- (1.) This appeal has been preferred by the Revenue under Section 260A of the IT Act, 1961 (for short, ''the Act'') against the order of the Tribunal, Chandigarh in IT/SS No. 37/Chd/2005 and CO. 71/Chd/ 2005 for the block period ending on 14th Sept., 1999 claiming following substantial questions of law: 1. Whether the learned Tribunal is right in holding at p. 68 of the order that the office note dt. 21st May, 2001 which was appended to 158BC order dt. 21st May, 2001 and is part of the said order, does not constitute a satisfaction note within the parameter of Section 158BD of the IT Act, 1961 in respect of the person who has borrowed money through the assessee broker who is the searched person for the purpose of order under Section 158BC of the IT Act, 1961 ? 2. Whether the learned Tribunal is right in holding that the Asstt. CIT Circle, Yamuna Nagar ought to have handed over the seized material and satisfaction note to ITO, Ward-1, Yamuna Nagar without appreciating the fact that the ITO, Ward-1, Yamuna Nagar was not having jurisdiction over the case, as an officer not below the rank of Asstt. CIT only is competent to pass an order under Section 158BC/ 158BD of the IT Act, 1961 and since the Asstt. CIT Yamuna Nagar himself was granted jurisdiction as per order dt. 31st Dec., 2001, there was no necessity to transfer the seized material/satisfaction note to ITO Ward-1 ? 3. Whether the learned Tribunal is right in holding that there has been delay in recording of satisfaction prior to issue of notice under Section 158BD of the Act whereas the Tribunal has itself observed that the satisfaction note dt. 21st May, 2001 referred to in qus. No. 1 above is within the period of limitation. And, when the statute has not prescribed any time limitation for issue of notice under Section 158BD of the Act ? 4. Whether the learned Tribunal is right in law in deleting the addition of Rs. 3,17,500 ignoring overwhelming evidence in the shape of Annex. A-1 and another documentary evidence in the shape of statement of the author of the document establishing that these transactions relates to the assessee ? 5. Whether the learned Tribunal is right in law in not taking into cognizance of additional evidence i.e. an examination report/opinion of laboratory of the Government Examiner of Questioned Documents, Shimla regarding the Diary of Dalai and (ii) Affidavit of Dalai dt. 27th Oct., 2004, which was adduced during the proceedings before the learned Tribunal ?
(2.) On 14th Sept., 1999, search was carried out at the residence of one Anil Kumar Goel @ Anil Dalai who was deriving income from commission from the money lending business. During search, a bahi (diary), Annex. A-1, was seized. The same contained various entries in code language in figures and words. His statement was recorded on 14th Sept., 1999, 30th Sept., 1999, 2nd Nov., 1999, 4th Nov., 1999 and was concluded on 20th Jan., 2000. The substance of his statement was that he was, inter alia, doing business of broker in money lending transactions between various parties. The lenders/borrowers contacted him and he would arrange meetings between them. If the transaction matured, he would get his commission and if he got commission, he made entries in the diary. The entries in the diary seized represented commission received in transactions between parties mentioned in the diary in code form which could be identified. In his case, block assessment was completed on 21st May, 2001 and on the said date, an office note was appended to the assessment order to the effect that undisclosed income of persons other than searched persons was disclosed, as under: The issue of entries depicting advancing of loans by various persons as figuring in A-1/and other related documents has been examined in detail on the basis of details, almost all the persons and concerns are identifiable except in the case of three accounts mentioned above. No real names relating to the family of Shri Nand Lal Garg and his sons could be identified and discovered. Therefore, cognizance of these entries on protective basis has been taken in the case of the assessee keeping in view the fact that block search assessment of Shri Nand Lal Garg and his sons are pending with Hon'ble Settlement Commission. As regards entries of other persons are concerned, no adverse inference is taken in the case of the assessee as these persons are identifiable. Moreover, in view of the fact that Shri Anil Kumar Goyal was a broker in the money lending business and document marked as 'A-1' has been maintained by him in the regular and normal course of business. Therefore, due cognizance is being taken separately, in the case of lenders by initiating proceedings under Chapter XIV-B of the IT Act, 1961.
(3.) Accordingly, proceedings under Section 158BD r/w Section 158BC of the Act were initiated against the assessee who was identified as having lent money from undisclosed sources. The assessee filed return of its income dt. 30th Dec., 2002 declaring undisclosed income at nil. However, the AO assessed the undisclosed income at Rs. 3 lacs relying upon the statement of Anil Dalai and the entries in the document found during the search, apart from Rs. 17,500 as income from interest thereon.;