TMI Blog2007 (8) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 127 - DELHI HIGH COURT] , this Court reiterated the law that the undisclosed income must be unearthed as a result of the search. We are clearly of the opinion that in the absence of any incriminating material found during the search conducted on 11/12-9-2001 in the premises of the Bansal Group, the statement of V.P. Jain recorded on 25-9-2001 and on 14-12-2001 could not be used for proceedings under Chapter XIV-B of the Act. We also find that the statement of V.P. Jain was recorded behind the back of the assessee. When the assessee was in fact allowed to cross-examine V.P. Jain, after his second statement was recorded on 14-12-2001, V.P. Jain had retracted from his earlier statement. The Assessing Officer, nevertheless, relied upon the statement given by V.P. Jain on 25-9-2001 completely disregarding his subsequent statement. Thus, we are of the view that the revenue has not been able to raise any substantial question of law which would necessitate admission of this appeal. Excess stock - It was contended by the assessee that different bundles have a different weight and it cannot be said with any degree of certainty that the average weight of the goods was 65 k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss premises of a group of assessees, including the assessee before us, collectively called the Bansal Group. Thereafter, proceedings were initiated against the assessee under section 158BC of the Act. The Assessing Officer made huge additions and these additions were, by and large, confirmed by the Commissioner of Income-tax (Appeals) [CIT (A)]. The Tribunal set aside the orders of the CIT(A) and that is why the revenue is before us. Since the facts of all the cases are more or less similar, they were dealt with by the Tribunal by one order and we do the same. 3. Two issues have been canvassed before us : firstly with regard to unexplained payment of commission and secondly with regard to excess stock of goods found in the searched premises. 4. There is no dispute that the search and seizure operation was conducted on 11/12-9-2001. Nothing incriminating was found during the course of search except the books of account of the assessee and the revenue wanted to verify their correctness. Accordingly, on 25-9-2001, the Deputy Director of Income-tax recorded the statement of one V.P. Jain. According to V.P. Jain, he had made purchases of ₹ 25 crores from the Bansal Group out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ravi Kant Jain [2001] 250 ITR 141 , this Court laid down the law with regard to the special procedure contemplated by Chapter XIV-B of the Act. It was held as follows: The special procedure of Chapter XIV-B is intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. As the statutory provisions go to show, it is not intended to be a substitute for regular assessment. Its scope and ambit is limited in that sense to materials unearthed during search. It is in addition to the regular assessment already done or to be done. The assessment for the block period can only be done on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with the Assessing Officer. Evidence found as a result of search is clearly relatable to sections 132 and 132A. 10. Similarly, in CIT v. Elegant Homes (P.) Ltd. [2003] 259 ITR 232 , the Rajasthan High Court held : In Chapter XIV-B of the Act, special provisions, for assessment in search cases have been given and if any amount of income has not been taxed and during the course of search, if som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f V.P. Jain was a direct consequence or result of obtaining some incriminating material which showed that the assessee had undisclosed income. 14. Quite apart from the above, we also find that the statement of V.P. Jain was recorded behind the back of the assessee. When the assessee was in fact allowed to cross-examine V.P. Jain, after his second statement was recorded on 14-12-2001, V.P. Jain had retracted from his earlier statement. The Assessing Officer, nevertheless, relied upon the statement given by V.P. Jain on 25-9-2001 completely disregarding his subsequent statement. 15. Under these circumstances, we are of the view that the revenue has not been able to raise any substantial question of law which would necessitate admission of this appeal. 16. The second question urged before the Tribunal and before us relates to excess stock being found during the course of the search. The assessee is engaged in the manufacture of mild steel galvanized iron wires. The wires are stacked in bundles and they apparently run into thousands of bundles. The search party did not physically count the bundles (as it was not possible) but took a visual estimate. There was also no actual we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployees. 20. Of course, the best method of determining the number of bundles and their average weight would be to actually count the bundles and use machines/cranes for weighing each bundle. This is no doubt a tedious exercise but where a liability is sought to be foisted upon an assessee, the revenue has to be a little more serious while exercising powers conferred upon it under the Act. Mere guess work or an estimate cannot be an adequate substitute for a scientific investigation or carrying out some empirical study. The officers who conducted the search did not want to take the necessary trouble which, of course, would have been time consuming, but the impact of making a guesstimate can be quite damaging insofar as the assessee is concerned. The assessee cannot be made to suffer the consequences of lethargy on the part of the officers of the revenue. 21. Under these circumstances, we are of the opinion that the Tribunal rightly came to the conclusion that the alleged excess stock calculated by the revenue needs to be deleted. It is, of course, not possible today to redetermine the stock so the question of any remand does not arise. 22. In our view, no substantial questi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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