Changes in special procedure for assessment of search cases. - Income Tax - 1941/1997

INSTRUCTION NO. 1941/1997 Dated: January 17, 1997 Section(s) Referred: 158BE ,158BG Statute: Income - Tax Act, 1961 The Income-tax (Second Amendment) Ordinance, 1996 (32 of 1996) was promulgated by the President on 31st December, 1996. The Ordinance, inter alia, provides for certain changes in the special procedure for assessment of search cases as contained in Chapter XIVB of the Income-tax Act, 1961. As per section 1(2) of the Ordinance, the provisions relating to Chapter XIVB shall come into force on the 1st day of January, 1997. References have been received from officers in the field regarding the applicability of the provisions of section 4 to 10 of the Ordinance (relating to special procedure for assessment of search cases) to the pending block assessments as on 1.1.97. The Board have considered the matter and with a view to setting at rest the doubts raised, hereby issue the following instructions :- (i) The provisions of sections 4 to 10 of the said Ordinance apply only to those block assessments which arise out of searches initiated on or after 1.1.97. Therefore, the pending block assessments as a result of searches initiated upto 31.12.96 will be governed by the provisions of Chapter XIVB as they stood before promulgation of the Ordinance; (ii) In cases where the search was initiated before 1.1.97, (a) no interest or penalty will be leviable, (b) the order of assessment for the block period shall be approved by the Commissioner of Income-tax, (c) the first appeal will lie with the ITAT, (d) no prosecution u/s. 276CCC will be launched for failure/delay in filing the return u/s. 158BC, and (e) the period of limitation for passing the order u/s. 158BE shall be one year from the end of the month in which the last of the authorisations for search u/s. 132 or for requisition u/s. 132A, as the case may be, executed. In other words, all the provisions introduced through the Ordinance will apply only in respect of searches initiated on or after 1.1.1997. These instructions may be brought to the notice of all officers in your region immediately.