Block assessment is limited to search material; accepted wealth-tax disclosures and later valuation reports cannot widen undisclosed income.

Chapter XIV-B applies only to undisclosed income supported by material found during search. Accepted wealth-tax disclosures of jewellery and silver articles could not be ignored and treated as unexplained investment merely because the assets were later noticed again in search proceedings, so those items fell outside block assessment. A valuation report obtained after the regular assessment, relating to bungalow construction, also could not be used to make a Chapter XIV-B addition because it was not based on search material and would impermissibly expand the limited block-assessment framework. The commentary therefore confirms that prior accepted disclosures and post-assessment valuation exercises do not justify additions as undisclosed income under block assessment.

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Issues: (i) Whether additions towards unexplained investment in gold and silver could be sustained as undisclosed income in block assessment proceedings; (ii) Whether the assessee's disclosure of jewellery and silver articles in accepted wealth-tax returns excluded those items from Chapter XIV-B; (iii) Whether addition based on a departmental valuer's report regarding bungalow construction could validly form part of undisclosed income under Chapter XIV-B.

Issue (i): Whether additions towards unexplained investment in gold and silver could be sustained as undisclosed income in block assessment proceedings.

Analysis: Chapter XIV-B is attracted to undisclosed income detected on the basis of material found during search under section 132. Where the assessee had already disclosed the relevant jewellery and silver articles in wealth-tax returns that were processed and accepted, the Department could not ignore those disclosures and treat the same assets as unexplained investments merely because they were noticed again in the search proceedings.

Conclusion: The addition for unexplained investment in gold and silver could not be sustained and the finding was in favour of the assessee.

Issue (ii): Whether the assessee's disclosure of jewellery and silver articles in accepted wealth-tax returns excluded those items from Chapter XIV-B.

Analysis: The decisive consideration was that the assets had been disclosed in returns that stood accepted by the Department. In such circumstances, the alleged unexplained investments did not constitute undisclosed income for block assessment purposes, and section 158BB(1) could not be used to enlarge the block assessment beyond the scope of search material and legally recognised disclosures.

Conclusion: The accepted wealth-tax disclosures excluded those items from block assessment and the issue was decided in favour of the assessee.

Issue (iii): Whether addition based on a departmental valuer's report regarding bungalow construction could validly form part of undisclosed income under Chapter XIV-B.

Analysis: The addition was founded on a valuation report obtained after the regular assessment, not on undisclosed material unearthed in search. That basis did not fall within the ambit of Chapter XIV-B, because a block assessment cannot be used to make additions divorced from the search material and to reopen the matter through a subsequent valuation exercise.

Conclusion: The addition based on the departmental valuer's report was not permissible under Chapter XIV-B and the issue was decided in favour of the assessee.

Final Conclusion: The judgment confirms that block assessment is confined to undisclosed income supported by search material and cannot be expanded by resort to prior accepted disclosures or post-assessment valuation reports.

Ratio Decidendi: In block assessment proceedings under Chapter XIV-B, only undisclosed income evidenced by material found during search can be brought to tax; items already disclosed in accepted returns, or additions resting solely on a later valuation report, fall outside that limited statutory framework.

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