TaxTMI 
TaxTMI 
2001 (12) TMI 53
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....ing undisclosed income of Rs.88,500 for the block period from April 1, 1985 to November 22, 1995. The Assessing Officer completed the assessment, determining the total undisclosed income of the block period at Rs.7,22,232. As the assessee had not previously paid tax, no deduction was allowed from the income of the assessee. Aggrieved by the assessment under undisclosed income of Rs.7,22,232, the assessee preferred appeal before the Tribunal. Before the Tribunal, the assessee raised many contentions. One of the contentions was that the Assessing Officer was not correct in including the income below the taxable limit as the undisclosed income for the purpose of assessment under section 158BC. Since the income for the years 1986-87 and 1987-88 was below the taxable limit, the assessee was not required to file the return of the income. This contention was accepted by the Tribunal. The Tribunal also allowed certain other deductions and directed the Assessing Officer to look into the matter. The Revenue has referred the question with regard to the non-inclusion of the income of the above two years for assessment. From the assessment order, the following is revealed: -----------------....
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....; 37,768.00 Total undisclosed income 54,768.00 Assessment year 1990-91: House property income 5,000.00 Business income and other sources for shortage in cash 86,157.00 flow  ....
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.... 62,500.00 Undisclosed income ----------- 5,000.00 Assessment year 1992-93: House property income 5,000.00 Business income 50,000.00 ----------- &nbs....
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.... 3,22,888.00 ------------ 3,27,888.00 Less : Depreciation lorry (cost Rs.35,000) 17,500.00 Undisclosed income &nbs....
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....ed income ---------- 66,000.00 Summary of the undisclosed income: Assessment year 1986-87 18,000.00 1987-88 18,000.00 1988-89 40,669.00 &....
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....nbsp; (Up to 22-11-1995) 66,000.00 -------------- Net undisclosed income for the block period 7,22,232.00 -------------- The assessment for the block period is completed as under: Net undisclosed income for the block period &nbs....
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....ctive of the previous year or years to which such income relates and irrespective of the fact whether regular assessment for any one or more of the relevant assessment years is pending or not. Section 158BB deals with computation of undisclosed income of the block period. It says that the undisclosed income of the block period shall be the aggregate of the total income of the previous years falling within the block period computed in accordance with the provisions of Chapter IV, on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with the Assessing Officer, as reduced by the aggregate of the total income, or, as the case may be, as increased by the aggregate of the losses of such previous years, determined. That section deals with the following: "(a) where assessments under section 143 or section 144 or section 147 have been concluded, on the basis of such assessments; (b) where returns of income have been filed under section 139 or section 147 but assessments have not been made till the date of search or requisition, on the basis of the income disclosed in such returns; ....
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....t expired and that you are in a position to prove to the satisfaction of the Assessing Officer that such income or the transactions relating to such income have been recorded in the books of account and documents maintained in the normal course, such income is to be indicated against that previous year. For any year, if the return has not been furnished for the reason that the taxable income was not above the maximum amount not chargeable to tax, the total income is to be mentioned against that previous year." According to us, the note does not state as contended by learned counsel for the assessee. As a matter of fact, the note specifically states that even though the return is not filed on the ground that the total income is below the taxable limit, the total income has to be mentioned against the previous year. Further, it is well known that even if the note contains anything which is inconsistent with the section, then the section will prevail. Hence, according to us, on the basis of the note, the section cannot be interpreted. In this context, we refer to a decision of the Gujarat High Court reported in Khandubhai Vasanji Desai v. Deputy CIT [1999] 236 ITR 73, which says as....