V.B Gupta, J.:— The issue involved in the present appeal is regarding deletion of an addition totalling Rs. 2,23,08,152 made on the basis of the report of valuation cell of the Department of Revenue on account of unexplained investment in the properties of the assessee.
2. On November 17, 2000, a search and seizure operation under section 132(1) of the Income-tax Act, 1961, (for short as “the Act”) was conducted in the case of Pashupatinath Jee Tours and Travels at its business and residential premises of its partners and their relatives. The assessee is a partner of this firm and during the course of search of his residence B-174, East of Kailash, New Delhi, some papers of properties in which the assessee had made investments were found. The Assessing Officer made a reference to the Valuation Officer and treated the difference between the valuation as per the Departmental Valuation Officer's report and the declared value of the properties as the assessee's undisclosed income for the assessment year 1999-2000 and the period April 1, 2000 to November 17, 2000.
3. In appeal, the Commissioner of Income-tax (Appeals) (“the CIT(A)”) deleted the additions made by the Assessing Officer holding that no adverse material was found during the course of search to suggest that the assessee had understated the investment in the properties. The Revenue challenged the order of the Commissioner of Income-tax (Appeals) before the Income-tax Appellate Tribunal (for short as “Tribunal”) and vide its impugned order dated August 21, 2006, the Tribunal dismissed the appeal holding that in the absence of any adverse material found during the course of search, no addition can be made by treating the investment as undisclosed.
4. Now, the Revenue has challenged the impugned order of the Tribunal in the present appeal.
5. The contention of learned counsel for the Revenue is that despite opportunity to the assessee, he had neither filed any report of the registered valuer, substantiating the declared cost of ihe properties in issue nor any objections to the report relied upon by the Assessing Officer. Since the investment was not disclosed by the assessee in the books of account maintained in the regular course of business, it had to be estimated on the basis of material found/available.
6. Section 158B of the Act is a part of Chapter XTV-B dealing with special procedure for assessment of search cases. The Chapter contains sections 158B to 158BH. “Block period” and “undisclosed income” have been defined in clauses (a) and (b) to section 158B, for the purpose of the Chapter. We are concerned with the definition of “undisclosed income”. The provision in its entirety reads as follows:
“(b) ‘undisclosed income’ includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other documents or transactions represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act.”
7. It is clear from the above definition that the income or the property, which has been disclosed or would have been disclosed for the purpose of this Act does not form part of the undisclosed income for the purpose of block assessment. Under the provisions of Chapter XTV-B, only such of the aforesaid categories of income, which has been found as a result of search can alone be the subject-matter of an assessment under this Chapter. The definition specifies that where an assessee has claimed any expenses or addition, which is found to be false, the same can only be regarded as an undisclosed income for the purpose of this Chapter.
8. Under Chapter XIV-B of the Act, before an addition of an “undisclosed income” can be made, the Assessing Officer has to bring on record the material to show that on evidence found as a result of search there is an undisclosed income represented by credits appearing in the books of account.
9. This court dealing with section 158B of the Act in Commissioner Of Income-Tax, Delhi-Ii v. Ravi Kant Jain., [2001] 250 ITR 141 held that (page 145):
“The special procedure of Chapter XIV-B is intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. As the statutory provisions go to show, it is not intended to be a substitute for regular assessment. Its scope and ambit is limited in that sense to materials unearthed during search. It is in addition to the regular assessment already done or to be done. The assessment for the block period can only be done 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. Evidence found as a result of search is clearly relatable to sections 132 and 132A.”
10. In the case in hand, no incriminating material whatsoever was found during the course of search that might show that the assessee had made more investment in the properties than his declared value. In the absence of any adverse material found during the course of search, addition could not be made by treating the investment as undisclosed and as such no fault can be found with the view taken by the Tribunal.
11. The above being the position, the order of the Tribunal does not give rise to a question of law, much less a substantial question of law, to fall within the limited purview of section 260A of the Act, which is confined to entertaining only such appeal against the order which involves a substantial question of law. Accordingly, the present appeal filed by the Revenue is, hereby, dismissed.