Block assessment limits apply where search reveals undisclosed income, not items already recorded in books and returns.

Block assessment under Chapter XIVB is confined to undisclosed income revealed by search material and linked evidence; income already recorded in the assessee's books, returns or accepted regular assessment cannot be brought to block assessment. Section 158BB requires computation to rest on material found as a result of search or requisition, not on information already disclosed in the ordinary course. As the disputed purchase was already reflected in the assessee's books and returns, and no search material showed undisclosed income, the foundation for block assessment was absent. The proceedings were therefore not legally sustainable and the assessee succeeded.

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Issues: Whether block assessment under Chapter XIVB could be initiated and sustained against the assessee when the alleged income was already reflected in the assessee's books of account and returns, and no material was unearthed in the search indicating undisclosed income.

Analysis: Block assessment under Chapter XIVB is exceptional and is attracted only when search material reveals income or transactions not already forming part of the regular returns, accounts, or assessments. Section 158BB links computation of undisclosed income to evidence found as a result of search or requisition and to materials relatable to such evidence. If the alleged information found in the search of another person is already disclosed by the assessee in the normal course, the basis for proceeding under the block assessment provisions does not arise. On the facts, the disputed purchase was already shown in the assessee's books and returns, and the regular assessment had accepted it. The foundation for treating the amount as undisclosed income was therefore absent.

Conclusion: The block assessment proceedings were not legally sustainable and the assessee succeeded.

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