TMI Blog2008 (1) TMI 921X X X X Extracts X X X X X X X X Extracts X X X X ..... ised by the assessee in the above two appeals. The brief facts relating to this issue are these. A search and seizure action was carried out under s. 132 of the Act at the residential premises of partners of the assessee firms on 21st Sept., 2000. In the course of such search proceedings, certain keys belonging to the business premises of the three firms, having common partners, were found. On the basis of such keys, the search party obtained the search warrant in respect of the business premises which resulted in search in respect of the three firms situated in the same building having common entrance. In the course of search, the stocks belonging to all the three firms were inventorised. Subsquently, assessment proceedings were initiated by issue of notice under s. 158BC of the Act in the case of M/s Pransukhlal Jewellers. The assessment was completed on 30th Sept., 2002 determining the undisclosed income at ₹ 5,85,963. By this time, no proceedings were initiated in respect of the other two firms viz., M/s Pransukhlal Sons Jewellers and M/s Pransukhlal Brothers. The assessment orders in respect of these two firms show that satisfaction note was drawn under s. 158BD and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these two assessees. On the other hand, the learned Departmental Representative had nothing to say except to rely on the orders of the AO. 5. Rival submissions of the parties have been considered carefully. The question for our consideration is whether block assessment proceedings under s. 158BD in the case of M/s Pransukhlal Sons and M/s Pransukhlal Brothers were validly initiated. In order to appreciate the controversy, it would be appropriate to refer to the provisions of s. 158BD of the Act which read as under : 158BD. Where the AO is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under s. 132 or whose books of account or other documents or any assets were requisitioned under s. 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction over such other person and that AO shall proceed (under s. 158BC) against such other person and the provisions of this chapter shall apply accordingly. The perusal of the above provisions clearly shows that such provisions can be invoked only where the AO having jurisdiction over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 158BD of the Act. 7. Now the crucial question which arises for our consideration is whether any material was found in the course of search at the business premises of M/s Pransukhlal Jewellers on the basis of which the AO could draw the satisfaction note under s. 158BD to the effect that any undisclosed income belonged to M/s Pransukhlal Sons or M/s Pransukhlal Brothers. The assessment order neither in the case of M/s Pransukhlal Jewellers nor in the case of M/s Pransukhlal Sons nor in the case of M/s Pransukhlal Brothers, indicates that materials found in the course of search in the case of M/s Pransukhlal Jewellers pointed out any undisclosed income of M/s Pransukhlal Brothers or M/s Pransukhlal Sons. The copy of satisfaction note has also not been produced before us by the Revenue. Therefore, only the circumstantial evidence can be looked into. 8. The block assessment in the case of M/s Pransukhlal Sons shows that undisclosed income assessed comprises of ₹ 7,02,119 being undisclosed sales on account of shortage of diamonds and silver found at the time of search and ₹ 4,72,000 on account of excess gold found in search. So, the only material cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h diary. So this material was sufficient to invoke the provisions of s. 158BD of the Act. At this stage, it may be mentioned that contents of the satisfaction note were not brought on record by the assessee while arguing for admission of the additional ground. The learned counsel for the assessee also could not ask for bringing the same on record since it would have amounted to investigation of facts and such action would have come in his way for admission of additional ground. The only argument of learned counsel for the assessee was there could not have been any material on record on the basis of which provisions of s. 158BD could be invoked. Since we have noticed from the assessment order in the case of this assessee that a diary was found from the residence of one of the partners of this firm which disclosed undisclosed income of this firm, the same constituted the material for invoking the provisions of s. 158BD of the Act. Hence, in our opinion, the proceedings under s. 158BD were validly initiated against this assessee firm. The additional ground raised by the assessee in this case is, therefore, rejected. 10. Now we proceed to dispose of the appeals of M/s Pransukhlal Je ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the GP rate has not been disputed before us. The order of CIT(A) is therefore, modified accordingly and the AO is directed to assess the undisclosed income at ₹ 1,49,842. 11. Now, we take up the appeal of M/s Pransukhlal Brothers [IT(SS)A No. 38/Mum/2006]. The AO has made addition of ₹ 6,92,740 in respect of asst. yr. 2000-01 on the basis of diary and ₹ 25 lakhs in respect of asst. yr. 2001-02 on the basis of disclosure made by the assessee at the time of search. As far as addition of ₹ 6,92,740 is concerned, the same is confirmed being not disputed before us. Regarding the other addition, first two contentions raised in the case of M/s Pransukhlal Jewellers are same in this case also and therefore, the same stand rejected for the reasons given by us in the preceding paras. The last contention of the learned counsel for the assessee is that addition of ₹ 25 lakhs could not be made merely on the basis of disclosure made at the time of search. It was also submitted that the sum of ₹ 25 lakhs related to all the firms in respect of discrepancies in the stock which included shortage as well as excess of stock. Further it is submitted that when sea ..... 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