Search material and sworn statement justified best judgment assessment and sustained income additions for earlier years.

Search materials showing concealed bills, a password-protected suppressed set of accounts, and a marked disparity between recorded and actual transactions supported a finding of suppression of income. The statement recorded on oath retained evidentiary value, and a bare retraction did not displace it. On that basis, the Revenue could sustain additions and adopt gross profit for earlier years through best judgment assessment under the Income-tax Act, and the Tribunal was upheld in doing so.

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Issues: Whether additions to income and adoption of gross profit for earlier assessment years could be sustained on the basis of materials found in search, including computer-generated bills and statements recorded during search, and whether the Tribunal was right in upholding best judgment assessment under the Income-tax Act, 1961.

Analysis: The search revealed two sets of bills, with the concealed set accessible only through a password, and showed a large disparity between accounted and actual purchases and sales. The materials seized during search, together with the statement recorded under oath, established a definite pattern of suppression. The Court followed the principle that, where search material discloses concealment and the statement has evidentiary value, prior years may also be assessed on the basis of such material, and a self-serving retraction does not displace that evidentiary value. On that footing, the Assessing Officer was entitled to proceed on best judgment under the statutory power applicable to such assessment.

Conclusion: The additions and the gross profit adoption were valid, and the questions of law were answered against the assessee and in favour of the Revenue.

Ratio Decidendi: Search materials revealing suppression of income, together with a statement recorded on oath, can validly support best judgment assessment for earlier years, and a bare retraction does not nullify that evidentiary value.

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