Summary
The Supreme Court held that material from a survey simultaneously conducted at a connected builder’s premises could be used in the assessee’s block assessment when relatable to search evidence. Although the construction transaction had been disclosed, the cash payment of Rs.95.16 lakh had not. Sections 158BB and 158BH permitted use of the connected material within the statutory limits of block assessment. The Revenue’s appeals were allowed and the Assessing Officers’ block-assessment orders restored.
Issues
- Whether material from a connected person’s simultaneous survey could support block assessment of the searched assessee.
- How the requirement that additional material relate to search evidence limited its use.
Provisions considered
- Section 158BH, Income-tax Act, 1961The enabling provision applied other provisions of the Act to Chapter XIVB assessments unless otherwise provided. Read with section 158BB’s search-related evidentiary boundary, it permitted use of the connected simultaneous-survey material in this case. (¶¶ 12, 13, 14, 15)
Held
- Block assessment is a special procedure for undisclosed income unearthed through search, additional to regular assessment rather than a replacement for it. Its statutory evidentiary limits must be strictly observed. (¶¶ 12, 13, 14)
- Section 158BB allowed search or requisition evidence together with other materials or information available to the Assessing Officer and relatable to that evidence. The requirement of connection with search evidence remained a boundary on the assessment power. (¶¶ 12, 13)
- Material gathered in a simultaneous survey of a person connected with the assessee could fall within that category. The survey at the builder and interior decorator’s premises was connected to the assessee’s search and transactions, and the Assessing Officer was entitled to use the resulting adverse material. (¶¶ 2, 9, 10, 11, 15)
- Disclosure of the construction investment and the builder transaction did not disclose the additional cash payment of Rs.95.16 lakh. The Court sustained its treatment in the block assessment on the connected material. (¶¶ 2, 11, 15)
- The contrary decisions relied on for the assessee were not accepted as laying down the correct law on the issue. The challenged orders were set aside and the Assessing Officers’ block assessments restored in all tagged appeals. (¶¶ 16, 17)
Result
All Revenue appeals allowed; impugned orders set aside and Assessing Officers’ block-assessment orders restored. Parties to bear their own costs.