COMMISSIONER OF INCOME TAX Vs. MUKTA METAL WORKS

JUDGEMENT

(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:

(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:

(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.