B.R. Jain, A.M.: This appeal by Revenue and cross-objection by assessee against order dt. 22nd March, 2002 of learned CIT(A)-1, Hyderabad, in block assessment for period 1st April, 1989 to 10th Dec., 1999 raise following grounds: Grounds in appeal: order of CIT(A) is erroneous both on facts and in law. learned CIT(A) ought to have appreciated that non-issue of notice under s. 143(2) within time-limit of 12 months is only technical flaw and on that only count assessment need not be quashed. learned CIT(A) ought to have taken into consideration order of Hon ble Supreme Court of India in case of CIT vs. Jai Prakash Singh (1996) 132 CTR (SC) 262: (1996) 219 ITR 737 (SC) according to which non-issue of notice under s. 143(2) within stipulated was only procedural irregularity and assessment made could be irregular but not void or illegal. learned CIT(A) ought to have taken note of apex Court s opinion and sustained assessment. Any other ground that may be urged at time of hearing. Grounds in cross-objection: learned CIT(A) ought to have held that there is no undisclosed income as contemplated under provisions of Chapter XIV-B of IT Act, under circumstances that on previous day of search, survey under s. 133A was carried out and findings of search and seizure and survey operations are one and same. learned CIT(A) ought to have held that AO is not correct in assessing voluntary donations given to assessee society of Rs. 23 lakhs under provisions of s. 68 of IT Act. learned CIT(A) ought to have held that AO has erred in adding s u m of Rs. 16.64 lakhs as unexplained income in absence of any incriminating material found during course of search. learned CIT(A) ought to have held that AO is not correct in making addition of Rs. 87,870 towards unexplained investment in purchase of land and Rs. 13,420 towards unexplained expenditure under facts and circumstances of case. learned CIT(A) ought to have held that society is exempt from tax under provisions of s. 19(23C)(vi) of IT Act. AO is not correct in levying surcharge of Rs. 2,43,917 as provisions of s. 113 are not applicable to facts of case. Any other grounds that will be urged at time of hearing of appeal. Additional grounds in appeal: learned CIT(A) erred in considering facts and circumstances of case regarding assessment completed under Chapter XIV-B. survey under s. 133A was conducted in assessee s premises on 9th Nov., 1999 and later on it was converted into search and seizure operation under s. 132 of IT Act. warrant of authorization under s. 132 of IT Act issued by Director of IT (Inv.), Hyderabad, dt. 10th Dec., 1999 was served on assessee and books of account and loose sheets were impounded on strength of authorization. As search under s. 132 was conducted, CIT(A) ought to have appreciated that assessment proceedings were rightly completed under Chapter XIV-B of IT Act. learned CIT(A) ought to have appreciated that assessee did not offer any additional income on which it wanted to pay tax during course of survey under s. 133A and that entire income as found during course of search under s. 132 of IT Act has been rightly assessed for block period. From facts and circumstances, CIT(A) ought to have confirmed order of AO. Any other ground that may be urged at time of hearing. above additional grounds raised by Revenue had not been objected by assessee. Moreover, grounds being legal and since same go to root of matter, grounds so raised have been admitted for adjudication. Briefly, facts are that respondent is society registered under Societies Registration Act, 1860 with objectives, inter alia, of formulating, establishing and running of educational institutions. assessee did not file any return of income. There was survey operation on 9th Dec., 1999 under s. 133A of Act, when certain Kucha slips/receipts, register and fixed deposits of about Rs. 9.50 lakhs were found. statement of secretary of society was recorded, who admitted to make surrender of income of Rs. 11,43,000 and pay taxes thereon. This action was followed by search operation carried under s. 132 of Act on same very day, when Kucha slips and other incriminating documents found were seized. assessee did not maintain books of account for MCA course although substantial collections were made from students and expenditure was incurred without accounting for same. In his statement recorded on 17th Dec., 1999 on oath by DDIT, Unit-1, Visakhapatnam, secretary of society in reply to question No. 16, replied and made admission of undisclosed income of Rs. 11.43 lakhs as under: "In view of defects pointed out above, I would like to offer as undisclosed income of society sum of Rs. 11.43 lakhs which represents excess amount over and above stipulated fee of Rs. 21,000 per year per candidate collected by society for MCA admission, particulars of which are contained in loose slips seized today. I also undertake to file return of my undisclosed income and pay taxes due thereon as soon as possible." Consequent to issuance of notice under s. 158BC of Act on 19th April, 2000, respondent filed return of undisclosed income on 12th May, 2000 declaring nil income. notice under s. 142(1) of Act was also issued on 18th June, 2001 requiring assessee to furnish certain information. Thereafter, another notice under s. 143(2) of Act was issued on 15th Oct., 2001 which was served on 27th Oct., 2001. assessment of undisclosed income of Rs. 40,65,290 has been completed on 28th Dec., 2001. Before learned CIT(A), assessee challenged validity of assessment on two counts: Notices issued under ss. 142 and 143(2) were beyond 12 months from end of month in which return was filed and, therefore, notices were not valid. That findings of survey cannot be taken for arriving as undisclosed income as same does not come under purview of provisions of s. 158BA of Act. learned CIT(A) following various Tribunal judgments where it was held that AO having failed to initiate assessment proceedings within time-limit prescribed under proviso to s. 143(2) of Act, entire block assessment as made would be without jurisdiction and as such, same has to be quashed and also anything found or detected as result of survey under s. 133A of Act is outside scope of assessment in Chapter XIV-B which deals only with assessment of undisclosed income as result of search, quashed assessment. He, however, did not consider it fair and proper to adjudicate on various other grounds raised in appeal. learned Departmental Representative while assailing decision taken by learned CIT(A) contends that learned CIT(A) acted beyond his jurisdiction to say on basis of opinion published in TAXMAN Magazine Vol. 18, p. 50 that income found and disclosed in course of survey, cannot be subjected to assessment for block period merely on ground of seizure made under s. 132 of Act. In fact, learned CIT(A) cannot touch upon jurisdictional aspect as validity of action under s. 132 of Act could not be examined by him. Reference to following passage in judgment rendered by Hon ble Delhi High Court in case of M.B. Lal vs. CIT (2005) 199 CTR (Del) 571: (2005) 279 ITR 298 (Del) at p. 302, was made: "The Tribunal has, as noticed earlier, answered both these questions in favour of Revenue. It has, relying upon decision of Special Bench of Tribunal at Bangalore in C. Ramaiah Reddy vs. Asstt. CIT (Inv.) (2003) 81 TTJ (Bang)(SB) 1044: (2004) 268 ITR 49 (Bang)(SB)(AT), held that validity of action taken under s. 132 of Act could not be examined in appeal filed before it. We see no reason to take different view. Any appeal before Tribunal against block assessment made under s. 158BC does not take within its fold questions touching validity of search conducted under s. 132 of Act. Whether or not conditions precedent for search stipulated under cls. (a), (b) and (c) of s. 132(1) of Act were satisfied in given case fall beyond scope of assessment proceedings instituted under s. 158BC of Act or any statutory appeal preferred against order made under that provision. If petitioner was keen to test validity of said proceedings, his remedy lay in writ petition under Art. 226 of Constitution." It was further contended that material and evidence was found and seized under s. 132 of Act, which gave jurisdiction to make assessment for block period in terms of s. 158BA(1) of Act. respondent had not filed regular returns of income even though material was there to show that assessee had received income. This income was not accounted for in regular books of account also, which was liable to be assessed as undisclosed income of block period. As regards information, it may come from any source. In case of respondent action under s. 132 was initiated after findings of survey carried on 9th Dec., 1999. There is no event to say that assessment has been made on basis of material found in survey under s. 133A of Act and that AO did not act on basis of material or evidence found as result of search. learned CIT(A) therefore erred in quashing assessment on that basis. learned CIT(A) also relied upon certain Tribunal decision to hold that notices under ss. 142 and 143(2) having not been issued within one year of expiry of month in which return was filed and thus it was nullity is contrary to view entertained by larger Bench of Tribunal in case of Nawal Kishore & Sons Jewellers vs. Dy. CIT (2003) 81 TTJ (Luck)(SB) 362: (2003) 87 ITD 407 (Luck)(SB) at paras 55 and 56 of judgment as under: "55. In view of above legal position, we hold that non-issuance of notice under s. 143(2) would only be irregularity which is curable and not as nullity. Hence, assessment order passed in violation of such requirement cannot be declared as null and void. Having held that non-issuance of notice under s. 143(2) is not nullity but is irregularity, question may arise as to what course should be adopted in such cases by appellate authority. One easy course would be to set aside assessment and restore matter to file of AO for fresh assessment after giving reasonable opportunity of being heard to assessee. But there may be cases where sufficient opportunity might have already been given by AO or assessee might have participated in proceedings before AO or there may be sufficient material on record for adjudication. In such cases, mere restoration may prove to be futile exercise, therefore, in such cases, appellate authority may adjudicate issue itself after giving reasonable opportunity to assessee to explain his case. These observations are mere guidelines and no limitations are being placed on powers of appellate authority. appellate authority would be free to choose right course depending upon facts of each case." Furthermore, there has been amendment in statute by Finance Act, 2006 w.r.e.f. 1st Oct., 1991 and also Explanation has been inserted below s. 148 as under: "Provided that in case (a) where return has been furnished during period commencing on 1st day of October, 1991 and ending on 30th day of September, 2005 in response to notice served under this section, and (b) subsequently notice has been served under sub-s. (2) of s. 143 after expiry of twelve months specified in proviso to sub-s. (2) of s. 143, as it stood immediately before amendment of said sub-section by Finance Act, 2002 (20 of 2002) but before expiry of time-limit for making assessment, assessment or recomputation as specified in sub-s. (2) of s. 153, every such notice referred to in this clauses shall be deemed to be valid notice: Provided further that in case (a) where return has been furnished during period commencing on 1st day of October, 1991 and ending on 30th day of September, 2005, in response to notice served under this section, and (b) subsequently notice has been served under cl. (ii) of sub-s. (2) of s. 143 after expiry of twelve months specified in proviso to cl. (ii) of sub-s. (2) of s. 143, but before expiry of time-limit for making assessment, reassessment or to computation as specified in sub-s. (2) of s. 153, every such notice referred to in this clause shall be deemed to be valid notice. (Explanation For removal of doubts, it is hereby declared that nothing contained in first proviso or second proviso shall apply to any return which has been furnished on or after 1st day of October, 2005 in response to notice served under this section.)" It has, therefore, been contended that aforesaid legal provisions have to be taken in existence at time when assessment proceedings in this case w e r e taken up. respondent had already been given sufficient and reasonable time to explain as to how there is no undisclosed income assessable for block period. learned CIT(A), therefore, erred in holding that assessment made by non-issuance of notice under ss. 142 and 143(2) of Act within one year from end of month in which return for block period was filed was nullity. On other hand, authorised counsel, Sri C. Subramanyam, fairly admits that in view of decision rendered by Special Bench of Tribunal in case of Nawal Kishore & Sons Jewellers vs. Dy. CIT (supra) and also amendment in t h e Act brought with retrospective effect from, it cannot be held that assessment made for block period without issuing notices under s. 142 and s. 143(2) of Act within one year from end of month in which block return has been made, shall be nullity, and as such, decision taken by learned CIT(A) on that count can be set aside. He also admits that learned CIT(A) or Tribunal cannot touch upon validity of jurisdiction under s. 132 of Act as was held by Hon ble Delhi High Court in case of M.B. Lal vs. CIT (supra). He, however, states that learned CIT(A) did not quash assessment on that ground nor gave any finding about validity of action under s. 132 of Act. In fact, case of assessee all through before authorities below is that information or material found or collected in survey proceedings under s. 133A of Act cannot be used for making assessment of undisclosed income for block period. In this case, assessee in particular, had admitted to make surrender of income of Rs. 11.43 lakhs in survey proceedings. This amount cannot be taken as "not disclosed or would not have been disclosed" for purpose of this Act, and as such, same shall be outside scope of undisclosed income defined in sub-s. (b) of s. 158B of Act. identical statement was recorded by search party and nothing new other than what was already disclosed had come to their notice. In that view of matter, findings of survey or disclosure made in survey could not be used for making block assessment of assessee. assessee made reference to para 8 of order of learned CIT(A) where such glaring facts are duly recorded as under: "With regard to survey conducted under s. 133A on 9th Dec., 1999, converted into search on next day i.e. 10th Dec., 1999 which lasted about 15 minutes, it has been submitted that to establish undisclosed income it is essential that transaction must be discovered during course of search and seizure operation. If Department before search already knows transaction and then search proceedings were started it will not fall within definition of undisclosed income. In this connection, it would be relevant to reproduce statement recorded from secretary of society on date of survey and at search under s. 132 of IT Act: Q. No. 15. What is total collection so far? Ans. total collection made so far is Rs. 16.61 lakhs, out of which Rs. 10.30 lakhs were deposited in form of FDRs in Vysya Bank, Ramnagar, Visakhapatnam, in name of society. Amount of Rs. 1.50 lakhs was spent for purpose of purchase of furniture and preparation of application forms and balance amount has been spent for certain purposes which did not qualify for expenditure in normal course of business and for same no vouchers have been maintained and I am not in position to offer evidence in respect of same. Q. No. 18. From various application forms and loose scribblings indicating payments by MCA students, it is found that you have collected amount of Rs. 16.64 lakhs till date from 25 students as against sum of Rs. 21,000 per student which university stipulates to be collected from them. Have you issued any receipts to your students from whom such amounts were collected? Ans. We have not issued any receipts so far. Q. No. 19. There is also no evidence as to purpose for which excess amounts have been collected. From note books in which collection particulars have been mentioned, it is seen that against each candidate you have mentioned figure like Rs. 2.3, 2.0 to be collected as against prescribed course fees of Rs. 21,000. Further, non-maintenance of books of account and non-issue of receipts to concerned students clearly indicate your intention not to bring into accounts excess amounts collected from students. Moreover, you have also admitted that you have already incurred expenditures to tune of approximately Rs. 5 lakhs for various purposes, which you cannot substantiate or cannot claim as normal expenditure of your day-to-day business. In view of this, what is income you would like to disclose as your income, which has not been indicated in your books of account and accounted for so far? Ans. In view of deficiencies observed by you in course of survey operations today, I would like to offer as income of society sum of Rs. 11.43 lakhs which represents differential amount over and above stipulated fees of Rs. 21,000 per each candidate. amount will be offered by me as additional income of society for asst. yr. 2000-01 (financial year 1999-2000) and I will pay advance tax due on above additional income on or before 15th Dec., 1999. I am offering this additional income voluntarily to purchase peace with Department and request that no penalty or prosecution proceedings are initiated against me. In order to prove my commitment for paying taxes, I undertake to pay at least Rs. 1 lakh by Monday, i.e. 13th Dec., 1999." learned counsel for assessee placed reliance on certain decisions on prepositions set out against each as under: (i) Words "has not been" in s. 158B(b) are to be considered in those cases where disclosure has already been made by assessee for any assessment year before date of search and words "would not have been disclosed" are to be considered in those cases where returns have not been filed by assessee before date of search as held in Vidya Madanlal Malani vs. Asstt. CIT (2000) 69 TTJ (Pune) 456: (2000) 74 ITD 341 (Pune). (ii) Information gathered during survey cannot be made basis of addition in block assessment. Material found during search can only be made basis for block assessment as was held in Asstt. CIT vs. Fertilizer Traders (2004) 83 TTJ (All) 473. (iii) assessee having disclosed investment or material before search, AO shall not be justified in making use of said material in computing undisclosed income as same is outside meaning of s. 158(b) of Act as was held in Smt. Sivabala Devi vs. Asstt. CIT (2004) 88 TTJ (Mad) 955: (2004) 88 ITD 333 (Mad). (iv) Reading of s. 158BA(1) makes it specifically clear that action under ss. 132 and 132A alone is to be considered for making assessment of undisclosed income material detected or found as result of survey under s. 133A is to be excluded from purview of s. 158BA of Act. Amount in question cannot be treated as assessee s undisclosed income as it is covered by regular assessment. In view of above, there is no justification in treating such amount as undisclosed income of assessee as was held in Prakash Tulsidas vs. Asstt. CIT (2000) 68 TTJ (Nag) 479: (2000) 73 ITD 444 (Nag). (v) AO included under s. 158BB undisclosed income found during survey made under s. 133A. CIT(A) excluded that portion which had been included based on material found during survey on premises that in respect of block assessment under s. 158BB, material collected during survey under s. 133A could not be taken into consideration. This was confirmed by Tribunal and upheld by Hon ble Madras High Court in CIT vs. G.K. Senniappan (2006) 203 CTR (Mad) 447: (2006) 284 ITR 220 (Mad). It was thus contended by learned counsel for assessee that learned CIT(A) cannot be said to have erred in quashing assessment made on basis of material or evidence found as result of survey carried under s. 133A of Act. As regards cross-objections, it was contended that learned CIT(A) did not render any decision on merits of case though such grounds were duly raised by him. In case Tribunal sets aside decision taken by learned CIT(A), matter has to be restored back to learned CIT(A) for taking decision on merit of grounds raised before him for which no adjudication has been done by him as has clearly been stated in impugned order. We have heard parties with reference to precedents on record and perused material carefully. jurisdiction to make assessment for block period vests with AO immediately after action under s. 132 is taken on person. In this case, it is admitted position that action under s. 132 was taken on 10th Dec., 1999 as is evident from copy of Panchnama placed at paper book pp. 48 and 49. Special Bench of Tribunal in case of Nawal Kishore & Sons Jewellers vs. Dy. CIT (supra) has already entertained view that non- issuance of notice under s. 143(2) or under s. 142 of Act within one year from end of month in which block return is filed is not fatal to jurisdiction to make assessment. Non-issuance of notice is merely irregularity and if sufficient opportunity has been given by issuance of notices prior to completion of assessment, same cannot be made basis to quash assessment. Moreover, there has been amendment with respect to issuance of notice beyond period of one year which has been made w.r.e.f. 1st Oct., 1991. If notice is issued beyond period of one year from end of month in which return was filed, such notice shall be deemed to be valid notice. This amendment shall also apply with full force to assessment made for block period. In that view of matter and as has also fairly been admitted by learned counsel for assessee, learned CIT(A) could not have come to conclusion that by non-issuance of notice within period of one year from end of month in which return was filed will render such notices as invalid and consequently quashed assessment. respondent was given sufficient time by issuance of notices under ss. 143(2) and 142 of Act much prior to completion of assessment so that there is no denial of adequate opportunity to him to show that there was no undisclosed income assessable for block period in his case. There was thus, no legal infirmity committed by AO in making block assessment. decision taken by learned CIT(A), therefore, being contrary to provision of law, is hereby set aside. Furthermore, s. 158BB of Act mandates computation of undisclosed income of block period on basis of evidence found as result of search or other documents and such other material or information as are available with AO and relatable to such evidence. Hon ble Madras High Court in CIT v s . G.K. Senniappan (supra), on which assessee s counsel has also placed reliance, had occasion to consider expression "such other materials or information as are available with AO" in s. 158BB of IT Act and also expression "such evidence", and has given interpretation as under: "A mere reading of above provision clearly indicates that sentence such other materials or information as are available with AO cannot be bisected or taken in isolation for purpose of computation. Such other materials or information as are available with AO, should as per section relatable to such evidence. word such used as prefix to word evidence assumes much significance, in this provision, as it indicates only evidence found, as result of search or requisition of books of account or other documents, at time of search. Any other material cannot form basis for computation of undisclosed income of block period." In present case in appeal, survey was undertaken on assessee on 9th Dec., 1999 and it was found that assessee had not recorded full receipts in regular books of account, Kuccha slips for receipts were also found in his possession and regular returns had also not been filed by assessee. All this information led to action under s. 132 of Act, on 10th Dec., 1999 when all such materials and evidence showing income having not been disclosed in books of account were found and seized. assessee has made assertion that it had agreed to declare income of Rs. 11.43 lakhs in his statement recorded in survey proceedings. This statement was made on basis of material or information found as result of survey on 9th Dec., 1999. It has, therefore, been pleaded that amount so admitted as assessee s income cannot be taken as amount which would not have been disclosed for purpose of IT Act and as such, amount of Rs. 11.43 lakhs could not have been taken as undisclosed income within meaning of sub-s. (b) of s. 158B of Act. We, however, are not inclined to agree with proposition being laid down by learned counsel for assessee. Under peculiar facts of case, it is evident that assessee has not filed any return of income for any of earlier years nor for year in which search was conducted on him. He had also not maintained regular books of account for amounts collected by him rather has maintained only Kuccha slips for receipts from MCA course and expenses incurred against that. Merely because he agreed to disclose income of Rs. 11.43 lakhs cannot be taken that such amount would have been disclosed by him which, in fact also, he did not do on any of later date till block assessment was completed on him. Both from facts and conduct of assessee, it is evident that income through seized document was such which assessee had neither disclosed nor it would have disclosed for purpose of this Act. Furthermore, AO is found to have made block assessment on basis of material and evidence found as result of search on assessee on 10th Dec., 1999 and did not rest its decision to treat undisclosed income only on basis of material or evidence found during survey proceedings under s. 133A of Act carried on 9th Dec., 1999. It is true and we are also fully in agreement to proposition that income found on basis of material or evidence discovered in survey proceedings under s. 133A of Act cannot be taken to make assessment of undisclosed income of block period but such statement is true when such material or evidence is not found as result of search or information is not available to AO relatable to evidence found as result of search. In other words, if action to search does not reveal any material or evidence of undisclosed income and independent survey is carried on person, then findings of such survey or material or evidence found in such survey cannot be taken as basis for making assessment of undisclosed income for block period. decision rendered by Madras High Court in CIT vs. G.K. Senniappan (supra) is one such case where search was conducted against third person in which it was found that assessee had utilized undisclosed income for making contributions to certain unregistered chits conducted by said person. Thereafter, survey was conducted in business premises of assessee which indicated certain real estate transactions carried on by assessee but profits derived thereon had not been disclosed to Department. income so found in survey proceedings was treated as undisclosed income under s. 158BB of Act but CIT(A) excluded income found in survey from total income assessed as undisclosed income and his order also stood confirmed by Tribunal. Before Hon ble High Court, it was contended that material gathered in course of survey under s. 133A of Act can also have been regarded as material for purpose of making of block assessment under s. 158BB of Act. Hon ble High Court agreeing with CIT(A) and Tribunal found that decision taken by them was in accordance with provisions of law. From aforesaid judgment, it is thus evident that material gathered in course of survey under s. 133A which is not found or seized in search carried out under s. 132 of Act, cannot be made as basis for making assessment of undisclosed income for block period on person. However, in peculiar facts of case at hand and as has also been found by us earlier, AO assessed undisclosed income on basis of material found and seized as result of search on assessee and he did not rest his decision to include evidence found as result of survey only for making assessment of undisclosed income of assessee. learned CIT(A), thus, in present case, did not take into consideration correct facts and applied law half-heartedly only so as to come to conclusion that addition was illegally made. Quashing of order thus, was uncalled for and unjustified. We, therefore, set aside his decision on that count as well. learned CIT(A), however, did not render decision on merits of all other grounds taken before him by assessee. We, therefore, restore matter back to him so that he takes decision on merit on all other grounds in appeal, after providing reasonable opportunity of being heard to assessee. As result of this, appeal of Revenue as well as cross-objection by assessee are allowed for statistical purposes only. *** DEPUTY COMMISSIONER OF INCOME TAX v. ALL SAINTS CHRISTIAN EDUCATIONAL SOCIETY