TMI Blog2009 (5) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... given the provisions of section 153 of the Act would operate as a legal bar for any such notice to the assessee. The provisiond of section 147/ 147 will apply. Dismiss the appeal. - 19 of 2006 - - - Dated:- 15-5-2009 - RANJAN Gogoi and B. K. SHARMA JJ. U. Bhuyan for the appellant. R. Goenka, R. K. Agarwal and M. Talukdar for the respondent. JUDGMENT The judgment of the court was delivered by 1. RANJAN Gocoi J. - This appeal under section 260A of the Income-tax Act, 1961 (hereinafter referred to as "the Act") is directed against an order dated January 17, 2006, passed by the Income-tax Appellate Tribunal, Guwahati Bench (hereinafter referred to as "the Tribunal"). By the afore said order the learned Tribunal has interfered with the addition of undis closed income of the respondent-assessee to the extent of Rs. 13,66,715 for the block period 1986-87 to 1996-97 as made by the Assessing Officer. 2. The brief facts relevant to the present adjudication may be noticed at this stage. 3. There was a search in the Baid group of companies on September 13, 1995. The respondent-assessee, a Hindu undivided family, as the pro prietor of one of the group co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, therefore, we are of the view that the addition of Rs. 13,66,715, made by the Assessing Officer is not sustainable in law and accordingly the same is directed to be deleted. The grounds taken by the assessee are, therefore, allowed." 5. In view of the arguments that have been raised before us and the issues that have been struck by the parties, it will be necessary to amplify the order of the learned Tribunal and understand the basis of the conclusion arrived at. 6. The finding of the learned Tribunal that the Assessing Officer had failed to initiate proceedings in terms of section 153 of the Act read with Explanation 3 necessarily follows a conclusion that in the present case notice under section 148 of the Act was necessary and no such notice having been given to the assessee the provisions of section 153 did not authorise such notice to be issued any further. 7. Chapter XIV of the Act deals with the procedure for assessment. Section 147 authorises reopening of a concluded assessment subject to a notice under section 148 within the time prescribed by section 149 which provi sion of the Act is further subject to those contained in section 150. Section 153 deals wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under section 148 of the Act was given/issued to the respondent-assessee though such notice was necessary, the aforesaid conclusion should have ended the controversy before the learned Tribunal. The further question that stood answered by the finding of the learned Tribunal that the pro visions of section 153 of the Act read with Explanation 3 was not followed while initiating the proceeding were really not necessary to be gone into by the learned Tribunal. Whether the limitation for issuing notice under section 148 of the Act had expired and if so whether such bar of limitation stood lifted under section 153 of the Act are questions that should have been left to be dealt with by the Revenue at an appropriate stage and time following the finding of the learned Tribunal. Notwithstanding the above, as strenuous arguments have been made by the learned counsel for the parties in view of the conclusion recorded by the learned Tribunal, the same will have to be, at least, noticed by the court. 11. The order of the learned Tribunal dated July 22, 2002, in the case of M/s. Baid Commercial Enterprises Ltd. on the basis of which the addition of Rs.13,66,715 was made by the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Tribunal and that documents reflecting an amount of Rs. 59,18,246 were seized from the aforesaid National Transport and Cap ital Travels which belonged to the said parties. Consequently, it was held that the assessee before the learned Tribunal cannot in any way be made liable in respect of the said amount of Rs. 59,18,246. That the aforesaid conclusion of the learned Tribunal did not amount to a finding or direction within the meaning of the said expressions appearing in section 15 3(3) (ii) of the Act is sought to be contended on the basis of the decision of the apex court in Rajinder Nath v. CIT reported in [1979] 120 1TR 14, the relevant part of which, as placed before the court, may be extracted below (page 18): "The expressions 'finding' and 'direction' are limited in meaning. A finding given in an appeal, revision or reference arising out of an assessment must be a finding necessary for the disposal of the particular case, that is to say, in respect of the particular assessee and in relation to the particular assessment year. To be necessary finding, it must be directly involved in the disposal of the case. It is possible in certain cases that in order to render ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been made on the said question, a fact, evident from a reading of the order dated January 17, 2006, passed by the learned Tribunal. In such circumstances, we deem it appropriate not to enter into the said arena and record any finding in that regard. 14. The discussion above necessarily has to lead us to the conclusion that the ultimate conclusion reached by the learned Tribunal was correct, though for reasons different as indicated by us. Ordinarily and in the nor mal course, the present proceeding should have been terminated on the basis of the said conclusion. However, Sri Goenka, learned counsel appearing for the respondent-assessee has raised a further question to the effect that it is not within the power and jurisdiction of the assessing authority to issue notice under section 148 of the Act in respect of an assessment for a block period made under Chapter XIV-B of the Act. In this regard, Sri Goenka has placed before the court a judgment of the hon'ble High Court of Gujarat in Cargo Clearing Agency (Gujarat) v. Joint CIT which is reported in [2008] 307 1TR 1 (Guj). 15. We have given our anxious consideration as to whether we would be really required, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally excluded. Section 148 has been excluded by the first proviso to section 158BC(a) whereas sections 142, 143, 144 and 145 have been specifically incorporated by sub-clause (b) of section 158BC. 17. We have given our anxious consideration to the views expressed by the hon'ble High Court of Gujarat and the reasons contained in support thereof. On such consideration we regret our inability to subscribe to the view recorded by the hon'ble High Court of Gujarat. In reaching the afore said conclusion we rely on a judgment of the apex court reported in CIT v. Suresh N. Gupta [2008] 297 ITR 322. The following extract from the judgment of the apex court would succinctly sum up the situation and provide adequate justification for our respectful disagreement with the views of the hon'ble High Court of Gujarat expressed in Cargo Clearing Agency (Gujarat) [2008] 307 ITR 1 except in the matters specifically dealt with in this order (page 7): "12. Reading of the relevant provisions of Chapter XIV-B one finds that section 158BA deals with assessment of 'undisclosed income' as a result of search whereas computation of such income falls under section 158BB. The procedure for block a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to treat 10/6 previous years as a unit of time for the block assessment period. The important thing to be noted is that the block assessment computation in section 158BB does not exclude the concept of 'previous years' as well as the concept of 'total income'. Those concepts are retained. Further, we need to examine the s of Chapter XIV-B. The said Chapter has three parts consisting of assessment, computation and procedure for making block assessment. Assessment of undisclosed income as a result of search stands covered by section 158BA whereas computation of undisclosed income of the block period falls in section 158BB and procedure for block assessment falls in section 158BC. In this case, we are mainly concerned with computation of undisclosed income under section 158BB(1). This section incorporates the principle of aggregation of total income of the previous years falling within the block period computed in accordance with the provisions of Chapter IV. The important thing to be noted is that the computation has to be done even under section 158BB of 'undisclosed income' in the manner provided for in Chapter IV of the 1961 Act which deals with 'computation of total income'. Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of the previous years falling within the block period including returned/assessed incomes as per regular returns and regular assessments. The second aggregate to be computed is the aggregate of the total incomes/losses of the previous years determined in terms of clauses (a) to (1) of section 158BB(1). The difference between the first aggregate and the second aggregate is described in section 158B(b) as the 'undisclosed income' to be taxed under the provisions of section 113 of the 1961 Act at the special rates prescribed. Further, clause (a) of the Explanation to section 158BB clarifies that the total income/loss of each previous years shall, for the purpose of aggregation, be taken as the total income or loss computed in accordance with the provisions of Chapter IV without giving effect to set off of brought forward losses under Chapter VI or unabsorbed depreciation under section 32(2) of the 1961 Act. Hence, one has to read section 158BB with section 4 of the 1961 Act. There is no conflict between the computation machinery under Chapter XIV-B and normal computation machinery under Chapter 1V. This is the importance behind enactment of section 158BH which, inter alia, states ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of time comprising of 10/6 assessment years preceding the previous years. B. The unit of time in both situations above remains constant. C. It is open to Parliament to treat 10/6 previous years as one unit of time for the purposes of assessment for the block period. Act. D. The concept of previous year is retained in Chapter XIV-B of the Act. E. The non obstante clause in section 158BA has to be read, in juxtaposition with section 158BH. If so read other provisions of the Act will be applicable to the scheme under Chapter XIV-B, if no conflict arises upon such application. 19. The above principles adequately take care of the view adopted by the hon'ble High Court of Gujarat that as section 147 of the Act provides for reassessment of escaped income of any assessment year, the said section cannot have any application to a block assessment which is made for 10/6 years without reference to any particular assessment year. 20. In so far as the view expressed by the hon'ble High Court of Gujarat that in course of block assessment following a search all materials are available with the Assessing Officer, and therefore, the conditions precedent for the exercise of power un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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