- (1.) We have heard learned counsel appearing for the parties. The special appeals are directed against the orders dated January 29, 1999, passed by the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur (for short, "the Tribunal"), by which the Tribunal has partly allowed the appeals filed by the assessee and dismissed the appeals of the Revenue.
(2.) The appeal was admitted on the following substantial questions of law: "1. Whether the statement recorded under section 132(4) of the Income-tax Act can be ignored or overlooked, which is free from any ambiguity or extraneous circumstances? 2. Whether the normal course of assessment under section 143(3) cannot be adopted and, accordingly, estimate of income of the entire period on the basis of bills/vouchers found for a few days or part period can be made as the assessment in this case relates to pre-block period assessment? 3. Whether the Income-tax Appellate Tribunal was justified in approving finding of the Commissioner of Income-tax (Appeals) which has no reasonable basis for reaching to conclusion about estimate of sales from Rs. 7,59,000 to Rs. 5 lakhs only?"
(3.) The assessee-firm derived income from trading of silver ornaments and also pawning of gold and silver ornaments. It maintained two separate trading accounts; one for silver ornaments and another for silver bullion. On a search carried out at the business premises and also the residential premises of the partners on October 10, 1990, two diaries indicating the credit sales, out of the regular books, were found and seized. These diaries started on April 1, 1990. The diaries relating to any earlier years were not found. At the time of search, statements of the partners of the assessee-firm were recorded under section 132(4) of the Income-tax Act, wherein the partners surrendered an amount of Rs. 6,13,080, which represented the entries in the two diaries relating to unaccounted credit sales. Notices were issued under section 148, on which the revised return for the current year 1989-90) was filed, in which the assessee surrendered Rs. 2,28,540. The Assessing Officer assessed the total unexplained income for the four years at Rs. 8,92,268. In appeal before the Commissioner of Income-tax (Appeals), the addition of Rs. 5,08,500 was made, and the relief was given for the remaining amount. The details of the revised returns, assessments and the orders upheld by the Commissioner of Income-tax (Appeals) are given as follows:;