a flat. The assessee made initial payment of Rs. 2,65,110 on 6th April, 1994, and further paid three instalments of Rs. 35,000 each. The assessee thus paid total amount of Rs. 3,86,000 for the flat and the same was accounted for in the books of account. According to the assessing officer the flat is located in a posh locality and that was a premium for the membership of the society in this locality. Original member acquired the membership of the society in 1988 and the assessee purchased the membership six years latter in 1994. The assessing officer deciding the figure of "55T' given against flat in the seized paper read as Rs. 5,50,000 and treated the same as premium paid on acquisition of the membership of the society out of undisclosed income.

7.1. The learned counsel for the assessee has made a submission that the addition made is wholly presumptive. No addition could be made on account of alleged prevailing practice of payment of "on" money on the basis of any similar notorious fact unless the actual payment was proved and in support he placed reliance on Raja Sugaqqr Co. Ltd. 150 M 421 (Del) (sic) and in the case of Income Tax Officer v. W.D. Estate (P) Ltd. (supra). The learned departmental Representative on the other hand relied upon the order of the assessing officer and advanced arguments in support thereof.

7.2. We have considered the facts and rival submissions. This addition is also based on the impugned piece of paper seized during the course of search. On the right hand side in the said paper, there is an entry of "550" with a narration "flat". There is no detail recorded of the purchase of any flat nor there are any details recorded of the sale consideration paid in the said paper. The assessing officer however, decided "550" as 5,50,000 by adding "000" to the figure given "550,'. Here also there is no basis given for reading the figure "550" as Rs. 5,50,000. There is also no supporting or corroborative evidence for treating the figure "550" as Rs. 5,50,000. Moreover, we have already considered and given a finding above that the said paper was neither a document nor a book of account and accordingly no reliance could be placed thereon without any supporting or corroborative evidence which the Revenue failed to bring on record.

7.3. We find that the assessing officer has not made any enquiry about the premium paid, if any, either from the vendor or from the society nor there is an independent material evidence brought on record to prove that the assessee paid Rs. 5,50,000 over and above Rs. 3,86,000 paid by the assessee and accounted for in the books of account. No such addition thus could be made merely on the basis of presumption and conjectures. The addition made in this respect is equally unjustified and the same is also directed to be deleted.

8. The next ground raised is against addition of Rs. 3,61,166 made on account of unaccounted investment in construction of house at Narain Singh Park, Panipat. This house is owned by three co-owners i.e., assessee, his brother Avinash Jain and mother Urmila Jain. The house was constructed during the period from April, 1993 to March, 1995. The assessing officer estimated the cost of construction at Rs. 31,53,500 against the investment disclosed in the property at Rs. 20,70,000.

The assessing officer thus treated the balance amount of Rs. 10,83,500 as undisclosed investment. The assessee having 1/3rd share in the property, the assessing officer made an addition of Rs. 3,61,166 as unexplained investment representing the undisclosed income for the block period. The unaccounted investment in the property as worked out is based on certain material seized during the course of search and report of the DVO obtained about cost of construction.

8.1. The learned counsel for the assessee has made a submission that the assessing officer neither relied upon the report of the DVO nor on the seized paper while making such addition. The learned counsel submitted that an addition of Rs. 2,37,500 (round at Rs. 2,37,000) was made by the assessing officer over and above the cost of construction estimated by the DVO. The addition of Rs. 2,37,500 comprised of estimate of additional woodwork of Rs. 1,87,500 and Rs. 50,000 on account of labour charges. It was pointed out during the course of hearing that there was no justification for making such further addition of Rs. 2,37,500 on account of woodwork because the DVO had duly considered the expenditure on woodwork in his report placed at pp. 62 to 69 of paper book No. 1. Besides, the figure of Rs 1,87,500 on account of woodwork is arrived at by dividing the figure of Rs. 3,75,000 equally between the Model Town house and N.S. Park house. The figure of Rs. 3,75,000 appears at p. 31 of the paper book and against that figure the words 'UT/NSP" are written. From this figure the assessing officer presumed that 50 per cent of the expenditure being Rs. 1,87,500 related to N.S. Park house and the same is therefore, added over and above the estimate given by the DVO despite the fact that the cost of woodwork was duly considered by the DVO in his report.

8.2. The learned counsel has also pointed out that no such addition of Rs. 1,87,500 is made in the case of Model Town house. The learned counsel has also contended that the expenditure as reflected in the seized document relates to the construction of both the houses at Model Town and NS Park as it bears the description as "MT/NSP". The contention that the amount of expenditure found recorded in the seized paper related to both the houses was further supported by the fact that the aggregate amount of Rs. 35,34,456 almost tallied with the cost of construction of the two houses shown i.e. Rs. 15,28,930 for Model Town house and Rs. 20,70,000 for N.S. Park house. To prove the correctness of the cost of construction of Model Town house further reliance has been placed at the seized document at p. 15 of paper book No. 2 wherein the cost of construction for basement worked out at Rs. 2,74,000 @ Rs. 125 per sq. ft. and of the other floors at Rs. 11,89,936 @ Rs. 200 per sq. ft. and after adding over an expenditure @ 2 per cent amounting to Rs. 29,293 the total cost of construction of Model Town house comes to Rs. 14,93,924 and it broadly tallies with the cost of construction at Rs. 15,28,930 shown by the co-owners. The difference is primarily because the document atpage No. 15 of paper book No. 2 showed the estimate while the other amount represents the actual expenditure. The aforesaid document was seized from the Model Town house and the same has not been disputed by the assessing officer either.

8.3. The learned counsel has placed reliance on the report of the approved valuer placed at p. 88 of the paper book, according to which, the cost of construction of N.S. Park house was at Rs. 20,80,000. Referring to circular issued by the Chief Engineer CPWD showing the plinth area rates as on 1-1-1992, it has been pointed out that the plinth area rates adopted by the DVO were incorrect as he applied the rate of 1976 and adjusted the same with misc indexation. The learned counsel has pointed out that the DVO applied the plinth area rate for the ground floor at Rs. 3,487 per sq. mt. and for first floor at Rs. 3,321 per sq. mt. whereas as per the CPWD manual the consolidated rates for a double storeyed house Type-IV is Rs. 2,145 per sq. mt.

8.4. The learned counsel has further contended that merely on the basis of the DVO's report no addition could be made and for such proposition he has placed reliance on the following decisions ..

(a) Income Tax Officer v. Santosh Kumar Dalimia (1994) 121 CTR (Cal) 17: (1994) 208 ITR 337 (Cal);

(b) Bholanath Majurndar v. Income Tax Officer (1997) 137 CTR (Gau) 198 : (1996) 221 ITR 608 (Gau);

(d) CIT v. Jawahar Mills Ltd. (1997) 142 CTR (All) 306: (1997) 226 ITR 330 (All).

8.5 The learned counsel has submitted that as per the above decisions the valuer's report was only an expert opinion which differ from valuer to valuer and it was not a conclusive evidence. Reliance was also placed on Shand Complex v. Income Tax Officer (1997) 63 ITD 181 (Pat)(TM) in support of the proposition that there was no difference in the cost estimated by the DVO and the registered valuer. He further placed reliance on Income Tax Officer v. Petamber Industdries Ltd. (1992) 42 ITD 373 (Del) and CIT v. Pratap Singh Amrosingh Rajender Singh & Deepak Kumar (1992) 64 Taxman 585 (Raj). In support of the proposition that no addition could be made merely on the basis of difference in valuer's report. He further placed reliance on 204 M (Stat) 7 (SC), L. B. Kharawala v. Income Tax Officer (1984) 38 CTR (Guj) 278 : (1984) 147 ITR 67 (Gui) and Dinkar Rai Anant Rai Mankad v. Income Tax Officer (1985) 155 ITR 406 (Guj) in support of the proposition that the valuer's report could not be rejected merely on the basis of the report of the DVO. The learned cousnel of the assessee while concluding his arguments has submitted that on the facts and discussion and ratio of various decisions cited the addition made on account of undisclosed income of Rs. 3,61,166 is wholly unjustified and the same deserves to be deleted.

8.6. The learned departmental Representative on the other hand, relied upon the other of the assessing officer and he also made elaborate submissions in support thereof. The learned departmental Representative has further submitted that as per the said paper seized cost of construction was at Rs. 36.60 lakhs. Further, papers seized relating to the construction of the house has shown the total investment in the property at Rs. 35,34,456 and out of this Rs. 7,11,461 is shown as investment on Model Town house leaving the balance amount of Rs. 28,22,995 as the cost of construction of N.S. Park house. Moreover, the DVO to whom reference was made also estimated the cost of construction of N.S. Park house at Rs. 28,61,452 excluding cost of furniture, fittings and fixtures which almost tally with the investment found recorded in the seized papers. The assessing officer made certain adjustments and adopted the total investment in N.S. Park house and unaccounted investment in the said house was adopted at Rs. 10,83,500 and the assessee having 1.3rd share in the house addition of Rs. 3,62,166 as undisclosed income has rightly been made.

We have carefully considered the facts, relevant material on record and the rival submissions. We find that the assessee Shri Atul Jain and his brother Arvind Jain and mother Urmila Jain jointly constructed house at N.S. Park during the period 11om 1993 to 1995 and they have shown total investment in construction of house at 20,70,000. The investment made by each co-owner is as under :

Rs.

Atul. Jain (assessee)

7,90,000

Arvind Jain (brother)

7,90,000

Urmila Jain

4,90,000

20,70,000

The investment so made has been accounted for in the regular books of account and they have also shown such investment in their returns for the assessment year 1995-96 filed on 31st Aug., 1995/31st Oct., 1995, prior to the date of search on 16-11-1995.

8.8. Another house was constructed in Model Town by Anil Jain HUF and Arvind Jain HUF during the period from 1991 to 1993 and they made total investment in construction of the house at Rs. 15,28,930. The investment made by each co-owner as recorded in the books of account is as under :

Rs.

Anil Jain HUF

7,64,465

Arvind Jain HUF

7,64,465

8.9. Both the co-owners of Model Town property also filed their returns and disclosed the said investment in the returns for the assessment year 1994-95 filed on 31st Aug., 1995, prior to the date of search on 16-11-1995, with source of the investment so shown in the property. N.S. Park house was got valued from an approved valuer by the assessee and the approved valuer Paramjeet Associates vide his report dt. 23-11-1996, assessed the cost of construction at Rs. 20,80,000, the valuation report about the Model Town house from the valuer R.P. Chaudhary contained in his report dt. 2-2-1997, estimated the cost of construction at Rs. 14,71,929.

8.10. The assessing officer in the block assessment has referred to an entry made in the above discussed seized paper. On right side of this paper, there is a figure of 3,560 with the narration "house" expenses". The assessing officer decoded to read this figure as Rs. 35,60,000 after adding "000" against the figure of "3,560". We have considered and discussed at length the nature of the said paper earlier and have given a finding that the said paper being not corroborated by any independent evidence cannot be considered as a document in proof of investment in house property of Rs. 35,60,000 and accordingly this paper is liable to be ignored. Moreover, the assessing officer has also not relied upon the said paper in regard to the investment made in the house property.

8.11. Certain loose papers running from p. 51 to 83 to Annexure 1 to Panchnama were found and seized during the course of search from N.S. Park house. According to the assessing officer the total of figures given in these documents and as noted at p. No. 53 is Rs. 35,34,455. The assessing officer noted that these papers showing details of expenses incurred on construction of house are for the period from March, 1993 to 1995. Page 78 of the paper seized gives details of Rs. 7,11,461 with the caption "(MT)". According to the assessing officer these expenses related to the construction of the house at "Model Town". The remaining expenses recorded in the said papers for Rs. 28,22,995 were taken as relating to "N.S. Park house".

8.12. We note that photo copies of these papers have not been placed by the assessee in the paper book. The Bench requires the learned departmental Representative to produce the said papers claimed to be in possession of the department for perusal but he also expressed his inability to produce them. The position being so we are not in a position to appreciate the nature of the entries made therein, actual period to which these papers relate and how the total has been drawn and shown as bifurcated between the two houses constructed.

8.13. The assessing officer also got the cost of construction for both the houses estimated from the DVO by making a reference under s. 131(1)(d) of the Income Tax Act. The DVO in his report dt. 21-11- 1995, estimated the cost of construction of N.S. Park house at Rs. 29,61,500. The valuation report is placed at pp. 62 to 69 of the paper book. The cost of construction of Model Town house was also simultaneously estimated by the DVO at Rs. 26,71,559. The DVO in his report has shown the period of construction as given by the assessee for N.S. Park house from 1993-94 to October, 1995, and for Model Town house from F.Y. 1991-92 to 1992-93. We also hold that while so estimating the cost of construction to DVO has also taken into account the woodwork and glass work in both the houses. The assessing officer while estimating the cost of construction of N.S. Park house adopted the record of the DVO at Rs. 28,61,500 and therein be made addition on account of woodwork and expenses on waterfall. As per the seized papers there was found purchase of timber of Rs. 3,75,000. The assessing officer treated such timber cost for both houses and accordingly 50 per cent thereof at Rs. 1,87,500 was taken for N.S. Park house. Rs. 50,000 was taken as labour cost on wood furnishing and fixtures. The assessing officer also noted that the cost of waterfall in the seized paper is shown at Rs. 95,000 whereas the DVO has taken its cost at Rs. 40,000. The difference of Rs. 55,000 along with the cost of woodwork at Rs. 2,37,500 was added in the cost of construction estimated by the DVO at Rs. 28,61,600 and this resulted in difference of Rs. 10,83,500 between the cost of construction adopted by the assessing officer and that shown by the co-owners of the property at Rs. 20,70,000. The assessee having 113rd share in the property his share of unaccounted investment in the property was taken at Rs. 3,61,166. It would thus be seen that the assessing officer has not placed full reliance on the papers seized containing entries of cost of construction. He mainly relied upon the report of the DVO and by making certain adjustments as discussed above, the unaccounted investment was worked out and adopted.

8.14. We find that the DVO did not offer any opportunity to the assessee before finalising his report in respect of both the houses, the reference having been made under s. 131(1)(d). Subsequently the assessee seems to have represented before the DVO with the submission that the assessee procured building material and labour at very cheap rate. The DVO, therefore, for arriving at realistic conclusion about procurement of building material and labour in view of the difference in rates at source of material and local rates as well as difference in local labour rates and labour from Bihar, etc. divided the total estimated cost into material cost at Rs. 21,88,048 and labour cost at Rs. 6,72,452 and allowed deduction at 35 per cent from material cost and 25 per cent from labour cost which worked out to material cost at Rs. 14,22,881 and labour cost at Rs. 5,84,339 respectively. The total cost was thus worked out at Rs. 20,07,220 in his subsequent report dt. 27-11-1996, placed at pp. 78 to 79 of the paper book. Similarly the cost estimated of Model Town house was also revised for similar reasons to Rs. 19,00,254 vide report of the DVO dt. 27-11-1996, placed at pp. 80 to 82 of the paper book.

8.15. We also find that in the report of the DVO cost of woodwork done in the houses has been included and, therefore, there is no justification for adding the cost of woodwork in the cost estimated by the DVO. Further, since the assessing officer has not adopted the cost of construction based on the seized papers, there is no justification for making addition of Rs. 55,000 on account of construction cost of waterfall on the basis of said papers. The revised report of the DVO though placed in the paper book, the learned departmental Representative has neither referred the same nor he could point out any serious defect or deficiency therein. The learned departmental Representative has also not controverted the claim of the assessee that he procured building material as well as labour at rates cheaper than the market rate being building material purchased from source and labour taken from Bihar. The revised estimate of cost of construction of N.S. Park house as per DVO at Rs. 20,07,220 is little less than the actual amount of investment shown in the property by the co-owners at Rs. 20,70,000.

8.16. It has been claimed before the assessing officer as well as before us that the total amount of investment found recorded in the seized papers was of Rs. 35,54,456 and such investment relates to both the houses at N.S. Park and Model Town. The total investment as shown for both the houses accounted for in the books comes to Rs. 35,98,930 (Rs. 20,70,000 + Rs. 15,28,930) which is little higher than that found recorded in the seized paper. It is also claimed that the material was purchased on credit basis and the payments were made subsequently and there was a continuity in the construction of the two houses. The construction of Model Town house started in 1991 and was completed in 1993 while the construction of N.S. Park house started in 1993 and was completed in 1995. Besides continuity of construction there was also an apparent overlaping in the period of construction of the two houses because the year 1993 was common for construction of both the houses. We find that as per p. 78 of the seized papers an amount of Rs. 7,11,461 has been shown with the capital (MT) meaning thereby that this amount was fully invested in the construction of Model Town house. We also note that the purchase of timber of Rs. 3,75,000 was shown with the capital 'NT/NSP" meaning thereby that the timber purchased of Rs. 3,75,000 was meant for both the houses at N.S. Park and Model Town. It can, therefore, be safely inferred that the expenses recorded on the construction of house in the seized papers were for both the houses and such inference is further strengthened by the fact that the cost of construction shown for both the houses by the family members comes to Rs. 35,98,930 which almost tallies with the figures of expenses recorded in the seized papers. Moreover, the Revenue has not brought on record and material to establish from the seized papers that Rs. 28,22,995 were invested in construction of N.S. Park house alone and no part thereof related to the investment made in Model Town house. Considering the facts and circumstances discussed above we came to the conclusion that the details of expenses recorded in the seized papers on construction of houses related to both the houses at N.P. Park and Model Town.

8.17. It is evident from above that the DVO has estimated the cost of construction of N.S. Park house at Rs. 20,07,220 which is less than the actual cost of construction shown by the co-owners at Rs. 20,70,000. Moreover, in view of the ratio of decisions cited in (1994) 121 CTR (Cal) 17 : (1994) 208 ITR 337 (Cal), (1997) 137 CTR (Gul) 98 : (1997) 221 1TR 608 (Gau), (1997) 226 1TR 111 (AP), (1997) 226 1TR 330 (A.U) (supra), no addition could be made on account of income from undisclosed sources merely on the basis of the report of the DVO. Further, the report of the DVO obtained under s. 131(1)(d) is only an expert opinion taken without affording an opportunity of being heard to the assessee and such export opinion would differ from valuer to valuer and it cannot be taken as a conclusive evidence for assessing undisclosed income. Moreover, there is not much difference in the cost of construction estimated by the DVO and the registered valuer so far as the N.S. Park property is concerned. Also, there is no material evidence to prove and establish that the assessee made investment in construction of the house at N.S. Park over and above that disclosed in the books of account by Rs. 10,83,500 for adopting deemed income under s. 69 of the Income Tax Act.

8.18. Having regard to all the facts and circumstances discussed we see no justification for the undisclosed income computed at Rs. 3,61,156 on account of unexplained investment made in N.S. Park house at Panipat and the undisclosed income so adopted is directed to be deleted.

9. The next ground taken is against computing undisclosed income of Rs. 91,000 on account of investment in movable assets found on search. The learned counsel has made a submission that part of the items found were acquired prior to the block period and they were pretty old. He has further submitted that the assessee's family has been paying income-tax for more than four decades and it is one of the well-established and reputed family of Panipat who have been in business for the last several years. The value of these assets cannot exceed Rs. 7,000 as per details given on p. 66 of paper book No. 1. The learned counsel Pas further submitted that the assessee and his brother Avinash Jain are staying together with their father Shri N.C. Jain and all the three persons put together have made withdrawals as under :

Rs.

Shri N. C. Jain

3,01,548

Smt. Urmila Jain

3,22,010

Shri Atul Jain (assessee)

2,87,542

Shri Avinash Jain

2,37,221

11,48,321

9.1. The learned counsel has also pointed out that Shri N.C. Jain during the course of search made the remark on the Panchnama that one a/c local made, one colour TV (Sony) and one V.C.P. were purchased in the year 1982 at Rs. 10,000, Rs, 20,000 and Rs. 10,000 respectively. The fridge was also fifteen years old and was purchased for Rs. 5,000 approximately. The assessing officer has not disputed these remarks. The learned counsel has, therefore, pleaded that in view of the position explained, there was no justification for making any addition on account of movable assets found.

9.2. The learned departmental Representative, on the other hand, has relied upon the order of the assessing officer and has further submitted that since the assessee failed to prove that source of acquisition of said movable assets, the assessing officer was justified in treating the value of the said items as being income of the assessee for the block period.

9.3. We have considered the facts and rival submissions. It so appears, the family of Shri N. C. Jain at the time of search was living in the house at Model Town and N.S. Park. Following items were recovered from the residential premises of Shri N.C. Jam, Atul Jain (assessee) and Avinash Jain at N.S. Park house.

(i) One colour TV (Vediocon Bazooka);

(ii) On VCP (National);

(iii) One Sterio (National);

(iv) On washing machine (Videocon);

(v) One sophist (8 seater);

(vi) One colour TV (Sony);

(vii) Three a/cs (local made); fridge and

(viii) Cooking range.

9.4. A copy of the inventory prepared at the time of search is placed at p. 37 of the paper book. As per footnote given by Shri N.C. Jam on the date of search on the inventory made, one A/c local made; one colour TV (Sony); and one VCP were purchased in the year 1982 at the rate of Rs. 10,000; Rs. 20,000 and Rs. 10,000, respectively. The fridge is also fifteen years old and was purchased at Rs. 5,000 approximately. These items are claimed by the assessee Shri Atul Jain and the remaining three by Shri Avinash Jain as per the details given at p. 36 of the paper book. Acquisition value given therein is as under :

Atul Jain :

One colour TV (Videocon Bazooka)marriage gift;

One VCP (National)Old acquired before block period;

One Steric, (National)

Rs. 1,000

One washing machine (Videocon)

Rs. 6,000

One sofaset (8 seater)old acquired before block period;

One colour TV (Sony)-Nil

Rs. 7,000

Avinash Jain :

Three A/cs (local)two old acquired before block period

Nil; one new =

Rs. 10,000

Fridge-Old acquired before block periodNil

Cooking range

7,000

Rs. 17,000

Total value : 24,000

9.5. We find that the footnote given by Shri N.C. Jain on the inventory prepared claiming acquisition of certain items is 1982 or earlier to that has not been controverted by the Revenue by bringing any material evidence on record and the position being so the claim of the assessee in respect of the said item deserves to be accepted as old having been acquired prior to the block period. As regards the other items, we find that only two items such as one sterio of Rs. 1,000 and one washing machine of Rs. 6,000 have been owned by the assessee and their acquisition cost comes to only Rs. 7,000. It is claimed that these items have been acquired out of withdrawals made for household expenses. We find that the assessee has made the following withdrawals for household expenses as well as for payment of taxes and LIP premium :

Asst. yr.

Household expenses

Tax/LIC premium

Rs.

1985-86

2,000

6,952

1986-87

8,400

6,462

1987-88

8,400

9,772

1988-89

8,400

12,029

1989-90

7,700

11,601

1990-91

8,513

49,779

1991-92

13,327

15,044

1992-93

7,700

15,015

1993-94

5,600

3,73,116

1994-95

12,000

41,732

9.6. Apart from the withdrawals shown by the assessee, his father Shri N.C. Jain has also made withdrawals for household expenses during the period ranging from Rs. 8,400 to Rs. 12,000 and his mother Smt. Urmila Jain has shown withdrawal for household expenses ranging from Rs. 10,000 to Rs. 19,000 during these years. Besides, other family members Arvind Jain, Anil Jain, Sneh Jain, Kusum Jain, etc. have also shown withdrawals for their household expenses separately. Complete details of the withdrawals made by all family members are placed at pp. 32 and 33 of the paper book. Looking to the withdrawal shown by the assessee and his parents the acquisition of two items of Rs. 7,000 is considered to be within the means of the assessee and accordingly the same are considered to be covered. The three items owned by the assessee's brother Shri Avinash Jain requires consideration in his individual case, since he is assessed to tax separately.

9.7. Having regard to all the facts and circumstances explained no addition on account of undisclosed income desirves to be made on this count in the hands of the assessee and the addition of Rs. 91,000 made is directed to be deleted.

10. The last ground raised relates,to the addition of Rs. 67,800. The addition made comprised of one hundred debentures of Reliance Polythelene of Rs. 5,000; 300 debentures of Reliance Petroleum Ltd. of Rs. 7,800, and RajIaxrni Units of UTI taken in the names of minor daughters of Rs. 55,000. As per the explanation offered, the source of investment in debentures of Rs. 12,800 was out of unaccounted income and investment in UTI of Rs. 55,000 was out of gift amounts received by minor daughters on their birth from close relations.

10.1. The assessee, however, failed to give the names and addresses of the relatives and the amounts given by them in gift to the minor daughters.

10.2. The learned counsel of the assessee reiterated the submissions made before the assessing officer whereas the learned departmental Representative relied upon the order of the assessing officer.

10.3. We have considered the facts and the rival submissions. We note that the assessee purchased 100 debentures of Rs. 5,000 on 25th April, 1994, and further 300 debentures of Rs. 7,800 on 18th Feb., 1995. The assessee submitted before the assessing officer that these debentures were acquired for unaccounted income. The learned counsel has not seriously contested the addition made on this count before us. The investment thus made in debentures of Rs. 12,800 is, therefore, held to be representing the undisclosed income within the meaning of s. 69 of the Income Tax Act, and the computation of undisclosed income made to that extent stands confirmed.

10.4. As regards the RajLaxmi Units of the UTI in the names of minor daughters of Rs. 55,000 we find that there is no doubt about the custom prevailing in the Hindu families of receiving gifts from close relations at the time of birth or birthdays, of children but cash gifts are normally of small amounts. There is normally no record kept for such birthday gifts given or taken. We also note that one of the daughters was born on 19th Feb., 1992, and the other may be either two years younger or elder. Therefore, not many birthdays have been celebrated till the date of search in November, 1995, of daughters. Keeping these facts in view it would be fair and reasonable if the cash gift received by minor daughters from close relations is adopted at Rs. 15,000. As regards the source of balance amount of Rs. 40,000 there is no valid explanation available either before the assessing officer or before us. It is also not the case of the assessee that the amount invested came out of withdrawal shown for household expenses by the assessee or other family members. There being no valid explanation about the source of the amount invested in UTI the undisclosed income computed to the extent of Rs. 40,000 on this count in held justified and the same is confirmed.

11. The learned counsel of the assessee during the course of hearing raised the following additional ground with the request that the same may be admitted and decided on merits as it does not require any fresh investigation on fact, being a pure question of law :

"On the facts and circumstances of the case and without prejudice to any other ground of appeal, the learned assessing officer erred in not giving the benefit of s. 54 with regard to the capital gains arising on sale of Pitampura house in relation to the alleged sales proceeds of Rs. 21,39,000."

11.1. The learned counsel, however, on discussion and consideration sought permission to withdraw the additional ground raised and the learned departmental Representative having no objection, he was allowed to withdraw the same. The additional ground is, therefore, rejected, having been withdrawn. 12. In the result, assessee's appeal stands partly allowed.