Block assessment extrapolation based on seized evidence is permissible when undisclosed sales show a rational, non-arbitrary pattern.

Seized search material showing sales outside the books can support an inference of undisclosed production, and in block assessment the intervening period may be estimated where the extrapolation has a rational nexus with that evidence and is not arbitrary. The text explains that papers covering only part of the period may still establish a continuing pattern of undisclosed sales, making extrapolation permissible if the Tribunal's approach is plausible and no perversity is shown.

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Issues: Whether the Tribunal was justified in sustaining addition for unaccounted production by extrapolating seized material for the block period.

Analysis: The addition was founded on material seized during search showing sales outside the books. The seized papers covered only part of the relevant period, but they established the pattern of undisclosed sales. In block assessment, once undisclosed income is found from search material, estimation for the intervening period is permissible if it has a rational nexus with the seized evidence and is not arbitrary. The Tribunal adopted the same approach on identical facts and its view was found to be plausible and reasonable, with no perversity shown.

Conclusion: The addition sustained by the Tribunal was valid and the issue was decided against the assessee and in favour of the Revenue.

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