Search-based block assessment notice fails where no incriminating material shows undisclosed income.

A notice under section 158BC of the Income-tax Act, 1961 is sustainable only where search proceedings yield incriminating material showing undisclosed income for the block period. Here, no such material was found, the petitioner's explanation about the bank account was accepted, and the appraisal report itself recorded no involvement in the alleged accounts. Since the statutory precondition for invoking Chapter XIV-B was not satisfied, the notice was invalid and was quashed in favour of the assessee.

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Issues: Whether the notice issued under section 158BC of the Income-tax Act, 1961 was sustainable when no incriminating material or undisclosed income was found in the search.

Analysis: The notice under section 158BC could be issued only if the search yielded material indicating undisclosed income for the block period. The record showed that nothing incriminating was found during the search, the petitioner's explanation regarding the bank account was accepted, and the appraisal report itself recorded that there was no involvement of the petitioner in the alleged accounts. On the revenue's own material, the precondition for invoking Chapter XIVB was not satisfied.

Conclusion: The notice under section 158BC was unsustainable and was rightly quashed; the finding is in favour of the assessee.

Final Conclusion: The writ petition succeeded, the impugned notice was set aside, and costs were awarded to the petitioner.

Ratio Decidendi: A notice under section 158BC can be sustained only when search proceedings disclose incriminating material showing undisclosed income; in the absence of such material, the notice is invalid.

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