1. Both the appeals arise out of the common order and as such they were heard together.

2. In the assessment year 1996-97, Shri Lalu Prasad (hereinafter referred to the Assessee) was the Chief Minister of the State of Bihar. He filed his return of income on 14.10.1996. Gross total income shown by him in the return is as follows:

Income From Other Sources

: Acc. Intt. on N.S.C. 0.00

: Intt. on F.D. Matured 216,060.00

: Intt. on S/B A/C 2,439.00

: Pay & Allowance as 72,802.40

Chief Minister 291,301.40

Short Term Capital Gains 0.00 0.00

Long Term Capital Gains 0.00 0.00

Gross Total Income 291,301.40

3. He also furnished details of pay and allowance received as Chief Minister and incidental expenses in the following manner:

DETAILS OF PAY/ALLOWANCES AS CHIEF MINISTER

Pay 23,539.85

Allowance 35,209.70

Sumptuary Allowance 23,539.85 82,289.40

TDS Reimbursed 8,497.00

For FY 95-96 90,786.40

Less : Incidental Expenses Depreciation on Car (On opening Wdv-64,922/- @ 20%) 12,984.00

Insurance/Expenses on Car (estimated) 5,000.00 17,984.00

Net income 72,802.40

4 The Assessing Officer gave intimation to the Assessee under Section 143(1)(