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58. Ld. AR on the contrary tried to justify the first appellate order on the issue. He referred the copies of different documents and written submissions addressed to the first appellate authority, placed on record in the shape of paper book filed on behalf of the assessee containing page Nos. 1 to 60 of the paper book.

59. Considered the arguments advanced by the parties in view of orders of the authorities below and material available on record. The assessee a partnership firm was carrying on the business of manufacturing and exports of Indian handicrafts. Premises of the assessee firm was searched u/s 132 of the Act on 3.8.99. The accounts of the assessee firm were being maintained regularly on computer and back up of the same was taken on floppy disk. At the time of search hard disc of the computer was affected by the virus and the cash payment file was destroyed. The back up floppy disc alongwith the computers were seized by the department . The assessee firm requested the AO to restore the data from floppy disc vide its letter dated 9.7.2001. The contention of the assessee remained that the AO framed the assessment u/s 158 BC after restoring the accounts contained in the floppy disk. The additions of Rs. 59,80,201/-, Rs. 84,64,549/- and Rs. 55,49,139/- made u/s 69 of the Act for the block period on account of excess of assets over liabilities was further questioned by the assessee before the Ld. CIT(A) on the basis that print out taken from the virus affected seized computers were not the regular books of accounts of the assessee firm and as requested by the assessee AO should have restored the data from the floppy disk as in regular practice the assessee used to take back up of data stored in the hard disk at floppy. It was pointed out that the undisclosed income as defined u/s 158B of the Act has to be assessed under chapter IVB of the Act. It was contended that while framing the block assessment u/s 158BC undisclosed income detected at a result of search can be taxed only on the basis of the material found during the course of search. Reliance was also placed on the following decisions :-

1. CIT vs. Shambhulal C. Bachkaniwala (2000) 245 ITR 488

2. N.R. Paper and Board Ltd. vs. DCIT 234 ITR 733

60. The further contention of the assessee remained that the AO was not justified in recomputing the total income of the assessee for the various assessment years in the block assessment, for which regular assessment was required to be made u/s 143(3) of the Act. It was submitted that expenses incurred during the course of business of the assessee firm and personal drawings of the partners were strictly met out from the cash withdrawn from the bank account of the assessee firm and was being mentioned in the computer print outs. Since cash payment files were damaged due to virus in the computer and cash payments were not found recorded therein whole of the cash withdrawn in self by the firm is appearing therein as cash in hand. The difference between the expenses and personal drawings of the partners as stated in the financial statements and have recorded in the computer print outs was exactly equal to the difference of cash in hand as shown in the financial statement and computer print out. It was submitted that the sole source of income as shown in the final accounts filed with the department alongwith the return of income and in the seized material as well were export sales, Export incentives in addition to the interest accrued in foreign currency TDRs. The assessee had furnished the figures of export sales for the financial year ending on 31.3.1996, 31.3.1997 and 31.3.1998 as per profit and loss account and as per seized material. The figures were similar and there was no change. Similar was the position with regard to computer draw backs.