Ita/19/2011 Of The Commissioner Of Income-Tax-I v. Orma Marble Palace (P) Ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR.JUSTICE ASHOK MENON THURSDAY, THE 10TH DAY OF JANUARY 2019 / 13TH POUSHA, 1940 I.T.A.No.19 of 2011 AGAINST THE ORDER IN I.T.(S&S) A.NO.139/COCH/2004 DATED 22.06.2010OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN. [ASSESSMENT YEAR - BLOCK PERIOD 1990-91 TO 1999-2000 (UPTO 02.03.2000)] APPELLANT/APPELLANT: THE COMMISSIONER OF INCOME-TAX-I,COCHIN. BY ADV. SRI.JOSE JOSEPH, SC FOR GOI (TAXES) RESPONDENT/RESPONDENT: ORMA MARBLE PALACE (P) LTD.,KOTHAKULANGARA, ANGAMALY - 683 572. BY ADV. JOSEPH MARKOS [SR.]ADV.SRI.N.RAGHURAJADV.SMT.K.AMMINIKUTTY THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 03.01.2019, THE COURT ON 10.01.2019 DELIVERED THE FOLLOWING: Vinod Chandran,J.: JUDGMENT Simultaneous search and seizure proceedings underSection 132 of the Income Tax Act, 1961 [for brevity “theAct”] was made on 02.03.2000, in six business concernscoming under a group, known as “Orma Group” of concerns.The residence of the Directors were also searched. Blockassessment was carried out for the period 1990-91 to1999-2000 and broken period upto 02.03.2000, on all theconcerns. Modifications were made by the appellateauthorities, against which appeals were filed by theRevenue against all the concerns. Five of such appeals werewithdrawn by the Department in pursuance of the litigationpolicy of the Government of India. The sole appealsurviving is with respect to a Private Limited Company;also coming under the said group. 2. The issues arising from the assessment orderas challenged by the assessee before the Tribunal were onthe question of undisclosed investments as also theundisclosed income detected under four separate heads ofunder-invoicing, undisclosed sales, investments inunaccounted purchases, and interest income. The AO foundthat the undisclosed income was in excess of the undisclosed investments. An assessment, hence was carriedout bringing to tax Rs.1,50,83,279/- for the block periodas undisclosed income. Out of this, the NRE gifts andloans, amounting to Rs.15,19,000/- disclosed in the blockperiods, in the returns of the Directors and one of thefirms was reduced. The total income thus brought to taxwas Rs.1,36,64,279/- as undisclosed income. 3. On first appeal, the Commissioner of Income Taxconsidered the grounds raised on the undisclosedinvestments as also the undisclosed income. The excessstock, found of Rs.20,61,480/- was found to be more or lesscorrect, since the assessee had not seriously challengedthe quantity of excess stock, but for the contention raisedwith respect to broken and cracked materials. The firstappellate authority found that the AO had already grantedan allowance for the same; but all the same extendedbenefit of doubt and allowed a reduction of Rs.1 lakh. Theundisclosed investment, on excess stock, of Rs.19,61,480/-stood confirmed. As to the unexplained investment in landand property, it was found that the search recovered onlyagreements for sale entered into by the employees of theassessee who obviously did not have the capacity to makesuch purchases. However, there was nothing seized as to the sale having finally fructified. The AO has also notconducted any enquiry as to the agreements havingmaterialized into sale and the conveyance of the propertieshaving taken place. The first appellate authority, hence,confined the undisclosed investment in land and property toRs.1,51,000/-; being the advance amounts revealed as paidfrom the agreements recovered from the premises of theassessee. The gifts and loans from non-residents as claimedby the assessee were found to be bogus by the AO, to theextent of Rs.27,82,912/-. Out of this, Rs.15,69,000/-having been offered in the block assessment by therespective recipients of the gifts, was deleted by the AOhimself. The balance remaining was Rs.7,58,427/-. Theassessee had claimed it to be loans obtained from thirdparties, whose names and addresses were supplied to the AOand the confirmation letters also filed. It was found thatthe claim of loans of Rs.7,58,427/- was also not withrespect to the Private Limited Company, who is therespondent-assessee herein. The undisclosed investmentswith respect to gifts and loans was, hence, confined toRs.84,000/-. The investment in the office building, foundto be undisclosed, coming to Rs.1,25,720/-, was notseriously challenged by the assessee and the same stood confirmed. The further investment found is with respect todevelopment of land at Kothakulangara, Angamaly. The fiveDirectors of the Company had purchased properties,measuring 85.806 cents, and constructed an office buildingtherein belonging to the Directors in their individualcapacity. The AO found the land to be low lying andrequiring filling up for the purpose of construction. Theundisclosed investment for development of property wasfound to be Rs.10,00,000/-. The first appellate authorityfound that there was absolutely no evidence to arrive atsuch an amount and no enquiry has been conducted to thatend. The entire amounts said to have been invested fordevelopment of land was set aside. The total undisclosedinvestment, as confirmed by the first appellate authority,was found to be Rs.23,22,200/-. 4. The first appellate authority then looked atthe undisclosed income as found by the AO. The AO had foundsuppression of sale to the extent of 10% on the salesreturned in each of the assessment years of the blockperiod. The first appellate authority held that there wasno material found in relation to under-invoicing of salefor the assessment years 1996-97 to 1999-2000. Thematerials recovered, pointing to under-invoicing on sale, was confined to the financial year in which the search andseizure operations took place. The reply given by theassessee with respect to the allegation of under-invoicingof sale was elaborately dealt with by the first appellateauthority. The assessee had contended that the AO hasabsolutely no power to estimate income on the basis of theavailable seized incriminating documents. The appellateauthority has to confine such estimation, if at all made,to the year for which the documentary evidence was detectedand seized was the finding in appeal. There was also acontention taken that the statements made by the employeesof the assessee were under duress and that no reliancecould be placed on the same. It was also contended thatbased on the statement of the employees associated with theother concerns, there was an estimation made with respectto this particular assessee. The first appellate authorityfound that the statements do not have any relevance withthe assessee and are sweeping in nature, which cannot betaken as evidence. The reliance placed on such statementswithout any corroborative evidence, was found to beillegal. The first appellate authority confined theaddition with respect to under-invoicing of sale toRs.9,26,893/-, as those occasioned in the year in which the search and seizure was conducted, i.e., 2000-2001. Thefirst appellate authority also relied on various decisionsof different High Courts to find that the estimation madefor the other years, as against which no corroborativeevidence was recovered, cannot be sustained. Theundisclosed income estimated for the assessment years 1996-97 to 1999-2000 was set aside, holding that there is totalabsence of tangible material on record to make such anestimation. 5. The further head under which undisclosed incomewas found by the AO were unaccounted purchases and thecorresponding sales. The AO determined the undisclosedinvestments in purchases at Rs.28,66,305/-, which wasdetermined as undisclosed income. The corresponding salesfor each of the assessment years was determined at Rs.5lakhs; totalling the unaccounted sales of Rs.25 lakhs. Theundisclosed income so estimated from the unaccounted saleswas spread over for the assessment years 1996-97 to2000-01. The appellate authority also looked into theseized materials as discussed by the AO. The seizedmaterials were, a document showing an expenditure ofRs.1,80,000/- to a supplier, seizure of cash amounting toRs.8,15,000/- by the police which was owned up as relating to M/s.Orma Marble Palace and a balance-sheet and profitand loss statement submitted to the State Bank ofTravancore,AngamalyBranchon30.08.1995.Thebalance-sheet submitted to the Bank for the purpose ofavailing of loan indicated a reserve and surplus of Rs.35lakhs with the closing stock of Rs.60.2 lakhs. It was basedon this that the AO determined the unaccounted purchasesfor the year 1996-97 at Rs.28,66,305/-. The defence of theassessee was that the balance-sheet was submitted to theBank to procure Overdraft of Rs.60 lakhs. There was also acontention raised that the document as obtained from theSBT, Angamaly Branch was not admissible in the blockassessment proceedings for the same having not beenrecovered in the process of search and seizure underSection 132. The first appellate authority found that theassessee having started the business in December, 1994;carried on the same only for three months in the financialyear relevant to the assessment year 1995-96. The assesseehad made only purchases during the said period coming toRs.10 lakhs shown as closing stock as on 31.03.1995.Referring to the balance-sheet submitted to the Bank as on30.08.1995 and the closing stock of Rs.60 lakhs, it wasfound that the total purchases made during the period was of Rs.32.08 lakhs as against the sale of Rs.21.92 lakhs.The discrepancy with respect to the balance-sheet as framedon the close of the assessment year 1995-96 and thatproduced before the Bank was found to support thecontention of the assessee. It was held that there was nocredible evidence to support the claim of closing stock ofRs.60 lakhs as on 30.08.1995. We immediately notice ourstrong objection with respect to such finding, since theclosing stock as found by the AO was based on thebalance-sheet as submitted by the assessee themselvesbefore the Bank. We will deal with the question ofadmission of the document later. The figures available inthe balance-sheet submitted before the Bank leading to ananomalous situation, was held to be not reliable. Theaddition of Rs.28,66,305/- as made by the AO on the basisof the balance-sheet submitted by the assessee before theBank was set aside, finding that the figures revealed fromthe balance-sheet as on 31.08.1995 was anomalous and thatthe document could not be relied on; having not beenrecovered in the search and seizure. The unaccounted salesestimated for the five years at Rs.5 lakhs was also foundto be without any basis and the same was set aside. 6. On the question of undisclosed interest income,the AO had relied on a Diary recovered from the businesspremises, which was named “Essar Collection Book”. Theassessee claimed the same to be petty loans to thetemporary and casual workers and the interest received onthe said accounts. The AO found that though 2 digit figuresare shown with decimals, the amounts cannot be in tens,hundreds or thousands. The AO decoded the figures asexisting in lakhs and thus made the addition ofRs.66,65,000/- and determined interest income at the rateof 24% for the five months in the assessment year 2000-01,at Rs.6,66,500/-. The first appellate authority found thatsuch determination of interest income and the decoding ofthe figures was without any basis. The entire interestincome determined as undisclosed was set aside. The firstappellate authority, hence, computed the undisclosedinvestments and undisclosed income in the following manner: For the block period, the first appellate authoritysustained an addition of Rs.23,22,200/- as undisclosedincome.7. The Department filed an appeal before theTribunal and the assessee filed a Cross Objection. On thequestion of excess stock detected amounting toRs.20,61,480/-, the Revenue's grounds were rejected and theassessee's grounds were partly allowed; directing the AO toallow breakage allowance at 25%. The undisclosed investmenton land and property as restricted by the first appellateauthority at Rs.1,51,000/- was upheld by the Tribunal,rejecting the Revenue's appeals. The scaling down of giftsand loans as asserted to be from non-residents was alsoconfined to that allowed in first appeal, beingRs.84,000/-.OntheundisclosedinvestmentofRs.1,25,720/-, as noticed by the first appellate authority,there was no serious objection raised by the assessee. Onthe question of investment for development of property atKottakulangara, the issue was found in favour of theassessee and the first appellate authority's order wasconfirmed to that extent. We have to find that there couldbe no serious dispute raised on the computation ofundisclosed investments as modified by the first appellate authority and confirmed by the Tribunal. We find that theexercise has been done on the basis of the facts asavailable in the records. We also notice that 25% allowancefor breakage was granted by the Tribunal on a discussion ofthe normal practises in the business. We do not find anyperversity in the said finding on the question ofundisclosed investment. We perfectly agree with the orderspassed by the appellate authorities on that aspect.8. The further question is on the undisclosedincome as determined by the AO and modified by the firstappellate authority. The Tribunal upheld the order of thefirst appellate authority on the question ofunder-invoicing of sales relying on the decision in CITv.J.K.Narayanan[(2007) 293 ITR 179 (Mad)] on the basis ofthe declaration therein that addition of undisclosedincome could be made only on the basis of search andmaterials recovered thereat. The finding was that theaddition can be made only with respect to the assessmentyear 2000-01. Relying on the very same decision, the issueof unaccounted purchases and sales were also decidedagainst the Revenue, confirming the order of the CIT(Appeals). So was the fate of the undisclosed interestincome, which also stood affirmed by the Tribunal as reversed by the first appellate authority. 9. The questions of law arising from the order areonly with respect to the undisclosed income and we re-frameit as follows: reversed by the first appellate authority. 9. The questions of law arising from the order areonly with respect to the undisclosed income and we re-frameit as follows: (i) Whether the Tribunal was correct in havingaffirmed the order of the CIT (Appeals) confiningtheadditionsmadewithrespecttounder-invoicing of sales to the assessment year2000-01 when there was indicated a consistentpractise of such under-invoicing?affirmed the order of the CIT (Appeals) confiningtheadditionsmadewithrespecttounder-invoicing of sales to the assessment year2000-01 when there was indicated a consistentpractise of such under-invoicing? (ii) Whether the Tribunal was correct in having heldthat there could be no estimation carried out forthe other years in the block period when therewere no documents seized to evidence suchunder-invoicing having been carried out in theearlier years?that there could be no estimation carried out forthe other years in the block period when therewere no documents seized to evidence suchunder-invoicing having been carried out in theearlier years? (iii) Whether the Tribunal was correct in havingaffirmed the view of the CIT (Appeals) that thebalance-sheet submitted by the assessee before theBank as on 31.08.1995 cannot be relied on forreason of that document having not been recoveredon search and the figures reflected therein beinganomalous when compared with the figures in thebalance-sheet filed by the assessee as on theclose of the respective assessment years?affirmed the view of the CIT (Appeals) that thebalance-sheet submitted by the assessee before theBank as on 31.08.1995 cannot be relied on forreason of that document having not been recoveredon search and the figures reflected therein beinganomalous when compared with the figures in thebalance-sheet filed by the assessee as on theclose of the respective assessment years? (iv) Whether the Tribunal was correct in having deletedthe estimation made by the AO at the rate of Rs.5lakhs per year on the unaccounted sales whichcould have been carried out by the assessee?the estimation made by the AO at the rate of Rs.5lakhs per year on the unaccounted sales whichcould have been carried out by the assessee? (v)Ought not the Tribunal have sustained theundisclosed interest income which was based on theassessee's own entries in a Diary recovered onsearch? (vi)Had not the Tribunal acted in a totally perversemanner in deleting the additions made by the A.O?manner in deleting the additions made by the A.O? 10. The learned Senior Counsel appearing for theassessee-respondent heavily relied on the judgments of theBombay, Rajasthan and Delhi High Courts to contend thatChapter XIV-B of the Act lays down a special procedure forassessment and it has to be treated differently from theregular assessment carried out under Section 143(3). It isthe contention of the learned Senior Counsel that therecould be no best judgment assessment carried out and therecould be no estimation made to determine the undisclosedincome. The undisclosed income has to be determined fromthe materials recovered on search. The computation ofundisclosed income of the block period as spoken of inSection 158BB is specifically referred to. The undisclosedincome can only be determined “on the basis of evidencefound as a result of search or requisition of books ofaccount or other documents and such other materials or information as are available with the Assessing Officer andrelatable to such evidence”. The words employed in theprovision would specifically indicate that there could beno estimation made, is the compelling argument. Thedecisions relied on by the learned Senior Counsel areC.I.T.v.Dr.M.K.E.Memon[(2001) 248 ITR 310 (Bom.),C.I.T.v. Rajendra Prasad Gupta[(2001) 248 ITR 350 (Raj.)] andC.I.T.v. Ravi Kant Jain[(2001) 250 ITR 141 (Delhi)]. information as are available with the Assessing Officer andrelatable to such evidence”. The words employed in theprovision would specifically indicate that there could beno estimation made, is the compelling argument. Thedecisions relied on by the learned Senior Counsel areC.I.T.v.Dr.M.K.E.Memon[(2001) 248 ITR 310 (Bom.),C.I.T.v. Rajendra Prasad Gupta[(2001) 248 ITR 350 (Raj.)] andC.I.T.v. Ravi Kant Jain[(2001) 250 ITR 141 (Delhi)]. 11. J.K.Narayanan,as relied on by the Tribunal,has absolutely no application in the facts of the case.There, the assessee had filed a belated return, showing theincome relating to the said year even before the search wasconducted. It was in such circumstance that the DivisionBench of the Madras High Court held that, there cannot beany application of Chapter XIV-B for reason of theinformation of the income for the year having been impartedby the assessee himself, to the AO long before the search. 12. In Dr.M.K.E.Memonthe Division Bench of theBombay High Court was concerned with a search and seizurecarried out in the clinic of a medical practitioner, whosemajor income was the medical examination fees and chargesfor issuance of medical fitness certificates of candidatesgoing to gulf countries. Wide discrepancies were found between the entries in the registration book, where thecandidates who came for medical fitness test wereregistered and the amounts seen collected in the cash book.The period for which assessment was carried out was from01.04.1986 to 11.12.1996. The assessee, in pursuance tonotice issued under Section 148BC, offered an undisclosedincome of Rs.75.60 lakhs; Rs.13.8 lakhs for the period uptoNovember, 1993 and for the later period Rs.53.22 lakhs. TheAO made an assessment on best judgment, for the entireblock period at Rs.2.33 crores. The assessee challenged theestimation made and also disputed the addition of Rs.47.28lakhs, which was asserted to have been refunded tocandidates; who on preliminary check up were found to beunfit. The Tribunal allowed both the contentions. TheDivision Bench approved the view of the Tribunal, which wason facts. It was noticed that the appellant had beenregistered as a panel doctor for the Saudi Consulate in1984 and Qatar and Kuwait consulates in 1986 and 1991respectively. The estimation made prior to November 1993 onthe basis of the post November 1993 records were found tobe arbitrary for reason of the various relevant factorshaving not been considered. The relevant factors as noticedby the Division Bench were the adverse impact of the Gulf war, the possibility of the professional fees remainingstatic for the entire 10 years being remote, the refundhaving been effected to candidates found unfit at theinitial stage who were charged only a nominal fee and so onand so forth. The arbitrariness was insofar as theDepartment having applied the peak income rate of 1993period to the entire block period. In fact, on the questionof estimation, the division Bench held so: “We agree with the contention advanced on behalf ofthe Department that in matters under Chapter XIV-Bthe Assessing Officer is required to estimate theundisclosed income. We agree with the contention ofthe Department that this estimation involves guesswork. However, the Assessing Officer under ChapterXIV-B cannot act arbitrarily while estimating theundisclosed income”. Hence, it cannot be understood that the Division Bench wasof the opinion that there could be no estimation made whena block assessment is carried out. The concluding remarkson Chapter XIV-B having laid down a special procedure forassessment of search cases also cannot have anysignificance insofar as the present case is concerned. Thedifference noticed was insofar as the block assessmentunder Chapter XIV-B being confined to the assessment of Hence, it cannot be understood that the Division Bench wasof the opinion that there could be no estimation made whena block assessment is carried out. The concluding remarkson Chapter XIV-B having laid down a special procedure forassessment of search cases also cannot have anysignificance insofar as the present case is concerned. Thedifference noticed was insofar as the block assessmentunder Chapter XIV-B being confined to the assessment of undisclosed income for the block period and not concernedwith the total income or loss of the previous year; whichlater exercise is one under Section 143(3). The DivisionBench also noticed the decision of the Hon'ble SupremeCourt in CSTv.H.M.Esufali H.M.Abdulali[(1973) 90 ITR 271(SC)], the locusclassicus insofar as the manner in whichan estimation has to be carried out on best of judgment.13. Rajendra Prasad Guptadealt with a blockassessment for the period 1986-87 to 1995-96. Therein, theAO rejected the returns filed by the assessee, which waschallenged by the assessee successfully before theTribunal. A Division Bench of the Rajasthan High Courtfound that undoubtedly the AO has jurisdiction to resort tobest judgment assessment in proceedings under Section158BB. However, the difference with respect to a regularassessment and a block assessment under Section 158BC wasemphasized. As was found by the Bombay High Court, it washeld that the block assessment is confined to theassessment of undisclosed income, as distinguished from aregular assessment where the total income is assessed.Though there is conferred the power of best judgment, anyestimate of undisclosed income has to have a nexus with thematerial recovered on search. The undisclosed income, even that estimated, would have to have correlation to thematerials recovered on search. The Tribunal's order wasupheld, since therein the AO had not recorded whether thereturns filed by the assessee were in accordance with thefacts that came to light during the course of search andseizure. The estimate made also could not be correlated tothe material on record which were recovered on search. 14. The Delhi High Court in Ravi Kant Jainsuccinctly found the nature of the special provisions underChapter XIV-B as follows: “The special procedure of Chapter XIV-B isintended to provide a mode of assessment of undisclosedincome, which has been detected as a result of search.As the statutory provisions go to show, it is notintended to be a substitute for regular assessment. Itsscope and ambit is limited in that sense to materialsunearthed during search. It is in addition to theregular assessment already done or to be done. Theassessment for the block period can only be done on thebasis of evidence found as a result of search orrequisition of books of account or documents and suchother materials or information as are available withthe Assessing Officer. Evidence found as a result ofsearch is clearly relatable to section 132 and 132A”. 15. What is discernible from the aforesaiddecisions of the various High Courts is that the AO while 15. What is discernible from the aforesaiddecisions of the various High Courts is that the AO while carrying out block assessment is definitely entitled toproceed on best of judgment and make estimations for theblock period. However, such estimation has to be made onlyon aspects which have a direct correlation to thematerials, transactions and aspects which were detected inthe search carried out under Chapter XIV-B. We would alsoemphatically state that there is no restriction in so faras the estimation being permitted only on the basis of thematerials recovered at the search. It could be on the basisof evidence found as a result of search or requisition ofbooks of account or documents and such other materials orinformation as are available with the Assessing Officer.16. To counter the argument regarding theestimation made for the prior years without any materialfor that years having been recovered, the learned StandingCounsel for Government of India (Taxes) relies on thedecisions in CITv. Hotel Meriya[(2011) 332 ITR 537 (Ker)]and Sunny Jacob Jewellers and Wedding Centrev. Dy.CIT[(2014) 362 ITR 664 (Ker.)].17. In Hotel Meriya, as in this case, search wasconducted under Section 132 in a bar attached hotel. Duringsearch, it was revealed that the assessee was not issuingbills for sale of liquor and consumers were issued with paper slips showing the price. Copies were retained, whichdid not contain the price of the articles sold. Thepersons in charge of the accounts and the business gavestatements under Section 132(4); that only 80% of the salesturnover was recorded in the cash book. In the trading andprofit and loss account as also the balance-sheet furnishedto the Kerala Financial Corporation, a much higher amountwas shown as gross and net profit. The AO made anestimation for all the years, which was slightly modifiedby the first appellate authority. The Appellate Tribunal,on facts, found that there was suppression; but, however,directed the income tax to be assessed only on the profitwhich was determined at 25% of the sales turnover. Thequestions arose as to whether the statements recorded ofthe Partner as well as the employees along with thedocuments seized would tantamount to evidence under Section158BB and whether such materials are sufficient to concludethat there was concealment of income in the assessmentyears prior to the year in which the search was conducted.It was found that “the statement of the partner and theemployees recorded and documents collected are relevant andadmissible in respect of all matters for the purpose of anyinvestigation connected with any proceeding under the Income-tax Act” (sic para 13). As to the estimation madefor the prior years for which there was no relevantmaterial recovered, specifically relating to those previousyears, it was held that the statements clearly indicatedthat there was a suppression of sales by around 20%. Theslips recovered were relating only to the year in which thesearch was conducted; still it was held that Chapter XIV-Bdoes not mandate that in making block assessment thereshould be evidence regarding concealment of income forevery year in the block period. 18. Sunny Jacob Jewellers and Wedding Centre wasan assessment under Section 153A, wherein the questionagain arose as to whether there was a mandate to collectinformation and evidence for each and every one of sixprevious years. Therein also, estimate slips were collectedfrom the jewellery, which recorded price lower than thatactually received from the customers. The Manager of a showroom, a Cashier in another business premises and a ComputerOperator made statements; based on which as also theestimate slips, an estimation was carried out for the sixyears. The Division Bench relied on Hotel Meriya, though itwas specifically noticed that they were not concerned witha block assessment. Based on the estimate slip recovered 18. Sunny Jacob Jewellers and Wedding Centre wasan assessment under Section 153A, wherein the questionagain arose as to whether there was a mandate to collectinformation and evidence for each and every one of sixprevious years. Therein also, estimate slips were collectedfrom the jewellery, which recorded price lower than thatactually received from the customers. The Manager of a showroom, a Cashier in another business premises and a ComputerOperator made statements; based on which as also theestimate slips, an estimation was carried out for the sixyears. The Division Bench relied on Hotel Meriya, though itwas specifically noticed that they were not concerned witha block assessment. Based on the estimate slip recovered from five business concerns as also pre-search enquirypurchases made in two concerns and the note books seizedfrom one of the business concerns, it was held that therecould be an estimation made for the previous six years alsodespite the fact that the materials recovered were onlywith respect to the year in which the search was conducted.19. It is in this background, we have to look atthe instant order of the Tribunal which has been challengedbefore us by the Revenue. As in Hotel Meriya, we noticethat the finding on facts with respect to the suppressionand concealment of income has been upheld by all the lowerauthorities, including the Tribunal. The Tribunal has goneto the extent of saying that the estimation could be madeonly with respect to the year in which the search was madefor reason only of the documents recovered being inrelation to that particular year alone. We have also totake note of the argument of the learned Senior Counselappearing for the assessee that there are references to thematerials and statements as relatable to the other businesspremises of the very same group. We agree with the assesseethat such materials cannot be taken into account fordetermining the undisclosed income in the business of thisparticular assessee. However the statements made by the staff of the group concerns reveal the common practisesadopted in the business; which cannot be eschewed. We,hence, will not refer to the materials, if at all lookedinto by the AO, which relate to the other group concernsbut find no reason to ignore the statements made. What wewould essentially look at is, whether the materialsrelatable to the individual assessee and the statementsrelatable to the group concerns herein were sufficient tomake such estimation and whether the estimation has acorrelation to such materials and statements. 20. The statement of one of the Directors, Sri.Laji Joseph, recorded under Section 132 specificallyadmitted that the units belonging to the group did not showthe actual sale price in the bills. The rate of suppressionwas stated to be 5% to 8% for variety of goods rangingbetween 32 to 50 rupees per square feet. For the highervalue items, there was no suppression, according to theDirector. The submission on oath by the Director was foundto be an under-statement by the AO based on the otherevidences. The Computer Operator of the assessee herein hadstated the practise of first taking the customers aroundthe stock yard for choosing the required items. After theselection, an estimate is prepared on the Computer and 20. The statement of one of the Directors, Sri.Laji Joseph, recorded under Section 132 specificallyadmitted that the units belonging to the group did not showthe actual sale price in the bills. The rate of suppressionwas stated to be 5% to 8% for variety of goods rangingbetween 32 to 50 rupees per square feet. For the highervalue items, there was no suppression, according to theDirector. The submission on oath by the Director was foundto be an under-statement by the AO based on the otherevidences. The Computer Operator of the assessee herein hadstated the practise of first taking the customers aroundthe stock yard for choosing the required items. After theselection, an estimate is prepared on the Computer and printout taken with copy. A copy is given to the customershowing the actual price and then later a bill is prepared,wherein a reduced amount is shown and at times all theitems sold are not shown. The statements of the employeesin the group concerns also revealed the modus operandiadopted by the group, which was uniform and disclosed adefinite pattern. On the extent of suppression, thecomputer printout of sales tax report, product-wise andpurchase reports were referred to. In the assessee'sbusiness premises, on 01.03.2000 the actual sales as perthe daily statement seized as sheet No.36 in the bunchmarked “AMA-14” indicated it to be Rs.2,20,442/-, whilewhat was accounted was Rs.18,090/-. Sri.Lijo Joseph, whosubmitted that more or less sale price was shown in thesale bills, when confronted with a bill and estimate withrespect to one another show room, admitted that theestimate showed only Rs.48,857.60 while the actual pricewas Rs.1,43,668.93. The Director, who was examined in thecourse of the search in the business premises of therespondent-assessee, also could not explain the variousother documents with which he was confronted. Further, itwas found that there was a Customer Care Scheme with PrizeCoupons issued by the assessee. As per the Scheme, for every purchase of Rs.50,000/-, one coupon was given to thecustomer with a lottery being held on the expiry of theScheme; offering a Tata Indica motor car to the winner.Verification revealed that coupons were given to customersfar in excess of their purchase price as disclosed in theaccounts. Specific references were made to 4 individualsand the bills issued in their favour. The AO had, at thefirst instance, proposed an addition of 50%. 21. The following purchasers of the assessee were also summoned and examined; whose statementscorroborated the allegation of under-invoicing carried outby the assessee. In the case of one T.J.Francis, the saleprice accounted was only 1/4[th] of the actuals. C.K.AbdulHameed, who was examined on 30.03.2000, was given a billshowing only 1/3[rd] of the actual sale price. Similarly,T.R.P.Chandran, A.R.P.Sen, Joshy Paul and C.T.Thankachanalso gave statements before the AO. These purchasers werenot those of the respondent-assessee alone. However, as wenoticed earlier, the modus operandi adopted by the groupconcerns is also a pointer to the manner in which aconsistent pattern of suppression was practised in all thegroup concerns. There were also instances of bulk salesbeing totally omitted and handwritten receipts and estimate not being accounted in the accounts fully or partly. It wasfound that the extent of sales suppression was about66-75% and the accounted sale price was only 1/3[rd] of theactual turnover. The aforesaid findings have been enteredon the basis of the materials recovered from thepremises and the corroborating statements made by theDirector, the employees as also the purchasers from therespondent-assessee and other group concerns. Though theevidence relates to the year in which the search wascarried out, as we have already found, it could lead toestimation being made by the AO. The AO is not divested ofthe power to make assessment on the best of his judgment byreason only of the proceedings being under Chapter XIV-Bfor the purpose of block assessment. 22. On the sustainability of the estimation, theAO found, on the basis of supporting material as also thestatements, that 2/3[rd] of the turnover has been suppressed.The disclosed turnover constituted only 1/3[rd] of the actualsales made from the business premises. In certain cases,the assessee had recorded more than 1/3[rd] of the actual saleprice. Hence, on a consideration of the totalcircumstances, it was proposed to make a fair estimate ofaverage undisclosed sales turnover at 50% of the actual sales in the pre-assessment notice. Objections were filedby the assessee and a detailed consideration was made.Though it was alleged that the employees had made theirstatements under duress, they were not produced forcross-examination. Some of the specific instances ofunder-invoicing mentioned in the pre-assessment notice werenot controverted and on the others, the explanation offeredwas not satisfactory. The purchasers, who were grantedCustomer Care Scheme Prize Coupons far in excess of thesales price invoiced were cross-examined without any avail.They stood by their statements and also established thesource from which they made the purchases. In a block salemade to Beemapally Mosque, there was no sale accounted. Itwas also found that there were reputed institutions likeParumala Seminary and Taj Garden, Kumarakom, who madepurchases from the group concerns, in which purchases thesale price was correctly invoiced. Taking an overall viewof the under-invoicing carried out, a fair estimation at10% of the declared sales was confirmed by the AO asagainst the proposal of 50%. The 10% estimation was made onthe respective turnover of each of the prior years. We donot find any reason for the appellate authority or theTribunal to have interfered with the same. 23. We have already found that there is lack ofmaterial insofar as the prior years of the block period,but the same has been held to be inconsequential, in so faras the A.O being conferred with the power to makeassessment in the best of his judgment. The AO wasperfectly justified in carrying out an assessment on thebest of judgment, making estimations on the basis of thematerials recovered. As has been found in Hotel Meriya, itcannot be assumed that a dealer who practises suppressionwould retain the materials disclosing suppression, for longyears; in the instant case a block period of 6 years. Thereis also no presumption insofar as the suppression havingoccurred only in the year in which the search wasconducted. If at all, the presumption is otherwise insofaras the special procedure prescribed under Chapter XIV-B toassess undisclosed income for a block period, comprising ofassessment years prior to the date of search, on the basisof the materials recovered at the search and other otherevidences available before the AO relatable to suchmaterial. At the risk of repetition, it has to be noticedthat the block assessment prescribed under Chapter XIV-Balso confers power on the AO to make assessment on the bestof judgment. Question Nos.(i) and (ii) are answered in favour of the Revenue and against the assessee. We henceset aside the order of the Tribunal and the first appellateauthority and confirm the under-invoicing of sale bills atRs.90,50,924/-. 24. On the question of undisclosed purchases, thesame has been arrived at for the particular year wherein abalance-sheet was recovered from the SBT, Angamaly Branch.The contention raised by the assessee based on the wordsemployed in Section 158BB is also to the extent that thebalance-sheet and profit and loss account as on 31.08.1995submitted before the Angamaly Branch of the SBT cannot berelied on since it is not a material recovered on search.We recall that Section 158BB speaks of computation ofundisclosed income on the basis of evidence found as aresult of search or requisition of books of account orother documents and such other materials or information asare available with the Assessing Officer and relatable tosuch evidence. Hence, any other material or information asare available with the AO relatable to the evidencerecovered on search could be relied on for carrying out ablock assessment. In this context, we notice our ownjudgment in I.T.A.Nos.28 and 29 of 2010dated 14.08.2018[P.A.Ahamedv.C.I.T.]. Therein the assessee was in appeal against re-assessment proceedings alleging it to be on amere change of opinion. A search and seizure was conductedin the office of the assessee, a practising Advocate, andcertain Bank statements were recovered. In pursuance of thesearch, the AO called for the details of the accounts fromthe Banks. The details of the accounts were made availableby the respective Banks to the AO. The AO, at the firstinstance, looked into the Bank accounts and there was aproposal to treat the Bank accounts as professionalreceipts. The objection filed was considered and some ofthe credits were found to have been explained. The AO thenfound the Bank credits to be part of the professional feesand was found to be inclusive of the professional income.When determining the undisclosed income, the unexplainedexpenditure/investment made by the assessee alone wastaken. Hence, a conscious decision was taken not todetermine the undisclosed income based on the credits inthe Bank accounts as revealed from the Banks' statements.Later on, at the stage of re-assessment, the then incumbentofficer took up as a ground the fact that the Bank detailswere received later to the search and, hence, could nothave been relied on in the block assessment. We extractherein paragraphs 10 and 11 of our judgment: "10. S.Ajit Kumar [(2018) 302 CTR 7 -Commissioner of Income Tax v. S.Ajit Kumar] wasrelied on by the learned Senior Counsel to stressthe cardinal principle that in a block assessmentaddition can be made only of undisclosed income, theevidence of which was found in the course of thesearch under Section 132 of the Act. The specificcontention is that the details of the Bank accountsin the instant case was made available to the AO inthe post search enquiry, which cannot be relied on.We are not convinced that the cited decision helpsthe Revenue in any manner. Laying down such cardinalprinciple, the Hon'ble Supreme Court hadspecifically stated that 'the additions could bealso of undisclosed income revealed in anyproceedings simultaneously conducted in thepremises of the assessee, relatives and/or personswho are connected with the assessee and are havingtransactions/dealings with such assessee' (sic)(para9). The facts in the cited decision indicate that asearch was conducted in the premises of the assesseeand in the course of the return filed by theassessee, the details of the assessee's transactionwith a builder and interior decorator was disclosed.In a survey conducted at the premises of thebuilder, a payment of Rs.95,16,000/- was detected,which had not been accounted for. The assesseecontended that the same cannot be taken into accountin the block assessment for reason of theundisclosed income being not supported by anymaterial recovered in search. The learned Judges quoted Section 158BB and laid emphasis on the words'on the basis of evidence found as a result ofsearch or requisition of books of account or otherdocuments and such other materials or informationas are available with the AO and relatable to suchevidence' and held that this prescribed the boundarywhich has to be followed. The power of survey beingspecifically provided under Section 133A, anymaterial or the evidence found or collected in asurvey which has been simultaneously made at thepr