TMI Blog2012 (11) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... materials to it by the Income Tax Authorities was devoid of merits as the assessee has not brought any positive evidence on record to show that it was in need of vital information without which it was not in a position to complete its block return - In the absence of any materials placed before the Tribunal, the said contention was rejected - Tax Case (Appeal) Nos.1169 to 1171 of 2005 - - - Dated:- 6-6-2012 - Mrs.Justice CHITRA VENKATARAMAN, Mr.Justice K.RAVICHANDRA BAABU, JJ. For appellants : Mr.V.S.Jayakumar For respondent : Mr.T.Ravi Kumar Standing Counsel for Income Tax JUDGMENT CHITRA VENKATARAMAN, J. These tax case appeals have been filed by the assessees against the order of the Income Tax Appellate Tribunal in respect of the block assessment period 1991-92 to 2001-02 raising the following questions of law:- 1. Whether the Tribunal was right in upholding the block assessment made under Section 158BC of the Act by holding that the period taken to approach the Settlement Commission and its rejection is to be excluded and thus the impugned order is not barred by limitation ? 2. Whether the Tribunal was right in holding that Explanation 1(iv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, the assessees went on appeal before the Commissioner of Income Tax (Appeals). Among various grounds taken on the merits of the assessment, the assessees contended that the assessment made was barred by limitation since Explanation 1(iv) to Section 158BE not having a retrospective effect, the time during which the applications were pending before the Settlement Commission could not be ignored. In other words, the period during which the applications were pending before the Settlement Commission should not be excluded in the matter of computing the time limit for passing assessment orders under the block assessment procedure. The assessees further pointed out that the insertion of Explanation 1(iv) to Section 158BE under the Finance Act 2002 with effect from 1.6.2002 is prospective in character. As such even by invoking the Explanation, the applications already filed before the Settlement Commission could not come for any reckoning of the exclusion period. In considering the said issue, the Tribunal held that Explanation 1(iv) to Section 158BE is retrospective in nature; as such the block assessment order passed on 26.9.2003 was well within the limitation period. Aggrieved by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case on hand, particularly with reference to Explanation are usefully extracted hereunder: Section 158BE Time Limit for completion of block assessment:- The order under section 158BC shall be passed - (a) Within one year from the end of the month in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned after the 30th day of June, 1995 but before the 1st day of January, 1997; (b) Within two years from the end of the month in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January, 1997. (2) The period of limitation for completion of block assessment in the case of the other person referred to in section 158BD shall be - (a) .... ...... .... (b) .... ...... .... Explanation : In computing the period of limitation for the purposes of this section, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of interest under sections 243, 244 in a case referred to in sub-section (1), the period commencing from on and from the date of the application to the Settlement Commission under Section 245C and ending with the date of receipt by the Assessing Officer of the order of the Settlement Commission sending the case back to the Assessing Officer shall be excluded and where the assessee is a firm, for the purposes of the time limit for cancellation of registration of the firm under sub-section (1) of section 186 the period aforesaid shall, likewise, be excluded. The above said provision it was omitted under the Finance Act 2002 with effect from 1.6.2002. 9. A reading of the provisions contained in Section 158BE shows that it provides for time limit for completion of the block assessment, in the cases of search done prior to 1.1.1997 and the search done after 1.1.1997. While in respect of the the search conducted prior to 1.1.1997, the period of limitation given for passing an order under Section 158BE is one year, in respect of the search made after 1.1.1997, the limitation period given is two years. In both cases the limitation is calculated from the end of the month in whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any court (2) the period commencing from the day on which the Assessing Officer direct the assessee to get his accounts audited under Section 142(2A) and ending on the day on which the assessee is to furnish a report of such audit under the section. That being the case the starting point of the period would be filing of the petition and ending with the date on which an order was received by the Commissioner, all the applications which are pending as on the date of introduction of the Explanation under the Finance Act 2002 would stand covered by the Explanation. 13. We do not think that there exists any difficulty in understanding the scope of this provision. When the intent of the Section to cover cases pending before the Settlement Commission as on the date of amendment is clear, to hold otherwise that it covers only those applications filed after 1.6.2002 would only bring in an unwarranted strained understanding of the plain language of the Section which it does not call for. Going by the well settled principles on interpretation of statutes that when the language of the section is clear and gives no room for any doubt or ambiguity, the provisions have to be applied as they a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Commission, rightly under Section 245HA, provisions were made for the exclusion of the period during which the applications were pending before the Settlement Commission. In the background of the jurisdiction of the Settlement Commission, Section 158 BH assumes significance. 15. It is no doubt true that Chapter XIVB is a code by itself laying down the procedure for assessment of search cases pending for computation of undisclosed income of the block period; the assessment of the undisclosed income as a result of the search, the assessment of the undisclosed income of any other person, the procedure for block assessment and the time limit for completion of block assessment . Considering the said provision in the decision reported in (2008) 297 ITR 322 (SC) (Commissioner of Income Tax Vs. Suresh N.Gupta), the Apex Court pointed out that even though Chapter XIV-B is a complete code by itself yet by reason of Section 158BH, except those specifically provided in the Chapter, all other provisions of the Act to block assessment procedure in Chapter XIVB apply to the case of the block assessment too. For computation of income under Chapter XIV B one has to take note of the normal co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 ITR 423 (Hajee K.Assainar Vs. Commissioner of Income Tax). It would not be out of context herein to point that even in the said decision in paragraph 12 the Kerala High Court pointed out that if a statute deals merely with the matters of procedure and does not affect the rights of parties, the new procedure would prima facie apply to all pending as well as future actions. As far as the calculation of the limitation and the exclusion of the time limit herein is concerned, the Explanation merely deals with the procedural matters and in any event Explanation being clarificatory in nature and on the strength of the wording of Clause (iv) of Explanation 1 in Section 158BE, we have no hesitation in rejecting the plea of the assessee by confirming the order of the Tribunal . Consequently, the substantial questions of law 1 and 2 raised by the assessees stands rejected. 18. As far as the fourth question of law regarding the levy of interest under Section 158 BFA is concerned, the Tribunal pointed out that the contention of the assessee that the delay in furnishing the block return was due to non-supply of the copies of the seized materials to it by the Income Tax Authorities was devo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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