TMI Blog2013 (12) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... i M Lava, Adv JUDGEMENT:- PER : N Kumar, J This appeal is preferred by the Revenue, challenging the order passed by the Tribunal as well as the Lower Appellate Authority in holding that the income shown in the return of the assessee does not constitute undisclosed income. 2. There was a search operation under Section 132 of the Income Tax Act, 1961 (for short hereinafter referred to as the Act ) on 12.11.1997 in the case of M/s.Sadhwani Group of Companies. Consequent to said search, notice under Section 158BC of the Act, was issued on 19.11.1998 calling upon the assessee to file the return of income for the block period. In response to the notice, the assessee filed the return of income in Form No.2B. The assessee in the regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Authority, granted relief to the assessee. Against the said order, the Revenue preferred an appeal to the Tribunal, which has declined to entertain the appeal, dismissed the appeal confirming the order of the Appellate Authority. It is against the said order, the Revenue is in appeal. It is relevant to note that no search has taken place in the hands of this respondent Assessee. 3. This appeal came to be admitted to consider the following substantial question of law: Whether the Appellate Authorities were correct in holding that the NRI gifts detected in the course of search cannot be treated as an undisclosed income of the assessee for the block period despite the identification of the donor, his creditworthiness and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment of the undisclosed income unearthed as a result of search without affecting the regular assessment made or to be made. Search is the sine qua non for the block assessment. The special provisions are devised to operate in the distinct field of undisclosed income and are clearly in addition to the regular assessments covering the previous years falling in the block period. The special procedure of Chapter XIV-B is intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. It is not intended to be substituted for regular assessment. Its scope and ambit is limited in that sense to materials unearthed during search. It is in addition to the regular assessment already done or to be done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esult of search proceedings initiated by the income-tax authorities, under Section 132 of the Act, notwithstanding any other provisions of the Act except to the extent provided for in the Chapter. Thereafter it was held that, a bare reading of Section 158BB of the Act makes it clear that the condition precedent for invoking a block assessment is a search conducted under Section 132 or documents or assets requisitioned under Section 132A. Moreover, Section 158BD permits the application of the provisions of this Chapter only on the satisfaction of the Assessing Officer that the seized documents show undisclosed income of a person other than the person with respect to whom search was conducted or a requisition was made. Thereafter, at parag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, one is ipso facto making a statement with respect to whether or not the assessee possessed the intention to do the same. To gauge this, however, reliance must be placed on the surrounding facts and circumstances of the case. 7. From the aforesaid judgment, it is clear that an undisclosed income signifies income not stated in the returns filed. If income is disclosed in the return filed, either under Section 139(1) or under Section 139(4) of the Act, it cannot be construed as an undisclosed income. Then Chapter XIV-B is not attracted. Therefore, the condition precedent for exercising power under Chapter XIV-B are: (i) A search under Section 132 of the Act where incriminating evidence of undisclosed income is seized; (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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