ITA 8/2008 BEFORE THE HON’BLE MR. JUSTICE RANJAN GOGOI THE HON’BLE MR. JUSTICE A.C.UPADHYAY (Ranjan Gogoi, J.) This appeal, by the Revenue, under Section 260A of the Income Ta x Act, 1961, (hereinafter referred to as the Act ), is against the order dated 24.8.2007 passed by the Income Tax Appellate Tribunal, Guwahati Bench, Guwahati in I.T.A. No.55 (Gau)/2007. The appellant is aggrieved by the findings recorded in the aforesaid order of the learned Tribunal to the effect that the excess in come disclosed in a particular assessment year falling in the block assessment y ear can be available to the assessee for set-off of undisclosed income in subseq uent year of the same block period . On the basis of the aforesaid findings, con sequential directions have been issued by the learned Tribunal to the Assessing Officer to allow set-off in favour of the assessee. 2. The facts that will be required to be noticed for the purpose of adjudication of the substantial questions of law framed in the present appeal m ay be briefly noticed hereunder. 3. A search and seizure operation was conducted in the business and residential premises of the assessee on 13.3.2003. Search and seizure operation s were also conducted in the locker of Andhra Bank, A.T. Road Branch, Guwahati o n 24.3.2003 which was in the joint names of the assessee and her son one Shri Aj oy Kumar Jain. Thereafter, notice under Section 158BC of the Income Tax Act was issued and served on the assessee on 13.8.2004. The assessee filed return of inc ome for the block period 1.4.1996 to 13.3.2004 disclosing undisclosed income in the following manner :- Asstt. Year 2001-02 Rs. 15,000/- Asstt. Year 2002-03 Rs.11,00,000/- Asstt. Year 2003-04 Rs. 85,000/- ---------------- Rs.12,00,000/- 4. The assessment of the block period was completed by the Assessin g Officer under Section 158BC of the Act by order dated 13.3.2005. By the afores aid order, the Assessing Officer determined undisclosed income for the block per iod as hereunder :- A.Y. Total income determined in Income in Undisclosed income the Block assessment as per regular return (II-III) Para 22.1 I II III IV 1997-98 96291 96291 Nil 1998-99 112216 112216 Nil 1999-00 89344 89344 Nil 2000-01 88052 88052 Nil 2001-02 816582 252915 563667 2002-03 2019702 289844 1729858 2003-04 4296747 1851368 2445379 Total undisclosed 47389 04 income 5. Aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). By order dated 11.12.2006, the learned Commissioner all owed the appeal filed by the assessee and set aside certain additions made by th e Assessing Officer in the undisclosed income of the assessee for the block peri od. In so far as the claim of set-off is concerned, the appellate authority took the view that there cannot be set-off of one year’s undisclosed income shown i n the block return with any other year . 6. In respect of deletion of certain additions made by the Assessin g Office, the Revenue filed an appeal before the learned Tribunal. Insofar as th e finding with regard to set-off is concerned, the assessee filed cross-objectio n contending that for the assessment years 2001-2002; 2002-2003 and 2003-2004, t he undisclosed income or part thereof, as disclosed by the assessee, not being l inked either with the undisclosed investment or unexplained expenditure under Se ction 158B(b) of the Act, such amount should have been set-off against the undis closed income of subsequent years falling within the same block period. The lear ned Tribunal dismissed the appeal filed by the Revenue by holding the deletions made by the learned Commissioner to be justified in law. In so far as the cross- objection is concerned, the same was allowed by holding that the excess income disclosed in a particular assessment year falling in the block assessment year c an be available to the assessee for set-off of undisclosed income in subsequent year of the same block period . 7. Aggrieved this appeal has been filed by the Revenue wherein the following substantial question of law had been framed by order dated 2.4.2008 :- Whether on the facts and in the circumstances of the case, the Tribunal was justified and correct in law in directing the Assessing Officer to allow set -off of excess income disclosed in a particular year falling within the block pe riod against the undisclosed income of subsequent year falling within the same b lock period ? 8. We have heard Mr. U. Bhuyan, learned counsel for the appellant a nd Shri J.C. Gaur, learned counsel for the respondent assessee. We have perused the orders of the primary authority as well as the first appellate authority. Th e impugned order passed by the leaned Tribunal has also been duly perused by us. 9. The plea raised by the assessee with regard to the claim of s et-off is that certain amounts declared as undisclosed income by the asses see were not related to any undisclosed investment or unexplained expenditure by the Assessing Officer. Therefore, according to the assessee, such amount(s) co uld not have been added to the undisclosed income by the Assessing Officer and the same were liable to be set-off against the undisclosed income of subsequent years within the block period. 10. On the face of it, the contention of the assessee appears to be untenable. In the present case, undisclosed income of the assessee was found to be more than what had been voluntarily declared in the return filed by the asses see for the block period. Consequently, additions were made to the undisclosed i ncome declared by the assessee in the return filed for the block period. If the undisclosed income determined by the Assessing Officer exceeds the declared undi sclosed income of the assessee, there can be no set-off of the declared undisclo sed income as the same would become a part of the undisclosed income determined by the Assessing Officer. Set-off presupposes existence of a surplus i.e. declar ed undisclosed income is more than what has been determined by the Assessing Off icer. Such a situation cannot be visualized under the Act as the undisclosed inc ome determined by the Assessing Officer cannot be less than what has been volunt arily declared by the assessee. In the aforesaid circumstances, the findings rec orded by the learned Tribunal and the consequential direction issued, as noticed by us, are clearly erroneous. The said directions are, therefore, set aside and the appeal of the Revenue is allowed.