Rajesh Balia, J. - (1.) HEARD learned counsel for the appellant.
(2.) IN this appeal, the appellant has challenged the order of the INcome-tax Appellate Tribunal, dated May 24, 1999, setting aside the order of the assessing authority on the ground that the assessment made by the assess-ing authority for the block period 1986-87 to 1995-96 up to August 31, 1995, under Section 158BB to the extent that it rejects the return filed by the assessee under the proceedings for the different years disclosing the incumbent of purchase was not justified inasmuch as the assessing authority had necessary jurisdiction to assess the income to best of his judgment on finding that the income disclosed by the assessee in the returns filed in the proceedings did not disclose the income correctly. The Tribunal has not accepted resort to estimation submitted by the assessing authority, inter alia, on the ground that the assessing authority has resorted to the best judgment assessment without examining the material that has come in his possession during the course of search. It is contended by learned counsel that there is no prohibition against making a best judgment assessment under Section 158BB in view of the Explanation to Section 158BB permitting resort to the provisions of Sections 144 and 145 of the INcome-tax Act, 1961. We are of the opinion that so far as the contention of learned counsel for the appellant that the Assessing Officer has necessary jurisdiction to resort to best judgment assessment in proceedings under Section 158BB, the correctness of it cannot be doubted. However, under the scheme of the provisions for block assessment, it is apparent that it relates to assessment of "undisclosed income" of the assessee excluding the income subjected to regular assessment in pursuance of the returns filed by the assessee for such period. It is also apparent from the perusal of Section 158BB that the returns are also required to be filed in pursuance of the notice under Section 158BC(a) and the assessment is to be framed on that basis in the light of material that has come into possession of the assessing authority during the course of search which is the foundation of the proceedings. That being so, the correctness or otherwise of the returns filed in pursuance of the notice under Section 158BC(a) has to be examined with reference to the material in the possession of the assessing authority having nexus to assessment of "undisclosed income" which is with the assessing authority, and premise of such proceedings. If the returns filed by the assessee do not accord with the materials which are already in the possession of the authority, it can be estimated to the best judgment by the assessing authority on the basis of the material in his possession. However, the assessing authority is not conferred with power to make estimation of income de hors the material in his possession, while making regular assessment order under Section 158BB. It has to be borne in mind that proceedings under Sections 158BB and 158BC are that of undisclosed income. Therefore, the proceeding carries with it a presumption that returns filed in pursuance of such proceedings are of undisclosed income and not necessarily in accordance with the books of account. Its verification has to be searched outside regular books with reference to material that has been found during search. That makes it imperative to adjudicate the return with reference to material that has come in the possession of the assessing authority during the course of search proceedings and on which basis the belief about the existence of undisclosed income is entertained by the assessing authority inviting invocation of Sections 158BB and 158BC. The enquiry into the correctness of such returns with reference to material so found has nexus with the object of the special provisions, to adjudge whether the assessee is still honestly disclosing his income correctly after incriminating material has been found in the possession of the Revenue authority before such returns can be rejected and thereafter to frame assessment estimating the income liable to tax to the best of judgment on the basis of the material that is available with him. Having perused the assessment order, we are of the opinion that no such finding has been recorded by the Assessing Officer whether the returns filed by the assessee do not accord with facts that came to light during the course of search and seizure nor estimate of income made by the assessing authority appears to be after considering that material on record. It is the substance and the reasoning adopted by the Tribunal that the Assessing Officer has estimated the income without reference to the material in his possession which cannot be countenanced. Thus, finding has rightly been reached by the Tribunal on the basis of the material that was on record by applying the principle of law correctly. Such finding does not give rise to any substantial questions of law. The appeal is, accordingly, rejected. There shall be no order as to costs. ;