JUDGMENT
1. This appeal has been filed by the Revenue, against the judgment of the Tribunal, dated November 28, 2001. This appeal was admitted, vide order dated December 9, 2002, by framing the following substantial question of law:
“(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified while interpreting the provisions of section 158BB(1)(c) of the Act that credit of the income is to be given while computing undisclosed income even if no return is filed under section 139(1) in the cases of below taxable income?”
2. The facts of the case are that the assessment was made for the block period 1988–89 to 1999–2000 and that matter was carried up to the Tribunal and the Tribunal, ultimately, while deciding ground No. 8, relating to deletion of addition of Rs. 1,57,467 held that the addition was deleted by the Commissioner of Income-tax (Appeals) holding that the assessee was not having taxable income during the period and was not under the obligation to file a return and so merely on account of non-filing of the return of income the assessee's income cannot be computed as undisclosed income and this was found to have been so considered rightly.
3. It may be observed that this is not in dispute that this amount of Rs. 1,57,467 represents the amount of income of the assessee during the relevant previous years in which his income was below taxable limits and for those period the assessee was not under the obligation to file any type of income-tax return.
4. It is contended by learned counsel on behalf of the Revenue, on the basis of language of section 158BB, that in the case of search and seizure, when the block assessment is to be made income is to be computed in accordance with the various provisions of Chapter IV and no deduction can be allowed with respect to the income during the years during which it was below taxable limits and, therefore, the order of the Tribunal, so also the Commissioner of Income-tax (Appeals) is required to be interfered with.
5. On the other hand, learned counsel for the assessee supported the impugned order contending it to be in accordance with the provisions of section 158BB.
6. We may gainfully quote the relevant parts of section 158BB, being subsection (1) and clauses (c) and (ca) thereof, which read as under:
“158BB. (1). 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 this Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence, 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,—…
(c) where the due date for filing a return of income has expired, but no return of income has been filed,—
(A) on the basis of entries as recorded in the books of account and other document maintained in the normal course on or before the date of the search or requisition where such entries result in computation of loss for any previous year falling in the block period; or
(B) on the basis of entries as recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition where such income does not exceed the maximum amount not chargeable to tax for any previous year falling in the block period;
(ca) where the due date for filing a return of income has expired, but no return of income has been filed, as nil, in cases not falling under clause (c);”
7. A bare reading of this section shows that according to sub-section (1), the undisclosed income of the block period is to be taken to be the aggregate of the total income of the previous years falling within the block period to be computed in accordance with the provisions of the Act on the basis of the material mentioned in this sub-section but then such aggregate amount is further subject to reduction and increase as provided in this subsection (1) itself inasmuch as it is to be reduced by the aggregate of total income, so also is to be increased by the aggregate of losses, of such previous years determined according to various clauses of this sub-section (1). Thus, the circumstances mentioned in clauses (c) and (ca), as the case may be, are required to be taken into account for the purpose of increasing or reducing the aggregate of the total income as arrived at. In this sequence, a look at clause (c) shows that it comprises of sub-clauses (A), and (B). Subclause (A) prescribes the procedure for computation of losses for any previous year falling within the block period while clause (B) provides for computation of the income falling within the block period.
8. Since it is not a case of computation of any losses the relevant and applicable clause would be only sub-clause (B) which provides that the income is to be computed on the basis of computation as recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition where such income does not exceed maximum amount not chargeable to tax for any previous year falling within the block period.
9. In our view, this unmistakably shows that where the total income for any previous year falling within the block period as arrived at on the basis of the books of account and other documents maintained in the normal course on or before the date of the search or requisition of the documents if it does not exceed the maximum amount not chargeable to tax has to be reduced from out of the aggregate income of the block period as arrived at under sub-section (1) in accordance with the provisions of the Act on the basis of the documents. Our view is further fortified from a bare reading of clause (ca) which provides that where due date of filing of the return has expired but no return of income has been filed in cases not falling in clause (c) income is to be taken as “nil”. Obviously, meaning thereby, that in cases where the total income for any previous year falling within the block period exceeds the maximum amount not chargeable to tax and return has not been filed then the entire income is to be taken into account as aggregate income of the assessee during the relevant block period and no deduction on that account is required to be made. Obviously, therefore, where it does not exceed maximum amount not chargeable to tax for any previous year falling within the block period that income is required to be reduced from out of the aggregate income of the block period arrived at in accordance with the provisions of section 158BB and it cannot be said to be the undisclosed income even if no return is filed within the time prescribed under section 139 as obviously the assessee was not under the obligation to file any return.
10. Our view also finds support from the judgment of the Madhya Pradesh High Court, in CIT v. Asandas Khatri, [2006] 283 ITR 346.
11. Accordingly, the question framed is answered in favour of the assessee and against the Revenue. Resultantly, we find no force in the appeal and the same is dismissed.