ADARSH KUMAR GOEL, J. - (1.) REVENUE has preferred this appeal under s. 260A of the IT Act, 1961 against the order of the Tribunal, Chandigarh Nos. 18 and 38/Chd/2001 and C.O. No. 57/Chd/2007 in the case of Shri Hazari Lal, proposing to raise following substantial questions of law : "4.1 Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding the non - existence of commission agency prior to the period relevant to asst. yr. 1997 -98 on the ground that the documents dt. assessee particularly when on the contrary, the provisions of s. 158BB(3) of the Act specifically cast onus on the assessee to establish the non -relateability of the document found during search with supporting documentary evidence ? 4.2 Whether on the facts and in the circumstances of the case, the Tribunal was right in law in allowing relief of Rs. assessee during search operation when the document seized at the time of search had been confronted to the assessee during the assessment proceedings ? 4.3 Whether on the facts and in the circumstances of the case, the Tribunal was right in law in allowing relief of Rs. 33,80,000 by merely relying on the statement recorded under s. 132(1) of the Act ignoring the fact that the assessee had failed to explain the documents seized at the time of search and that the AO was empowered to draw an adverse inference under s. 114 of the Indian Evidence Act especially when the assessee failed to substantiate his liability with supportive documentary evidence ? 4.4 Whether on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the addition of Rs. 14,00,000 made on the basis of seized document without plausible reasons particularly when the assessee failed to discharge his onus to explain the contents of a document with any corroborative material in view of the specific provisions of s. 158BB(3) of the Act ? 4.5 Whether on the facts and in the circumstances of the case, the Tribunal was right in granting relief to the assessee by recording a perverse finding contrary to evidence on record ? 4.6 Whether the findings recorded by the learned Tribunal are legally sustainable in view of the admission made by the assessee during the course of assessment proceedings -
(2.) INFERENCE of income from commission agency for sale and purchase of vehicles was sought to be drawn. Block assessment was made on the basis of inferences drawn from documents seized during the search, which was upheld by the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
(3.) THE Tribunal granted further relief to the assessee by recording following findings : "16. We have considered the rival submissions carefully. We have also perused the document in question and orders of the lower authorities as also the written submissions of the assessee to the lower authorities. On consideration of the aforesaid, we find that the crux of the dispute revolves around understanding the meaning of notations of the amounts and certain names found recorded in document No. 34 which was seized in the course of the search of the assessee. A copy of the said document has been annexed as part of the assessment order. Now, according to the Revenue the said document contains entries which depict either undisclosed incomes or undisclosed investments made by the assessee. Prima facie a glance of the said document does not show as to what it contains or what it means. The notations of the amounts and the names do not carry any description of the nature of the transaction as made out by the Revenue. Therefore, in order to make out an intelligible inference of such document, the same has to be deciphered by its author. Since it has been found from the assessee it becomes the duty of the assessee to explain the same. The assessee was confronted with the said document in the course of assessment proceedings. The AO required the assessee to explain as why the impugned amounts be not held as unexplained investment assessable in the hands of the assessee. The plea of the assessee was that insofar as the amounts totalling Rs. 33,80,000 are concerned, the same reflects summary of payments which were due from various dealers and the payments in respect of which were to be made to the customers who sold the vehicles. The assessee submitted that he being in the business of commission agency, was only acting as a middleman in the sale/purchase of vehicles. The explanation of the assessee has been negated by the AO as well as by the learned CIT(A). According to the Revenue, certainly impugned amounts reflected the amounts recoverable from sub - agents with regard to the vehicle sold through the assessee but the existence of the liability to handover such amounts to the seller of the vehicle does not stand justified. Now the response of the assessee to this is that he does not purchase and sell the vehicles on his own account. Therefore, there cannot be a situation where any money is due to be received from the buyer which was not to be handed over to the seller of the vehicle. Now the question is that the document in question does not by itself speak fully. In such situation, in our view, the document is to be understood with reference to the explanation tendered by the assessee and circumstantial material, evidence and information on record. No doubt, the assessee was found earning commission income on sale/purchase of vehicles in the course of search and such income was hitherto undeclared. For making the addition, AO has proceeded on the basis that the assessee also bought and sold the vehicles with own funds and not acted merely as a commission agent. It is not in dispute that the notings in the seized document relate to business of commission agency. Now, if the assessee is to be held acting only as an agent earning commission the impugned notings do not partake the character of investments made by the assessee. The learned CIT(A) has proceeded on the basis that the line between a commission agent selling on commission basis or selling after purchasing it is very thin because it was not necessary in the short period involved to get the vehicle transferred in assessee's name where he was selling it after purchasing from the seller. We appreciate that there is a thin line between the two. So however, the present case is relating to an assessment made in pursuance to a search conducted by the Department under s. 132(1) of the Act. Therefore, to infer that the assessee was selling the vehicles after purchasing on its own is an inference which was required to be deduced from the material, evidence or any other such information available with the AO which was relatable to the evidence or material found during the search. In this light, we have perused the statement of the assessee recorded during the course of search, the seized material in question, the informations furnished by the assessee before the AO and find nothing to infer that the assessee was purchasing the vehicles and thereafter selling them on his own account. In fact, undisputedly a delivery book was seized at the time of search and the assessee contended that its examination does not reveal that the assessee ever purchased the vehicles on its own account and thereafter sold the same. This averment was made before the AO. There is no rebuttal to this from the side of the Revenue. Therefore, to reach at such presumption and thereafter use it to decipher the contents of the document No. 34 would be unjustified. In this situation, it is safe to deduce that the explanation tendered by the assessee with regard to the impugned notations is plausible and deserves to be accepted in the background of fact that the contra inference by the AO is not based on any material. Therefore, we do not find any justification for sustaining the addition of Rs. 33,80,000. 17. Now insofar as the addition of Rs. 14 lakhs is concerned, herein also we find that the inference drawn by the AO in para 4.7 of his order that the assessee had made investment in flour mill is not based on any corroborative material. Now, with regard to the sum of Rs. 5,50,000 relating to the addition made on account of unexplained investment in milk chilling plant in our view the assessee has been successful in explaining that the same is relatable to his business interest in partnership firm M/s Johri Mill, Samana in which the income from letting out of milk chilling plant is derived. So, however, it is also important for the assessee to explain the nature of the noting in question and whether the same finds a proper place in the accounts of M/s Johri Mills, Samana. This aspect, in our view is factual in nature and has not been gone into by the lower authorities. Therefore, while setting aside the orders of the lower authorities on this issue, we direct the AO to allow a reasonable opportunity to the assessee to explain as to what is the nature of the said noting vis -a -vis the firm M/s Johri Mill, Samana in question. After considering the explanation furnished by the assessee, the AO shall pass an appropriate order in accordance with law on this issue. With respect to addition of Rs. 3,18,000 also we find that no specific explanation has been furnished before the lower authorities. The assessee has not denied the relevance of the amounts in question and thus the onus was on the assessee to offer credible explanation in this regard. The explanations furnished by the assessee on this count have not been found to be satisfactory and thus the addition has been rightly sustained by the learned CIT(A). 18. In the result, in ground No. 4 whereas the additions of Rs. 33,80,000 and Rs. 14 lakhs are deleted, the addition of Rs. 5,50,000 is restored to the file of the AO the addition of Rs. 3,18,000 is sustained. Thus on this ground the assessee partly succeeds." The Tribunal also dismissed the appeal of the Revenue by recording the following finding : "23. In this connection, we find that the factual aspect is that in the course of assessment, the assessee was asked to explain the household expenses. The assessee gave replies giving the detail of his family size and the level of expenses claimed to have been incurred to meet the household expenses in the period relevant to block period in question. The AO was not satisfied and considering the social status of the assessee and the household articles etc. owned by the assessee found the expenditure claimed by the assessee to be on the lower side. He made an addition of Rs. 5,37,239 as unexplained household expenses. The learned CIT(A) has since deleted the said addition by making the following discussion in para 7.3 of his order which reads as under : Rs.7.3 The contention of the learned counsel that the Department did not discover any evidence during the search and seizure which proved conclusively that the household expenses declared by the assessee was less than the actual and therefore, no addition could be made under s. 158BC for it by simply estimating the expenditure is correct. Therefore, in view of the arguments of the learned counsel for the assessee and the case law relied upon by him as also in view of the order of the Tribunal Mumbai 'B' Bench in the case of Sunder Agencies vs. Dy. CIT (1997) 59 TTJ (Mumbai) 610 the addition made by the AO for low household expenses is deleted from the assessment under s. 158BC. However, the AO may take action under s. 148.' ;