Block assessment requires seized material for undisclosed income; estimated addition under section 145 is not warranted without supporting evidence.

In block assessment under Chapter XIV-B, undisclosed income must be computed from seized material and other evidence available under section 158BB(1). Section 145 cannot be used to estimate undisclosed income for a period not supported by seized documents, because that provision applies only after books or documents are rejected as unreliable or incapable of yielding true income. On the facts described, the tribunal's deletion of the estimated addition was upheld, and the High Court treated the matter as a pure finding of fact with no substantial question of law arising.

---

---

Issues: Whether, in a block assessment under Chapter XIV-B, the Assessing Officer could invoke section 145 to estimate undisclosed income for a period not supported by seized material and make an addition on that basis.

Analysis: The Tribunal's finding was that section 145 applies only after books of account or documents are rejected as unreliable or incapable of yielding true income. In a block assessment, undisclosed income has to be computed on the basis of evidence found as a result of search and other material available under section 158BB(1). Where no seized document contained details for the relevant period, estimation of undisclosed income on the basis of section 145 was not warranted. The High Court found that this was a pure finding of fact and did not give rise to any substantial question of law.

Conclusion: The addition based on estimated undisclosed income was not sustainable, and the deletion made by the Tribunal was upheld in favour of the assessee.

Ratio Decidendi: In block assessment proceedings, undisclosed income must be computed from seized material and other available evidence under section 158BB(1), and section 145 cannot be used to make an estimated addition for a period not supported by such material.

---