1. The appeal was admitted in terms of the following questions:

“(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in sustaining additions made in block assessment proceedings under section 158BD of the Act, irrespective of the fact that the entries were made in the regular books of accounts?

(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in sustaining addition on account of alleged low withdrawal/gift/opening capital of the appellant/inclusion of income of wife, on the basis of statement recorded during the course of search, and without considering the entire material on the record?

(iii) Whether taking of any ‘alternative’ ground/plea by the appellant should be treated as confession/admission by the appellant in respect of the main ground/plea?

(iv) Whether the appellant can be said to have forgone/withdrawn the grievances contended in the main ground/plea, simply because of taking an alternative ground/plea?

(v) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in correctly applying the test of human probabilities while sustaining addition on account of gift?

(vi) Whether gift received by the appellant from his father can be equated with other gifts received from strangers and can be said to be non-genuine by applying the test of human probabilities, particularly when the resources of father are not in dispute?

(vii) Whether a case of cash credit/gift from stranger or unrelated party can be compared/equated with a case of normal gift received by a son from his father?

(viii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in placing heavy reliance on the statement recorded during the course of search than the affidavits submitted, which is on higher pedestal, while arriving at the conclusion?

(ix) Whether tax can be levied on the basis of estimation of income when the estimation is too arbitrary and irrational based on surmises and conjectures?

(x) Whether, on the facts and in the circumstances of the case, the Tribunal could ignore the documentary evidence, available on the record and place reliance on the purported statement recorded during the course of search, while sustaining additions?

(xi) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in placing reliance on statement which are not free from doubt and ambiguity and without being corroborated with an evidence, while coming to the conclusion?

(xii) Whether the finding arrived at by the Tribunal is not perverse? which is not supported by complete document placed on the record by the appellant?

(xiii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in sustaining addition in respect of capital and income of wife relying on the sole statement of the appellant and his wife irrespective of the fact that the wife is being separately assessed and income so added is duly recorded in the books of account of the wife?

(xiv) Whether the statement recorded during the course of search can be the sole basis of sustaining the addition particularly considering the evidentiary value of these statements recorded in the environment of fear, mental torture, harassment, inconvenience, pressure and other adverse circumstances?”

2. The search and seizure under section 132 of the Income-tax Act, 1961, was carried out at the business premises of M/s. Rajan Products and residential premises of its partners. At the time of the search cash book and ledger belonging to the assessee were also seized from the premises. Thereafter notice issued under section 142(1) read with section 158BD on August 12, 1998. In compliance with the said notice, the assessee filed “nil” return for the block period in question, i.e, 1986-87 to 1996-97. He computed the total undisclosed income to the tune of Rs. 12,27,958. The assessee has challenged the order of the Assessing Officer. The Tribunal after considering the material on record, sustained the addition of Rs. 2,28,080 on account of unexplained capital of Smt. Gayatri Devi in the year 1995-96. The second addition of Rs. 1,03,965 sustained was on account of unexplained accretion in capital of Smt. Gayatri Devi and alleged bogus cash creditors. The third addition was on account of unexplained capital of Shri Chain Sukh Rathi to the tune of Rs. 1,78,882. The fourth addition was Rs. 5,94,000 on account of low household expenses shown in the block period. The last addition was Rs. 30,000 on account of unexplained gift from the father. Learned counsel for the assessee submits that addition on this account is only the basis of material seized during the search and therefore, there is no justification for addition on account of the capital shown by the wife. Similarly, he submits that the capital amount in the books, the assessee has already shown in his business and once entry is made in the regular books of the assessee that cannot be treated as concealed income. He further submits that household expenses have not been shown in the block period as the income was below the taxable limit. So far as a gift from the father is concerned, the father has gifted this amount by cheque and is genuine, therefore, no addition should be made and cannot be assessed as income from undisclosed sources under section 158BB of the Act.

3. Mrs. Parinitoo Jain submits that there is material on record the cash book and ledger of the assessee which was found in the search at the premises of M/s. Rajan Products. Notice under section 158BD was given for assessment of income in the block period. The statement of the assessee and his wife was recorded. She could not satisfy as to how she got this capital income shown.

4. After examining the facts, the Assessing Officer had added the following additions on account of unexplained household expenses:

Period assessment year Amount given per annum for household expenses to his wife Amount withdrawn for household expenses at Kanpur Undisclosed income Rs. Rs. Rs. 1986-87 1987-88 30,000 18,000 48,000 1987-88 1988-89 30,000 18,000 48,000 1988-89 1989-90 30,000 18,000 48,000 1989-90 1990-91 30,000 18,000 48,000 1990-91 1991-92 36,000 24,000 60,000 1991-92 1992-93 36,000 24,000 60,000 1992-93 1993-94 42,000 30,000 72,000 1993-94 1994-95 42,000 30,000 72,000 1994-95 1995-96 48,000 — 48,000 1995-96 1996-97 48,000 — 48,000 1996-97 1997-98 42,000 — 42,000 (1-4-1996 to 25-9-1996)

5. The statement to this effect has been recorded and Mrs. Gayatri Devi has stated in her statement that she used to receive Rs. 4,000 to Rs. 6,000 or Rs. 7,000 per month from her husband to meet the household expenses. Considering her statement and also the expenses, the Tribunal has sustained the addition on account of undisclosed household expenses to the tune of Rs. 1,000 per month for the assessment years 1986-87 to 1989-90 and Rs. 1,500 per month for the assessment years 1990-91 to 1993-94. Considering the facts on record, we see no reason to interfere in the finding of the Tribunal on this account and no material has been shown that this finding is perverse.

6. The other addition has been made in respect of unexplained capital of Smt. Gayatri Devi. The capital of Rs. 2,28,080 has been introduced in the name of Smt. Gayatri Devi, the wife of the assessee. This addition has been made on the basis of the statement of Smt. Gayatri Devi Rathi, the wife of the assessee, which was recorded during the search in the year 1995-96 as she could not explain the source. The only source, which can be visualised is that amount has been received from her husband or her husband has introduced this amount in the name of his wife, Smt. Gayatri Devi. Therefore, again we see no perversity in the finding of the Tribunal. The Tribunal has rightly added this amount of Rs. 2,28,080 in the income of the assessee.

7. The third item relates to the addition of Rs. 1,03,965. This amount pertains to the assessment years 1996-97 and 1997-98. This is an accretion of the capital introduced in the name of his wife, i.e, Rs. 2,28,080. As the amount of Rs. 2,28,080 has been treated as the amount of the assessee, this addition is consequential and the consequential addition will have to be sustained in the hands of the assessee.

8. The next addition is on account of unexplained capital in the name of Chain Sukh Rathi, i.e, the assessee to the tune of Rs. 1,78,882. Chain Sukh Rathi has introduced this capital in the assessment year 1995-96 and no source has been established that this amount should be treated out of disclosed income. The Tribunal has rightly sustained this addition also in the hands of the assessee.

9. The last addition pertains to Rs. 30,000. The assessee has shown the gift from his father. It is true that Rs. 30,000 has been paid by cheque by his father, but there is no occasion for the father to gift this amount to the son. This amount is also rightly treated as undisclosed income of the assessee, which has been received in the name of gift from his father. Consequently, the addition made by the Assessing Officer and affirmed by the Tribunal is confirmed.

10. Mr. Jhanwar, learned counsel for the assessee submits that in view of the provisions of section 158BB the income should be computed in accordance with the provisions of this Act and the income exempted to that extent should not be taxed.

11. The reading of section 158BB is as under:

“Computation of undisclosed income of the block period.— Amendment has been made by inserting the following words ‘in accordance with the provisions of this Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence.”

12. When some material was seized connecting the concealed income, the Income-tax Officer can compute the income on that basis but that should be computed and taxed in accordance with the provisions of the Act, 1961, therefore, the tax exemption limit has to be kept in mind and to that extent, income not chargeable to tax, tax should not be charged on that part of the income. We agree with Mr. Jhanwar that concealed income should be computed in cases of search in accordance with the provisions of section 158BB and after computing the total concealed income, it should be taxed as per the rates specified for the concealed income, in each year.

13. The questions proposed are answered accordingly. The appeal is disposed of with the above directions.