Rejected VDIS declaration in search assessment was remitted for fresh scrutiny of only undisclosed income.

In a search assessment under Chapter XIV-B, an addition based on a rejected VDIS declaration was held not to stand on the existing record because the facts were materially identical to those in the assessee's brother's matter, where the same VDIS claim had already been sent back for fresh examination. The impugned addition was set aside and the Assessing Officer was directed to re-examine the particulars declared under VDIS 1997 and bring to tax only that part which could validly constitute undisclosed income under the block assessment scheme.

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Issues: Whether the addition of Rs. 11,96,600 made on the basis of the rejected VDIS declaration was sustainable or required to be set aside and remitted for fresh consideration.

Analysis: The addition arose from a search assessment under Chapter XIV-B following action under section 132 and notice under section 158BC(a) of the Income-tax Act, 1961. The material facts were found to be materially identical to those in the connected matter of the assessee's brother, where the same VDIS-related claim had been considered and the matter had been restored to the Assessing Officer for fresh decision. In the absence of any distinguishing feature, the same course was followed here, with directions that the Assessing Officer re-examine the particulars of income declared under VDIS 1997 and assess only that part which could validly be brought to tax as undisclosed income under the block assessment scheme.

Conclusion: The impugned addition was set aside and the matter was remitted to the Assessing Officer for fresh adjudication in accordance with the earlier directions.

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