INCOME TAX ACT, 1961

Section 260A

Appeal (High Court) - Maintainability - No substantial question of law - Deletion of disallowance made in block assessment on the ground of no incriminating documents found during search

AO passed detailed assessment Order in respect of the block period and made disallowances of foreign tour expenses. CIT(A) dleted disallowance and Tribunal upheld order of CIT(A) on the ground that during search and seizure proceedings no incriminating documents were found which could be linked with foreign trips made by assessee. Revenue challenged this by way of appeal before High Court. Held: Section 158BC requires AO to determine undisclosed income of the block period in the manner provided under section 158BB. Section 158BB (1) states that undisclosed income of the block period would be the aggregate of total income of previous years falling within block period computed, in accordance with provisions of the 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 AO and relatable to such evidence, as reduced by the aggregate of the total income, or as the case may be, as increased by the aggregate of losses of such previous years. Therefore, while determining/computing undisclosed income of the block period, AO would compute income on the basis of evidence found as a result of search or on requisition of books of accounts. This is so because correctness or otherwise of the return filed in pursuance of notice under section 158BC (a) has to be examined with reference to materials in possession of the AO having nexus to assessment of undisclosed income. Hence, block assessment has to be framed in the light of material coming to the possession of AO pursuant to the search, which is the foundation of proceedings. In the instant case. It was clear that findings returned by Tribunal in respect of deletions exhibited due application of mind on the part of Tribunal and on the basis of the factual evidence on record. There was no perversity, much less any ambiguity, in the findings returned by Tribunal. There was no CIT(A) had dealt with the related issue in great detail which had been affirmed by the Tribunal. Accordingly there was concurrent findings of fact by the two lower appellate authorities and hence there was no reason to believe that findings were otherwise incorrect or improper. Accordingly, appeal filed by revenue under section 260A was devoid of merit and was dismissed as no question of law, much less any substantial question of law, arose from the order of Tribunal.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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