Advance tax payment and undisclosed income under block assessment: income reflected through tax payment may not be treated as undisclosed.

Advance tax payment has statutory significance in the search-assessment scheme, and income reflected through such payment is not automatically excluded from consideration as disclosed income merely because no return had been filed on the date of search. In the context of block assessment under Chapter XIV-B, the discussion distinguishes authority on belated returns after search and treats advance tax as relevant to determining whether income is undisclosed. On that basis, income represented by advance tax paid by the assessee was treated as outside the category of undisclosed income for block assessment purposes.

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Issues: Whether income represented by advance tax paid by the assessee could be treated as undisclosed income for the purpose of block assessment under Chapter XIV-B.

Analysis: The decision turned on the statutory scheme governing search assessments and the meaning of undisclosed income. The Court held that payment of advance tax is not to be ignored as a matter of law and has statutory significance. Relying on the principles underlying self-assessment and the treatment of tax paid on the basis of returns, the Court distinguished authority dealing with belated returns after search and held that such authority did not decide whether advance tax payment could be considered while determining undisclosed income. The Court accepted that income disclosed through advance tax payment cannot automatically be excluded from the revenue's consideration merely because no return had been filed on the date of search.

Conclusion: Income disclosed by payment of advance tax cannot be treated as undisclosed income for block assessment purposes, and the question was answered in favour of the assessee.

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