2006 (1) TMI 87 - HC - Income Tax

Only search-recovered evidence can be used for block assessment under Section 158BB; Section 133A survey materials excluded

Commissioner of Income-Tax Versus GK. Senniappan.

HC held that for block assessment under section 158BB, only evidence 'found' as a result of search or requisition of books/documents at the time of the ... Block assessment under section 158BB - Search under section 133A - undisclosed income for making contributions to certain unregistered chits – Revenue by filing the appeal before this court contended that the material gathered in the course of section 133A survey can also be regarded as a material for the purpose of block assessment under section 158BB. - HELD THAT:- Mere reading of section 158BB clearly indicates that the sentence 'such other materials or information as are available with the Assessing Officer' cannot be bisected or taken in isolation for the purpose of computation. Such other materials or information as are available with the Assessing Officer, should as per the section relatable to such evidence. The word 'such' used as a prefix to the word 'evidence' assumes much significance, in this provision, as it indicates only the evidence found, as a result of search or requisition of books of account or other documents, at the time of search. Any other material cannot form basis for computation of undisclosed income of the block period. – Revenue appeal dismissed Issues:Interpretation of section 158BB for block assessment based on materials gathered during a survey under section 133A of the Income-tax Act, 1961.Analysis:The High Court of Madras dealt with the issue of whether materials gathered during a survey under section 133A of the Income-tax Act can be considered for block assessment under section 158BB. The case involved an assessee engaged in chit fund and real estate businesses, where undisclosed income was utilized for contributions to unregistered chits and unreported real estate transactions. The Assessing Officer included the undisclosed income found during the search under section 132(1) in the block assessment under section 158BB. However, the Commissioner of Income-tax (Appeals) and the Tribunal excluded the income based on materials from the survey under section 133A, leading to an appeal by the Revenue.The Revenue contended that materials from the section 133A survey should be considered for block assessment under section 158BB, arguing that the language of the Act allows for such inclusion. The court analyzed section 158BB, which outlines the procedure for block assessment in search cases. It states that undisclosed income for the block period should be based on evidence found during search or requisition, along with other materials or information available to the Assessing Officer related to such evidence.The court emphasized that the phrase 'such other materials or information' in section 158BB should be understood in conjunction with the evidence found during search or requisition. The term 'such' indicates a direct link between the evidence and any additional materials or information. Therefore, only evidence directly resulting from the search or requisition can be used for computing undisclosed income for the block period. The court concluded that the Commissioner and the Tribunal correctly interpreted the statutory provisions, leading to the dismissal of the appeal by the Revenue.In summary, the judgment clarifies that for block assessment under section 158BB, only evidence directly stemming from the search or requisition can be considered, and any other materials or information must be related to such evidence. The court's decision highlights the importance of interpreting statutory provisions in accordance with their specific language and requirements, ensuring a strict adherence to the legal framework governing income tax assessments.