Block assessment undisclosed income taxed at special rate; basic exemption, extended filing time, and section 88 relief were rejected.

In block assessment of undisclosed income, income not disclosed within the relevant time was taxable under section 158B(b), and computation under section 158BB(1)(c) had to use the due date under section 139(1), not the extended period under section 139(4). The normal basic exemption limit applicable to annual assessments was inapplicable, and tax on block-period undisclosed income was chargeable at the special rate under section 113. The claim for relief under section 88 also failed for want of supporting material, so the addition was sustained as undisclosed income.

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Issues: Whether, in a block assessment of undisclosed income, the assessee was entitled to claim the basic exemption limit, the benefit of the extended time for filing a return under section 139(4), and relief under section 88, and whether the undisclosed income had to be computed with reference to the due date under section 139(1).

Analysis: The definition of undisclosed income under section 158B(b) was applied to hold that income not disclosed within the relevant time could be brought to tax in block assessment. The due date for filing the return was construed as the specified date under section 139(1), and not the extended period under section 139(4), for the purpose of section 158BB(1)(c). Once that due date had expired, no deduction was available from the total undisclosed income. The tax on block-period undisclosed income was further held to be chargeable at the special rate under section 113, and the normal basic exemption applicable to annual assessments was held inapplicable. No material was shown to support the claim under section 88.

Conclusion: The claim for basic exemption, reliance on section 139(4), and benefit under section 88 were rejected, and the addition was sustained as undisclosed income taxable at the block assessment rate.

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