appeal of Revenue has been filed against order of CIT(A), Ludhiana, in block assessment relating to block period ending on 8th Feb., 2000 and other appeal has been filed by assessee against order of CIT(A), Ludhiana, dt. 11th Dec., 2003 passed under s. 154 of IT Act, 1961, relating to same period of block assessment completed by AO. Since issues raised in both appeals arise from same block assessment completed by AO and appeals decided by CIT(A), both were heard together and are being disposed of by this consolidated order for sake of convenience. First, we take up appeal filed by Revenue, where following two grounds of appeal have been taken: "1. That learned CIT(A) has erred both in law and on facts of case in deleting addition of Rs. 46,47,070 made on account of interest paid by assessee out of undisclosed sources on various loans. That learned CIT(A) has erred both in law and on facts of case i n deleting addition of Rs. 5 lakhs on account of undisclosed investment made to acquire right of his sister-in-law in family property." In addition, Revenue has also requested for admission of following additional ground of appeal vide letter dt. 4th Oct., 2004: "Without prejudice to grounds of appeal already taken, interest element for asst. yr. 1999-2000 amounting to Rs. 3,63,070 is not to be allowed as deductions and, therefore, learned CIT(A)-I has erred both in law and facts of case in ignoring proviso to s. 69C of IT Act, 1961." learned senior Departmental Representative, Sh. P.S. Sachdev, submitted that issue raised in additional ground is purely legal issue for which all relevant facts are on record and case does not call for investigation o f facts. Therefore, additional ground raised by Revenue deserves admission. He relied on judgment of Hon ble Supreme Court in case of National Thermal Power Co. Ltd. vs. CIT (1999) 157 CTR (SC) 249: (1998) 229 ITR 383 (SC). learned counsel for assessee, Sh. Sudhir Sehgal, on other hand, submitted that he has no objection to admission of additional ground, but in present case, there is no unexplained expenditure for which addition under s. 69 could be made. We have heard both parties and carefully considered rival submissions. It is settled law that additional ground which is purely legal in nature for which relevant facts are already on record, can be raised before Tribunal. reliance in this regard is placed on judgment of Hon ble Supreme Court in case of National Thermal Power Co. Ltd. vs. CIT (supra). In present case, ground raised by Revenue is purely legal in nature n d all relevant facts are already on record. In fact, same relates to addition made by AO and considered by CIT(A). Therefore, we are of considered opinion that it is fit case for admission of additional ground. same is admitted accordingly. relevant material facts relating to this case are that IT authorities carried out search and seizure action under s. 132(1) of Act at residential and business premises of assessee on 8th Feb., 2000. During such action, cash of Rs. 3 lakhs was found and incriminating documents more particularly referred to Annexs. A-7 and A-9 were also found and seized. AO issued notice under s. 158BC of IT Act, 1961 (In short Act ) on 8th Feb., 2000. assessee filed return for block assessment disclosing therein undisclosed income of Rs. 3,82,000. income disclosed in block return varied from Rs. 12,000 to Rs. 60,000 for asst. yrs. 1992-93 to 2000-01 (upto date of search). assessee was carrying on business of purchase and sale of foreign made country liquor on wholesale basis. AO observed that seized documents listed in Annexs. A-7 and A-9 indicated that assessee had obtained loans amounting to lakhs of rupees from different persons on which he was paying interest at different rates. When assessee was confronted with these documents and asked to explain nature of transactions recorded therein, assessee submitted that such transactions pertained to sale of empty bottles and cases of empty cartons of liquor in last few years. However, AO rejected such explanation by observing that entries recorded on various documents clearly indicated loan transactions for which interest has also been paid. assessee was asked to file confirmatory affidavits from persons in whose names these loan transactions appeared. However, assessee filed none. Besides, assessee also admitted that no books of account have been maintained to record these transactions. AO also observed that transactions noted on seized documents were in coded forms i.e. figure of 2,54,180 was recorded as "254.180". He noted that on reverse side of p. 17 of Annex. A-7, amount was correctly noted as R s . 2,54,180. He also made similar observations in respect of other entries noted on pp. 3 and 4 of assessment order. He also noted that fact that transactions were written in coded form was obvious from noting on seized documents compared with withdrawals/deposits in bank account. For example, on 29th Sept., 1997, seized document showed entry as 40 , but on 29th Sept., 1997, bank account showed withdrawal of Rs. 40,000. Similarly, he noted other similar transactions on p. 4 of assessment order. Thereafter, AO referred to party-wise entries noted in names of various persons like DPS . Sh. Bimal , Sh. Bali , Sh. Shergill , S. Satnam Singh Shergill , Jallota , Mehar Chand Mahajan , Binny , Popli , Satish K. Aggarwal , Vasdev Ji , Parveen , Balbir Singh Handa , GDC , Dr. Grover , etc. These details have been noted on pp. 4 to 19 of assessment order. On basis of entries noted on seized documents listed at Annexs. A-7 and A-9, AO also worked out interest paid by assessee to various persons. AO referred to pp. 45 and 46 of Annex. A-9 seized from residence of assessee where entries of date- w i s e addition/substraction of figures were noted. He also observed that assessee had also recorded month-wise summary of transactions which were written on back side of p. 21 of Annex. A-7. Thereafter, all detailed transactions noted on seized documents in names of various persons were summarised on pp. 22 to 24 of assessment order and AO arrived at figure of total loan transactions taken by assessee during period from 1997-98 to 1999-2000 at Rs. 1,80,95,000. However, AO did not make any addition on account of unexplained cash credits despite fact that assessee had not filed any confirmation of loan transactions along with any other supporting evidence. As noted above, AO also worked out interest paid by assessee on aforesaid amounts for which entries appeared on seized documents. AO observed that assessee had paid interest amounting to Rs. 42,84,000 before 31st Dec., 1998 in respect of loans taken by assessee. He also worked out interest of Rs. 3,63,070 in respect of loans taken after 31st Dec., 1998 and both aggregated to Rs. 46,47,070 (i.e. Rs. 42,84,000 + Rs. 3,63,070). AO observed that source of interest paid of Rs. 46,47,070 relating to both periods was out of income from undisclosed sources. He, therefore, made addition of Rs. 46,47,070 to undisclosed income. other addition made by AO was of Rs. 5 lakhs. Briefly stated, facts of case are that documents listed in Annex. A-9 seized from residence of assessee also included of memorandum of oral family settlement dt. 31st Dec., 1991 on pp. 14 to 22. said family settlement indicated that they were legal owners in respect of property No. 573, Model Town, Jalandhar, namely, Mrs. Sudershan Ghumman W/o Late Sh. Harjit Singh Ghumman (brother of assessee), Mrs. Jasrajpal Ghumman W/o Late Sh. Jagbir Singh Ghumman (brother of assessee) and Sh. Ranjit Singh Ghumman S/o Late Sh. Kapoor Singh Ghumman (i.e. assessee). On date of settlement, cost of plot was valued at Rs. 26,00,000 and that of building at Rs. 3,68,000. It was mutually agreed that Smt. Sudershan Ghumman shall get piece of land adjacent to house No. 573 along with sum of Rs. 1,23,000 from assessee in lieu of surrender of her share in property. Similarly, Smt. Jasrajpal Ghumman was to receive Rs. 8,69,666 from assessee in lieu of her share in property. In exchange of consideration, assessee would become owner of entire House No. 573. It was decided that Smt. Sudershan Ghumman would receive her consideration by last week of January, 1992 and handover possession to assessee by 30th April, 1992. Similarly, Smt. Jasrajpal Ghumman was to receive her consideration by 30th June, 1992. Pages 4 to 11 of Annex. 9 were receipts dt. 20th Jan., 1992 to 26th Jan., 1992, totalling Rs. 1,23,000 signed by first party indicating receipts of entire amount by Smt. Sudershan Ghumman, where she also stated that she had received entire consideration and now had no connection with ownership of House No. 573 for which possession was also handed over on 30th April, 1992. Page 25 of same annexure indicated receipt of Rs. 1,84,666 through DD dt. 30th June, 1992 signed by Smt. Jasrajpal Ghumman as per family settlement. She further stated that there was nothing due from Sh. Ranjit Singh Ghumman as she had received full amount against her share in property No. 573. She also stated that she had no connection with said property for which possession had already been given to assessee. assessee was confronted with these documents and was asked to explain source of entire payments. However, assessee submitted that he had not paid full consideration till now and payment of Rs. 5,00,000 was still outstanding. During assessment proceedings, assessee also filed certificate from Smt. Jasrajpal Ghumman stating that amount of Rs. 5 lakhs was still due from assessee. AO observed that submission of assessee was not correct because seized document found during course of search indicated that she had received full amount of consideration. She also handed over possession of her share in property and nothing was due to her after that date. Since assessee failed to explain source of payment of Rs. 5,00,000, AO made addition of said amount as income from undisclosed sources. Being aggrieved, assessee impugned additions in appeal before CIT(A). It was submitted before CIT(A) that additions made by relying on documents seized during search listed in Annexs. A-7 and A-9 were arbitrary and uncalled for. It was submitted that assessee had explained entries made on seized documents represented petty undisclosed income from business of sale of loose bottles/cases and empty whisky cartons sold outside books of account. Such income was duly disclosed in return filed for block assessment. It was submitted that notings on pp. 45, 46 and 47 of Annex. 9 where plus/minus figures were noted were explained to be in respect of cards game played for fun in leisure time. It was stated that AO was wrong in treating loan transactions aggregating to Rs. 1,80,95,000 in para 4.23 of assessment order. It was submitted that during course of search only cash of Rs. 3,00,000 was found and same was also accepted by AO. No other valuable assets in form of immovable properties, gold, ornaments, jewellery, FDRs, etc. were found. In case assessee had received loans aggregating to Rs. 1,80,95,000, there should have been matching assets/investments found at time of search. Thus, assessee pleaded that conclusion drawn by AO that assessee had raised loans amounting to Rs. 1,80,95,000 was unjustified. It was also submitted that no person would give such huge loans to assessee without taking any security. assessee did not have any assets except 1/3rd share in ancestral residential house. Therefore, inference drawn by AO that these were transactions of loans was not correct. During course of appeal proceedings, assessee also submitted cash flow statement on basis of incomings and outgoings noted by AO in assessment order based on seized documents. It was submitted that even if contention of Revenue was accepted that assessee had received loans aggregating to Rs. 1,80,95,000, assessee would be left with surplus cash of Rs. 3,79,125 on date of search after making payment of interest and part repayment of loans. Thus, it was submitted that AO was not justified in making addition of Rs. 46,47,070 on account of repayment of interest made out of undisclosed income for reason that cash available with assessee was sufficient to cover impugned repayments of interest. learned CIT(A) considered these submissions and observed that averments made by assessee that pp. 45, 46 and 47 of Annex. 9 as well as other pages of Annex. 7 as representing of cards games played for fun at leisure time were not whole-heartedly correct. However, he observed that additions were otherwise unwarranted because of following reasons: (a) As per AO, assessee has raised loans aggregating to Rs. 1,80,95,000 on which interest of Rs. 46,47,070 had been paid. However, during course of search only cash of Rs. 3 lakhs was found and same was also accepted by AO. No other valuables in shape of money, cash, bullion, gold, jewellery were found. Only investment of Rs. 6.50 lakhs was noted in purchase of flat at Shimla. Thus, learned CIT(A) observed that presumption of AO that assessee had raised loans of such huge amount was not correct. (b) AO has not identified persons from whom so-called loans had been procured by assessee i.e. DPS , Sh. Bimal , Sh. Bali , Sh. Shergill , S. Satnam Singh Shergill , Jallota , Mehar Chand Mahajan , Binny , Popli , S. Satnam Singh Shergill , Jallota , Mehar Chand Mahajan , Binny , Popli , Satish K. Aggarwal , Vasdev Ji , Parveen , Balbir Singh Handa , GDC , Smt. Karamjit, Dr. Grover , IS , SS Randhawa , MI , etc. He observed that AO could not trace out these persons to corroborate his suspicion. One Sh. G.D. Chaudhary also filed confirmation dt. 15th Feb., 2002 in whose name amount was shown as loan stating that he had not given any loan to Sh. Ranjit Singh Ghumman nor had received any interest. (c) cash flow statement prepared by assessee on basis of seized documents indicated availability of cash for so-called interest payments. Even if stand of Revenue that these transactions represented amounts borrowed by assessee was accepted for argument s sake, assessee could have been left with surplus cash to tune of Rs. 3,79,125 as on date of search. This also takes into account repayment of interest and part payment of loans. Thus, no addition of Rs. 46,47,070 was called for on this score as well. (d) If contention of AO that assessee had paid interest amounting to Rs. 46,47,070 on amounts borrowed was accepted, assessee would be entitled to deduction of corresponding amount because amount could only be considered for purpose of business. Thus, net effect is that no addition would be called for. (e) learned CIT(A) also observed that onus of proving that payment was not real was on party who claimed it to be so. He relied on judgment of Hon ble Supreme Court in case of CIT vs. Daulatram Rawatmull 1972 CTR (SC) 411: (1973) 87 ITR 349 (SC). He also observed that there was little logic in AO s contention that assessee must have taken loans for investment not disclosed to Department, because no such evidence was found during course of search. He observed that in assessment proceedings suspicion, however, k may be, cannot take place of evidence. He relied on certain decisions of Tribunal. (f) He further observed that it was settled law that for purpose of block assessment, addition could be made only on basis of evidence found during course of search and if no material has been found during course of search then no addition could be made on presumptions. He relied on following judgments: (i) Dolly Farms & Resorts (P) Ltd. vs. Dy. CIT (2000) 69 TTJ (Del)(TM) 821: (2001) 14 IT Rep. 159 (Del); (ii) Dy. CIT vs. Mahavir Woollen Mills (2001) 15 IT Rep. 237 (Del); (iii) CIT vs. Ravi Kant Jain (2001) 167 CTR (Del) 566: (2001) 15 IT Rep. 539 (Del); (iv) Jaya S. Shetty vs. Asstt. CIT (1999) 64 TTJ (Mumbai) 551: (2000) 12 IT Rep. 526 (Mumbai); (v) Elite Developers vs. Dy. CIT (2000) 68 TTJ (Nag) 616: (2000) 73 ITD 379 (Nag); (vi) Sunder Agencies vs. Dy. CIT (1997) 59 TTJ (Mumbai) 610: (1997) 63 ITD 245 (Mumbai); (vii) Harakchand N. Jain vs. Asstt. CIT (1998) 61 TTJ (Mumbai) 223. Thus, learned CIT(A) deleted entire addition of Rs. 46,47,070. As regards addition of Rs. 5 lakhs made by AO being undisclosed investment in property for acquiring 1/3rd share in residential house No. 573, Model Town, Jalandhar, from Smt. Jasrajpal Ghumman, wife of deceased brother, assessee submitted that assessee had made only two payments of Rs. 1,85,000 and Rs. 1,84,000 out of total payment of Rs. 8,69,666 due to Smt. Jasrajpal Ghumman were found and remaining amount of Rs. 5 lakhs was still payable to her. It was also submitted that certificate from Smt. Jasrajpal Ghumman stating that amount of Rs. 5 lakhs was still due to her was also filed. However, AO neither summoned Smt. Jasrajpal Ghumman nor made any enquiry and simply made addition by referring to seized documents found during course of search. Accepting contentions of assessee, learned CIT(A) deleted addition of Rs. 5 lakhs. Revenue is aggrieved with order of CIT(A). Hence, this appeal before Bench. learned senior Departmental Representative, Sh. P.S. Sachdev, heavily relied on findings recorded by AO in block assessment order. H e submitted that in this case search and seizure action under s. 132(1) was carried out at premises of assessee on 8th Feb., 2000. During course of search cash of Rs. 3 lakhs was found and further incriminating documents listed in Annexs. A-7 and A-9 were found and seized. He submitted that in response to notice issued under s. 158BC of Act, assessee filed return for block assessment admitting undisclosed income of Rs. 3,82,000 for various assessment years falling in block period. He submitted that assessee was carrying on business of sale of foreign made country liquor on wholesale basis. On scrutiny of seized documents, AO noted that these were written in coded form i.e. amount of Rs. 2,54,180 was written as 254.180. He referred to p. 3 of assessment order and submitted that AO has given detailed reasons supported by entries noted on seized documents itself. He submitted that amount of Rs. 40 represented Rs. 40,000 written in seized documents. He referred to pp. 3 and 4 of assessment order, where AO has given specific instances in support of his finding that figures were written in coded form. He further stated that assessee was confronted with these documents, he gave strange reply that these transactions represented sale of empty bottles/cartons made outside books of account. He submitted that AO rejected these submissions which were apparently not correct. He submitted that seized documents were found from premises of assessee and entries made therein were in his own handwriting. assessee has never disputed fact that these do not belong to him or entries made therein do not relate to him. onus was entirely on assessee to explain nature of these transactions. He drew strength from sub-s. (4A) of s. 132 which provides that if any books of account or other documents are found from premises of t h e assessee during course of search, presumption is that such documents belong to such person and contents noted therein were true. But in present case, assessee did not discharge onus in explaining nature of entries noted therein. AO also carried out scrutiny of these documents and found that same represented loan transactions in grey market. He also drew our attention to pp. 4 to 21 of assessment order which contained period-wise details of loans taken by assessee and repayment of interest therein. He then drew our attention to para 4.22 on p. 21 of assessment order where AO has referred to pp. 45 and 46 of Annex. A-9 which contained account of entries of date-wise addition and substraction of figures. In this account assessee has worked out month-wise summary of transactions which have also been written on back side of p. 21 of Annex. A- 7. He submitted that on basis of these entries, AO has totalled up transactions on pp. 22 to 24 of assessment order and found that total loans aggregating to Rs. 1,80,95,000 were received by assessee during years 1997-98 to 1999-2000. He submitted that in para 5 on p. 24 of block assessment order, AO has also worked out interest payments aggregating to Rs. 42,84,000 before 31st Dec., 1998 and Rs. 3,63,070 of later period. Thus, total interest paid aggregated to Rs. 46,47,070. He referred to p. 79 of paper book which is copy of seized document of Annex. A-7 where account of one DPS has been mentioned from which details of pp. 4 and 5 of assessment order have been noted by AO. He then referred to pp. 91 and 95 of paper book in support of contention that amount of Rs. 2,54,180 was written in coded form as 254.180. He then referred to findings recorded by CIT(A) on pp. 7 to 10 of impugned order. He submitted that learned CIT(A) was not correct in observing that since no corresponding assets/investments were found at t i m e of search, conclusions drawn by AO that transactions represented borrowings by assessee from different persons were not correct. He submitted that admittedly seized documents were found from residence of assessee. assessee was duly confronted with same. onus was entirely on assessee to explain nature of entries under s. 132(4A) of Act. assessee s explanation was found to be totally untenable. Drawing our attention to p. 8 of impugned order, learned Departmental Representative submitted that even learned CIT(A) has observed that explanation of assessee that pp. 45, 46 and 47 of Annex. 9 as well as other pages of Annex. 7 representing cards game were not accepted. Therefore, learned Departmental Representative submitted that findings recorded by CIT(A) that AO had not found out any matching investment to cover huge amount of loans was contrary to provisions of Act. He stated that it was for assessee to discharge such onus and explain entries with some corroborative evidence. But, assessee chose to give evasive reply instead of explaining nature of entries. Similarly, reasoning of learned CIT(A) that AO has not identified persons from whom so-called loans had been raised is shorn off merit because as per law, it was not for AO to establish existence and identity of these persons. This could have happened only if assessee furnished names and addresses of persons and explain nature of transactions. Since this was not done, there was no onus cast on AO to prove identity and existence of these persons. He further submitted that learned CIT(A) has referred to cash flow statement and has given finding that on basis of entries found in seized documents, source of repayments stands explained. He has also observed that, in fact, assessee was left with surplus. In this regard, he referred to remand report dt. 9th Dec., 2002 of AO submitted to CIT(A) on so-called cash flow statement. He referred to p. 5 of said remand report where AO had given reasons that AO had rightly drawn conclusion that assessee had borrowed funds from various persons duly supported by entries on seized documents made by assessee himself; repayment of interest was obvious from interest rates mentioned at scores of places, interest payments shown were in conformity with period, interest rates and amounts mentioned in such documents themselves. He has also mentioned that wherever there was no payment of interest for longer period like 2 or 3 months, payments after such period were in proportion covering intervening periods. Further, entries also indicated interest rate or amount depending on increase or decrease in principal amount. Further, entries found in seized documents were also supported by bank transactions and proof that amounts mentioned in assessment order were actual amounts beyond reasonable doubt. He referred to p. 6 of remand report where AO has pointed out that assessee had taken only few of loan transactions in cash flow statement and not entire transactions noted on seized documents. He has also observed that assessee must have definitely taken loans for investments in some business or acquisition of assets which was not disclosed to Department. AO has also pointed out that assessee should have disclosed investment and income from such investment before claiming benefit of availability of funds. He submitted that AO has also noted that certain transactions must have been squared up by making payment of amounts taken from them still outstanding in seized documents. He noted these transactions on p. 7 of remand report. He submitted that if these payments were taken into account, there would have been huge negative balance in account of receipt and payment which would have proved that interest has been paid out of undisclosed sources. He submitted that while deciding present appeal and allowing benefit of cash flow against payments of interest, learned CIT(A) has not written word about various points raised in remand report. He submitted that learned CIT(A) has then referred to judgment of Hon ble Supreme Court in case of CIT vs. Daulatram Rawatmull (supra) to say that it was for Revenue to prove that apparent was not real. He submitted that this situation could have happened only if assessee could have proved that apparent was not real. But in present case, assessee has not done so. Thus, learned Departmental Representative submitted that conclusion drawn by AO that entries made on seized documents represented loan transactions of assessee were based on logical reasoning and human probability duly supported by corroborative evidence and entries in seized documents. He submitted that learned CIT(A) has referred to various decisions noted on p. 10 of order. But he submitted that none of decisions is applicable to facts of present case for simple reason that in this case, assessee failed to explain nature of entries. He also relied on judgment of Delhi High Court in case of Yadu Hari Dalmia vs. CIT (1980) 17 CTR (Del) 234: (1980) 126 ITR 48 (Del), where it was held that if expenditure is not accounted for, same could be estimated as treated as income from undisclosed sources under s. 69C of Act. Absence of direct evidence does not preclude assessment by inference and estimate. He further relied on judgment of CIT vs. Bhagwati Developers (P) Ltd. (2003) 182 CTR (Cal) 619: (2003) 261 ITR 658 (Cal), where it was held that assessee must prove source of expenditure. On failure to do so, unexplained expenditure is liable to be treated as deemed income of assessee under s. 69C of Act. As regards additional ground taken by Revenue, learned senior Departmental Representative drew our attention to p. 24, para 5, of assessment order where AO has quantified interest before 31st Dec., 1998 at Rs. 42,84,000 and interest of Rs. 3,63,070 after 31st Dec., 1998. He referred t o amendment introduced Finance (No. 2) Act, 1998, w.e.f. 1st April, 1999, whereby proviso to s. 69C has been inserted. He submitted that as per proviso to s. 69C, it has been clearly mentioned that if source of expenditure is deemed to be income of assessee, same shall not be allowed as deduction under any head of income. He submitted that even if interest of Rs. 42,84,000 related to period prior to 1st April, 1999, remaining expenditure of Rs. 3,63,070 should not have been allowed by CIT(A), in view of amendment to s. 69C. Thus, he submitted that order of CIT(A) may be set aside and that of AO restored. learned counsel for assessee, Sh. Sudhir Sehgal, on other hand, heavily relied on order of CIT(A) and reiterated submissions which were made before authorities below. He submitted that earlier assessee was carrying on business of sale and purchase of foreign made country liquor on wholesale basis. This business was closed in year 1998. Search action under s. 132(1) was carried out by Revenue authorities at premises of assessee on 8th Feb., 2000. Thereafter, assessee filed return in response to notice issued under s. 158B declaring therein undisclosed income of Rs. 3,82,000 for various assessment years covered under block period. He submitted that AO has made additions on basis of entries recorded on documents listed in Annex. A-7 and A-9. He submitted that assessee had given explanation that entries on seized documents represented sale of empty bottles and cartons left over in earlier assessment years. He submitted that this explanation of assessee was not accepted and AO treated entries as representing loans transactions of assessee during period from asst. yrs. 1997-98 to 1999-2000. He drew our attention to para 4.23 on p. 24 of assessment order, where AO has aggregated loan transactions of Rs. 1,80,95,000. He submitted that during course of appeal proceedings, assessee had taken alternative plea that even if contention of Revenue that amount of Rs. 1,80,95,000 represented loan transactions of assessee was accepted, source of repayment of interest amounting to Rs. 46,47,070 stood explained. For this purpose, assessee had also submitted cash flow statement made on basis of entries of receipts and payments noted by AO in assessment order. He referred to copy o f such cash flow statement placed at pp. 20 to 27 of paper book. He submitted that copies of accounts of various parties referred to by AO in block assessment order are at pp. 28 to 46 of paper book. He referred to remand report submitted by AO to which our attention was also drawn by learned Departmental Representative. On p. 7 of remand report, AO submitted that assessee had not included some of accounts which must have been squared up before search and if these were taken into account, there would have been huge negative balance in account of receipt and payment reflected in cash flow statement. He submitted that nowhere AO had pointed out even single transaction noted by AO in assessment order and which has not been taken into account by assessee while preparing cash flow statement. He submitted that expression used by AO that these accounts must have been squared up falls in realm of presumptions and assumptions. Despite fact that search had been carried out but no other document was found indicating any further payment than those noted by AO in assessment order, he submitted that even learned Departmental Representative has not been able to point out as to which particular entry has been omitted by assessee. Relying on judgment of Delhi High Court in case of Vinay Kumar Modi vs. CIT (2004) 190 CTR (Del) 548: (2005) 272 ITR 91 (Del), learned counsel submitted that addition cannot be made on basis of presumptions and assumptions by using expressions, "must have been", must be , etc. He submitted that cash flow statement was prepared by taking into account each and every transaction noted on seized document. learned CIT(A) considered cash flow statement and held that on basis of entries of receipts and payments, source of interest of Rs. 46,47,070 stood explained out of amounts received as loans and no addition under s. 69C was called for. He submitted that assessee has discharged onus in explaining source of payment of interest. As regards additional ground of Revenue, learned counsel for assessee submitted that question of making addition under s. 69C would arise only if any part of expenditure is treated to be unexplained. However, in present case, source of entire repayment of interest of Rs. 46,47,070 including amount of Rs. 3,63,070 stands explained on basis of entries noted on cash flow statement. He further stated that assessee has not claimed any deduction for repayment of interest. Therefore, no addition/disallowance of Rs. 3,63,070 relating to period after 31st Dec., 1998 can be made by relying on insertion of proviso to s. 69C. Thus, he concluded his arguments by saying that learned CIT(A) has rightly deleted addition of Rs.46,47,070. We have heard both parties at some length and given our thoughtful consideration to rival contentions, examined facts, evidence and material placed on record. We have also gone through orders of authorities below and referred to relevant pages of paper book to which our attention has been drawn. undisputed facts of case are that Revenue authorities had carried out search and seizure action at premises of assessee on 8th Feb., 2000 and during such operation, cash of Rs. 3,00,000 was found. In addition, certain incriminating documents indicating undisclosed income were found and seized. documents listed in Annexs. A-7 and A-9 are not disputed by assessee to effect that these do not belong to him or entries made therein are not pertaining to him. Thus, assessee has accepted that these documents pertain to him. In response to notice under s. 158BC, assessee filed return for block assessment declaring therein undisclosed income of Rs. 3,82,000. Sub-s. (4A) of s. 132 of Act provides that where any books of account, other documents, etc. are found in possession or control of any person in course of search, it may be presumed that such books of account and other documents belong to such person and that contents of such books of account and other documents are true. section further provides that such books of account and other documents which purport to be in handwriting of any particular person or which may reasonably assumed to have been signed by o r to be in handwriting of any particular person are in that person s handwriting. Thus, person from whom these books of account/documents have been found cannot simply get away by saying that these do not belong to him or entries noted therein do not relate to him. Sub-s. (4A) of s. 132 casts heavy burden on assessee to explain nature of entries recorded on seized documents and also explain transactions. No doubt, s. 132(4A) raises presumption which is rebuttable. But whether such presumption has been rebutted or not has to be seen in light of facts and circumstances of each case. In present case, we find that assessee was confronted with entries in seized documents. He explained that same represented sale of loose bottles/cases and empty cartons of whisky, etc. sold outside books of account. This explanation of assessee was absolutely untenable, to say least. assessee was carrying on business of sale of foreign made country liquor on wholesale basis. said business was closed in year 1998. assessee was not running distillery where empty bottles and empty cartons could be leftover with assessee. assessee purchased Indian made foreign liquor in bottles in packed cartons and sold same in same position as assessee was wholesaler. Therefore, where was question of having any surplus empty bottles and cartons available with assessee and where these were stored when this business already stood closed. There is no entry in seized documents to show purchases of such huge quantity resulting in volume of transactions amounting to Rs. 1,80,95,000. Further, how does assessee explain entries relating to rate of interest and interest paid at number of places, if these were only sale transactions. Thus, it was only cock and bull story and explanation was evasive which could not be believed. We also do not accept contention of assessee that entries in respect of pp. 45 and 46 of Annex. A-9 as well as other pages of Annex. A-7 were representing of cards game played for fun at leisure time. In fact, such explanation has been rejected by learned CIT(A) himself. so-called plus/minus figures noted on these pages are to be seen in light of transactions noted on other pages of seized documents. transactions noted therein indicate minus/plus figures on various dates which also match with figures noted on documents in Annex. A-7. Moreover, no specific arguments in support of his contention that transactions noted therein were only minus/plus figures of cards game played during leisure time were advanced before us. Thus, explanation of assessee was bald, uncorroborated and, therefore, bereft of truth. We, therefore, reject finding of CIT(A) that inference drawn by AO that amounts represented loans taken by assessee was far-fetched. Since transactions recorded on seized documents were within knowledge of assessee, it was for him to explain same. It appears that learned CIT(A) has not referred to seized documents before recording such finding. Thus, in light of these facts and circumstances of case, we are of considered opinion that assessee had not given proper explanation about entries noted on seized documents found during course of search. Since these entries were written in handwriting of assessee himself and same were not disputed, onus was on assessee to rebut presumption raised under s. 132(4A) of Act. However, assessee has given evasive reply and has not explained transactions noted on seized documents. Therefore, presumption raised under s. 132(4A) remained unrebutted by assessee. Now next aspect that requires to be decided by this Bench is whether i n absence of any valid explanation given by assessee for entries n o t e d on seized documents, AO was justified in treating these transactions as representing amounts borrowed by assessee. detailed discussion in assessment order with reference to each page of seized documents does not leave any doubt in our mind that amounts represented loan transactions raised in grey market. names of various parties noted by AO and amounts shown against their names indicating date- wise/month-wise position of borrowings, repayment of interest and principal amount. This fact is also reinforced from notings on seized documents at various places about rate of interest and amount of interest paid to parties. These details have been noted by AO in para 4.21 on p.22 of assessment order. Besides, AO has also summarized all these transactions on basis of entries found in seized documents on pp. 22 to 24 of block assessment order. working given by AO has not been challenged by assessee either before CIT(A) or even before us. We have also referred to seized documents to which our attention has been drawn which give detailed position about amounts of loan and interest, rate of interest paid to parties. Thus, on basis of entries noted on seized documents and in absence of any rebuttal by assessee with some credible evidence, we are of considered opinion that AO was justified in treating amounts as loan transactions of assessee and also computing interest paid by assessee on these loans at Rs. 46,47,070. assessee on these loans at Rs. 46,47,070. Now next important aspect of case which requires consideration by this Bench is whether learned CIT(A) was justified in deleting addition of Rs. 46,47,070. We find from p. 24 of block assessment order that AO worked out aggregate amount of loans at Rs. 1,80,95,000 which has not been challenged before us by parties. Such working is also based on seized documents. It is pertinent to mention that provisions of ss. 68, 69, 69A, 69B and 69C have specifically been made applicable to block assessments and are included in sub-s.. (2) of s. 158BB dealing with computation of undisclosed income of block period. Despite fact that assessee failed to furnish even names and addresses of parties from whom such amounts were borrowed and appeared in seized documents, much less of filing any confirmation or any supporting evidence for proving genuineness of such credits, AO has not made any addition under s. 68 of Act. Even if these amounts are to be treated as receipts, onus was entirely on assessee to prove nature of such receipts and show how these were exempt from income-tax. Reliance in this regard is placed on judgment of Hon ble Supreme Court in case of Roshan Di Hatti vs. CIT 1977 CTR (SC) 200: (1977) 107 ITR 938 (SC). We do not agree with finding of CIT(A) that Revenue has failed to establish identity of persons in whose names loan transactions appeared with seized documents. onus was on assessee to furnish such evidence/details. But assessee chose to keep quiet about same. burden shifts to Revenue only when assessee explains entries recorded on seized documents with some evidence. It was for assessee to prove that apparent was not real. However, no addition in respect of credits appearing in seized documents though relating to block period has been made by AO. Further, it is fact that assessee borrowed these amounts for purpose of earning some income either by way of investment or by way of carrying on business. assessee must not be borrowing huge amounts on interest from grey market just for purpose of keeping amounts at home without utilizing same for purpose of earning some income. After all, assessee was not doing any charitable activity. Admittedly, assessee has not disclosed investment or business where borrowed funds were invested by assessee. However, AO has not made any addition on account of income from such undisclosed business though provisions of s. 145 have also been made applicable with retrospective effect from 1st July, 1995. Now effect of action of AO is that availability of amount of Rs. 1,80,95,000 in hands of assessee in form of loans has been established and is supported by entries in seized documents. Therefore, question arises as to whether AO could still make addition under s. 69C on ground that same represented expenditure incurred out of undisclosed income. cash flow statement was prepared by assessee on basis of seized documents and same appeared at pp. 20 to 27 of paper book. learned counsel for assessee made statement at Bar that all entries noted in seized documents by AO have been taken into account while preparing cash flow statement. Copies of accounts noted by AO in block assessment order have also been placed at pp. 28 to 46 of paper book. We have also referred to remand report dt. 9th Dec., 2002 submitted by AO before CIT(A) where he has noted that some of accounts must have been squared up before search, but these have not been reflected in cash flow statement. He has specifically noted certain transactions on p. 7 of remand report. However, there is absolutely no mention in seized document that these loans were returned by assessee or were squared up. It is settled law that block assessment has limited scope and is to be made with reference to books of account, documents and other valuables, material, information found during course of search. Since repayment of loan/squared up account mentioned on p. 7 of remand report is not supported by any entry in seized documents, it cannot be presumed that assessee must have repaid those amounts. Now, on basis of cash flow statement, source of repayment of interest to tune of Rs. 46,47,070 stands explained. learned CIT(A) has observed that assessee would be left with surplus of Rs. 3,79,125 as on 17th Feb., 2002 and such finding has not been challenged by Revenue. In fact, neither AO nor learned Departmental Representative has been able to point out even single entry of repayment noted in seized document which was omitted by assessee in cash flow statement. That being so, source of payment of entire amount of interest stands covered by availability of cash worked out by AO on basis of seized documents. Therefore, no addition is warranted when AO himself has not considered loans/receipts of Rs. 1,80,95,000 as undisclosed income of assessee under s. 68 of Act. As regards claim of Revenue that provisions of s. 69C are applicable, same would apply only if there is unexplained expenditure. Once AO has accepted receipt of loans aggregating to Rs. 1,80,95,000 on basis of seized documents, availability of same has to be considered against payments of interest and also other payments made during same period. Since entire payment of interest is covered by amount of Rs. 1,80,95,000, there does not remain any unexplained repayment of interest. Moreover, AO has not estimated income from undisclosed business where borrowed amounts were invested. deduction of expenditure and interest could be considered against such undisclosed income. Now in order to invoke provisions of s. 69C, there must exist unexplained expenditure. But in present case, source of such expenditure stands explained on basis of own finding of AO. We are, therefore, of opinion that no addition under s. 69C is liable to be made on account of repayment of interest both for period prior to 31st Dec., 1998 and after said date. However, we do not accept finding of CIT(A) that even if source of payment of interest remains unexplained, assessee would be entitled to deduction against business income. This question would arise only if assessee had disclosed business income against which expenditure is claimed. But in this case, neither assessee had disclosed income from business where borrowed funds were invested nor AO has estimated any such income. Therefore, how could deduction of expenditure be considered and allowed to assessee. Considering fact that source of payment of interest stands explained, addition under s. 69C cannot be made. In this view of matter, we confirm order of CIT(A) for this reason and reject this ground of appeal as well as additional ground of appeal of Revenue. next grievance of Revenue relates to deletion of addition of Rs. 5 lakhs made on account of undisclosed investment made to acquire right of his sister-in-law in family property. facts relating to this ground have already his sister-in-law in family property. facts relating to this ground have already been discussed while dealing with facts in regard to ground No. 1. learned Departmental Representative has drawn our attention to para 6.2 on p. 25 of assessment order. He submitted that during course of search memorandum of oral family settlement dt. 31st Dec., 1991 listed on pp. 22 to 24 of paper book was found which indicated that there were three joint owners in respect of ancestral property i.e. House No. 537, Model Town, Jalandhar. As result of such family settlement, land was valued at Rs. 26,00,000 and that of building at Rs. 3,68,000. It was mutually agreed that one sister-in-law, namely, Smt. Sudershan Ghumman, shall get piece of land adjacent to House No. 537 along with sum of Rs. 1,23,000 from assessee. H e submitted that pp. 102 to 109 of Annex. A-9 are receipts of amounts aggregating to Rs. 1,23,000 by Smt. Sudershan Ghumman. Thus, she received t h e entire amount of Rs. 1,23,000. However, other joint owner, Smt. Jasrajpal Ghumman, was to be paid amount of Rs. 8,69,666 by assessee in lieu of surrender of her share in favour of assessee and said payment was required to be made by 30th June, 1992. He submitted that p. 113 of paper book is receipt of Rs. 1,84,666 by demand draft dt. 30th June, 1992 signed by Smt. Jasrajpal Ghumman and in said receipt she has further submitted that no amount was due from assessee and possession of her share in property has already been handed over. During course of search, assessee was confronted with this fact where he stated that he had already taken possession of premises. However, he stated that amount of Rs. 4,50,000 was still payable. Later on, he stated that amount of Rs. 5,00,000 was payable. He referred to p. 113 of paper book where Smt. Jasrajpal Ghumman has clearly confirmed having received entire amount. He submitted that subsequently assessee also filed certificate from Smt. Jasrajpal Ghumman placed at p. 54 of assessee s paper book stating that amount of Rs. 5 lakhs was still due from Sh. Ranjit Singh Ghumman. He submitted that on basis of seized documents which clearly confirmed that entire amount of Rs. 8,69,666 had already been paid as full consideration and she had handed over possession of property and nothing was due to her after said date, so-called certificate filed by assessee was only self- serving statement. Therefore, learned CIT(A) was not justified in deleting impugned addition. learned counsel for assessee, on other hand, heavily relied on order of CIT(A) and reiterated submissions which were made before authorities below. He submitted that out of two sisters-in-law, assessee did not have cordial relations with Smt. Sudershan Ghumman. Therefore, receipts for payments made to her (copies placed at pp. 102 to 109 of paper book) are on proper revenue stamps. However, assessee had cordial relations with other sister-in-law, namely, Smt. Jasrajpal Ghumman. Even payments made to her were not on proper revenue stamps. Therefore, assessee had not paid remaining amount of Rs. 5 lakhs. Drawing our attention to p. 54 of paper book, he submitted that certificate dt. 24th Jan., 2002 was furnished from Smt. Jasrajpal Ghumman stating that amount of Rs. 5 lakhs was still due to her. He submitted that AO had not made any enquiry to find out truth from Smt. Jasrajpal Ghumman. She was neither summoned nor examined by AO. Thus, he submitted that factual position stated by assessee was rightly accepted by CIT(A), thus, he contended that order of CIT(A) does not merit any interference. We have heard both parties and carefully considered rival contentions, examined facts, evidence and material placed on record. factual position stated above that there was memorandum of oral family settlement dt. 31st Dec., 1991 which stipulated aforesaid payments to be made by assessee, to other joint owners, is not disputed by assessee. said document also mentioned that payment to Smt. Sudershan Ghumman was to be made by last week of January, 1992 and possession was to be given by 30th April, 1992. It was also mentioned that Smt. Jasrajpal Ghumman was to receive amount of Rs. 8,69,666 by 30th June, 1992. Now, p. 25 of Annex. A-9 referred to and relied upon by AO for making impugned addition (copy placed at p. 113 of paper book) duly signed by Smt. Jasrajpal Ghumman reads as under: "We have received sum of Rs. 1,84,666 (one lakh eighty-four thousand s i x hundred and sixty-six) only vide draft No. 7650970, dt. 30th June, 1992 payable at Canara Bank, Civil Lines, Jalandhar City, as per family settlement with regard to property No. 573, Model Town, Jalandhar City. Now, there is nothing due from Ranjit Singh Ghumman and we have received full amount against our share of property in question. We have now no connection or concern with ownership of portion of property in question. possession of share of our property in question has already been given to Ranjit Singh Ghumman. Sd/- Jasraj Pal" perusal of same shows that amount of Rs. 1,84,666 received on 30th June, 1992 which was stipulated date for making payment to her was final payment. She clearly stated that no other amount was due from assessee and "we have received full amount against our share of property in question." She also confirmed that there was no connection or concern with ownership of property and possession of same has already been handed over to Sh. Ranjit Singh Ghumman. Now if assessee had cordial relation with Smt. Jasrajpal Ghumman and amount of Rs. 5 lakhs was still due to her, it is not understood as to why there was any need for her to say that payment of Rs. 1,84,666 was full and final payment of amount payable to her. Therefore, contents of receipt found during course of search have to be accepted true, particularly when said receipt is duly signed by Smt. Jasrajpal Ghumman. addition made on basis of seized document found during course of search supported by logical reasoning appears to be justified. During course of assessment proceedings, assessee only filed certificate from Smt. Jasrajpal Ghumman stating that amount of Rs. 5 lakhs was still due to her. It was not even affidavit. No reference was made to receipt found during search and reason why she had earlier accepted t h t full payment had been received from assessee. Considering documents seized during search, where she had categorically acknowledged that entire consideration as result of memorandum of oral family settlement had been received and nothing was due to her, we are of consideration opinion that learned CIT(A) was not justified in deleting impugned addition. Accordingly, we set aside order of CIT(A) and restore that of AO. This ground of appeal is allowed. As regards appeal filed by assessee, only grievance of assessee is that learned CIT(A) was not justified in not appreciating application filed by assessee under s.154 of Act. facts of case are that AO had made addition of Rs. 3,00,000 on account of household expenses. On appeal, learned CIT(A) reduced addition to Rs. 1 lakh. Subsequently, assessee filed application under s. 154 before CIT(A) stating that addition of Rs. 1 lakh may be treated to have been covered by undisclosed income of Rs. 3,82,000 declared in return filed for block assessment. However, learned CIT(A) rejected request of assessee o n ground that he had maintained addition of Rs. 1 lakh in addition to income declared in return filed for block assessment. assessee is aggrieved with order of CIT(A). Hence, this appeal before us. learned counsel for assessee, Sh. Sudhir Sehgal, did not advance n y specific arguments in support of this ground except reiterating submissions made before CIT(A). learned Departmental Representative, on other hand, relied on orders of authorities below. We have heard both parties and carefully considered rival submissions, examined facts, evidence and material placed on record. We have also gone through orders of authorities below. In submissions made before CIT(A) and as noted by him in impugned order, there is nothing to show that assessee had taken plea that income declared in block assessment should also cover addition made on account of household expenses. scope of power vested under s. 154 with authority concerned is very limited to rectify only mistakes of law or facts which are apparent from records. All those issues which involve prolonged discussions and arguments fall outside scope and provisions of s. 154 of Act. Reliance in this regard is placed on judgment of Hon ble Supreme Court in case of T.S.. Balaram, ITO vs. Volkart Bros. & Ors. (1971) 82 ITR 50 (SC) where apex Court has observed that all issues which involve prolonged discussions and arguments, where two conceivable views are possible fall outside provisions of s. 154 of Act. Now, in this case also, matter whether addition made was covered against income declared in return filed for block assessment or not was debatable issue which required examination into facts. Further, no such plea was apparently taken during course of appeal proceedings before CIT(A). Thus, it could not be said to be mistake apparent from record. If assessee had any grievance against finding of CIT(A) for maintaining addition of Rs. 1 lakh, he should have filed appeal against order passed under s. 250. Therefore, even if learned CIT(A) has rejected application under s. 154 on merits, we are of considered opinion that issue being debatable was not covered within scope and ambit of provisions of s. 154 of Act. In this view of matter, we confirm order of CIT(A) for this reason and reject ground of appeal of assessee. In result, appeal filed by Revenue is partly allowed and appeal filed by assessee is dismissed. *** Assistant Commissioner of Income-tax v. Ranjit Singh Ghuman