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TMI Blog2013 (6) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.7.1998 for block period F.Y. 1986-87 to 1996-97 have been deleted. The appeal was admitted on the following substantial questions of law by this Court on 3.4.2006:- "(i) - Whether in the facts and circumstances of the case, the Tribunal was justified in law in deleting the additions made by the Assessing Officer for the relevant assessment year falling within the block period of 1986-87 to 1996-97 primarily on the ground of Section 158BB is not applicable for the purposes of making additions unless the additions are directly referable to material found during the course of search and seizure proceedings? (ii)- Whether in the facts and circumstances of the case, the Tribunal was justified in deleting the additions on account of cash cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed source in his statement before the ADIT, Udaipur and notice under Section 158BC/BD were issued to him. In response, the assessee returned income of Rs. 3,40,211/- for the block period. The Assistant Commissioner of Income Tax, Investigation Circle, Udaipur by his assessment order dated 31.7.1998 added Rs. 2,99,470/- as undisclosed income of the assessee based on his own admission to the total income of the assessee for the assessment year 1997-98. The Assessing Officer ('AO') further made various additions under several heads and computed the total income including undisclosed income under Section 158BB of the Act at Rs. 15,68,479/- and the total undisclosed income for the block period at Rs. 12,28,268/-. Feeling aggrieved by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the AO had estimated undisclosed income without reference to the material in his possession was arrived at on the basis of material on record and by applying the principle of law correctly and therefore, it cannot be said that any question of law arises in the present case. It was further submitted that under Chapter XIV-B, the AO has to assess only the undisclosed income and he cannot seek to assess the income or loss of the previous years which is only done in the normal regular assessment under the law. It was prayed that the appeal be dismissed. We have considered the rival submissions made at the Bar. It is settled position of law that the exercise under Section 143(3) of the Act for regular assessment stands on a different footing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent under section 143(3). In a large number of cases we find that the above distinction is not kept in mind by the Assessing Officer. It is for this reason that we have spelt out the difference between the regular assessment and the block assessment under Chapter XIV-B of the Income Tax Act." Further while dealing with the same issue, this Court in Commissioner of Income Tax v. Rajendra Prasad Gupta : (2001) 248 ITR 350 (Raj.) held as under:- "We are of the opinion that so far as the contention of learned counsel for the appellant that the Assessing Officer has necessary jurisdiction to resort to best judgment assessment in proceedings under section 158BB, the correctness of it cannot be doubted. However, under the scheme of the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esumption that returns filed in pursuance of such proceedings are of undisclosed income and not necessarily in accordance with the books of account. Its verification has to be searched outside regular books with reference to material that has been found during search. That makes it imperative to adjudicate the return with reference to the material that has come in the possession of the assessing authority during the course of search proceedings and on which basis the belief about the existence of undisclosed income is entertained by the assessing authority inviting invocation of sections 158BB and 158BC. The enquiry into the correctness of such returns with reference to material so found has nexus with the object of the special provisions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the block period arrived at in accordance with the provisions of Section 158BB and it cannot be said to be the undisclosed income even if no return is filed within the time prescribed under Section 139 as the assessee was not under obligation to file the return. In the case of Commissioner of Income Tax v. Chandra Chemoux : (2008) 298 ITR 98 (Raj.), this Court held that addition can be made only when evidence is available as a result of search or requisition of books of account, documents and other material, however, addition cannot be made on the basis of inferences. In the present case while the AO in its assessment order dated 31.7.1998 dealt with the issue as if it was undertaking the assessment proceedings under Section 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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