Search-corroborated statement supports undisclosed income addition; later quantification dispute was not an effective retraction.

ITAT Mumbai held that an assessment under section 153C was valid because search yielded a register recording surgeries and cash receipts, and the director's oath statement admitted unaccounted income; the assessee offered no effective rebuttal when confronted with the seized material. The addition of undisclosed income was also sustained because it rested on corroborated search evidence and not on a bare confession alone. The later letter did not constitute a full retraction, as it only disputed quantum and did not negate the disclosure of unaccounted receipts and cash payments. The assessee's jurisdictional challenge and cross objection failed, while the Revenue's appeals succeeded.

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Issues: (i) whether the assessment framed under section 153C was invalid for want of seized material belonging to the assessee; (ii) whether the addition of undisclosed income based on the search material, statements recorded on oath, and later retraction could be sustained.

Issue (i): whether the assessment framed under section 153C was invalid for want of seized material belonging to the assessee?

Analysis: The assessee challenged the jurisdiction on the ground that no incriminating material was found during search. The Tribunal found that a register detailing surgeries and cash receipts was found during search, the director's statement on oath admitted receipt of unaccounted cash income, and the assessee did not offer any rebuttal when shown the seized documents. The later plea that the case rested only on survey material was rejected.

Conclusion: The jurisdictional challenge failed and the cross objection was dismissed.

Issue (ii): whether the addition of undisclosed income based on the search material, statements recorded on oath, and later retraction could be sustained?

Analysis: The Tribunal held that the addition was not founded on a bare confession alone. It was supported by the seized register, the detailed statement of the performing surgeon, and the director's statement under section 132(4) admitting unaccounted receipts and cash payments. The subsequent letter did not amount to a full retraction of the disclosure; it only disputed the quantum and did not dislodge the existence of undisclosed income. The reliance placed on authorities dealing with loose papers or survey statements without corroboration was held inapplicable because the present case involved corroborative search material and an oath statement.

Conclusion: The addition was upheld and the Revenue succeeded on merits.

Final Conclusion: The Tribunal sustained the assessment addition as based on corroborated search material and rejected the jurisdictional objection, resulting in dismissal of the assessee's cross objection and allowance of the Revenue's appeals.

Ratio Decidendi: An addition arising from search proceedings can be sustained where a statement on oath is corroborated by seized material, and a later explanation that only disputes quantification does not amount to an effective retraction capable of nullifying the disclosure.

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