Incriminating material in search assessments must arise from the search itself; later survey material and third-party statements are insufficient.

In search-related assessments, an addition to income cannot be sustained unless it is supported by incriminating material found in the search or requisition itself. Material gathered later in a survey, or statements recorded from a third party unconnected with the search, is insufficient to justify the addition. On the facts, no incriminating material was discovered during the search, and the Revenue's reliance on subsequent third-party statements could not replace the missing search-based evidence. The addition was therefore deleted and the challenge to it failed.

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Issues: Whether an addition to income could be sustained where no incriminating material was found in the search and the Revenue relied instead on material and statements recorded in a later survey or from a third party.

Analysis: The addition was deleted by the first appellate authority and the Tribunal on the ground that the material sought to be used against the assessee was not gathered in the search itself. The Court accepted that, in the context of search-related assessments, the evidentiary basis must arise from material found in the search or requisition, and that material collected independently in a survey or through a third-party statement, when unconnected with the search sequence, could not justify the addition. On the facts, nothing incriminating had been discovered in the search and the Revenue's reliance on subsequent third-party statements was insufficient.

Conclusion: The addition could not be sustained and the appeal failed.

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