Law:

Section:

Section 158B, read with section 158BB, of the Income-tax Act, 1961 - Block assessment in search cases - Undisclosed income - Block assessment years 1987-88 to 1997-98 - Whether as a result of amendment to definition of 'undisclosed income' under section 158B(b) brought about by Finance Act, 2002 with retrospective effect from 1-7-1995, any income, which has been suppressed by making any false claims of expenditure or deduction or allowance, discovered as a result of search or requisition, can be added as undisclosed income - Held, yes - Whether, however, such addition can be made only in regard to income related to false claim of expenditure disclosed by material unearthed during search - Held, yes - Whether in matters relating to household expenditure, where normally monthly expenditure tends to depend upon income, it is not permissible to assess expenditure during a previous year, with reference to expenditure during a later year - Held, yes FACTS A search and seizure operation completed in the case of the assessee, led to seizure of a loose slip relating to his business which showed the calculation of household expenditure of Rs. 14,000. Relying on the slip, the Assessing Officer, concluded that the household expenses were per month and not per year. As the said slip did not bear any date, he treated the same as relating to the year in which it was found,i.e., accounting year 1996-97 and calculated the expenditure accordingly. In regard to the previous years also, he calculated the household expenses by deducting 10 per cent per year from the expenditure determined for 1997-98 considering the inflation rate at 10 per cent. On appeal, the assessee contended that in the returns with computation of income filed by him every year, he had shown the withdrawals towards household expenses and the same had been accepted by the Assessing Officer; and that once a particular issue had been examined by the Assessing Officer, it cannot be reopened by the Assessing Officer while framing the block assessment unless there is some incriminating evidence with regard to the income or claim of the assessee in a particular assessment year. The assessee also contended that while…

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