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[2008] 173 Taxman 100 (Kerala)/[2009] 311 ITR 226 (Kerala)/[2008] 219 CTR 369 (Kerala) [2008] 173 TAXMAN 100 (KER.) HIGH COURT OF KERALA Commissioner of Income-tax v. Binoy Mathai* C.N. RAMACHANDRAN NAIR AND T.R. RAMACHANDRAN NAIR, JJ. IT REFERENCE NO. 215 OF 1999 APRIL 4, 2008 Section 158BB of the Income-tax Act, 1961 - Block assessment in search cases - Undisclosed income, computation of - Whether income of previous year, for which time for filing return is not over as on date of search, can be excluded from block assessment only if such income or transactions pertaining to such income are recorded in books of account or other documents maintained in normal course of business on or before date of search - Held, yes FACTS On 27-10-1985, a search was conducted in the premises of the assessee. Based on the materials gathered, the Assessing Officer made assessment for the entire block period which included income assessable for the assessment year 1995-96. On appeal filed by the assessee, the Tribunal noticed that the time for filing return for the assessment year 1995-96 had been extended by the Central Board of Direct Taxes till 31-10-1995 and, therefore, the assessee had time to file return for the assessment year 1995-96 on the date of search. It, therefore, directed to exclude income for the assessment year 1995-96 from the block assessment. On reference : HELD The provisions of sections 158BA and 158BB provide for exclusion of income of the previous year for which the time for filing return was not over as on the date of search. In the instant case, even though the time for filing the return under section 139(1) was over, yet by virtue of general extension of time granted by the Central Board of Direct Taxes for filing return for the assessment year 1995-96, the assessee had time till 31-10-1995 to file the return. In fact, the assessee had filed the return on the due date and what was added in the block assessment under challenge was the income returned by the assessee in the return for the assessment year 1995-96. [Para 2] From a combined operation of the above two provisions, it is found that income of previous year for which time for filing return was…

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