Chapter XIV-B requires search material for undisclosed income; absent such evidence, the assessee's disclosure stands.

Chapter XIV-B of the Income-tax Act, 1961 cannot be invoked to treat income as undisclosed unless the search yields material supporting that treatment. The assessee's returns and audited accounts had already disclosed the relevant income, and the Tribunal found that the Assessing Officer had brought no search material to justify classifying prior years' income as undisclosed. That factual finding was left undisturbed, and the High Court upheld the view that no undisclosed income arose from the search. The appeal therefore failed because no substantial question of law arose from the Tribunal's findings.

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Issues: Whether Chapter XIV-B of the Income-tax Act, 1961 could be invoked and income treated as undisclosed income in the absence of any material found during the search operations.

Analysis: The assessee's returns and audited financial records showed disclosure of the relevant income in the firm's accounts, and the returns of the firm had been filed for the relevant years. The Tribunal found on facts that the Assessing Officer had treated the prior years' total income as undisclosed income without any material emerging from the search. No contrary factual basis was shown to disturb those findings.

Conclusion: The invocation of Chapter XIV-B was not justified on the facts, and the finding that there was no undisclosed income based on search material was upheld in favour of the assessee.

Final Conclusion: The appeal failed as no substantial question of law arose from the Tribunal's factual findings.

Ratio Decidendi: Chapter XIV-B cannot be invoked to assess income as undisclosed unless the search yields material supporting such treatment.

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