ASSISTANT COMMISSIONER OF INCOME TAX v. K.L. JOLLY & SONS
[Citation -2007-LL-0907-3]

Citation 2007-LL-0907-3
Appellant Name ASSISTANT COMMISSIONER OF INCOME TAX
Respondent Name K.L. JOLLY & SONS
Court ITAT
Relevant Act Income-tax
Date of Order 07/09/2007
Assessment Year BLOCK PERIOD 1ST APRIL, 1987 TO 3RD SEPT., 1997,
Judgment View Judgment
Keyword Tags opportunity to cross-examine • search and seizure operation • genuineness of transaction • income from house property • reopening of an assessment • permanent account number • production of evidence • incriminating document • investment in property • unaccounted investment • undisclosed investment • unexplained investment • valuation of property • computation of income • concealment of income • registered sale deed • source of investment • non-resident indian • diversion of income • condition precedent • regular assessment
Bot Summary: On the basis of these documents, it was submitted that firstly, it was not undisclosed income of the assessee and secondly, the addition could not be justified in the case of the assessee because the same income had already been considered in the case of another assessee. The learned Departmental Representative on the other hand, justified the order of the AO. It was submitted by him that simply because regular assessment was made under s. 143(3) in the case of the assessee in earlier year, it does not mean that the entire income was disclosed by the assessee. According to the learned counsel the gift amount of Rs. 10 lakhs received by the assessee was thus fully disclosed and the interest from FDR made out of the gifted amount was offered to tax by the assessee and the same was assessed by the Department. 1995-96 relevant portion of which has been reproduced above, wherein the gift of the assessee was accepted, was made on 18 th March, 1998 i.e., long before the initiation of proceedings under s. 158BD against the assessee. In view of the above, the block assessment order made in the case of the assessee under s. 158BD cannot be legally upheld and consequently the additions made by the AO against the assessee in the block assessment order dt. In appeal before learned CIT(A), the first argument of the assessee was that the gift received by the assessee of Rs. 10 lakhs having already been disclosed and considered from the point of view of taxability in the regular assessment under s. 143(3) in the case of the assessee for asst. In the case of CIT vs. S.M. Agarwal 211 CTR 18: 162 Taxman 3, the Hon ble Delhi High Court upholding the view taken by the Tribunal has held that the statement made by S could not be said to be relevant evidence against the assessee since the assessee was not given any opportunity to cross-examine her and even from the statement no conclusion could be drawn that the entries made on the relevant page belonged to the assessee and represented his undisclosed income.


P.N. Parashar, J.M. ORDER These two appeals and cross-objections involving common issues and similar facts are being decided by common order for sake of convenience. 2 . Shri Y.K. Kapur and Shri Neeraj Gupta, advocates appeared for assessee whereas Shri Purushottam Tripuri, senior Departmental Representative represented Revenue. 3. In IT(SS)A No. 132/Del/2004 Revenue has taken two grounds which are as under : "On facts and circumstances of case, learned CIT(A) has erred in (1) deleting addition on account of gift of Rs. 10 lakhs and Rs. 1,00,000 being 10 per cent premium on gift ignoring that alleged donor was not able to tell details of Jolly Family at time of recording of his statement. (2) deleting addition in respect of rental income, maintaining that same is assessable in hands of Mrs. Krishna Jolly, ignoring that entire investment in impugned property was made by M/s K.L. Jolly & Sons (HUF)." 4 . In IT(SS)A No. 133/Del/2004 Revenue has taken ground No. 1 for challenging deletion of addition of Rs. 10 lakhs on account of gift and of Rs. 1 lakh on account of premium as also for deletion and of Rs. 1,86,325 on account of another gift and of Rs. 18 ,632 on account of premium relating to that gift. 5 . Ground No. 2 has been taken against deletion of addition of Rs. 6,54,662 made by AO in respect of difference in valuation of property No. B-205, Second Floor, Greater Kailash-I, New Delhi, ignoring valuation report of DVO. 6 . In CO No. 234/Del/2006 assessee (HUF) has also challenged validity of assessment proceedings initiated under Chapter XIV-B of IT Act. IT(SS)A No. 132/Del/2004 & CO No. 233/Del/2006 7. Wherever assessee has challenged order of AO and that of learned CIT(A) by taking legal plea in cross-objection, Department has assailed order of learned first appellate authority for deleting additions made by AO. CO No. 233/Del/2006 8. In CO No. 233/Del/2006 assessee has taken only one ground to challenge validity of block assessment proceedings in Chapter XIV-B of IT Act. This ground is as under : "That order of CIT(A) upholding validity of proceedings insofar as they relate to gifts, Commission on gifts and rental income, are bad in law being beyond scope of Chapter XIV-B of IT Act, 1961 and also contrary to ratio of judgments reported." As above ground raises preliminary legal issue relating to validity of block assessment proceedings and scope of Chapter XIV-B, we consider it proper to take up this issue first. 9 . learned counsel for assessee assailed validity of block assessment proceedings by submitting that this very amount of gift has been subjected to tax in regular assessment done under s. 143(3). In this regard he invited our attention to assessment order in case of M/s K.L. Jolly & Sons (HUF) for asst. yr. 1995-96, dt. 18 th March, 1998 copy of which has been filed at pages at 61 and 62 of paper book. It was contended by him that after disclosure of gift during course of regular assessment, there was no legal justification for making addition of same in block assessment under s. 158BD. Thus it was argued by him that addition of Rs. 10 lakhs + Rs. 1 lakh made by AO while making assessment under Chapter XIV-B is not justified. 9.1 Regarding issue relating to rental income also it was submitted by him that this income has already been assessed in case of Smt. Krishna Jolly and therefore, same income stood disclosed and thus it cannot again be assessed in hands of M/s K.L. Jolly & Sons (HUF) in block assessment. According to him, since this income stood assessed in hands of one assessee, same cannot be assessed in two hands. In this regard also he made reference to p. 87 which contains details of income of Smt. Krishna Jolly from house property. This paper gives details of rent receipt from flat at Kaveri Apartments in asst. yrs. 1996-97, 1997-98 and 1998-99. It also contains details of interest paid to M/s K.L. Jolly & Sons (HUF) and funds borrowed for investment in house property. On basis of these documents, it was submitted that firstly, it was not undisclosed income of assessee and secondly, addition could not be justified in case of assessee because same income had already been considered in case of another assessee. 10. learned Departmental Representative on other hand, justified order of AO. It was submitted by him that simply because regular assessment was made under s. 143(3) in case of assessee in earlier year, it does not mean that entire income was disclosed by assessee. According to him if something requires deep scrutiny and that scrutiny was not done, then it would not mean that income or details thereof were disclosed. 11. In rejoinder learned counsel for assessee further explained that gift of Rs. 10 lakhs was received in financial year 1993-94 which was credited by bank on 13th April, 1994 as is evident from statement of bank. In this regard our attention was invited to bank statement of assessee of Bank of India, Greater Kailash-II, New Delhi in which amount of Rs. 10 lakhs has been credited on 13th April, 1994. learned counsel further pointed out that FDR of Rs. 10 lakhs was taken in same bank on 29th April, 1994 which was out of amount of gift received. For this purpose, he made reference to entry of bank account dt. 29th April, 1994 at p. 60 of paper book. It was further submitted by him that interest on FDR was duly disclosed in computation filed with return for assessment in asst. yr. 1995-96. In this regard he also invited our attention to p. 59 which is statement of affairs of assessee. Pages 61 and 62 are copy of assessment order. According to learned counsel gift amount of Rs. 10 lakhs received by assessee was thus fully disclosed and interest from FDR made out of gifted amount was offered to tax by assessee and same was assessed by Department. 1 2 . We have carefully considered facts and circumstances of this matter, entire material to which our attention was invited and rival submissions. following facts remain undisputed : (1) assessee received gift of Rs. 10 lakhs by Cheque No. 365503, dt. 24th March, 1994 from Dr. Parwal. (2) cheque was deposited on 24th March, 1994 and credit for same was given by bank on 13th April, 1994. This is proved from copy of bank statement at p. 60 of paper book. (3) assessee got FDR of Rs. 10 lakhs prepared out of amount o f gift. FDR was made on 29th April, 1994. This is also proved from same bank statement available at p. 60 of paper book. (4) assessee had received interest on FDR which is also indicated in bank statement. 13. assessee has filed documentary evidence to show that amount of cheque was credited in bank account on 13th April, 1994 and thus transaction of gift and interest income earned from FDR of Rs. 10,00,000 which was prepared out of amount of gift was duly disclosed to Department. It was shown that assessee has filed copy of bank account which is available at p. 60 of paper book. From this document, version of assessee stands substantiated. AO while making assessment order for asst. yr. 1995-96 asked assessee to explain credit entry of Rs. 10 lakhs dt. 13th April, 1994 in his bank statement. In response to this assessee had explained entire facts including amount of gift and name of donor, etc. portion of assessment order which is reproduced below clearly brings out these facts : "During course of assessment proceedings vide order sheet entry, dt. 16th March, 1998, assessee was asked to explain credit entry of Rs. 10 lakhs (dt. 13th April, 1994) in his bank statement. In response to this assessee filed letter, dt. 16th March, 1998, in which he explained that credit of Rs. 10 lakhs was received in financial year 1993-94 i.e. asst. yr. 1994-95. cheque was deposited on 24th March, 1994 and credit for same was given by bank on 13th April, 1994. This amount was nothing but gift received from Dr. D.P. Parwal, non-resident Indian, Bombay. On 18 th March, 1998, assessee filed letter from Dr. D.P. Parwal in support of this contention. In view of this submission of assessee that credit of Rs. 10 lakhs is gift, is accepted. After discussion, returned income is accepted." 14. From above observations it is clearly established that gift of Rs. 10 lakhs was accepted as genuine in assessment order made for asst. yr. 1995-96. assessee has also filed computation of income at p. 53 of paper book for asst. yr. 1994-95. In this computation interest on FDR has been shown at Rs. 6,615. assessee has also filed acknowledgement for filing return for asst. yr. 1994-95 which was filed on 28th Aug., 1995. computation of income filed with return for asst. yr. 1995-96 available at p. 55 of paper book also shows interest on FDR. In view of above it is clear that assessee had disclosed amount of gift and interest income thereon while filing IT return for asst. yrs. 1994-95 and 1995-96 and this interest income has been duly assessed to tax in course of regular assessment made under s. 143(3) in these two assessment years. Therefore, it cannot be said that transaction of gift or interest thereon was undisclosed transaction. 15. It may be mentioned that as observed by AO notice under s. 158BD of IT Act was issued to assessee for initiating proceedings against him on 17th April, 2001 and in response to this notice assessee filed return of block period showing nil undisclosed income on 1st June, 2001. assessment for asst. yr. 1995-96 relevant portion of which has been reproduced above, wherein gift of assessee was accepted, was made on 18 th March, 1998 i.e., long before initiation of proceedings under s. 158BD against assessee. It may further be pointed out that while filing return, copy of which is available at pp. 3 to 27 of paper book, assessee has put remark which is as under : "This return is filed under protest as assessee has no undisclosed income. However, return is being filed in compliance to notice issued by Asstt. CIT, Circle 20(2), New Delhi vide letter dt. 17th April, 2001." assessee had taken objection to initiation of proceedings right from very beginning. In his letter dt. 28th April, 2003 assessee brought this fact to notice of AO that gift from Dr. Parwal has already been accepted in case of assessee in asst. yr. 1995-96. relevant portion of letter dt. 28th April, 2003 is as under : "Furthermore, this very gift from donor, Dr. D.P. Parwal has been already accepted in case of assessee in asst. yr. 1995-96 under s. 143(3). Even Hon ble CIT(A), XV vide his orders in cases of Mr. Dalip Jolly, Mrs. Shoba Jolly, Mr. Pradeep Jolly and Mrs. Neena Jolly has been pleased to allow gifts from same donor, Dr. D.P. Parwal to above named family members." 1 6 . Before CIT(A) also assessee had raised this objection by making submission in his letter dt. 16th April, 2003 available at pp. 63 to 66 of paper book. relevant portion of this letter is as under : "In fact issue as to gifts received by assessee-HUF from Dr. Parwal of Jaipur NRI was examine by learned AO in this very case for asst. yr. 1995-96 in which gifts were received by assessee-HUF from Dr. Parwal. After making thorough enquiry and investigation into matter and taking into account material gift was accepted as genuine and order passed accordingly in case of HUF while framing regular assessment under s. 143(3) of IT Act for asst. yr. 1995-96. No grounds existed for taking proceedings under s. 158BD of Act to assume any undisclosed income in respect of NRI gifts from Dr. Parwal in whose case identity, creditworthiness and genuineness stood fully established to satisfaction of AO who passed order accepting gifts." 17. It may be pointed out that despite specific submission neither AO nor CIT(A) examined relevant matter to come to conclusion that amount of gift and interest thereon was undisclosed income of assessee for taking action against him. undisclosed income has been defined in Act as follows : "158B. In this Chapter, unless context otherwise requires, (b) "Undisclosed income" includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in books of account or other document or transaction represented wholly or partly income or property which has not been or would not have been disclosed for purposes of this Act, or any expense, deduction or allowance claimed under this Act which is found to be false." 18 . In case of CIT vs. Vikram A. Doshi (2002) 256 ITR 129 (Bom), Hon ble Bombay High Court has taken view that transaction disclosed in return which was subject-matter of regular assessment ought not to be assessed in block assessment. 19. In case of CIT vs. Vinod Danchand Ghodawat (2000) 163 CTR (Bom) 432 : (2001) 247 ITR 448 (Bom), Hon ble Bombay High Court has held that where assessee in wealth-tax returns, had disclosed value of gold and silver articles and jewellery, source of investment in these articles found in course of search cannot be probed into in block assessment. relevant observations of Hon ble High Court are as under : "Chapter XIV-B of IT Act essentially proceeds on basis that where n investment is made by assessee which is unexplained, then Department is entitled to invoke block assessment procedure. In present matter, AO found that source of acquiring jewellery has not been explained by assessee and, therefore, AO came to conclusion that unexplained investments in ornaments were required to be treated as undisclosed income for asst. yr. 1994-95. same reasoning has been given by AO with regard to silver articles and utensils which came to be detected during above search. However, Tribunal found that all above-mentioned articles have been declared by assessee in return of wealth. said return has been duly assessed. Under above circumstances, Tribunal was right in coming to conclusion that assessee has disclosed value of said articles in WT return, which was accepted by Department and, therefore, additions made by Department on ground of undisclosed income was erroneous. In present matter, assessee had disclosed above jewellery in his returns. said returns were processed. said returns were duly accepted. In circumstances, Chapter XIV-B has no application to facts of case. For above reasons, question Nos. 1 and 2 are answered in affirmative, i.e. in favour of assessee and against Department." 20. In case of Bhagwati Prasad Kedia vs. CIT (2001) 167 CTR (Cal) 336 : (2001) 248 ITR 562 (Cal), where Hon ble Calcutta High Court has pointed out to distinction between block assessment and regular assessment by making reference to Explanation to s. 158BA. In that case, assessee had taken advance from company. There was search and seizure resulting in block assessment of assessee. During block assessment, assessee was called upon to explain advance taken from company. assessee filed confirmatory letter of loan from company including IT returns filed by creditors. On question whether ITO was entitled to question loan amount which was subject-matter of regular assessment while making block assessment, Court observed as under : "Held, that AO was not entitled to question in block assessment loan which was subject-matter of regular assessment. AO was wrong i n holding that said sum could be taxed in block assessment although same featured in regular books of account. When loan creditor was assessee and in whose assessment loan advanced had been accepted by Revenue, AO was wrong in holding that assessee was liable to pay tax on that loan money taken from that assessee." In that case Hon ble Court further observed that "On composite reading of said three parts of Explanation it is crystal clear that legislature thought it fit to make distinction between block assessment and regular assessment. As has been held by Division Bench in Dy. CIT vs. Shaw Wallace & Co. Ltd. (2001) 165 CTR (Cal) 489 : (2001) 248 ITR 81 (Cal) that there are three types of income within meaning of said Act of 1961, i.e., incomes which are offered for taxation, incomes which are shown in return but deductions have been claimed wrongly and undisclosed income. AO while dealing with regular assessment is free to examine veracity of return as well as claims made by assessee with regard to exemption and/or deduction. Those can be considered under s. 143(3) of said Act of 1961, whereas third income being "the undisclosed income" is taxed and by way of block assessment resulting in search and seizure. Such block assessment is made under s. 158BA. logic behind two different modes of assessment, according to us, is that concealment of income and claiming deduction or exemption of taxes in respect of disclosed income cannot be treated at par. former is offence which goes to root of matter and other is on basis of causes shown by assessee where AO is free to accept justification shown or reject same. said two types of cases cannot be treated at part. Hence, we hold that AO was not entitled to question said loan in block assessment which is subject-matter of regular assessment. Hence, t h e AO was wrong in holding that said sum can be taxed in block assessment although same featured in regular books of account. Similarly, Tribunal also committed error in upholding decision of AO." 21. issue relating to meaning and scope of undisclosed income has been dealt with in detail by Hyderabad Bench of Tribunal in case of Essem Intra-port Services (P) Ltd. vs. Asstt. CIT (2000) 68 TTJ (Hyd) 103 : (2000) 72 ITD 228 (Hyd). In that case Bench has explained block assessment proceedings as follows : "Chapter XIV-B lays down special procedure for assessment in search cases. special procedure set out in Chapter XIV-B is separate set of rules, b y itself. For purposes of this Chapter, term undisclosed income is defined. definition of term undisclosed income is given in inclusive manner, but it is again made clear under s. 158B(b) that undisclosed income includes money, bullion, jewellery, etc. only if they represent income or property which has not been or would not have been disclosed for purposes of this Act. Therefore, we find that even though undisclosed income is defined in inclusive manner, scope and extent of term undisclosed income for purposes of this Chapter XIV-B is contingent upon fact that undisclosed income should be borne out of materials representing income or property which has not been or would not have been disclosed by assessee for purposes of this Act. When certain information and details are already furnished in returns of income or statements accompanying thereto, filed before Department, or when certain information and details are already recorded in books of account maintained in regular course of business, based on which returns of income would be filed in normal course, that very same information and details cannot be re-examined in course of block assessment proceedings to arrive at any fresh conclusions, so as to result in determination of undisclosed income based on that materials. true nature of undisclosed income, as it is construed in Chapter XIV-B is that assessee has not or would not have disclosed that income to Department in normal course, and such income should be found out by Department as result of search or requisition of books and details as provided under s. 132 of IT Act. Thus there are two elements to be satisfied so as to be treated as undisclosed income for purposes of this Chapter, i.e. factum of non-disclosure on part of assessee should be existing, and said non-disclosure should have been blown out as result of search or requisition of books, etc. under s. 132 of Act. It naturally follows therefore that whenever, assessee has disclosed necessary information and details regarding income or expenses or credit or property in returns of income or in statements accompanying returns, or even if books of account based on which returns would be filed contain those details, assessee gets away from clutches of non-disclosure in respect o f that income or property, etc. because those materials are already available, even in absence of any recourse to search operations under s. 132." 22. On examination of provisions of s. 143 and other provisions relating to regular assessment as well as provisions relating to Chapter XIV-B, following proposition can be culled out : (1) If item of income or expenditure has already been subjected to regular assessment, then same cannot be re-examined in block assessment unless some incriminating or adverse material is found during assessment unless some incriminating or adverse material is found during course of search. (2) There should be positive factum of non-disclosure on part of assessee. Such non-disclosure should have been detected as result of search. 23. In case of CIT vs. Ravi Kant Jain (2001) 167 CTR (Del) 566 : (2001) 250 ITR 141 (Del), Hon ble Delhi High Court has emphasized need that in block assessment scope and ambit is limited to material unearthed during course of search. observations of Hon ble Court are as under : "Block assessment under Chapter XIV-B of IT Act, 1961, is not intended to be substitute for regular assessment. Its scope and ambit is limited in that sense to materials unearthed during search. It is in addition to regular assessment already done or to be done. assessment for block period c n only be done on basis of evidence found as result of search or requisition of books of account or documents and such other materials or information as are available with AO. Evidence found as result of search is clearly relatable to ss. 132 and 132A." 24. Coming to facts of present case and applying propositions formulated in above referred cases, we can sum up discussion on issue relating to undisclosed income in case of present assessee by observing as under : (1) No search was conducted in case of present assessee. This is evident from fact that assessment in case of present assessee has been made under s. 158BD and not under s. 158BC. (2) During course of search no adverse or incriminating material relating to gifts was found. documents found during course of search only affirmed making of gift by Dr. Parwal to assessee in sum of Rs. 10 lakhs. There was no material or evidence to suggest that gift was bogus or that it was purchased by assessee or that donor had taken any amount in consideration of gift. (3) There was no evidence of any premium having been paid by assessee for taking gift. documents found during course of search related to transaction of gift and not to any transaction of paying any consideration for obtaining gift. Even during post search inquiry or during assessment proceedings, no evidence was found to hold that gift was obtained by assessee by making any payment. (4) There is no material on record to draw conclusion that assessee had invested his own undisclosed income for purchasing gift. 2 5 . In view of above, since transaction relating to gift stood disclosed and was considered in regular assessment and no incriminating material was found during search or during post search inquiries, this transaction cannot be treated as undisclosed nor income from this transaction can be treated as undisclosed. In view of provisions contained under s. 158B of IT Act, therefore, action of Department in initiating proceedings under s. 158BD in relation to gift cannot be justified in law. 26. So far as next item of income which is about rental income is concerned, about this item also contention of assessee was that same was disclosed to Department. In this regard before learned CIT(A) following plea was taken by assessee : "The issue as to ownership of property and rental income being shown in hands of Smt. K. Jolly and interest income being shown by assessee-HUF are all relevant facts for regular assessment. There is no incriminating material found on search to support Revenue s case for taking action under s. 158BD of IT Act. Proceedings under s. 158BD are not to be based on any assumptions, surmises or conjectures. In absence of there being any tangible evidence or material to show that property in question belonged to HUF and not to Smt. K. Jolly who is real and beneficial owner, proceedings under s. 158BD regarding that property also has to be dropped in interest of justice and fair play. assessee s case is also supported by finding given by learned CIT(A) in case of Smt. K. Jolly as stated above." 2 7 . learned CIT(A) has not given any finding on this plea of assessee. learned counsel for assessee has brought to our notice details of income of Smt. Krishna Jolly from house property as disclosed by her in asst. yrs. 1996-97, 1997-98 and 1998-99 as well as details of interest paid by her to M/s K.L. Jolly & Sons (HUF). details are as under : "Income of Mrs. Krishna Jolly from House Property (Flat at Kaveri Apartments) Asst Asst Asst yr. yr. 1998-99 yr. 1996-97 1997-98 (up to 3-9- 1997) Rent 9,500 1,14,000 47,500 received Less : House Tax 33,295 Paid ALV 9,500 80,705 47,500 Less : Deduction 1,900 16,141 9,500 under s. 24 (1/5th) 7,600 64,564 38,000 Less : Interest paid to M/s K. L. Jolly & K. L. Jolly & Sons (HUF) on Funds borrowed 11,250 1,35,000 56,250 for investment in house property : 18 (3,650) (70,436) ,250 From above, it is clear that there is no loss of tax to Revenue in case of M/s K.L. Jolly & Sons (HUF)." 28. Since details of rental income were disclosed by Smt. Krishna Jolly to Department and further since this rental income was subjected to regular assessment in her hands, this income can also not be treated as undisclosed income of assessee and cannot be brought to tax by invoking s. 158BD. It may also be pointed out that during course of search no incriminating material indicating that house belonged to assessee-HUF was found and therefore, rental income shown in hands of assessee by taking recourse to s. 158BD is also not justified. 29. In view of above, block assessment order made in case of assessee under s. 158BD cannot be legally upheld and consequently additions made by AO against assessee in block assessment order dt. 30th April, 2003 on account of alleged gift at Rs. 10 lakhs plus Rs. 1 lakh totalling Rs. 11 lakhs and on account of income from house property at Rs. 9,500 + Rs. 80,705 + Rs. 47,500 cannot be sustained. Thus total undisclosed income worked out by AO under s. 158BD for assessment years covered under block period at Rs. 12,37,705 is to be deleted because in view of our finding recorded above, block assessment order cannot be upheld as there as no undisclosed income which was to be computed in hands of assessee on facts and in circumstances of case. 30. Since block assessment order is held to be invalid and unjustified in law, all additions made in assessment order against assessee are to be deleted. Consequently ground taken by assessee in cross- objection stands allowed. 31. In result, cross-objection is allowed. IT(SS)A No. 132/Del/2004 32. Since we have deleted additions by allowing cross-objection in favour of assessee, we are not required to deal with grounds of revenue taken in this appeal on merits. However, we deem it proper to consider grounds of appeal on merits also. 33. In ground No. 1 Revenue has challenged deletion of addition of Rs. 10 lakhs on account of gift and Rs. 1 lakh being premium on gift. 34. relevant facts concerning this matter in brief are as under : search and seizure operation under s. 132(1) of IT Act was conducted in Fena Group of cases on 3rd Sept., 1997. Search was also conducted in M/s Saci Chemicals where assessee i.e. M/s K.S. Jolly & Sons (HUF) was partner. During course of search some papers were found from Shri Dalip Jolly at 237, Okhla Industrial Area, Phase-I, New Delhi which showed that Jolly family had taken gifts from one Dr. D.P. Parwal. One of gifts was to M/s K.L. Jolly & Sons, HUF i.e. assessee. This gift was made through cheque and was dt. 24th March, 1994. amount of gift was Rs. 10 lakhs. During course of search proceedings statement of Dr. Parwal was recorded by Asstt. DIT, (Inv. 2), Jaipur on 22nd Sept., 1997. information regarding undisclosed income of M/s K.L. Jolly & Sons (HUF) was passed on by them Jt. CIT-20 to AO i.e. Asstt. CIT, Circle 23(1), New Delhi who initiated action under s. 158BD against M/s K.L. Jolly & Sons (HUF). assessee filed return in response to notice issued under s. 158BD for block period from 1st April, 1987 to 3rd Sept., 1997 in Form No. 2B declaring nil undisclosed income. return was filed on 1st June, 2001. Thereafter notice under s. 143(2), 143(1) and detailed questionnaire were issued. 35. AO on going through statement of Dr. Parwal found that he was not able to exactly remember names of family members of Jolly and Pradip and also denied knowing names of father, mother, wives and children of Jolly and Pradip. On examining entire statement of donor, AO inferred that he was not able to tell details of family nor even surname of persons and had not visited them at their residence. Under these circumstances, he doubted genuineness of gift and concluded that so- called gifts were procured by Jollys in lieu of consideration. 3 6 . Before AO assessee pointed out that after statement recorded on 22nd Sept., 1997 donor wrote letter to ADI, Jaipur in month of November, 1997 again reaffirming his relationship with Jolly family and confirmed gift, but AO did not place any credence on this letter. Before AO assessee also submitted that gift was accepted by AO in asst. yr. 1995-96 while framing assessment order under s. 143(3). It was pointed out that bank statement and letter from Dr. Parwal regarding gift was submitted to AO during course of regular assessment and same was accepted by him. AO rejected this contention also by observing that there was lot of difference in circumstantial evidence while passing order under s. 143(3) for asst. yr. 1995-96 and after date of search. He thus rejected submissions of assessee that gift was accepted by AO and therefore, same should be treated as disclosed income. 37. Thus AO made addition of Rs. 10 lakhs by treating gift as bogus and as undisclosed income of assessee in garb of gift. He also added 10 per cent of amount of gift as premium/consideration paid from undisclosed sources called gift. 37.1 AO also made addition of Rs. 9,500, Rs. 80,705 and Rs. 47,500 in asst. yrs. 1996-97, 1997-98 and 1998-99 on account of income from house property. Thus total undisclosed income was worked out at Rs. 12,37,705. AO has taken into account statement of Dr. Parwal recorded by ADIT, (Inv)-2, Jaipur on 22nd Sept., 1997 during post search proceedings. 38. After discussing statement in paras 4 to 7 of his order, he has recorded his conclusion in para 8 which is as under : "8. In view of above, there are sufficient reasons to believe that gifts from NRIs are not without consideration and have been purchased. It is not unreasonable to take note of common phenomenon that receiving NRIs cheque is common mode of money laundering. payment of money cannot be considered gift merely because person giving amount or person receiving amount calls or labels it by way of gift . It is obvious that assessee s bold assertion of gifts cannot be accepted without ample undisputed evidences to prove same." 3 9 . In para 9 he has discussed another letter written by donor in November 1997 to ADIT (Inv.), Jaipur but has observed that this statement is just afterthought. assessee made reference to letter of donor namely Dr. Parwal dt. 21st March, 1994, bankers certificate and copies of letter addressed by Dr. Parwal to then Jt.CIT, Spl. Range 20, New Delhi and on basis of these documents, it was contended before AO that identity of Dr. Parwal is established, his creditworthiness, financial status and social status is proved and thus genuineness of gift is also proved. However, on perusal of para 12 of order of AO it is found that he has mainly placed reliance on statement of Dr. Parwal recorded by ADIT, Investigation-2, Jaipur on 22nd Sept., 1997 and has held that so-called gift was arranged by Shri Lakhotia, advocate and friend of Dr. Parwal, for consideration. Thus he held gift of Rs. 10 lakhs as bogus and treated same as undisclosed income of assessee in garb of gift. Thus he made addition of Rs. 10 lakhs and also added amount of Rs. 1 lakh i.e. 10 per cent of Rs. 10 lakhs being premium/consideration paid from undisclosed sources for obtaining alleged gift. This amount was also added by him as undisclosed income of assessee in asst. yr. 1994-95. 40. In appeal before learned CIT(A), first argument of assessee was that gift received by assessee of Rs. 10 lakhs having already been disclosed and considered from point of view of taxability in regular assessment under s. 143(3) in case of assessee for asst. yr. 1995-96, no legal valid proceedings can be taken in hands of assessee in proceedings under s. 158BD r/w s. 158BC of Act. 41. assessee also challenged addition by submitting that AO has not properly appreciated evidence and has drawn erroneous conclusion. In support of arguments assessee placed reliance on following decisions : (1) R.K. Syal vs. Asstt. CIT (2000) 66 TTJ (Chd) 656; (2) ITO vs. N. Sunitha (2001) 70 TTJ (Bang) 27; (3) Monga Metal (P) Ltd. vs. Asstt. CIT (2000) 67 TTJ (All) 247. 42. In appeal before learned CIT(A) assessee also made detailed 42. In appeal before learned CIT(A) assessee also made detailed submissions in order to prove identity and creditworthiness of donor and genuineness of transaction. assessee also placed reliance on decision of Hon ble Delhi High Court in case of CIT vs. Mrs. Sunita Vachani (1990) 84 CTR (Del) 18 : (1990) 18 4 ITR 121 (Del) and that of Chandigarh Bench of Tribunal in case of R.K. Syal (supra). 43. learned CIT(A) had dealt with similar matter in case of Shri Dalip Jolly in which case also same donor had made gift to another family member of this assessee. facts and circumstances being similar in t h e two cases, learned CIT(A) extracted entire discussion and his findings for deleting addition in that case. He therefore, following order in t h e case of Shri Dalip Jolly (supra), deleted addition in case of present assessee by observing as under : "The perusal of relevant paras of CIT(A) s order reproduced above, clearly shows that addition made in case of K.L. Jolly & Sons (HUF), appellant, is exactly on same reasoning and AO has not gathered any further facts or information and has mainly relied upon information and facts gathered by AO who passed assessment order in case of Sh. Dalip Jolly, cited above. arguments raised by appellant are also exactly on same lines as were made in case of Sh. Dalip Jolly. Even case laws cited are same. donor is also same. After perusal of detailed facts and reasoning I am fully inclined to concur with findings given by learned CIT(A)- XV in case of Sh. Dalip Jolly mentioned above. In case of appellant AO has not brought on record that donor has denied factum of gift, that donor does not posses creditworthiness, that there was any incriminating document found during search which could have indicated exchange of money for gift or any other indication pointing out gift to be arranged or bogus. For detailed reasoning given by learned CIT(A)-XV in case of Sh. Dalip Jolly with which I fully agree, addition made by AO in case of appellant cannot be sustained. Accordingly, addition of Rs. 11 lakhs (Rs. 10 lakhs on account of gift and Rs. 1 lakh on account of alleged premium) is deleted." 44. learned Departmental Representative has challenged findings of learned CIT(A) and has supported order of AO. He pointed out that it is improbable and unnatural conduct on part of donor to give gift of Rs. 10 lakhs to assessee although he was not even knowing names of family members of donee. He also placed reliance on order of Tribunal in case of Chroma Business Ltd. vs. Dy. CIT (2004) 82 TTJ (Kol) 540 : (2002) 82 ITD 540 (Kol) and on decision of Hon ble Supreme Court in case of Sumati Dayal vs. CIT (1995) 125 CTR (SC) 124 : (1995) 214 ITR 801 (SC). Regarding subsequent letter written by donor to ADI, Jaipur, it was submitted by him that earlier statement recorded on 22nd Sept., 1997 was correct and true version which has been rightly considered by AO. 45. contention of learned counsel for assessee was that AO has totally ignored subsequent letters of donor and has not dealt with same in assessment order properly. According to learned counsel, no incriminating material was found during course of search to show that gift was bogus and whatever documents were found, were only corroborative to genuineness of gift. He further submitted that Revenue has not been able to bring out any material to prove that any consideration was paid by assessee for acquiring gift and therefore, addition made merely on basis of suspicion, surmises and conjectures cannot be justified. Regarding statement of donor recorded by ADIT, Jaipur it was contended by him that this statement cannot be used against assessee because no opportunity was given to him to cross examine witness. It was also submitted by learned counsel for assessee that donor himself appeared before AO on 10th August and had confirmed genuineness of transaction before him but he did not record statement in writing. According to learned counsel, this fact is further proved by subsequent letters of donor dt. 12th Aug., 1999, 20th Aug., 1999 and 13th Sept., 1999 written to AO in which donor has also shown his social status as well as details of his bank account through which alleged gift was made. 46. We have carefully considered entire material on record and rival submissions. burden on assessee was to prove identity of donor, his creditworthiness and genuineness of transaction of gift. assessee had received gift in asst. yr. 1993-94. As observed by us while dealing with ground of assessee raised in cross-objection, we have held that transaction of gift was duly disclosed by assessee in that year and even interest income had been offered for taxation. 47. In search and seizure proceedings from residence of Shri Dalip Jolly certain documents relating to gift made to M/s K.L. Jolly & Sons (HUF) were found. These documents are filed at pp. 82 and 85 of paper book. We reproduce these documents as under : "Dated : 31st March, 1994. K.L. Jolly, of M/s K.L. Jolly & Sons (HUF) Greater Kailash Part-2 Delhi-110048. Mr. K.L. Jolly, I am enclosing herewith Cheque No. 365503, dt. 21st March, 1994 out of my NRE account No. 3317 with State Bank of India, NRI, Bombay for Rs. 10,00,000 (one million) only as gift to HUF out of love and affection. I, AM non-resident Indian settled in Hongkong for more than five years. My Passport No. is 625402. Yours faithfully, Sd/- (D.P. Parwal)" Second document Second document "Dated 17th March, 1998. To whom it may concern I, Dr. D.P. Parwal S/o Sh. Rameshwar Lal Parwal resident of Star Mansion, 18 /F, Flat 4, Kowloon, HongKong do hereby confirm that I had given amount of Rs. Ten lakhs by way of gift to M/s K.L. Jolly & Sons (HUF) through cheque No. 365503, dt. 21st March, 1994 drawn on SBI, NRI Branch, Bombay from my NRE account No. 3317. I was NRI since last 23 years when above gift was given by me. Name : D.P. Parwal Sd/- Signature." 4 8 . On closer examination of these documents it is found that this documentary evidence only support case of assessee. No incriminating document of any kind was found during course of search to indicate or to create any doubt regarding identity of donor or genuineness of transaction. assessee has also furnished copy of Cheque No. 365503, dt. 21st March, 1994 for Rs. 1,000,000 of State Bank of India, NRI Branch, Bombay in favour of M/s K.L. Jolly & Sons (HUF) issued by Dr. D.P. Parwal which is at p. 83 of paper book. 49. assessee has also placed on record letter of Dr. Parwal written to Asstt. Director of IT, Jaipur, dt. 11th Nov., 1997 available at p. 4 of paper book. In this letter he has made reference to discussion on 22nd Sept., 1997 in reference to summons issued under s. 131 dt. 18 th Sept., 1997. In this letter donor has confirmed gifts by giving following details. relevant contents of letter are as under : "That I personally know Mr. Dalip Jolly and Mr. Pradeep Jolly and their father Shri K.L. Jolly and their other family members very well and that we have visited each others houses several times. As desired by you I am giving below their present addresses. 1. Mr. K.L. Jolly and Mr. Pradeep Jolly S-23, Greater Kailash-II, New Delhi- 110040. 2. Mr. Dilip Jolly, 102, Friends Colony, New Delhi-110065. That I have given gifts to them and their family members out of love and affection and I have no business dealing with them. Hence gifts have been given from my NRE account No. 1/NRE/30150 of State Bank of India, NRI Branch, Nariman Point, Bombay and same can be verified by you. I am writing this letter to reiterate facts so that my dear friends do not face any hardship. I hope you would find above in order and would request you to please include my above submissions as part of my earlier deposition. I shall be glad to furnish any further details and clarifications required by you." Similarly assessee has filed pass-port of Dr. Parwal, his permanent account number, bank pass-book of Hongkong, visa and other details which go to prove identity of donor beyond any doubt. 5 0 . AO required assessee to furnish documentary evidence in respect of gift received from Dr. Parwal, nature of relationship with him, purpose of gift, supporting documents along with copies of bank statements as per cl. 7 of questionnaire issued during block assessment proceedings. assessee vide letter dt. 9th April, 2003 submitted that transaction of gift has already been dealt with in asst. yr. 1995-96 and genuineness of gift was duly disclosed. In this regard reference was made by assessee to assessment order passed under s. 143(3) dt. 18 th March, 1998, copy of which has also been placed on record. Again assessee made submission to AO vide letter dt. 16th April, 2003 and thereafter vide letter dt. 28th April, 2003. In letter dt. 28th April, 2003 appearing at pp. 76 to 78 of paper book, assessee made reference to gift deed letter dt. 21st March, 1994, bank certificate regarding proof that payment was received on NRI Account of Dr. Parwal, letter of Dr. Parwal dt. 30th Aug., 1999, 13th Sept., 1999. On basis of this documentary evidence, it was submitted that identity, creditworthiness of donor is proved and genuineness of gift is established. 51. In letter dt. 28th April, 2003 inaccuracies which appeared in statement of Dr. Parwal recorded by Asstt. Director of IT, Jaipur were also explained and certified by narrating circumstances. relevant portion of this letter is being reproduced here as under : "(i) That Dr. D.P. Parwal s identity is clearly established as he appeared in person before learned AO and categorically confirmed having given gifts to family members of assessee firm from his own NRE account. (ii) That Dr. D.P. Parwal has creditworthiness, financial status and financial capacity (both in Hongkong and in India) to give gifts to Jolly family. (iii) That Dr. D.P. Parwal had his own finds in his own Bank accounts. In Hongkong from where he gave gifts by account payee cheques to Jolly family. (iv) That Dr. D.P. Parwal has himself established long linkage, relationship, love and affection for Jolly family since 1956." (C) In cases of other family members of assessee, which were dealt under s. 158BC of IT Act by learned Jt. CIT, special Range 20, New Delhi (hereinafter referred as AO), love and affection towards family of assessee is proved by following : (i) Dr. D.P. Parwal letter dt. 11th Nov., 1997 given to Asstt. Director of IT, Jaipur explaining that inaccuracies had crept into his statement recorded by Asstt. Director of IT due to anxiety as he is NRI for over 3 decades and was deposing before IT Department for first time. (ii) Dr. D.P. Parwal came all way from Jaipur leaving his extremely busy business schedule and took pains to present himself personally before learned AO at Delhi on 10th Aug., 1999 as learned AO had asked to produce Dr. D.P. Parwal. learned AO asked Dr. D.P. Parwal to sign order sheet to mark his attendance in her office. (iii) Dr. D.P. Parwal took pains to write letter dt. 12th Aug., 1999 (1st letter) directly to learned AO from Jaipur by speed post confirming his oral statement made before her during his appearance on 10th Aug., 1999 before learned AO. letter of D.P. Parwal dt. 12th Aug., 1999 is on record and is very strong factual confirmation in support of his having made gifts to assessee and members. In this letter Dr. D.P. Parwal described about his background, his relationship with Sh. K.L. Jolly s role in inspiring him and causing vital turning points in life. He further confirmed having given gifts to members of Jolly family. (iv) Dr. D.P. Parwal took further pains to write another letter dt. 30th Aug., 1999 (2nd letter) from Jaipur directly to learned AO by speed post. This letter is on record and is very strong factual piece of evidence confirming assessee s case. In his letter, Dr. D.P. Parwal described about his financial status, big business and high value properties in India coupled with his social financial status and his philanthropic activities. (v) Dr. D.P. Parwal took further pains and went to Hongkong and wrote yet another letter (3rd letter) dt. 13th Sept., 1999 from Hongkong to learned AO. This letter was sent by Dr. D.P. Parwal to Sh. K.L. Jolly to be submitted by hand to learned AO. This letter is on record and is very strong factual evidence in confirmation and in support of assessee s case proving genuineness of these gifts from Dr. D.P Parwal to assessee to hilt. He further provided documentary evidence that gifts given to Jolly family members are from his own funds in his own NRE account. He also submitted documentary evidences to prove that he submitted his own funds from his own Bank accounts. In Hongkong to his own NRE account in SBI, Bombay (NRI Branch) from where account payee cheques of gifts amounts were issued by him to members of Jolly family. Furthermore, this very gift from donor, Dr. D.P. Parwal has been already accepted in case of assessee in asst. yr. 1995-96 under s. 143(3). Even Hon ble CIT(A)-XV vide his orders in case of Mr. Dalip Jolly, Mrs. Shobha Jolly, Mr. Pradeep Jolly and Mrs. Neena Jolly has been pleased to allow gifts from same donor, Dr. D.P. Parwal to above named family members. It is also submitted that as per s. 5(1)(iib) of GT Act, gifts from NRE account are exempt from gift-tax and as per this sub-section, relation between donor and donee is not required. jurisdictional Hon ble Delhi High Court ruling in case of CIT vs. Mrs. Sunita Vachani (supra), is binding and final and fully supports assessee s case. Gist of Hon ble High Court of Delhi s judgment is : "Even though it may be surprising as to how large sum of money are received by family in India by way of gifts from strangers from abroad, unless there is something more tangible than suspicion, it will be difficult to regard moneys received in India from abroad as representing income of assessee in India." 52. We have referred to letter of Dr. Parwal dt. 11th Nov., 1997 and other letters written by him to AO. In these letters, he has further given details of his acquaintance with assessee. He has also given details of his business which was started in name of Business Centre in 1997 which was inaugurated by Dy. Chief Minister of Rajasthan. With this letter also documents have been attached to show that Dr. Parwal commenced business in 1997 in Jaipur and had used bank account in India as well as Hongkong. documents are available at pp. 28 to 121 of paper book. On going through these documents nobody can doubt about identity of donor or his capacity to make gift of Rs. 10 lakhs to assessee. genuineness of transaction of gift is also proved beyond doubt. 53. Thus from entire documentary evidence whether collected during course of search or furnished by assessee before Departmental authorities or from material furnished by donor to Asstt. Director of IT, Jaipur and to AO, it is found that clinching voluminous documentary evidence fully support case of assessee. To repeat, no document was found during course of search or during post search enquiries to show anything against genuineness of gift. AO recorded statement of donee and from his statement also nothing adverse can be traced out. For reasons best known to him, AO did not examine donor although donor appeared before him and also wrote several letters to him. In any case AO himself could not collect any evidence or material to justify findings that gift was bogus or was procured by assessee by paying some consideration. learned Departmental Representative has not brought to our notice any incriminating material collected by AO during assessment proceedings which goes to create doubt about genuineness of gift. 54. only and main material taken into consideration by AO is statement recorded by Asstt. Director of IT, Jaipur. This statement was recorded by him during post search enquiry as is evident from observation of AO in 3rd sentence of para 4 at p. 2 of assessment order, which is as under : "During post search proceedings, IT Department, Jaipur has recorded statement of Dr. Parwal. In his report Asstt. Director of IT, Inv.- 2, Jaipur has stated that claim of Dr. Parwal that he is close friend of Jolly family and gift was made due to friendship is doubtful...." From above portion of assessment order it is clear (1) that during post search proceedings Asstt. Director of IT, Inv.-2, Jaipur recorded statement of Dr. Parwal; (2) that after recording statement he sent report to AO; and (3) that reasons and purpose or background in which Asstt. Director of IT, Inv.-2, Jaipur examined Dr. D.P. Parwal during post search proceedings is not known nor Department has brought such material on record. 55. This statement is sole testimony on basis of which AO has drawn adverse inference against assessee and about genuineness of gift. Hence, we would like to deal about competence and jurisdiction of Asstt. Director of IT, Inv.-2, Jaipur for recording statement during post search proceedings and also about evidentiary value of such statement particularly in context that this witness was not offered for cross examination to assessee nor was examined by AO despite fact that he wrote several letters to Asstt. Director of IT and AO to clarify so-called discrepancies and remained available before AO for getting himself examined. 56. Coming to power, jurisdiction and legal competence of Asstt. Director of IT, we have to trace out powers of Departmental Officers as given under ss. 131(1) and 131(1A) of Act. Whereas s. 131(1) deals with powers of AO, Dy. CIT(A), Jt. CIT, CIT(A) and Chief CIT or CIT. Sec. 131(1A) deals with powers of Director General or Joint Director or Asstt. Director or Authorized Officer. Former category deals with those officers who discharge judicial functions. These, powers are exercised while making assessment or deciding appeal or revision. These are judicial powers discharged while doing judicial or quasi judicial function. Whereas powers under s. 131(1) are in way related to assessment proceedings, powers under s. 131(1A) deal with pre-assessment stage and other than assessment proceedings. We consider it proper to reproduce provisions of s. 131(1) and 131(1A) which are as under : "131. (1) AO, Dy. CIT(A), Jt. CIT, CIT(A) and Chief CIT or CIT shall, for purposes of this Act, have same powers as are vested in Court under CPC, 1908 (5 of 1908) when trying suit in respect of following matters, namely : (a) discovery and inspection; (b) enforcing attendance of any person including any officer of banking company and examining him on oath; (c) compelling production of books of account and other documents; and (d) issuing commissions. (1A) If Director General or Director or Jt. Director or Asstt. Director or Dy. Director or Authorized Officer referred to in sub-s. (1) of s. 132 before he takes action under cls. (i) to (v) of that sub-section, has reason to suspect that any income has been concealed, or is likely to be concealed, by any person or class of persons, within his jurisdiction, then for purposes of making any enquiry or investigation relating thereto, it shall be competent for him to exercise powers conferred under sub-s. (1) on IT authorities referred to in that sub-section, notwithstanding that no proceedings with respect to such person or class of persons are pending before him or any other IT authorities." 57. In case of Arjun Singh vs. Asstt. Director of IT (Inv.) (2000) 159 CTR (MP) 53 : (2000) 246 ITR 363 (MP) Hon ble Madhya Pradesh High Court has dealt with scope and ambit of powers given to two categories of officers. Hon ble High Court has observed as under : "The purpose of power under sub-s. (1) of s. 131 of IT Act, 1961, is in aid of action under some provision under Act and it is well-settled principle of law that all statutory bodies must act for purpose of statute even though term for purpose of Act is not expressly stated. purpose of exercise of power under sub-ss. (1) and (1A) of s. 131 is not same, as power under sub-s. (1) operates in field where person is assessee and proceedings are pending against him; whereas power under sub-s. (1A) operates in field where there is no proceeding for assessment pending against any such person or class of persons and enquiry/investigation is necessary for purpose of making any enquiry/investigation on basis of reason to suspect concealment or likelihood of concealment of income by such person or class of persons. other requirement under sub-s. (1A) of s. 131 of Act is that authorities/officers mentioned therein in whose jurisdiction, income is alleged to have been concealed or is likely to be concealed, must have reason to suspect which in fact, is condition precedent for exercise of power and such reason or suspicion must be based on tangible material on record legally cognizable and not merely hearsay, conjectures and surmises. expression has reason to suspect that any income has been concealed or is likely to be concealed clearly refers to pre-assessment stage. power under s. 131(1A) cannot be said to be independent power in itself but is power for purpose of making enquiry and investigation relating to any income which has been concealed or is likely to be concealed by any person or class of persons, equipping with him with powers regarding discovery, production of evidence, etc., as provided under sub- s. (1) of s. 131 of Act. expression before he (i.e., authorised officer) takes action under cls. (i) to (v) of s. 132(1) of Act. is material and relevant, i.e., power regarding discovery, production etc., as provided under sub-s. (1) of s. 131 can be exercised by Authorized Officer before exercise of power of search and seizure in cls. (i) to (v) of s. 132(1). power under sub-s. (1A) of s. 131 is only enabling power regarding discovery, production of evidence, etc., before entering into actual exercise of search and seizure under s. 132 of Act. Such power under s. 131(1A) cannot be exercised for purpose of reopening of assessment under s. 147." On going through above decision, it is clear that sub-s. (1A) of s. 131 enables officers of Department to conduct pre-search enquiries. Regarding requirement of s. 131(1A) Hon ble High Court has observed as under : "The other requirement under sub-s. (1A) of s. 131 of Act is that authorities/officers mentioned therein in whose jurisdiction income is alleged to have been concealed or is likely to be concealed, must have reason to suspect which in fact, is condition precedent for exercise of power and suspect which in fact, is condition precedent for exercise of power and such reason or suspicion must be based on tangible material on record and legally cognizable and not merely some hearsay accusation, conjectures and surmise." 5 8 . Thus power can be exercised under s. 131(1A) of Act for conducting investigation or enquiry relating to undisclosed income or property by any person or class of persons on basis of reason to suspect that any income is concealed or likely to be concealed. As provided under s. 131(1A) such income should be concealed "within jurisdiction of such authorities". So far as present case is concerned, Department has not been able to show that Asstt. Director of IT, Jaipur had any reason to suspect that income of assessee was concealed income. assessee was definitely not within his territorial jurisdiction. There was no case that income has been concealed by donor. No search was conducted in case of donor whose statement was recorded in Jaipur. Thus legal competency of Asstt. Director of IT, Jaipur and authority of his jurisdiction to record statement of Dr. D.P. Parwal is not justified and we are afraid statement recorded by him can be justified in terms of his legal authority to do so. If statement is found to be recorded by authority not competent to do so, then its use in assessment proceedings has to be considered with that angle. 59. Now coming to evidentiary value of statement of Dr. Parwal it is also to be seen that as to under what circumstances this statement was recorded ? deponent i.e., donor has clarified circumstances under which he had given gift and had categorically disclosed full details of family of donee. He wrote several letters which have been referred to in earlier part of this order. He also wrote letters to clarify his stand. However, AO did not examine him nor offered opportunity to assessee to cross examine him. enquiry at level of AO cannot be said to be complete. witness remained un-cross-examined, un-confronted and no further enquiry was made which was necessary after letters written by him. AO therefore, in our opinion has not discharged his functions properly. According to rules of natural justice also testimony cannot be utilized against person if he had not been given opportunity to cross examine witness. 60. In case of CIT vs. S.M. Agarwal (2007) 211 CTR (Del) 18: (2007) 162 Taxman 3 (Del), Hon ble Delhi High Court upholding view taken by Tribunal has held that statement made by "S could not be said to be relevant evidence against assessee since assessee was not given any opportunity to cross-examine her and even from statement no conclusion could be drawn that entries made on relevant page belonged to assessee and represented his undisclosed income." In that case, during course of search conducted at premises of assessee documents of certain monetary transaction such as advancement of loan by assessee and also income by way of interest were found. On asking question assessee explained that account belonged to his daughter S but in her statement she denied to have any transaction with assessee. On basis of statement of S, AO concluded that assessee had earned income from undisclosed sources and accordingly added amount of loan and interest to income of assessee. CIT(A) set aside order of AO. On appeal by Revenue, Tribunal upheld order and held that AO had taken into account statement of S and had utilized same against assessee but fact remained that said statement was recorded behind back of assessee and no opportunity was given to him to cross-examine her. This view of Tribunal was upheld by Hon ble Delhi High Court and appeal of Revenue was dismissed. 61. In instant case also firstly in statement recorded by Asstt. Director of IT, Jaipur, donor had confirmed transaction of gift made by him to assessee and this statement, therefore, could not be said to be adverse evidence against assessee. Secondly, if certain discrepancies were noticed in said statement then Asstt. Director of IT, Jaipur, was required to provide opportunity to assessee to confront him particularly when donor wrote subsequent letter dt. 11th Nov., 1997 to him explaining all so- called doubts and discrepancies. Thirdly, statement of donor was recorded by Asstt. Director of IT, Jaipur and not by AO and if AO wanted to utilize same against assessee or wanted to draw any adverse inferences on basis of such statement against assessee, then it was incumbent upon him to have afforded opportunity of cross-examination to assessee. By not doing so, AO has violated settled rules of natural justice. It may be pointed out that even before AO donor appeared and there was full opportunity to AO to examine him. But despite his insistence AO neither examined him nor gave opportunity to assessee to cross- examine him. 62. Test of human probability and circumstantial evidence can be applied in context of some material and inferences can be drawn on basis of some evidence, documentary or oral or on basis of some circumstances attributable to particular transaction. In our opinion therefore, ratio of decision in case of Sumati Dayal (supra) cannot be applied to facts and circumstances of present matter. So far as gift by non-relation is concerned, it has been held by Hon ble Delhi High Court in case of CIT vs. Mrs. Sunita Vachani (supra), that "even though it may be surprising as to how large sums of money are received by family in India by way of gifts from strangers from abroad, unless there is something more tangible than suspicion, it will be difficult to regard moneys received in India from abroad as representing income of assessee in India." 63. Thus mere fact that person gave gift of huge money by itself cannot be factor to doubt genuineness of transaction of gift unless there is some other material to create such doubt. 64. Hon ble Rajasthan High Court has examined issue in case of Nek Kumar vs. Asstt. CIT (2004) 191 CTR (Raj) 207 : (2004) 141 Taxman 313 (Raj). In that case donor has given affidavit and also filed declaration that she had given gift to assessee. There being no material evidence to show that money was deposited by assessee or by any relative in bank from where it came back to assessee, it was held that gift could not be treated as non-genuine. 65. In case of ITO vs. Kailash Chand Bansal (2003) 129 Taxman 112 (Del)(Mag), ITO added amounts of gifts received by assessee on ground that assessee had failed to prove ingredients of love and affection and there was absence of any relationship between donor and donee. Tribunal, Delhi Bench C observed that assessee had adduced all necessary evidence in form of gift deeds, affidavit of donor, bank s confirmation and copies of NRE bank accounts. On these facts, it was held that initial burden which lay upon assessee had been discharged and same was shifted to AO who had failed to bring sufficient material on record to disprove gifts in question. deletion of addition by CIT was upheld by Tribunal. 66. In case of CIT vs. R.S. Sibal (2004) 18 7 CTR (Del) 291 : (2004) 269 ITR 429 (Del), AO noticed two deposits of Rs. 7 lakhs and Rs. 2.25 lakhs on 8th July, 1993 and 12th Aug., 1993 respectively in assessee s bank account. assessee was required to explain sources of two amounts. assessee gave details including copies of gift-deeds and affidavits of donors. However, AO treated gift as non-genuine. CIT(A) deleted addition which view was upheld by Tribunal. Hon ble High Court of Delhi followed decision in case of Sajan Dass & Sons vs. CIT (2003) 18 1 CTR (Del) 581 : (2003) 264 ITR 435 (Del) and upheld view of Tribunal and made following observations : "Held, dismissing appeal, that only ground on which genuineness of gifts had been doubted was alleged failure on part of assessee to establish relationship between donor and donee. Both t h e lower appellate authorities had recorded categorical finding that by producing documents, assessee had discharged onus which lay on him with regard to genuineness of gifts. inference drawn by appellate authorities, on appreciation of evidence was factual, giving rise to no question of law much less substantial question of law." Before Hon ble High Court one of argument raised was that assessee had not established capacity of donor to make aforenoted gift. It was also urged that there was no reason why two strangers would make gifts of heavy amounts as assessee has failed to prove any love and affection between said parties. Hon ble Delhi High Court rejected this contention and upheld view taken by Tribunal. 67. In view of above decisions, it is clear that genuineness of gift cannot be doubted on surmises and conjectures. In instant case, donor had huge resources which have been brought on record and also on consideration of love and affection made gift to assessee. AO has doubted genuineness of gift only on basis of suspicion without bringing any cogent material on record to disprove genuineness of gift. This approach, therefore, cannot be justified. 68. In view of above, order of learned CIT(A) and his findings for deleting additions cannot be interfered with. 69. So far as addition of Rs. 1 lakh made on account of premium paid for obtaining gift is concerned, there is no material on record to prove that any amount was paid by assessee directly or indirectly as premium for obtaining gift. In absence of any such material, addition cannot be justified. We, therefore, uphold findings of learned CIT(A) on this count also. 70. learned Authorised Representative had also brought to our notice order of Dy. Director, Directorate of Enforcement, Delhi Zonal Office, 10-A, Jam Nagar House, Akbar Road, New Delhi rendered in case relating to in contravention of s. 9(1)(a) and s. 9(1)(a), r/w s. 64(2), of FERA, 1973. Vide order dt. 17th March, 2005 Directorate of Enforcement has exonerated assessee and other family members against charges labeled against them. relevant observations of concerned authority are as under : ". . .The other evidences relied upon in show cause notice i.e., cheques and bank accounts statements made available by banker are not in any way deciding factor on genuineness or otherwise of gifts made by NRI for these documents by itself are proof of payments received from NRI but not of any payments made to him. Further, it has been clearly laid down in ATFE order dt. 30th June, 1997 in matter of Sh. Virender Kumar Jain and others that in order to constitute charge of contravention of s. 9(1)(a) it is necessary to prove that person proceeded against (i) has made any payment; and (ii) payment has been made to (c) non-resident, or (d) to credit of non-resident. ... If there is no evidence alleged transaction except payment as also of person who received payment will be relevant. It is also to be appreciated that evidence has to be of specific transaction and amount involved, it cannot be in general terms. If above ratio is applied to present case, I find that show cause notice is seriously lacking in nature of evidence as indicated by ATFE. ... In view of my above findings, hold that charge of making payments at premium to Dr. D.P. Parwal, NRI in lieu of gifts received by S/Sh. K.L. Jolly and Sons, Dalip Jolly, Pradeep Jolly, Shobha Jolly, Neena Jolly for amount of Rs. 1,10,00,000 is not sustainable. charge of contravention of s. 9(1)(a) r/w s. 64(2) of Foreign Exchange Regulation Act, 1973 is, therefore, not established as alleged in show cause notice No. T-4/77/DZ/2001/Dehradun (SCN I to V), dt. 22nd Aug., 2001. Accordingly, S/Shri Dalip Jolly, Pradeep Jolly, K.L. Jolly, Shobha Jolly, Neena Jolly and Dr. D.P. Parwal are exonerated of charges levelled in Memo. No. T-4/77/DZ/2001/Dehradun (SCN I to V), dt. 22nd Aug., 2001." From above observations and findings of independent authority under FERA, it is proved that assessee had not paid any amount through Hawala for procuring gift. In absence of any material to contrary, this order therefore, also supports version of assessee and goes against stand of Department. In view of above and on entirety of facts and circumstances of case, ground taken by Revenue in appeal deserves to be rejected. Consequently this ground is rejected. 71. Ground No. 2 This ground is directed against deletion of addition on account of rental income pertaining to property purchased in name of Smt. Krishna Jolly. AO made addition of Rs. 9,500, Rs. 80,705 and Rs. 47,500 on account of income from house property in hands of assessee for asst. yrs. 1996-97, 1997-98 and 1998-99. Before learned CIT(A) while challenging addition, it was proved that property was purchased by Smt. Krishna Jolly and she had acquired legal title and ownership of property. It was further submitted that since funds are arranged from HUF it cannot be said that property belongs to HUF particularly when owner who borrowed funds was paying interest. details of interest paid for funds borrowed from HUF were also submitted before learned CIT(A). learned CIT(A) after considering reasoning given by AO and submissions of assessee, deleted addition by observing as under : "It is factually correct that entire finances of Rs. 30 lakhs for purchase of property by Mrs. Krishna Jolly has been arranged from HUF i.e., appellant. I agree with learned counsel that merely on grounds that funds have been arranged by HUF it cannot be legally said that property purchased in name of Mrs. Krishna Jolly becomes property of HUF especially in light of fact that HUF has advanced money in form of loan at rate of 4.5 per cent to Mrs. Krishna Jolly and it is not only case of investing money of HUF in name of member of HUF. I also agree with learned counsel that there is no purpose in diversion of income from HUF to Mrs. Krishna Jolly because had property income been included in hands of HUF tax liability is lesser because interest received from Mrs. Krishna Jolly included in income of HUF is much larger than rental income of property. Therefore, there is no device to reduce tax liability and accordingly there is no occasion to doubt genuineness of loan transaction, in view of above discussion it is held that income from property belongs to Smt. Krishna Jolly and accordingly same is ordered to be excluded from income of HUF i.e., appellant." 72. We have carefully considered entire material on record and rival submissions on this issue and fully justify findings of learned CIT(A) after going through material filed by assessee on record to show that property was purchased by Smt. Krishna Jolly and rental income from same was offered to tax by her in earlier assessment years. Thus we uphold finding of learned CIT(A) and reject this ground also. 73. In result appeal of Revenue stands dismissed. IT(SS) No. 133/Del/2004 and C.O. No. 234/Del/2006 74. In this matter also, we take up cross-objection of assessee first. facts of this case are similar to facts in case of M/s K.L. Jolly & Sons (HUF). In this case also addition was made by AO of Rs. 10 lakhs on account of gift from Dr. Parwal and of Rs. 1,86,325 on account of alleged premium. other addition has been made on account of difference in valuation of property at B-205, Greater Kailash-I, New Delhi at Rs. 6,54,662. In this case also learned CIT(A) has deleted addition of Rs. 13,04,957 and that of Rs. 6,54,662 against which Department has come in appeal, challenging deletion of these additions made by AO. C.O. No. 234/Del/2006 75. assessee has filed cross-objection by taking following ground : "That order of CIT(A) upholding validity of proceedings insofar as they relate to gifts and investment in property bearing No. B.205, Greater Kailash-I, are bad in law being beyond scope of Chapter XIV-B of IT Act, 1961 and also contrary to ratio of judgments reported." 7 6 . In support of ground of cross-objection, contention of learned counsel for assessee before us was that gift of Rs. 10 lakhs was received by assessee from Dr. D.P. Parwal on 5th Nov., 1993 i.e., in asst. yr. 1994-95 by cheque. It was pointed out that assessment for asst. yr. 1994-95 was completed under s. 143(3) on 22nd Feb., 1996. learned counsel made reference to documentary evidence and in particular to bank passbook to show that assessee had made FDR of Rs. 10 lakhs on 17th Nov., 1993 by debiting to bank account No. 6424 with Central Bank of India out of gifted amount. It is further shown that interest of Rs. 42,000 earned from said FDR prepared out of gifted amount was duly disclosed in interest income of FDRs. 77. assessee has filed copy of computation of taxable income filed with return for asst. yr. 1994-95. In this computation interest on FDR is shown at Rs. 64,412. assessee also pointed out that as per certificate of bank dt. 8th June, 1995 total interest of Rs. 42,000 was received on FDR of Rs. 10 lakhs and this interest was duly reflected. learned counsel also made reference to assessment orders in case of assessee for asst. yrs. 1993-94 and 1994-95 passed under s. 143(3). Copies of these assessment orders have been placed on record. 78. On going through copy of bank account No. 6424 filed by assessee at p. 6 of paper book, it is found that assessee had received gift of Rs. 10 lakhs which was credited in his bank account in Central Bank of India on 5th Nov., 1993. Entry dt. 7th Nov., 1993 in this account shows that from same bank FDR of Rs. 10 lakhs was taken. bank certificate dt. 8th March, 1995 filed at page No. 4 of paper book further shows that on FDR of Rs. 10 lakhs, interest of Rs. 42,000 was earned up to 31st March, 1994. assessee had offered total interest on FDR at Rs. 64,412 in computation of income filed for asst. yr. 1994-95 as per copy of computation available at p. 3 of paper book. details of interest income on FDR of Rs. 64,412 are as under : Particulars Amount On FDR of Rs. 10,00,000, dt. 17-11-1993 as per 42,000 42,000 Bank Certificate from Central Bank of India On FDR of Rs. 2,10,000, dt. 21-3-2003 (compounded to Rs. 2,24,987) (Including Interest accrued Rs. 7,425 as 22,412 per Bank Certificate from Central Bank of India) Total 64,412 79. assessment order for asst. yr. 1994-95 has been passed under s. 143(3) on declared income of Rs. 1,41,930 which included interest income of Rs. 64,412 (Rs. 42,000 + Rs. 22,412). It may be pointed out that this assessment order was passed on 22nd Feb., 1996 whereas search took place on 30th Sept., 1997. Thus assessment order is prior to search. In view of above it is clear that gift of Rs. 10 lakhs, consequential FDR of Rs. 10 lakhs and interest income on said FDR at Rs. 42,000 stood declared and income therefrom was accordingly assessed by Department prior to date of search. Hence, it cannot be said that gift remained undisclosed. We have dealt with this matter in detail while dealing with similar issue in cross objection in case of M/s K.L. Jolly & Sons (HUF) and since facts of this case are virtually similar, following same reasoning, we allow ground taken in cross-objection in this case also by holding that proceedings under s. 158BD are bad in law being beyond ambit and scope of Chapter XIV-B of IT Act, Accordingly cross objection stands allowed. IT(SS)A No. 133/Del/2004 (Revenue s Appeal) 80. Since we have deleted additions by allowing cross-objection in favour of assessee, we are not required to deal with grounds of Revenue taken in this appeal on merits. However, as these grounds were argued before us, we deem it proper to consider grounds of appeal on merits also. 8 1 . Ground No. 1 has been taken by Revenue in this appeal to challenge deletion of addition of Rs. 10 lakhs on account of gift and Rs. 1 lakh being premium on said gift. AO has made additions of Rs. 10 lakhs on account of gift received from Dr. Parwal and of Rs. 1,00,000 being 10 per cent premium on said gift. He also made addition of Rs. 1,86,325 and premium of 10 per cent at Rs. 18 ,632 as gift received from same donor. addition on account of undisclosed income has been made for asst. yr. 1994-95. This has been done on same lines as has been done in case of M/s K.L. Jolly & Sons (HUF) in which case we have discussed issue relating to genuineness of gifts etc. in detail. 82. learned CIT(A) has discussed issue in detail and has deleted addition of Rs. 11 lakhs by observing as under : "The perusal of relevant paras of CIT(A) s order reproduced above, clearly shows that addition made in case of K.L. Jolly & Sons (HUF), appellant, is exactly on same reasoning and AO has not gathered any further facts or information and has mainly relied upon information and facts gather by AO who passed assessment order in case of Sh. Dalip Jolly, cited above. arguments raised by appellant are also exactly on same lines as were made in case of Sh. Dalip Jolly. Even case laws cited are same. donor is also same. After perusal of detailed facts and reasoning I am fully inclined to concur with findings given by learned CIT(A)- XV in case of Sh. Dalip Jolly mentioned above. In case of appellant AO has not brought on record that donor has denied factum of gift, that donor does not posses creditworthiness, that there was any incriminating document found during search which could have indicated exchange of money for gift or any other indication pointing out gift to be arranged or bogus. For detailed reasoning given by learned CIT(A)-XV in case of Sh. Dalip Jolly with which I fully agree, addition made by AO in case of appellant cannot be sustained. Accordingly, addition of Rs. 11 lakhs (Rs. 10 lakhs on account of gift and Rs. 1 lakh on account of alleged premium) is deleted." 83. He has also deleted additions of Rs. 1,86,325 and premium of Rs. 18 ,632 by observing as under : "Regarding addition of Rs. 1,86,325 and premium of 10 per cent Rs. 18 ,632 as gift received from Dr. Parwal including premium, AO has not made any detailed discussion in body of assessment order. entire discussion pertains to gift of Rs. 10 lakhs but in final para AO included amount of Rs. 1,86,325 in amount of Rs. 10 lakhs making total gift at Rs. 11,86,325 from Dr. Parwal and treated same as bogus as undisclosed income of assessee and further added 10 per cent as premium on above gift. appellant has challenged that gift of Rs. 1,86,325 was received during immunity period for asst. yr. 1992-93 and same has been duly disclosed in return and assessed. Even in his remand report submitted on 16th Dec., 2003 vide letter No. Asstt. CIT/Cir. 23(1)/2003-04/262 AO has not controverted stand of appellant pertaining to gift of Rs. 1,86,325. appellant s claim that as per banker s certificate dt. 18 th Dec., 1991 and 6th Jan., 1992 gift was received during immunity period under Immunity Scheme, 1991. In view of fact that gift of Rs. 1,86,325 was received during Immunity Scheme of 1991, no addition is called for. Even otherwise donor is same i.e., Dr. D.P. Parwal from whom gift of Rs. 10 lakhs is received which has been held as genuine on basis of detailed reasons given above and on same reasoning gift of Rs. 1,86,325 can also not be disputed and same is held as genuine. Accordingly, addition of Rs. 1,86,325 + premium of Rs. 18 ,632 is deleted." 84. Before us, learned Departmental Representative challenged finding of learned CIT(A) by placing reliance on order of AO. On other hand, learned counsel for assessee supported order of CIT(A). 85. We have carefully considered entire material on record and rival submissions. assessee has given details to prove genuineness of gift in letter dt. 23rd April, 2001 at pp. 76 and 77 of paper book. Relevant portion of letter has already been reproduced hereinabove while deciding appeal in case of M/s K.L. Jolly & Sons. 86. From documents on record, it is found that no incriminating material was found during course of search to suggest non-genuineness of gift. Further assessee had filed relevant documentary evidence to prove identity of donor, creditworthiness of donor and also genuineness of gift. AO has doubted genuineness of gift on basis of first statement of Dr. D.P. Parwal recorded by Asstt. Director of IT, Inv. 2, Jaipur. Regarding evidentiary value of his statement under facts and circumstances of matter, we have discussed this issue in detail while deciding case of M/s K.L. Jolly & Sons. By adopting same reasoning in this case also, we uphold finding of learned CIT(A) and reject ground No. 1 taken in this appeal by Revenue. 87. We may further mention that in relation to this gift also vide order dt. 17th March, 2005 Directorate of Enforcement has exonerated assessee and other family members against charges labeled against them. relevant observations of concerned authority have already been reproduced by us in para 57 hereinabove while deciding appeal in case of M/s K.L. Jolly & Sons. It has been held in this order that assessee had not paid any amount through Hawala for procuring gift. This order therefore, also supports version of assessee and goes against stand of Department. In view of above and on entirety of facts and circumstances of case, ground taken by Revenue in appeal deserves to be rejected. Consequently this ground is rejected. 88. Ground No. 2 taken by Revenue challenges deletion of addition of Rs. 6,54,662 made by AO on account of difference in valuation of property bearing No. B-205, Second Floor, Greater Kailash-I, New Delhi. On basis of Annex. A-12, AO noted undisclosed investment of AO in property at B-205, Second Floor, Greater Kailash-I, New Delhi. seller of property was Shri Ram Kumar Mehra and buyer was assessee. Sale consideration was disclosed at Rs. 48 lakhs. assessee was required to filed documentary evidence along with investment made in said property. assessee filed valuation from private valuer valuing property at Rs. 48 lakhs. It was submitted that property was purchased for Rs. 48 lakhs by registered sale deed dt. 28th July, 1997. For determination of value, AO referred matter to Departmental Valuation Officer who valued property at Rs. 54,54,662. assessee was confronted with valuation report and was directed to explain difference of Rs. 6,54,662. assessee vide letter dt. 23rd April, 2003 submitted that reference to DVO was not legally justified. After considering reply of assessee AO made addition of Rs. 6,54,662 on account of difference worked out on basis of report of DVO and sale consideration shown by assessee. 8 9 . In appeal before learned CIT(A) which was submitted that no incriminating material or any other evidence was found in course of search. It was pointed out that purchase of property was evidenced by registered sale deed dt. 1st Aug., 1997 and AO could not bring out any material to point out that sale consideration was incorrect. It was argued that reference made by AO to DVO to determine cost of consideration was beyond jurisdiction given by s. 55A of Act. assessee also filed report of approved valuer valuing said property but this report was not considered by AO. assessee further argued that since no incriminating document was gathered by AO it was not justified for making assessment in block assessment. In support of this submission, assessee has relied on decision of Tribunal, Delhi Bench in case of Ravi Prakash Agarwal (HUF) vs. Asstt. CIT (2000) 67 TTJ (Del) 234 along with decision in case of Pioneer Publicity Corpn. vs. Dy. CIT (2000) 67 TTJ (Del) 471 where it was held that no addition can be made on basis of report of DVO unless some material is found to indicate payment of unrecorded consideration. assessee also placed reliance on decision of Hon ble Bombay High Court in case of CIT vs. Vinod Danchand Ghodawat (supra) where it was held that no addition could be made in block assessment on basis of report of D V O obtained subsequent to order of assessment. learned CIT(A) considered these submissions and deleted addition by observing as under : "3.2 On going through facts submitted and assessment order, I find that this addition has apparently been made only on basis of Valuation Report. No other evidence of any unexplained investment has been mentioned by AO, I am in agreement with appellant that reference to VO in present case was beyond scope of s. 55A of Act and further that addition is not based on any evidence found during search or any material gathered which could be relatable to such evidence. In any case, valuation made by VO is subjective valuation and difference of less than 15 per cent between valuation made and amount declared by appellant cannot be basis of making addition on account of unexplained investment. decision of Tribunal cited by appellant are also squarely on issue and in favour of appellant. Considering above, addition of Rs. 6,13,746 is deleted. facts of case of appellant are exactly same and similar. I agree with detailed reasoning and conclusion drawn by learned CIT(A) in case of Sh. Dalip Jolly (Individual). AO has not brought any material on record which was found and seized during search indicating any unexplained investment in purchase of property. slight difference in valuation is only difference of opinion and it cannot be made subject-matter o f undisclosed income pertaining to block period until and unless there is some other supporting material indicating unaccounted investment found during search. difference in valuation is below 15 per cent in case of appellant as was in case of Sh. Dalip Jolly (Individual). Therefore for reasons given above and also as per reasons given by learned CIT(A)-XV mentioned above t h e addition made by AO on account of unexplained investment of Rs. 6,54,662 is deleted." 90. learned Departmental Representative has only placed reliance on order of AO whereas learned counsel for assessee has placed on order of CIT(A). 91. We have carefully considered entire material on record and rival submissions. In this case, no evidence was found either during course of search or during post search enquiry regarding any money which was paid by assessee for purchasing property or for making any undisclosed by assessee for purchasing property or for making any undisclosed investment in property. It is settled legal position that in block assessment order no addition can be made merely on basis of report of DVO. findings of learned CIT(A) in deleting tile addition are therefore, fully justified. We confirm same. Consequently this ground is also rejected. 92. Consequently, cross-objection by assessee is allowed whereas appeal of Revenue is dismissed. 93. In result, cross-objections filed by assessee are allowed whereas appeals filed by Revenue are dismissed. *** ASSISTANT COMMISSIONER OF INCOME TAX v. K.L. JOLLY & SONS
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