TMI Blog2006 (9) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect in taking the total valuation of the purchase instead of peak amount. (iv) The AO should have telescoping the addition to the stock deficit to stock purchase with that of the investment. 5. Any other grounds of appeal that may be urged at the time of hearing of the appeal." The assessee also raised additional grounds as under: "1. Without prejudice to my contentions that the purchase bills found during the course of search proceedings of Mude Ramachandra Rao, does not belong to me. In the alternative it is also contended that (a) If at all any addition to be made in my hands relating to purchase bills found during the course of search proceedings of Mude Ramachandra Rao, the same should be allowed as expenditure in my hands. (b) If at all any addition is to be made, it should be profit margin only and not the entire bill amounts. 2. Without prejudice to my contentions that there is deficit stock at all, in the alternative it is also to contend that (a) The very deficit stock arrived during the course of survey proceedings under s. 133A of IT Act does not come within the purview of block assessment as per the provisions of 158BA of IT Act. (b) If at all any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e does not have any connection with those bills as they do not relate to his business. It was, further contended that the appellant makes purchases only on credit basis. It is customary in his shop to mention the payment on the reverse of the bill along with the date of payment. If any bills relating to the Bomanna Group of cases are seized by the Department, they will confirm this fact. In the case of Bomanna Readymade Centre also the payment dates can be ascertained by verification of the bills. The fact of credit purchases will be evident from such verification. Therefore it is not proper to conclude that there are unexplained investments in the purchases. 5. The AO, however, was not satisfied with the explanation rendered by the assessee as per reasoning given in para 3.2 of his order reproduced as under and thus made an addition of Rs. 37,477 for asst. yr. 1995-96 and Rs. 3,59,892 for asst. yr. 1996-97 as undisclosed income forming part of the block period. "The first part of the assessee's objection disclaiming the bills as relating to his business is not tenable, as the bills are very much in the name of the assessee's business concern and were seized from the business p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no justification in the action of assessing authority to take the total value of purchases as unexplained investment instead of taking peak amount for making addition as undisclosed income. 7. On the other hand, the learned Departmental Representative while supporting the decision of the assessing authority contends that action under s. 158BC r/w s. 158BD of the Act was initiated after forming requisite satisfaction from the seized documents found from the sister concern of the appellant that the undisclosed income belongs to the assessee. Furthermore, the assessee could not bring any material on record to show that he did not have any business transaction with the parties who have raised these bills in the name of assessee for purchases made by it and also stand paid as per writing at the back of the respective bills. The assessing authority has acted on the basis of evidence found as a result of search. If the appellant had to disapprove this fact, burden was on him to have brought material on record to say so. Furthermore, the purchases made through these bills were not accounted for in the books of account of the assessee nor any income on that account was shown so as to all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. The assessee was duly confronted with the seized material and his explanation rendered before the assessing authority was not found satisfactory; as also the assessee did not bring on record any reliable or legal material to prove his oral plea raised before the assessing authority. Before us also, no such material has been adduced from which it could be discerned that the assessee did not make purchases through the bills so found and seized from the premises of M/s Bomanna Silks. It has also been found by the assessing authority that the purchases made through these bills have not been accounted for in the books of account for the stock held by it for which no day-to-day record has been maintained. Thus, there was unexplained investment which has to be treated as undisclosed income of the block period. This action of the assessing authority bringing to tax the amount of unexplained investment in purchases for asst. yr. 1995-96 at Rs. 37,477 and for asst. yr. 1996-97 at Rs. 3,59,892 as undisclosed income forming part of the block period, therefore, calls for no interference. 11. We also do not find any merit in the contention raised by the assessee through the additional gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce found as a result of search. It does not take into its encompass the material gathered or information collected as a result of survey which is not relatable to material found as a result of search. The Hon'ble Madras High Court in the case of CIT vs. G.K. Senniappan where the Revenue has used the material gathered as a result of survey under s. 133A of the Act as an evidence for the purpose of s. 158BB of the Act has held as under that such material cannot form basis for computation of undisclosed income: "A mere reading of the above provision clearly indicates that the sentence 'such other materials or information as are available with the AO' cannot be bisected or taken in isolation for the purpose of computation. Such other materials or information as are available with the AO, 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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