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COMMISSIONER OF INCOME TAX Versus M/s. HARSH ENTERPRISE

2016 (8) TMI 214 - GUJARAT HIGH COURT

Block assessment passed u/s.158BD r/w. Section 158BC - period of limitation - Held that:- In the present case, the first Notice u/s.158BC of the Act was issued to the assessee on 17.10.1996, which was served upon the assessee on 04.11.1996. Therefore, assessment could have been framed latest by 30.11.1997. However, on 29.08.1997, the Assessing Officer withdrew the Notice issued u/s.158BC of the Act and issued a fresh Notice u/s.158BD of the Act on 29.08.1997. On 17.10.1996 the Notice issued u/s. .....

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s count also, there could not have been any assessment on 01.12.1997. Thus, the Revenue’s claim that Notice u/s.158BD of the Act issued on 29.08.1997 was a valid Notice and that the consequential assessment framed on 24.12.1997 was within limitation cannot be accepted and is void ab initio being barred by time. Thus, the action of the A.O. of withdrawing the Notice u/s.158BC and issuing fresh Notice u/s.158BD of the Act is illegal and bad in law. There is no provision in the Act for initiating r .....

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. FOR THE APPELLANT : MR NITIN K MEHTA, ADVOCATE FOR THE OPPONENT : MR MANISH J SHAH, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. This Tax Appeal u/s.260A of the Incometax Act, 1961 is filed against the order dated 19.05.2006 passed by the Incometax Appellate Tribunal, Ahmedabad in IT(SS)A No.14/Ahd/1998 raising the following substantial question of law for our consideration: Whether the Appellate Tribunal is right in law and on facts in holding that block assessment passe .....

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4.12.1997 assessment was completed u/s.158BC(c) r/w. Section 158BD and 158BA for the block period - 01.04.1985 to 31.03.1995 and 01.05.1995 to the date of search, i.e. 21.09.1995, on an undisclosed income of ₹ 50 Lacs. In the first instance, the A.O. issued Notice u/s.158BC on 04.11.1996. Subsequently, when the A.O. realized that Notice u/s.158BC had been issued to a person who was not searched, Notice u/s.158BD of the Act was issued. The assessment order was passed u/s.158BC r/w. Section .....

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itio. Hence, this appeal at the instance of Revenue. 4. Mr. Nitin Mehta, learned Standing Counsel appearing for the Revenue, took us through the provisions of Section 158BC, 158BD and 158BE of the Act and submitted that the Tribunal committed serious error in law in allowing the appeal filed by the assessee. It is submitted that the Assessing Officer took necessary precaution before completing assessment inasmuch as he recorded his satisfaction by way of a proposal and sent it to the CIT concern .....

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the assessee, submitted that Section 158BC of the Act prescribes the issuance of a Notice requiring the person to furnish their returns of undisclosed income. Insofar as provisions of Section 158BD of the Act are concerned, it does not prescribe the issuance of any Notice as such because it only gives jurisdiction to the A.O. over the case of such other person to proceed with the assessment proceedings under Chapter XIVB of the Act and the A.O. cannot put the proceedings in motion by issuing a N .....

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est by 30.11.1997. However, since the assessment was framed on 24.12.1997, it is illegal and bad in law being barred by time. 5.2 It was further submitted that the proceedings initiated by way of Notice u/s.158BC of the Act issued on 17.10.1996 having been concluded by the A.O. as a result of withdrawal of the Notice u/s.158BC of the Act on 29.08.1997, the issuance of fresh Notice u/s.158BD on 29.08.1997 as well as subsequent assessment were illegal and bad in law. According to him, there is no .....

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essment in cases pertaining to Sections 132 and 132A of the Act. The said Chapter was introduced by the Finance Act, 1995 with effect from 01.07.1995 and comprises Sections 158B to 158BH of the Act. The provisions under this Chapter were made inapplicable in case of search initiated under Section 132 or Section 132A after 31.05.2003 by introduction of an amendment to the Chapter as Section 158BI vide the Finance Act, 2003 with effect from 01.06.2003. The lis before us requires examination of the .....

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ny entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act [or any expense, deduction or allowance claimed under this Act which is found to be false] . 8. Sections 158BC and 158BD of the Act are machinery provisions. Section 158BC of th .....

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a) The Assessing Officer shall, (i) In respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995 but before the 1st day of January, 1997 serve a notice to such person requiring him to furnish within such time not being less than fifteen days; (ii) In respect of search initiated or books of account or other documents or any assets requisitioned on or after the 1st day of January, 1997, serve a notice to such person requiring hi .....

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furnished a return under this clause shall not be entitled to file a revised return;] (b) The Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of section 142, subsections (2) and (3) of section 143 [section 144 and section 145] shall, so far as may be, apply; (c) The Assessing Officer, on determination of the undisclosed income of the block period in accordance with this Chapter, shall pass an orde .....

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ts or any assets were requisitioned under section 132A then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed [under section 158BC] against such other person and the provisions of this Chapter shall apply accordingly. 9. It is clear from the above provisions that Section 158BC speaks of the procedure for assessment of a person searched under Sec .....

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rst or the basic principles of interpretation of a fiscal legislation. It is time and again reiterated that the Courts, while interpreting the provisions of a fiscal legislation, should neither add nor subtract a word from the provisions of instant meaning of the sections. It may be mentioned that the foremost principle of interpretation of fiscal statutes in every system of interpretation is the rule of strict interpretation which provides that where the words of the statute are absolutely clea .....

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of Section 158BA as well as covered u/s.158BD of the Act, both before the amendment in Section 158BD and also after the amendment. 12. In the present case, the first Notice u/s.158BC of the Act was issued to the assessee on 17.10.1996, which was served upon the assessee on 04.11.1996. Therefore, assessment could have been framed latest by 30.11.1997. However, on 29.08.1997, the Assessing Officer withdrew the Notice issued u/s.158BC of the Act and issued a fresh Notice u/s.158BD of the Act on 29. .....

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