Undisclosed stock from a continuous survey-and-search operation remains taxable under block assessment, not regular assessment.

Undisclosed stock detected in a survey that immediately led to a same-day search remained assessable as undisclosed income under the block assessment regime. A survey under section 133A is limited to inspection and recording statements without oath, whereas a search under section 132 is based on prior information and reason to believe, with stronger evidentiary consequences. Where the survey and search formed one continuous operation and no formal disclosure had occurred before the search, the excess stock did not lose its character as undisclosed income. The special search-based assessment procedure therefore applied, and regular assessment was not the proper forum.

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Issues: Whether undisclosed stock detected during a survey that was converted into a search on the same day was assessable in regular assessment or had to be assessed in block assessment under Chapter XIV-B.

Analysis: Survey under section 133A is an investigation proceeding that permits inspection, inventory and recording of a statement without oath, and the information collected may be used in future proceedings. Search under section 132, by contrast, is founded on information in the officer's possession and reason to believe regarding concealment, and statements recorded therein have evidentiary value. A disclosure made during survey does not, by itself, amount to disclosure in compliance with the requirements of the Act so as to take the income out of the definition of undisclosed income. On the facts, the survey and search were not independent events but formed part of a single continuing operation, and the search was initiated on the basis of information obtained during survey. Since the special procedure for search cases applied, and no formal disclosure for the purposes of the Act had occurred before the search, the excess stock retained the character of undisclosed income assessable in block assessment.

Conclusion: The undisclosed stock was rightly brought to tax in block assessment proceedings and not in regular assessment.

Final Conclusion: The Revenue's appeal succeeded, and the assessee's contention that the income was taxable only in regular assessment was rejected.

Ratio Decidendi: Where a survey and a same-day search form one continuous operation and the income is detected and admitted only in that course, the income remains undisclosed income assessable under the search-block assessment regime rather than in regular assessment.

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