Appeal dismissed: block assessments under Section 154B limited to evidence found during search; post-search bank statements excluded

HC dismissed the appeal and upheld the Tribunal's findings that block assessments under section 154B must be based solely on evidence discovered during the search. The Court found no basis to disturb the Tribunal's reliance on post-search bank statements and agreed that declared gifts from non-resident individuals, where no incriminating evidence was found during the search, fall outside Chapter XIV-B. Consequently, the additions as undisclosed income were not sustained and the Tribunal's order was affirmed.

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Issues:
1. Addition based on bank statements discovered during post search inquiry.
2. Addition on account of alleged bogus gifts received from non-resident individuals.

Analysis:

Issue 1: Addition based on bank statements
The first issue pertains to the addition made by the Assessing Officer based on bank statements discovered during the post search inquiry. The appellant challenged this addition of Rs. 3,10,000 as undisclosed income. The Commissioner of Income-tax (Appeals) deleted this addition, stating that the bank statements were not recovered during the search and thus could not be considered as evidence for the addition. The High Court upheld this decision, emphasizing that the assessment in the block period must be based on evidence found as a result of the search, as per the statutory provisions.

Issue 2: Alleged bogus gifts from non-resident individuals
The second issue raised by the appellant concerned the additions made by the Assessing Officer on the grounds that gifts of Rs. 6,50,000 received from non-resident individuals were bogus. The Commissioner of Income-tax (Appeals) also deleted this addition, noting that during the search, only gift deeds and affidavits supporting the gifts were found, with no incriminating material indicating the gifts were bogus. The Tribunal concurred, highlighting that the documents supporting the gifts were already available with the assessee and that there was no evidence found during the search to suggest the gifts were not genuine. The High Court referred to previous judgments emphasizing that for undisclosed income assessment in search cases, incriminating material must be found during the search, which was not the case here. Therefore, the Tribunal's decision to delete the addition on the alleged gifts was upheld.

In conclusion, the High Court dismissed the appeal, affirming the decisions of the Commissioner of Income-tax (Appeals) and the Tribunal in deleting the additions made by the Assessing Officer.

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