Section 158BB of Income Tax Act "Computation of undisclosed income of the block period"
158BB. (1) The undisclosed income of the block period
shall be the aggregate of the total income of the previous
years falling within the block period computed, in
accordance with the provisions of this 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 Assessing Officer 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 the losses of such previous years, determined,-
(a) where assessments under section 143 or section 144 or
section 147 have been concluded prior to the date of
commencement of the search or the date of requisition, on
the basis of such assessments;
(b) where returns of income have been filed under section
139 or in response to a notice issued under sub-section (1)
of section 142 or section 148 but assessments have not been
made till the date of search or requisition, on the basis of
the income disclosed in such returns;
(c) where the due date for filing a return of income has
expired, but no return of income has been filed,-
(A) on the basis of entries as recorded in the books of
account and other documents maintained in the normal course
on or before the date of the search or requisition where
such entries result in computation of loss for any previous
year falling in the block period; or
(B) on the basis of entries as recorded in the books of
account and other documents maintained in the normal course
on or before the date of the search or requisition where
such income does not exceed the maximum amount not
chargeable to tax for any previous year falling in the block
period;
(ca) where the due date for filing a return of income has
expired, but no return of income has been filed, as nil, in
cases not falling under clause (c);
(d) where the previous year has not ended or the date of
filing the return of income under sub-section (1) of section
139 has not expired, on the basis of entries relating to
such income or transactions as recorded in the books of
account and other documents maintained in the normal course
on or before the date of the search or requisition relating
to such previous years;
(e) where any order of settlement has been made under
sub-section (4) of section 245D, on the basis of such order;
(f) where an assessment of undisclosed income had been made
earlier under clause (c) of section 158BC, on the basis of
such assessment.
Explanation.-For the purposes of determination of
undisclosed income,-
(a) the total income or loss of each previous year shall,
for the purpose of aggregation, be taken as the total income
or loss computed in accordance with the provisions of this
Act without giving effect to set off of brought forward
losses under Chapter VI or unabsorbed depreciation under
sub-section (2) of section 32:
Provided that in computing deductions under Chapter VI-A for
the purposes of the said aggregation, effect shall be given
to set off of brought forward losses under Chapter VI or
unabsorbed depreciation under sub-section (2) of section 32;
(b) of a firm, returned income and total income assessed for
each of the previous years falling within the block period
shall be the income determined before allowing deduction of
salary, interest, commission, bonus or remuneration by
whatever name called to any partner not being a working
partner :
Provided that undisclosed income of the firm so determined
shall not be chargeable to tax in the hands of the partners,
whether on allocation or on account of enhancement;
(c) assessment under section 143 includes determination of
income under sub-section (1) or sub-section (1B) of section
143.
(2) In computing the undisclosed income of the block period,
the provisions of sections 68, 69, 69A, 69B and 69C shall,
so far as may be, apply and references to "financial year"
in those sections shall be construed as references to the
relevant previous year falling in the block period including
the previous year ending with the date of search or of the
requisition.
(3) The burden of proving to the satisfaction of the
Assessing Officer that any undisclosed income had already
been disclosed in any return of income filed by the assessee
before the commencement of search or of the requisition, as
the case may be, shall be on the assessee.
(4) For the purpose of assessment under this Chapter, losses
brought forward from the previous year under Chapter VI or
unabsorbed depreciation under sub-section (2) of section 32
shall not be set off against the undisclosed income
determined in the block assessment under this Chapter, but
may be carried forward for being set off in the regular
assessments.
158BC. Where any search has been conducted under section
132 or books of account, other documents or assets are
requisitioned under section 132A, in the case of any person,
then,-
(a) the Assessing Officer shall-
(i) in respect of search initiated or books of account or
other documents or any assets requisitioned after the 30th
day of June, 1995, but before the 1st day of January, 1997,
serve a notice to such person requiring him to furnish
within such time not being less than fifteen days;
(ii) in respect of search initiated or books of account or
other documents or any assets requisitioned on or after the
1st day of January, 1997, serve a notice to such person
requiring him to furnish within such time not being less
than fifteen days but not more than forty-five days,
as may be specified in the notice a return in the prescribed
form and verified in the same manner as a return under
clause (i) of sub-section (1) of section 142, setting forth
his total income including the undisclosed income for the
block period :
Provided that no notice under section 148 is required to be
issued for the purpose of proceeding under this Chapter :
Provided further that a person who has furnished a return
under this clause shall not be entitled to file a revised
return;
(b) the Assessing Officer shall proceed to determine the
undisclosed income of the block period in the manner laid
down in section 158BB and the provisions of section 142,
sub-sections (2) and (3) of section 143, section 144 and
section 145 shall, so far as may be, apply;
(c) the Assessing Officer, on determination of the
undisclosed income of the block period in accordance with
this Chapter, shall pass an order of assessment and
determine the tax payable by him on the basis of such
assessment;
(d) the assets seized under section 132 or requisitioned
under section 132A shall be dealt with in accordance with
the provisions of section 132B.