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TMI Blog2012 (9) TMI 701X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the course of block assessment proceedings in the case of Shri Narendra Kumar Khanna, the Assistant Commissioner of Income Tax found that some papers seized from the premises belonged to Shri Awadhesh Kumar Gupta, 53/13, Nayaganj, Kanpur. On the basis of the materials found during the course of search, proceedings under Section 158BD read with Section 158BC of the Income Tax Act, 1961 (for short, the Act) were initiated against the assessee. A notice under Section 158BC of the Act was served upon Shri Avadhesh Kumar Gupta-the assessee on 7.11.1997. In compliance to the notice the assessee filed his return of income for block period of ten years on 31.3.1998 declaring Nil income. The block assessment was completed under Section 158 read w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saving bank account of the assessee. 6. This Income Tax Appeal has been preferred by the revenue against the order of ITAT dated 13.6.2008 on the following substantial questions of law:- "1. Whether on the facts and circumstances of the case, the Hon'ble Tribunal was justified in law in facts in deleting the addition of rs. 12, 47, 988/- made by the AO on a/c of undisclosed income by holding that no additions in the block assessment can be made on the basis of facts declared in the regular return of income filed prior to the date of search without considering the retrospective amendment made in Section 158B and 158BB by the Finance Act, 2002. 2. Whether on the facts and circumstances of the case, Hon'ble Tribunal was justified in law in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Auto Agency (2009) 314 ITR 191 (Gauhati), in which it was held as follows:- "13. A reading of the provisions of Section 158BB, as it existed before and after amendment, amply discloses that even prior to the amendment, Section 158BB authorised the Assessing Officer to make an assessment of undisclosed income on the basis of evidence found as a result of "search... and such other materials or information as may be available with the Assessing Officer". The use of the word "such" clearly points out that such materials or information must have some connection with the search and do not constitute independent materials, i.e., independent of the search. The aforesaid is the view indicated in Central Board of Direct Taxes Circular No. 8 of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, will not be open to interference." 10. Shri Srivastava has also relied upon Commissioner of Income Tax v. Ansal Buildwell Ltd (2008) 304 ITR 378 (Delhi); Commissioner of Income Tax v. Balaji Wire P. Ltd (2008) 304 ITR 393 (Delhi) and Commissioner of Income Tax v. Vivek Dougall (2008) 305 ITR 270 (Delhi). In all three judgments cited above, the Delhi High Court has relied upon CIT v. Ravi Kant Jain (2001) 250 ITR 141 (Delhi); CIT v. Elegant Homes P. Ltd (2003) 259 ITR 232 (Raj) and CIT v. Jupiter Builders P. Ltd (2006) 287 ITR 287 (Delhi) in which it was held as follows:- "8. As we understand it, in respect of a block assessment, undisclosed income is required to be computed on the basis of evidence found during the search or be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 132 and 132A." 10. Similarly, in Commissioner of Income Tax v. Elegant Homes Pvt. Ltd. (2003) 259 ITR 232 , the Rajasthan High Court held: "In Chapter XIV-B of the Act, special provisions for assessment in search cases have been given and if any amount of income has not been taxed and during the course of search, if some 'undisclosed' income is found on the basis of material seized, that should be treated as undisclosed income as per the scheme of special assessment under the aforesaid Chapter." 11. The view expressed by this Court in Ravi Kant Jain (2001) 250 ITR 141 is, of course, binding on us and we have also followed the view expressed by the Rajasthan High Court in Elegant Homes. In Commissioner of Income Tax v. Jupiter Builde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onducted at the premises of the respondent-assessee, and no incriminating material was found in the search conducted in the premises of Shri Narendra Kumar Khanna on the basis of which notices were issued to the respondent-assessee. 12. In the block assessment, the undisclosed income is required to be computed on the basis of evidence found during the search, or being directly relatable to the evidence found in the search. When nothing was found during the search, which may suggest that the books maintained by the assessee were unreliable or doubtful, the Assessing Officer cannot rely upon the material disclosed by the assessee in the return of the relevant year for the purpose of computation under Section 158BB of the Act. In CIT v. Ravi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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