1. - This appeal by the Revenue has been filed against the judgment of the learned Tribunal dated 4.2.2005, allowing the appeal of the assessee, and quashing the reassessment proceedings. The appeal was admitted vide order dated 23.5.2006, by framing the following substantial question of law.

"Whether in the facts and in the circumstances of the case, the Tribunal was justified in holding that the proceedings for re-assessment under Section 148/147 of the Income Tax Act were initiated by the Assessing Officer on non-existing facts because ultimately, the assessee has been able to explain that the income which was believed to have escaped assessment was explainable but some other additions were made under the assessment order?"

2. The necessary facts are, that some search was undertaken at some business establishment, and in that process one diary was found, which showed some entry regarding purchase of plot of land by the present assessee, in village 1-a-chhoti, for a consideration of Rs. 1,66,000/-, while in the agreement, it was shown to have been purchased for Rs. 45,000/-. On this basis, a notice under Section 148 was issued to the present assessee. Then query letters were also issued. The assessee appeared and explained, that he purchased the plot from his agricultural income, and also submitted the requisite return, showing the agricultural income. Then his statements were also recorded, wherein he deposed, that he carries on agriculture and animal husbandry. However, the Assessing Officer summoned the books of accounts of the establishment, at whose premises search was undertaken, and found, that during the period 4.3.95 to 16.3.95, the assessee had deposited Rs. 1,65,000/- cash, which the assessee had failed to explain, therefore, this amount was taken to be unexplained investment, and was added to income.

3. It may be observed here that the transaction. relating to the purchase of land relates to October, 1994.

4. Against this order, the assessee filed appeal before the learned Commissioner. The learned Commissioner in the order reproduced the books of M/s. Barar & sons, relating to the assessee, showing the credit and debit balance in the account of the assessee, and ultimately found, that during the relevant assessment year, the assessee purchased a plot for a sum of Rs. 1,60,000/- and also spent some amount on construction of the room etc. Thus, withdrawals made were utilised towards acquisition of plot, as also on construction, and it cannot be said that substantial amount aggregating to Rs. 1,65,000/- was still left with the appellant, so as to make deposits in cash with the firm within the short span of time, and thus, concluded, that the assessee has failed to prove the sources of deposits, aggregating to Rs. 1,65,000/- in cash, with M/s. Barar & Sons, and thus, the addition was upheld.

5. It may be observed here, that so far the allegation of purchase of plot, from the amounts representing undisclosed source of income is concerned, the assessee had clearly explained, that the amount was withdrawn from M/s. Barar & Sons by cheques, and from the entries in the books of accounts, as reproduced by the learned Commissioner it is clear, that a sum of Rs. 1,00,000/- was withdrawn on 8.10.94, and sum of Rs. 60,000/- was withdrawn on 9.10.94, and sum of Rs. 60,000/- was withdrawn by cheque on 17.10.94, apart from other withdrawals. Then even the learned Commissioner himself had recorded a finding, to the effect, that the withdrawals made by the appellant from the firm M/s. Barar & Sons were utilised towards acquisition of plot, as also in construction.

6. Then the assessee filed further appeal before the learned Tribunal, and the learned Tribunal found, that the Assessing Officer has accepted the investment in the plot, as explained, but made out addition. With this, it was held, that the reason, on the basis of which proceedings under Section 148 were initiated, did not lead to any additions, rather Assessing Offic