Delhi High Court

Poonam Jain vs Joint Cit on 22 March, 2004

Equivalent citations: (2004) 90 TTJ Del 316

ORDER

Keshaw Prasad, A.M.:

The cross-appeals in the case of Mrs. Poonarn Jain arise out of the Commissioner (Appeals), order dated 8-5-2000, the cross-appeals in the case of Smt. Trishla Jain arise out of the order of the Commissioner (Appeals), dated 14-7-2000, the cross-appeals in the case of MC Jain arise out of the Commissioner (Appeals)'s order dated 22-5-2000 and the appeal directed by the revenue in the case of Shri Sanjay Jain arises out of the order of the Commissioner (Appeals) dated 30-3-2000. As the common issues are involved in all the appeals, these are being disposed of by a consolidated order.

For the sake of convenience, we will first take up the appeals in the case of Smt. Poonam Jain.

assessed's appeal: (IT(SS)A No. 78/Del/2000)

1. The appeal directed by the assessed is not pressed, hence the same is dismissed.

Revenue's appeal: (IT(SS)A No. 91/Del/2000).-

1. The appeal directed by the revenue is against deleting the addition on account of undisclosed investment in the purchase/construction/sale consideration of property No. B-1/100, Ashok Vihar, Phase-H, Delhi and Property No. LU-33 Pitam Pura, Delhi.

2. Briefly the facts of the case are that the assessed is an individual who is being assessed to tax regularly and the regular books of account including the purchase consideration was mentioned. A search and seizure operation in the Jain group of cases including all the four assesseds before us was conducted on 3-9-1997. During search and seizure operation, certain incriminating documents relating to all the four assesseds were found. Accordingly, the notices under section 158BC of the Act was issued in all the cases in response to which the return of undisclosed income for the block period 1988-89 to assessment year 1998-99 (up to 3-9-1997) was filed.

3. The assessed filed the return of undisclosed income at Rs. 41.34 lakhs. During search, the documents pertaining to the assessed were found which were inventorised as Annex. A-20. As per the seized documents, the assessed purchased a property No. B-1/100, Ashok Vihar, Phase-II, New Delhi from Smt. Surjit Kaur for a consideration of Rs. 3,90,000 on 28-9-1994. The property was subsequently sold for Rs. 4,25,000 on 6-9-1995. When the assessed was asked to explain the sources of purchase consideration, it was explained to assessing officer. It was also stated that the capital gains on the sale of such property was already declared in the income-tax return for assessment year 1996-97 which has already been accepted by the department.

4. Similarly, Annex. A-13 of the seized documents indicated purchase of plot No. LU-33, Pitam Pura for Rs. 33,000. The assessing officer noted that a two and half storeyed building has been subsequently constructed on this plot up to March, 1997. The seized document revealed substantial amount of investment in the purchase of plot and construction thereon. It was explained by the assessed that the plot was purchased on 11-1-1996 and sold on 3-4-1996. The capital gain on such sale was also returned in the assessment year 1997-98 which stands accepted by the department. However, the assessing officer was not satisfied regarding the purchase/sale consideration and referred the issue to the Valuation Officer for estimating the cost of purchases/the fair market value of the properties on the date of sale. The Valuation Officer estimated the purchase consideration as well as sale consideration as under :

S. No.

Property

Purchase Price Declared

Purchase price estimated

Sale price declared

Sale price estimated

B-1/100, Ashok Vihar

3,90,000

1,189,400

4,25,000

1,406,000

LU-33, Pitam Pura

3,10,000

1,731,200

3,30,000

1,776,200

5. The assessed was confronted with these reports. The assessed stated that reference to the VO under section 131(1)(d) of the Act was illegal. It was stated by the assessed that the amounts were mentioned in the seized documents which were correct. The detailed submissions were made in this regard. However, the assessing officer did not find any force in the submissions of the assessed and adopted the purchase consideration and sale consideration as estimated by the VO. The assessing officer adopted the peak of investment in the properties including the two properties mentioned above as well as peak of sales consideration and held the differential amount to be undisclosed income of the assessed under Chapter XIV-B of the Act. The assessing officer also drew a trading account and held that profit earned by the assessed on the sale of the properties was a business profit and not profit under the head "capital gain". Both the findings of the assessing officer were challenged before the Commissioner (Appeals) who deleted the addition made by the assessing officer which has been challenged before us.

6. While learned Departmental Representative supported the order of the assessing officer, the learned counsel for the assessed placed heavy reliance on the decision of the learned Commissioner (Appeals). In the written synopsis placed on record, it was submitted that all the properties stood disclosed in the return of income and all the transactions were entered into in the regular accounts maintained by her. Valuation report could not form a basis for making additions as undisclosed income and the assessing officer himself is not an expert on the subject. Learned counsel also placed reliance on the following cases and the ratios in these cases which have been summarised in nut shell :

(a) CIT v. Ravi Kant Jain (2001) 250 ITR 141 (Del)

Assessment of block period can only be done on the basis of evidence of indisclosed income found as a result of search.

(b) CIT v. Vinod Dhanchand Ghodawat (2001) 247 ITR 448 (Bom).

The addition on the basis of DVO's report does not fall under the scope of Chapter XIV-B.

Block assessment-the addition cannot be made on the basis of DVO's report when no evidence found during search to establish assessed has spent more on renovation of residential house than recorded in books of accounts.

(d) Smt. Amaiya Bala Paul v. CIT (2003) 182 CTR (SC) 489: (2003) 262 ITR 407 (SC) Assessing officer cannot obtain a report from the Valuation Officer under section 131 of the Income Tax Act except when a reference is made under and in terms of section 55A or to a Competent Authority under section 269L.

(e) K. Moidu alias Kunhippa & Anr. v. Assistant Commissioner (2002) 256 ITR 76 (Coch)(TM).

Block assessment-expenses on construction of property-there is no scope for general estimation in the block assessment in the absence of specific and speaking material.

(f) Vaishali Hotels (P) Ltd. v. Asstt. CIT (2000) 66 TTJ (Pune) 692.

No material or evidence whatsoever was found at the time of search which could show that assessed had spent any amount outside the books of account-assessing officer simply followed the DVO's report which is based on pure estimate-impugned addition cannot be treated as undisclosed income.

(g) Ravi Prakash Aggarwal (HUF) v. Asstt CIT (2000) 67 TTJ (Del) 234.

Addition on the basis of DVO's report-unless some material is found which is not recorded in the books no addition can be made in block assessment on the basis of DVO's report.

(h) Subhash Mehra v. Dy. CIT (2000) 113 Taxman 79 (Del)(Mag).

It is held that without any evidence or material found and seized at the time of search the addition cannot be made on the basis of report of the DVO under the block assessment.

(i) Raj Rani Gupta v. Dy. CIT (2000) 72 ITD 155 (Mumbai).

Any undisclosed income should emanate from the seized material. It is volcano of the seized material that must emit the lava for the undisclosed income when volcano is missing there cannot be any undisclosed income.

(j) Associated Builders v. Asstt. CIT (2000) 72 ITD 76 (Nag).

The inadequacy of price or consideration could not be challenged by the assessing officer without valid evidence or solid material as assessed is the best judge of its affairs and the assessing officer cannot lay down any code for running the business.

(k) CIT v. A. Raman & Co. (1968) 67 ITR 11 (SC) What could be taxed under the Act is the actual income and the trader is not obliged to make maximum profit. If there is no evidence which shows the profit actually earned was more than the profit declared or there was deeming provision in the Act to bring an artificial income to tax, the assessing officer will not be justified in levying tax on the basis that the assessed could have earned more profit than what he actually earned.

7. The learned counsel also stated that reference to the VO for ascertaining the cost of purchase and the fair market value of the sale consideration was illegal as has been held by the Hon'ble Supreme Court in the case of Amiya Bala Paul (supra). The learned counsel also relied on the decisions reported in CIT v. Late Gulshan Kumar Through LR, (2002) 257 ITR 703 (Del), K.P. Varghese v. ITO & Anr. (1981) 131 ITR 597 (SC) and CIT v. Shivakami Co. (P) Ltd. (1986) 159 ITR 71 (SC). The learned counsel also stated that the entire accounts regarding the purchases of the properties and the sale of the properties have been maintained by the assessed and the assessing officer has not found any defect in the same. While relying on the decisions reported in CIT v. Pratap Singh Amro Singh Rajendra Singh (1993) 200 ITR 788 (Raj), K.K. Seshalyer v. CIT (2000) 246 ITR 351 (Mad), CIT v. Western Estates (1994) 209 ITR 343 (Cal) and IAC v. Bareilly Corporation bank (1988) 27 ITD 1 (Del) (TM), the learned counsel stated that where the entire accounts were maintained and no defects were found by the assessing officer, the cost of construction declared by the assessed has to be accepted.

8. Learned counsel also relied on the decision of the Tribunal in the case of Shri Manoj Jain who is also a member of Jain Group whose premises were also searched on the same date and where similar additions were made by the assessing officer and deleted by the Commissioner (Appeals).

9. We have considered the rival submissions. As a result of search on the premises of the assessed, no evidence was found which may represent wholly or partly the income of property which has not been or would not have been disclosed for the purposes of Income Tax Act. The assessing officer had merely a reason to suspect that the consideration was understated and he, therefore, referred the issue to the VO to estimate the purchase consideration as well as sales consideration. Chapter XIV-B which contains a special procedure for assessment of search cases is a self contained code and no addition on account of undisclosed income could be made on the basis of VO's report unless any evidence was found during the course of search to establish that the assessed has paid more than the disclosed consideration in purchase of the properties or construction thereof or she has received sale consideration more than disclosed in the regular accounts maintained by her or the return of income filed in the regular course of business. On similar basis, the Hon'ble MP High Court in the case of Kush Lal Chand Nirmal Kumar (supra) has deleted the addition from the block assessment. In catena of cases, the Tribunal has also taken the similar view and one such case for ready reference is reported in (2000) 66 TTJ (Pune) 692 (supra). Mumbai Bench of the Tribunal in case of Sunder Agencies v. Dy. CIT (1997) 63 ITD 245 (Mumbai) has held that Chapter XIV-B permits assessment only in respect of undisclosed income and such undisclosed income must come as a result of search. The Pune Bench of the Tribunal in the case of D.N. Kumani (HUF) v. Dy CIT (1999) 70 ITD 79 (Pat), the Hyderabad Bench of the Tribunal in the case of Essern Services (P) Ltd. v. Assistant Commissioner (2003) 72 ITD 231 (Hyd), the Indore Bench of the Tribunal in the case of Indore Construction (P) Ltd. v. Assistant Commissioner (2000) 71 ITD 128 (Ind), had taken the same view.

10. In view of the facts and legal position as aforesaid, there was no justification in the action of the assessing officer to make addition on account of undisclosed investment or profit on the sale thereof in respect of above two properties. The Commissioner (Appeals) has rightly appreciated the facts and deleted the addition.

11. Similar issue also arose in the case of Manoj Jain (IT(SS)A No. 106/Del/2002) a group. case where the search and seizure operation took place on the same date and similar additions were made on account of purchase and sales of properties. The Tribunal vide its order dated 19-2-2004, held that the addition on account of undisclosed purchase consideration and the sale consideration based on the VO's report was not permissible in block assessment. As no new facts have been brought on record, concurring with the same we hold that the addition made by the assessing officer was rightly deleted by the Commissioner (Appeals).

12. We also found that the Hon'ble Supreme Court in the case of Amiya Bala Paul has held as under :

"Apart from the aforesaid, a Valuation Officer is appointed under the Wealth Tax Act and can discharge function within the statutory limit under which he is appointed. It is not open to a VO to act in his capacity as VO otherwise than in discharge of his statutory function. He cannot be called upon nor would he have the jurisdiction to give a report to the assessing officer under the Income Tax Act except when a reference is made under and in terms of section 55A or to a competent authority except under section 269L of the Act."

13. In view of the above facts and legal proposition mentioned above, we hold that the Commissioner (Appeals) has rightly deleted the addition made by the assessing officer. The ground raised by the revenue is dismissed.

14. In ground No. 2, the deletion of the addition of Rs. 2,06,600 made by the assessing officer as business income of the sale of above mentioned properties has been challenged.

15. We find that the similar additions were made by the assessing officer in the case of Manoj Jain, a group case. The Tribunal vide its order mentioned earlier had held that the profit on the sale of the properties was assessable under the head "capital gain" as the assessed has not engaged himself in the business of purchasing and selling the properties. As the facts of the assessed's case are similar, concurring with the findings of the Tribunal, we hold that the Commissioner (Appeals) has rightly deleted the addition made by the assessing officer.

16. The appeal directed by the revenue is dismissed.

Now we will take up the appeal in the case of Smt. Trishla Jain.

assessed's appeal (IT(SS)A No. 108/Del/2000) :

17. Grounds of appeal Nos. 1 and 2 have not been pressed, hence the same are dismissed.

18. Ground No. 3 related to the addition of Rs. 1,81,332 confirmed by the Commissioner (Appeals) on account of property No. F-1-U/8, Pitam Pura, Delhi. The preliminary facts of the case of the assessed are the same as in the case of Smt. Poonam Jain. Consequent to search on 3-9-1997, the notice under section 158BC of the Act was issued in response to which the return was filed. During the course of assessment proceedings, the assessing officer noted that in search and seizure operation, certain incriminating documents were seized which indicated the purchase and sale of a number of immovable properties. These documents were inventorised as Annex.-58 (pp. 2 to 20). These documents indicated purchase of property No. F-1-U/8, Pitam Pura, Delhi from Smt. Sudesh Jain. This property was purchased on 18-10-1996 for Rs. 8.50 lakhs and a barsati was constructed on which the investment of Rs. 1,62,707 was incurred. As the assessing officer was not satisfied about the cost of purchase as well as construction, he referred the issue to the VO under section 131(1)(d) of the Act. The VO estimated the purchase consideration at Rs. 10.97 lakhs and the cost to construction at Rs. 1,50,000. The additions on account of undisclosed income were made on the same method which was adopted by the assessing officer in the case of Smt. Poonam Jain. On appeal, the Commissioner (Appeals) noted that in order to prove the cost of construction/ purchases, the assessed has also filed a valuation report from the registered valuer. The registered valuer has estimated the purchase consideration at Rs. 12.96 lakhs. Though the Commissioner (Appeals) deleted bulk of the additions made by the assessing officer, he held that the cost of purchases/construction estimated by the VO should be replaced by the cost of purchases/construction as estimated by the registered valuer. In this process, a part of the addition was confirmed by the Commissioner (Appeals) which is challenged before us. As the Commissioner (Appeals) has allowed partial relief on this account, the revenue has also challenged the relief.

19. While the learned counsel stated that no addition under Chapter XIV-B was warranted, the learned Departmental Representative relied on the assessing officer's order.

20. We have considered the rival submissions. It is admitted position that the appellant has filed a report from the registered valuer estimating the cost of purchase. Thus, once the assessed herself has admitted the apparent purchase consideration as estimated by her own valuer, she cannot go back from such report. The Commissioner (Appeals) appreciated these facts and directed the assessing officer to adopt the cost of purchase as determined by the registered valuer. We do not find any infirmity in the same and while upholding his findings, we dismiss the ground of appeal raised by the assessed.

21. In the result, the appeal filed by the assessed is dismissed. Revenue's Appeal (IT(SS)A No. 117/Del/2000)

22. In ground No. 1, the revenue has challenged the relief granted by the Commissioner (Appeals) in respect of cost of purchases/construction adopted by the assessing officer on the basis of VO's report.

23. On the basis of documents seized in search and seizure operation, the assessing officer noted that the assessed has entered into purchase and sale transactions of the following properties:

Property No.

(a) FIU-8, Pitampura

(b) 100/C-13/3, Rohini

(d) 100/C-9/7, Rohini

(e) 24/D-13/8, Rohini

(f) 109/F-17/8, Rohini

(g) 1246, Sector 15, Gurgaon.

(h) 1170, Sector 15, Gurgaon.

(i) 919, Sector 14, Gurgaon.

24. The properties mentioned at Sr. Nos. (a) to (f) were referred by the assessing officer to VO under section 131(l)(d) of the Act to estimate the purchase consideration/cost of construction. The properties mentioned at Sr. No. (g), (h) and (i) were not referred to the VO for estimating the cost of purchases. In respect of the properties referred to the VO, the assessing officer adopted the value as estimated by the VO and made addition accordingly.

25. In respect of property No. 1246, Sector 15, Gurgaon, the assessing officer noted that the property was purchased from Shri Rajiv Jain on 21-11-1994 for Rs. 30,000 and sold to Shri S.K. Jindal for Rs. 6 lakhs. The unpaid purchase consideration was paid to HUDA on 21-11-1994 and thus the purchase consideration was Rs. 5.89 lakhs. The assessing officer noted that the original allottee of this plot has paid Rs. 1,05,000 to HUDA and, therefore, purchase of this property at Rs. 30,000 was unbelievable and that too after five years of the allotment. Similarly, property at 1170, Sector 15, Gurgaon and at 919 Sector 14, Gurgaon were purchased and sold. No incriminating documents relating to these properties were found. During assessment proceedings, the assessing officer adopted his own estimation and estimated the cost of purchases/construction. As the assessing officer was not an expert of estimating cost of purchase/construction, the appeal was filed and the Commissioner (Appeals) deleted the addition which is challenged before us.

26. While challenging the order of the Commissioner (Appeals), learned Departmental Representative supported the order of the assessing officer, the learned counsel relied on his arguments made in the case of Smt. Poonam Jain in respect of those properties which were referred to the VO for estimating the cost of purchases/construction. The learned counsel in his arguments, inter alia, stated that all these properties have been disclosed to the income tax department much before the date of search and the profit on sale of properties returned by the assessed has been accepted by the department. Entire details of purchase consideration/construction has been maintained and no defects has been pointed out by the assessing officer in this regard; the assessing officer has not confronted either the buyer or the seller, all the transactions are supported by purchase/sale deed, no incriminating material relating to above properties were found during the course of search. Regarding the properties which were not referred to the VO, the assessed has filed the report from the registered valuer. The assessing officer rejected these reports without any valid reason. It was stated that the assessing officer has clearly omitted to consider that he was not an expert on the subject and, therefore, he could not superimpose his own opinion on the opinion of the registered valuer who was an expert on the subject. He, therefore, supported the order of the Commissioner (Appeals).

27. We have considered the rival submissions. As regards addition on account of VO's report (except in respect of properties at Sr. Nos. (g), (h) and (i), we have adjudicated similar issue in the case of Smt. Poonam Jain where we have held that no addition on account of undisclosed income could be made in the case of an assessment under Chapter XIV-B of the Act. On the same logic, we hold that the assessing officer was not justified in making any addition on this account. The Commissioner (Appeals) has, therefore, rightly deleted the addition.

28. As regards, the properties at Sr. Nos. (g), (h) and (i) which were not referred to the VO, we find that the assessed has furnished a report from registered valuer regarding purchase consideration and sale consideration, These properties were also declared to the IT department much before search and seizure operation and profits earned on the sale of these properties was offered to tax as capital gain. The department has also accepted such returns. The assessing officer was, therefore, not justified in making any addition in his order under Chapter XIV-B of the Act. The reason given by us in the case of Smt. Poonam Jain will equally apply here also. Keeping in view our findings in the case of Smt. Poonam Jain, we hold that the Commissioner (Appeals) has rightly deleted the addition made by the assessing officer. While upholding his findings, we dismiss the ground of appeal raised by the revenue.

29. In ground No. 2, the revenue has challenged the directions of the Commissioner (Appeals) to adopt the cost of purchase in respect of property No. F-1-U/8, Pitampura, Delhi based on the report of registered valuer as against the value adopted by the assessing officer on the basis of Valuation Officers report.

30. We have adjudicated this issue in assessed's appeal and in view of our findings therein, the ground of appeal raised by the revenue is dismissed.

31. In ground No. 3, the revenue has challenged the deletion of the addition of Rs. 3,52,184 made by the assessing officer on account of undisclosed business income on the sale of immovable properties.

32. We have adjudicated similar ground in the revenue's appeal in the case of Smt. Poonam Jain. As the facts are the same, keeping in view our findings in the case of Smt. Poonam Jain, we hold that the Commissioner (Appeals) has rightly deleted the addition by observing that the assessed was not engaged in the business of purchase and sale of immovable properties. The reasoning given by us in that case will equally apply here also. Accordingly, the ground of appeal raised by the revenue is dismissed.

33. In ground No. 4, the revenue has challenged the deletion of the addition of Rs. 1,50,000 made by the assessing officer on account of unexplained cash found during the course of search and seizure operation. During search, cash amounting to Rs. 25.50 lakhs was found. The assessed claimed that out of above sum, the cash to the extent of Rs. 3.50 lakhs belonged to her. However, in her return, under section 158BC, the assessed declared an income of Rs. 2,00,000 on account of such cash. Regarding balance, the assessed stated that the same was out of bank withdrawals made in the past. However, the assessing officer did not accept the contention of the assessed and added the sum of Rs. 1.50 lakhs to the income of the assessed as undisclosed income of the block period. On appeal, the Commissioner (Appeals) has deleted the addition which has been challenged before us.

34. While learned Departmental Representative supported the order of the assessing officer, the learned counsel supported the order of the Commissioner (Appeals).

35. We have considered the rival submissions. There is no dispute that the assessed had made withdrawals of enough cash from his bank account about three months back. When the assessed was questioned about the source of availability of cash, it was stated that the amount withdrawn from the bank was kept at the residence as the purpose for which it was withdrawn could not materialise. Such statement cannot be disbelieved unless the revenue brings on record some evidence to the effect that the withdrawn amount was invested somewhere else. The time gap of three months was not so big to disbelieve the explanation of the assessed. The Commissioner (Appeals) appreciated these facts and deleted the addition. We do not find any infirmity in his findings and while upholding the same, we dismiss the ground of appeal raised by the revenue.

36. The appeal filed by the revenue is dismissed.

Now we will take up the appeal in the case of Shri M.C. Jain.

assessed's Appeal (IT(SS)A Mo. 84/Del/2000):

37. Ground of appeal Nos. 1 and 3 have not been pressed, hence the same are dismissed.

38. In ground No. 2, the assessed has stated that the Commissioner (Appeals) has erred in holding that the assessing officer shall recompute the investment and profit on the sale of six properties standing in the name of Mrs. Veena Jain on the basis of valuation report of the registered valuer as against the actual price at which these properties were purchased and sold.

39. During search and seizure operation, certain documents were found which indicated purchase and sale of six plots in the name of Smt. Veena Jain. Subsequently, the assessed accepted that these were his benami investments and actual investment was made by him. In the return of undisclosed income filed in response to notice under section 158BC of the Act, the assessed declared the income of Rs. 1,98,000 representing undisclosed investment in all the six properties in the name of Smt. Veena Jain. These properties are as under:

(a)

294/13-2/6

Rohini

25.9 sq. mts.

(b)

130/G-27/3

Rohini

48 sq. mtrs.

(c)

23/D-12/8

Rohini

58.8 sq. mts.

(d)

131/G-27-3

Rohini

48 sq. mtrs.

(e)

295/B-2/6

Rohini

5.9 sq. mts.

(f)

272/C-9/7

Rohini

60 sq. mtrs.

40. As the assessing officer was not satisfied about the purchase consideration declared by the assessed in respect of above six properties, he referred the Property No. 294/B-2/6 Rohini to VO under section 131(l)(d) of the Act to estimate the purchase consideration of that property. The VO in his report to assessing officer estimated the purchase consideration at Rs. 7523 per sq. mtr. The assessing officer adopted this estimated purchase consideration in respect of above six properties in the name of Mrs. Veena Jain and made the addition accordingly. On appeal, the Commissioner (Appeals) directed to adopt the purchase consideration on the basis of the registered valuer's report and not on the basis of purchase consideration declared by the assessed. As the Commissioner (Appeals) confirmed part addition, the same has been challenged by the assessed.

41. While learned counsel stated that no addition was warranted, the learned Departmental Representative supported the order of the assessing officer.

42. We have considered the rival submissions. We have adjudicated similar issue in the case of Trishla Jain and in view of our findings therein, the ground of appeal raised by the appellant is dismissed.

43. The appeal directed by the assessed is dismissed.

Revenue's appeal (IT(SS)A No. 89/Del/2000):

44. In ground Nos. 1 and 3, the revenue has challenged the directions of the Commissioner (Appeals) to the effect that unaccounted investment and profit on sale of six immovable properties standing in the name of Smt. Veena Jain and admitted by the assessed to be his own be computed on the basis of report of registered valuer as against the report of the VO.

45. As mentioned earlier, during search and seizure operation, certain documents were found which revealed the investment in six properties in the name of Smt. Veena Jain. However, subsequently, the assessed owned the investment in these six properties to be his own and declared the purchase consideration as undisclosed income in his return under section 158BC of the Act. However, the assessing officer was not satisfied and following the VO's report in respect of another property which was located in Rohini adopted similar valuation in the case of the assessed. For making addition, the assessing officer has adopted the same basis for other properties also. On appeal, the Commissioner (Appeals) has deleted the addition which has been challenged before us.

46. While learned Departmental Representative supported the order of the assessing officer, the learned counsel supporting the order of the Commissioner (Appeals) further stated that the facts were similar to the case of Smt. Trishla Jain. It was further argued that all the properties have been declared earlier though in the name of Smt. Veena Jain. He stated that the assessing officer has adopted the valuation of some other property. He also stated that the valuation officer has based his estimate on the basis of a property of 260 sq. mtrs. in Prashant Vihar. As the instance which was relied on by the VO, was not comparable with the assessed, the assessing officer was not justified in adopting the same cost. He stated that Prashant Vihar was a posh locality whereas the assessed's properties were located in Rohini. It was further stated that the size of the plot in Prashant Vihar was 260 sq. mtrs. which was very ideal measurement. The plots owned by the assessed were very small which is proved that there was a plot of about 6 sq. mtrs. As the instances given by the VO was not comparable, no addition under Chapter XIV-B of the Act could be made relying on such valuation report. The Commissioner (Appeals) has, therefore, rightly deleted the addition.

47. We have considered the rival submissions. We have adjudicated similar issue in the case of Smt. Poonam Jain and Smt. Trishla Jain. Keeping in view our findings therein, we hold that the Commissioner (Appeals) has rightly allowed relief to the assessed. The ground of appeal raised by the revenue is, therefore, dismissed.

48. In ground No. 2, the revenue has challenged the deletion of the addition on account of purchase/sale consideration of property No. HP-63/C-13 Rohim, Delhi. The assessing officer noted that above numbered plot was purchased by the assessed. He observed that another property located at 54/F-18 section 8, Rohini owned by the assessed's daughter was referred to the VO to estimate the cost of construction. Relying on the same ratio, the assessing officer adopted the purchase consideration of the above property at Rs. 7.86 lakhs and sale consideration at Rs. 17.46 lakhs. The addition was made accordingly. On appeal, the Commissioner (Appeals) deleted the addition by observing that the property was already declared by the assessed to the income tax department before the date of search and seizure operation. Even the department has taxed the profit on its sale under the head "capital gain". The revenue has challenged the findings of the Commissioner (Appeals).

49. While learned Departmental Representative supported the order of the assessing officer, the learned counsel supported the order of the Commissioner (Appeals).

50. We have considered the rival submissions. Where a property had already been declared in the income tax return much before the date of search and seizure and the same has been accepted by the department, whether the addition on account of undisclosed income could be made in block assessment on the basis of VO's report has been considered by various benches of the Tribunal. We have dealt with this issue in great detail in the case of Smt. Poonam Jain. As the facts in the instant case are similar, keeping in view our findings in the case of Smt. Poonam Jain, we hold that the Commissioner (Appeals) has rightly deleted the addition made by the assessing officer. While upholding his findings, we dismiss the ground of appeal raised by the revenue.

51. In the result, the appeal filed by the revenue is dismissed.

Now, we will take up the revenue's appeal in the case of Shri Sanjay Jain (IT(SS)A No. 59/Del/2000).

52. In ground No. 1, the revenue has challenged the deletion of the addition of Rs. 3,29,930 made by the assessing officer on account of excess stock.

53. Briefly, the facts of the case are that the assessed is an individual who is, inter alia, engaged in the business of textiles. The business as well as residential premises of the assessed were subject to search and seizure operation under section 132(1) of the Act on 3-9-1997 as in other cases mentioned earlier. The inventory of the stock found at the business premises was also prepared. As per physical verification, the stock worth Rs. 19.14 lakhs was found as against the book stock of Rs. 13.41 lakhs.

54. At the time of assessment proceedings, the assessing officer asked the assessed to explain the difference in the stock and why not the investment in the excess stock be added to the income of the assessed. From the seized documents, the assessing officer also noted that the goods worth Rs. 5,61,995 though purchased were not recorded in the books of account.

55. The assessed vide his letter dated 22-1-1999, stated that the books of account were written up to 31-8-1997. It was stated that the value of stock adopted by the authorised officer was based on tag price and no rebate for general discount which ranged between 10 per cent to 20 per cent was allowed. It was also explained that some time the stock was sold at cost price also. The goods worth Rs. 1 lakh were physically present whereas their bills were received later on. It was also stated that the cut pieces and out of fashion/out of season items were sold even at lower than the cost price. The assessed also stated that the value of stock at tag price estimated by the authorised officer also included the element of the g.p. to be earned by the assessed. The assessed claimed that if rebate for the above eventualities was allowed to the assessed, the value of stock found on the date of search will tally to the book stock. The assessing officer considered the submissions of the assessed. He allowed some rebate for above eventualities and worked out excess stock at Rs. 3,29,930. The assessing officer held that the assessed has made investment in such stock from undisclosed source and treated the same as undisclosed income under Chapter XIV-B. On appeal, the Commissioner (Appeals) deleted the addition which has been challenged before us.

56. While learned Departmental Representative supported the order of the assessing officer, the learned counsel supported the order of the Commissioner (Appeals).

57. We have considered the rival submissions. The assessed derives his income from proprietary concern M/s. Sanjay Textiles which deals in cloth on retail basis. We find that on the date of search, the authorised officer had valued the stock at business premises at Rs. 19.41 lakhs. The assessing officer at the time of assessment considered the explanation of the assessed and allowed a discount of 10 per cent given to the customers. He also gave rebate for g.p. rate disclosed by the assessed. The value of stock found, therefore, came to Rs. 14,74,958 as against the book value of Rs. 11.83 lakhs. We also found that there has been an accounting error and the value of stock as per assessing officer which come to 14.67 lakhs and not 14.74 lakhs. Thus, the addition as per the assessing officer stood at Rs. 3,19,892 and not Rs. 3,23,930.

58. This addition consists of two items. The first item was regarding purchases worth Rs. 1, 14,480 made by assessed prior to 28-8-1997. The assessing officer felt that the bills which were dated prior to 28-8-1997 should have been entered in the books by 31-8-1997. In case, these were not entered, the purchases on the basis of such bills were not genuine. The second item related to the purchases worth Rs. 2,05,411 made prior to search and seizure operation whose bills were received after the date of search and seizure operation. We find that the assessed was questioned about not recording all the bills/goods in the relevant register till 31-8-1997. The assessed is a retail dealer in clothes. He receives goods from whole seller/distributors on approval basis. If the goods are found acceptable, the assessed shows his willingness to purchase the same. The bills for purchases are obtained and necessary entries are made in the account books. A considerable time is taken in receiving the goods, its approval, raising of bills and then entry in the register. This practice is not unusual; rather it was a normal market practice of the trade. When the Commissioner (Appeals) gave finding to this effect, the revenue could not produce any evidence to rebut such practice. It is also not in dispute that the bills for period prior to 28-8-1997 were found, thus, the assessing officer's finding that purchases made vide bills dated prior to 28-8-1997 and not entered in the register up to 31-8-1997 were not genuine, does not stand to any reason. The addition of Rs. 1,14,480 was, therefore, deleted by the Commissioner (Appeals). We do not find any infirmity in his findings and uphold the same.

59. As regards the addition of Rs. 2,05,411, we find that at the time of search and seizure operation, the assessed has stated that there were goods worth about Rs. 1,00,000 for which the bills were yet to be received. During assessment proceedings, the assessed furnished the list of purchases party wise amounting to Rs. 2,05,411. Even the reconciliation of these purchases was filed. We find that even the confirmed copy of accounts from the sellers have been furnished. Unless the revenue brings on record any evidence contrary to these evidences, it cannot be said that purchases were bogus. The Commissioner (Appeals) appreciated these facts and deleted the addition. While upholding his findings, we dismiss the ground of appeal raised by the revenue.

60. In ground No. 2, the revenue has challenged the deletion of the addition of Rs. 1,31,000 made by the assessing officer on account of unexplained cash. During search and seizure operation, cash amounting to Rs. 19,499 was found whereas as per books, the cash balance was Rs. 1,59,966. The assessed was asked to explain the difference in figures. In reply, the assessed stated that out of total cash found at the residence, cash amounting to Rs. 1,31,000 pertained to him. The assessing officer observed that at the commencement of the search and seizure operation, the assessed was asked as to how much cash was available with him at home but the assessed had stated that he did not know as to how much cash was available. The assessing officer, therefore, held that as the assessed has failed to explain the difference in cash, he made an addition of Rs. 1,31,000 by holding the explanation of the assessed to be fabricated. On appeal, the Commissioner (Appeals) deleted the addition which has been challenged before us.

61. While learned Departmental Representative supported the order of the assessing officer, the learned counsel supported the order of the Commissioner (Appeals).

62. We have considered the rival submissions. It is admitted position that at the time of search and seizure operation, cash amounting to only Rs. 1,59,966 was found whereas as per books of account, the cash available was Rs. 15,966. Thus, it is not a case of excess cash found. It appears that the assessing officer had made the addition on the ground that in the beginning of the search and seizure operation, the assessed could not tell as to how much cash was available at the residence. Merely because the assessed could not give the figures of cash available with him does not mean that no cash was kept at the residence. During assessment proceedings, it was explained that the cash of about Rs. 1,31,000 was kept at home. We feel that mere failure to state the exact amount of cash available at residence cannot lead to an inference of any unaccounted cash. When it is admitted fact that the cash found was much less than the cash as per book, the addition on account of unexplained cash is untenable. The Commissioner (Appeals) appreciated these facts and deleted the addition. We do not find any infirmity in the same and while upholding his findings, we dismiss the ground of appeal raised by the revenue.

63. The appeal filed by the revenue is dismissed.

64. Appeals are disposed of as stated above. We order accordingly.