TMI Blog2010 (8) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... ent assessees. The learned counsel further submitted that during the course of search operation the revenue authorities obtained statements from Shri Md.Riyasuddin, who categorically stated that there are no transactions which is not recorded in the regular books of account. The learned counsel submitted that the copy of statement is available at page 149 of the paper book. The learned counsel further submitted the assessee leased out the premises to M/s Prince Printers. Therefore, the materials found during the course of search operation may relate to those persons who took the premises on lease from the assessee. 4. Referring to the copies of the statements at page 154 of the paper book, the learned counsel pointed out that Mr.Md.Riyasuddin categorically said that there was no suppression of sales. Therefore, according to the learned counsel for the assessee, the statement said to have been recorded during the course of search operation does not support the case of the revenue. The learned counsel further submitted that Md. Riyasuddin retracted his statement. The retracted statement is available at page 167 of the Paper Book. Therefore, the revenue cannot place any reliance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thermore, the department has no material to suggest that any sales were suppressed by the assessees. Therefore, according to the learned counsel the addition made by the assessing officer is not supported by any material found during the course of the search operation. 8. Referring to the remand report filed by the Assessing Officer before the CIT(A), the learned counsel submitted that the so called spiral bound diary was not found in the business premises of the assessees or in the premises of the partners. The learned counsel further submitted that there is no ledger account in the books of the assessee firm as observed by the Assessing Officer in the remand report. Referring to one of the seized material marked as PAR/RES/1 the learned counsel pointed out that the report of the Assessing Officer does not say that the seized material relates to the particular assessee. The Assessing Officer simply drew an inference on the basis of assumption without any supporting material. 9. Referring to the seized material, the learned counsel pointed out that there was a variation with regard to the figures and the letters written in Hindi. Referring to one of the seized material, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1999-2000 to 2005-06 is 1.57% and in the case of Paragon Printers for the same period is 1.64% 10. On the contrary, Smt.Vasundhara Sinha, learned departmental representative submitted that she is placing reliance on the observation made by the Assessing Officer in the assessment order as well on the remand report and on the observations of the CIT(A) in the appellate order. Referring to page 10 of the order of the CIT(A) the learned departmental representative pointed out that it is not correct to say that Shri Md.Riyasuddin is not a partner of the firm. Shri Md.Riyasuddin was a partner till the year 2002. Thereafter his son Shri Md.Zafruddin became the partner of the assessee firm. One Mr.Md.Kanizuddin was also a partner along with Zafruddin. The search material was found in the residence of Shri Md.Kanizuddin. The spiral bound diary marked as A/PPF/35 was seized from the premises of M/s Paragon Printers. Therefore, it is not correct to say that the statements were not recorded from the partners of the firm and the material found during the search operation do not relate to the assessees. According to the learned departmental representative, during the course of search operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available on record. Therefore, the CIT(A) rightly confirmed the addition. 12. We have considered the rival submissions on either side and perused the materials on record. Admittedly, the search was conducted at the premises of both the assessees on 14-10-2004. Therefore the assessment has to be framed under Chapter XIV of the Act. The first objection of the learned counsel for the assessee is that the Assessing Officer has to confine himself to the material found during the course of search operation for the purpose of framing the assessment. We are unable to accept the contention of the learned counsel for the assessee. Section 158BI of the Act inserted by Finance Act, 2003 w.e.f. 1-6-2003 clearly says that the provisions of Chapter XIVB shall not apply in respect of searches initiated after 31-5-2003. Therefore Chapter XIVB which provides a special procedure for assessment of undisclosed income in search cases, more particularly sec.158BB is not applicable to the assessee since the search admittedly was conducted on 14-10-2004 i.e. after 31-5-2003. Sec.158BB(1) provides for assessment of undisclosed income on the basis of materials found during the course of search operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not relate to suppressed sales. In spite of specific contention of the assessee, the lower authorities have not given any finding how the materials available on record relate to the assessees and how it relates to the suppressed sales. The CIT(A), based upon some of the caselaws found that profit can be estimated on the basis of materials found during the course of search operation provided the same relates to the assessees. No doubt, profit can be estimated on the basis of material available on record including the material found during the course of search operation. Further, when the assessee contends that the material does not relate to the assessees it is for the authorities below to record a finding as to how the material available on record relates to the assessees. In the absence of such a finding, placing reliance on the material found on record cannot be justified. 14. Now coming to the contention of the learned departmental representative that the statement made u/s 132(4) can be a basis for making the assessment, no doubt assessment order can be passed on the basis of the statement recorded u/s 132(4) provided the same discloses the earning of income by the asses ..... 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