Searched document and search statement support block assessment of unrecorded cash receipt in flat sale transaction

A searched document must be read as a whole, including its reverse side, and a contemporaneous statement recorded during search can be treated as strong evidence against later retraction. On that basis, the seized loose paper was found sufficient to connect the assessee with an unrecorded cash component in a flat sale transaction. The block assessment under section 158BC/158BD was upheld because the seized material disclosed undisclosed income in the assessee's hands, even though the amount was also reflected by the purchaser. The addition for undisclosed income was sustained and the appeal failed.

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Issues: (i) whether the seized loose paper and the statement recorded during search constituted admissible material to show that the assessee received cash over and above the recorded sale consideration; (ii) whether the block assessment proceedings under section 158BC/158BD and the addition of Rs. 10.65 lakhs as undisclosed income were justified.

Issue (i): whether the seized loose paper and the statement recorded during search constituted admissible material to show that the assessee received cash over and above the recorded sale consideration.

Analysis: The majority held that a searched document must be read as a whole and that the paper, including its reverse side, formed part of the material confronting the assessee. The statement recorded at the time of search was treated as an admission with greater evidentiary value than the later retraction. The Revenue's case was further supported by the surrounding circumstances connecting the document with the flat transaction and by the failure to show any credible basis for excluding the cash component noted in the paper.

Conclusion: The material was held to be admissible and sufficient to connect the document with the assessee's transaction, against the assessee.

Issue (ii): whether the block assessment proceedings under section 158BC/158BD and the addition of Rs. 10.65 lakhs as undisclosed income were justified.

Analysis: The majority held that section 158BD was attracted because the seized material revealed undisclosed income in the hands of the assessee as well as in the hands of the searched person, and the fact that the amount was also disclosed by the purchaser did not prevent taxation in the assessee's hands. The assessee's objections based on lack of corroboration, retraction, and cited precedents were rejected on facts. The majority concluded that the cash component represented an unrecorded business receipt arising from the flat sale transaction.

Conclusion: The block assessment was upheld and the addition of Rs. 10.65 lakhs was sustained against the assessee.

Final Conclusion: The majority view upheld the impugned addition and confirmed the validity of the block assessment, resulting in dismissal of the appeal.

Ratio Decidendi: A searched document and contemporaneous admission recorded during search can be acted upon in block assessment proceedings to tax an unrecorded cash receipt in the hands of a person connected with the transaction, even if the amount was also disclosed by another person.

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