Law:

Section:

Section 158BB of the Income-tax Act, 1961 - Block assessment in search cases - Undisclosed income, computation of Where disallowable travelling expenses incurred through credit cards recovered in course of search, were assessed as undisclosed income of assessee for block period in question, addition of entire expenditure as undisclosed income could not have been made by Assessing Officer as it was admitted that only some items of expenditure were found in course of search to be unrelated to business of assessee or were found to be in respect of persons not connected with such business; in such a situation, Assessing Officer should have made an endeavour to segregate items of expenditure under separate heads and only those items which were found to be unconnected with business of assessee or were in respect of persons not connected with assessee, could have legitimately formed basis of an addition to undisclosed income; accordingly matter was to be remitted to Assessing Officer [Assessment year 1999-2000] [Remanded] CIT v. Bimal Auto Agency [2009] 314 ITR 191 / 226 CTR (Gauhati) 573 There was a search in the assessee's premises. Certain expenditure was admittedly shown by the assessee in its books of account. However, on the ground that the explanation furnished by the assessee with regard to the aforesaid expenditure was not satisfactory, the said amount of Rs. 14,98,282 on account of disallowable travelling expenses incurred through credit cards recovered in the course of search was assessed as undisclosed income of the assessee for the block period in question. Held that the Assessing Officer did not make any endeavour to find out or segregate the items of personal expenditure or expenditure unconnected with the business of the assessee from those items which were so relatable and, instead, the Assessing Officer, not being satisfied with the reply submitted by the assessee, proceeded to add the entirety of the expenditure as undisclosed income of the assessee. The addition of the entire expenditure as undisclosed income could not have been made by the Assessing Officer as it was admitted that only some items of expenditure were found in the course of search…

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