Commissioner of Income Tax vs G.K. Senniappan

K. Raviraja Pandian J.

The assessee is engaged in the business of chit fund and real estates. A search u/s 132(1) of the Income Tax Act, 1961 (in short ""the Act""), was

conducted in respect of one A.P. Shanmugaraj and others on July 1, 1998. The documents seized during the course of such search indicated that

the assessee had utilised undisclosed income for making contributions to certain unregistered chits conducted by the said A.P. Shanmugaraj. On

July 14, 1998 a survey was conducted in the business premises of the assessee which indicated certain real estate transactions carried on by the

assessee and profits derived thereon have not been reported to the Department. The Assessing Officer after receiving the returns filed by the

assessee, included u/s 158BB of the Act the undisclosed income found out during the search (?) made u/s 133A of the Act, That order was

carried on appeal and the Commissioner of Income Tax (Appeals) has excluded that portion of the income, which has been included based on the

material found during the survey on the premise that in respect of block assessment u/s 158BB the materials or evidence which has been gathered

during the survey (?) could be taken into consideration and not the material collected during the survey u/s 133A, which order was confirmed by

the Tribunal. Hence, the appeal at the instance of the Revenue. The 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 u/s 158BB.

Counsel for the Revenue submitted that the language contained in section that ""such other materials or information as are available with the

Assessing Officer"" would encompass with it the materials gathered during the survey proceedings made u/s 133A of the Act also and as such the

deletion of the income determined on the basis of the materials gathered u/s 133A of the Act can also partake of the character of evidence for the

purpose of Section 158BB of the Act.

Section 158BB occurs in Chapter XIV-B, which provides for special procedure for assessment of search cases. The computation of

undisclosed income of the block period is contemplated u/s 158BB. As per the section, the undisclosed income of the block period should be the

aggregate of the total income of the previous years falling within the block period computed in accordance with the provisions of this Act, on the

basis of the evidence found as a result of search or requisition of books of account or other documents and such other materials or information as

are available with the Assessing Officer and relatable to such evidence, as reduced by the aggregate of the total income, or as the case may be, as

increased by the aggregate of the losses of such previous years.

A mere reading of the above provision 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. Hence, we are of the view

that the Commissioner as well as the Tribunal have the issue in accordance with the statutory provisions, and requires no interference. The appeal

is accordingly dismissed.