- (1.) This appeal under Section 260A of the Income Tax Act, 1961 ('the Act') has been filed by the Revenue aggrieved by the order dated 15.7.2005 passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur ('Tribunal'), whereby, the appeal filed by the assessee has been partly allowed and certain additions made vide Assessment Order dated 31.7.1998 for block period F.Y. 1986-87 to 1996-97 have been deleted. The appeal was admitted on the following substantial questions of law by this Court on 3.4.2006:- "(i) - Whether in the facts and circumstances of the case, the Tribunal was justified in law in deleting the additions made by the Assessing Officer for the relevant assessment year falling within the block period of 1986-87 to 1996-97 primarily on the ground of Section 158BB is not applicable for the purposes of making additions unless the additions are directly referable to material found during the course of search and seizure proceedings (ii)- Whether in the facts and circumstances of the case, the Tribunal was justified in deleting the additions on account of cash credit to the extent of Rs.2,04,500/- by setting aside the additions made by the Assessing Officer on the ground that the opportunity was not given though demanded to produce the so-called creditors, without remitting the case back to the Assessing Officer for making the relevant enquiry into the genuineness of such cash credit and passing fresh order after giving an opportunity to the assessee to satisfy the Assessing Officer about its genuineness -
(2.) The facts in brief are that cash amounting to Rs. 5,72,000/- was captured from Chandan Singh on 19.9.1996 by the Police Authority of Jaipur at Sindhi Camp bus stand, who had travelled from Udaipur to Jaipur by a Deluxe bus. In the statement recorded by the Assistant Director of Income Tax (Investigation) IV, Jaipur, Chandan Singh stated that cash was given by his employer Sardar Singh to deliver it to Girdhar Ji Bajoria. The cash was requisitioned under Section 132A of the Act; notice under Section 158BC/BD was served on Chandan Singh; and in response to it, he filed return of income tax declaring total undisclosed income for the block period at Rs.2,99,440/-. During the course of assessment proceedings Chandan Singh stated that he was employee of M/s. K.K. Gas Distributors, Udaipur and the cash was given to him by Sardar Singh Hoda, Proprietor of the firm. He also mentioned that Rs. 2,99,470/- shown as undisclosed income is in fact undisclosed cash of Sardar Singh, his employer.
(3.) Sardar Singh assessee admitted the income from undisclosed source in his statement before the ADIT, Udaipur and notice under Section 158BC/BD were issued to him. In response, the assessee returned income of Rs. 3,40,211/- for the block period. The Assistant Commissioner of Income Tax, Investigation Circle, Udaipur by his assessment order dated 31.7.1998 added Rs. 2,99,470/- as undisclosed income of the assessee based on his own admission to the total income of the assessee for the assessment year 1997-98. The Assessing Officer ('AO') further made various additions under several heads and computed the total income including undisclosed income under Section 158BB of the Act at Rs. 15,68,479/- and the total undisclosed income for the block period at Rs. 12,28,268/-.;