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Issues involved: Challenge to order of Income-tax Appellate Tribunal setting aside assessing authority's order u/s 158BB for block period 1986-87 to 1995-96, rejection of return filed by assessee, jurisdiction of assessing authority for best judgment assessment, permissible estimation u/s 158BB, correctness of returns filed in pursuance of notice u/s 158BC(a), nexus of returns with material found during search, Tribunal's finding on assessing officer's estimation without reference to material.
Jurisdiction for Best Judgment Assessment: The appellant challenged the Tribunal's decision setting aside the assessing authority's order u/s 158BB for the block period 1986-87 to 1995-96. The court acknowledged that the assessing authority has necessary jurisdiction to resort to best judgment assessment under section 158BB. However, in block assessment, it pertains to "undisclosed income" excluding income already subjected to regular assessment. Returns filed under section 158BC(a) must be examined based on material in possession of assessing authority from the search, allowing estimation if returns do not align with available material. The assessing authority lacks power to estimate income without reference to material in his possession during regular assessment u/s 158BB. Verification of Returns and Material: The court emphasized that proceedings u/s 158BB and 158BC concern undisclosed income, presuming returns filed are not in accordance with regular books. The correctness of returns must be assessed with material found during search, determining if the assessee honestly disclosed income after incriminating material was discovered. The assessing authority must adjudicate returns with reference to material found during search to decide on rejection and frame assessment based on available material. Tribunal's Finding and Conclusion: The court noted that the assessing officer did not establish that the returns filed did not align with material discovered during search, and the estimation of income was seemingly made without considering available material. The Tribunal's finding, based on the material on record and correct application of legal principles, did not raise substantial legal questions. Consequently, the appeal was rejected with no costs imposed.
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