M.N.BHANDARI,J. - (1.) By this writ petition, a challenge is made to the order dated 30th September, 2013 so as the notice of demand and income tax computation dated 01st November, 2013. The further prayer is to accept the undisclosed income of Rs.10 lac or alternatively of Rs.25 lac, as earlier computed.
(2.) Learned counsel submits that the petitioner is carrying business of trading as well as manufacturing of emeralds on small scale level. He is maintaining regular books of account and had been assessed for income between Rs.1 lac to Rs.5 lac. The Income Tax Department conducted search at the place of Mr. Rajkumar Sharma on 12th November, 1997 wherein some loose papers, note books, currency notes, etc. were found. The Department gave notice to the petitioner under Section 158BD of Income Tax Act, 1961 (for short "the Act of 1961"). The reply to the notice was given followed by submission of income tax return with NIL amount. The petitioner could reveal that Mr. Rajkumar Sharma has approached Income Tax Settlement Commission and his petition has been admitted. To avoid litigation and to have peace in mind, the petitioner also submitted an application before the Commission on 12th November, 1999 offering undisclosed income of Rs.5 lac with intimation to the Assessing Officer. The petitioner denied investment of Rs.3,36,50,000/- by way of money lending to earn interest. The Settlement Commission computed undisclosed income to be of Rs.17 lac after considering Rule 9 Report. The petitioner accepted the aforesaid, however, it was quashed by the High Court with remand of case on a writ petition filed by the Revenue.
(3.) Learned counsel has explained the facts of the case also. It is submitted that the petitioner was having business relations with Mr. Raj Kumar Sharma, who was getting cut emeralds and sending it to the petitioner on approval basis for onwards sale. The petitioner was purchasing the emeralds and, if not approved, then to return it. The aforesaid has been considered to be a case of money lending and, therein also, the code of one was considered to be one lac. The decoding of the figure is based on presumption. The Revenue presumed money lending to Sohan Lal Sethi and Vimla Surana to the extent of Rs.10 crore and Rs.2 crore respectively by taking "1000" as 10 crore and "200" as 2 crore. No counter verification was made from those to whom money was alleged to have landed. At the best, the Revenue could have taken one equals to 1000. The brokers were not examined despite named therein. In view of the above, even the calculation of amount was made without counter verification and on hypothetical basis. The currency note of different denomination was taken as promissory note on surmises and conjectures. No evidence to receive interest was available. Addition in those circumstances can be made on "peak credit" basis and, as per the aforesaid, total comes to Rs.2,36,000/- instead of Rs.3,36,50,000/-.;