TMI Blog2006 (8) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - - Dated:- 28-8-2006 - Judge(s) : R. K. AGRAWAL., VIKRAM NATH. JUDGMENT The judgment of the court was delivered by R. K. AGRAWAL J.-In all these writ petitions, the petitioners who belong to the same group, have challenged the notices issued to them under section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), in respect of the various assessment years beginning from 2000-01 to 2002-03, which vary in each of the petitions. As all these petitions raise common questions of law, they have been heard together and are being decided by a common judgment. Civil Miscellaneous Writ Petition No. 504 of 2006, filed by Chandra Prakash Agrawal, is being treated as the leading petition. We are, therefore, giving the facts of this petition. Except for the assessment years and the assessment orders having been passed either under section 143(1)(a) or under section 143(3) of the Act, the facts are common in all the petitions. Briefly stated, the facts giving rise to the present petition are as follows: According to the petitioner, Chandra Prakash Agrawal, he is a partner of M/s. Sri Ram Chandra Prakash, situate at Kayamganj in the district of Farrukhabad an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued. Thereafter, the petitioner, vide letter dated March 9,2005, requested the Additional Cpmmissioner of Income-tax, Farrukhabad, to contact the Deputy Director of Income-tax (Investigation), Agra, for issuihg notice under section 158BC of the Act for completing the block assessment. Instead of initiatihg the proceedings under section 158BC of the Act, the Assistant Commissioner of Incometax, Circle-2, Farrukhabad, respondent No.1, had initiated proceedings for reassessment under section 148 of the Act by issuing a notice dated March 22, 2005. The petitioner, vide application dated March 9, 2005, requested a month's time for compliance with the notice. However, vide application dated April 11, 2005, the petitioner requested respondent No.1 to treat the return already filed by him on August 21, 2000, for the assessment year 2000-01 as a return filed in compliance with the notice dated March 22, 2005. He also requested for disclosing the reason for reopening the assessment under section 148 of the Act. Respondent No.1, vide notice dated November 10, 2005, issued under section 142(1) of the Act, asked the petitioner to appear and produce certain documents to which he filed detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, appearing for the petitioners, confined his argument only on the question that proceedings under section 158BC of the Act alone could have been taken and not the proceeding under section 148 of the Act, which has been illegally done. Sri Gupta, learned senior counsel, submitted that on the basis of the search conducted by the officers of the Central Excise Department on June 7/8, 2001, at the business premises of the petitioner, the Director of Income-tax (Investigation), Kanpur, had sent a requisition under section 132A of the Act on March 27, 2002, requiring the Central Excise Department to deliver the seized books of account, documents, etc. The books of account and other documents having been requisitioned under section 132A of the Act, recourse to proceedings under section 148 of the Act by issuance of the notice dated March 22, 2005, is wholly without jurisdiction as special procedure for assessment of search cases has been provided under Chapter XIV-B of the Act. The proceedings, if any, could have been taken only under section 158BA of the Act read with the other provisions of the said Chapter, as section 158BA which starts with a non obstante clause, completely exclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 148 of the Act issued to the petitioners is wholly legal and within jurisdiction. In reply, Sri S. P. Gupta, learned senior counsel, submitted that under sub-section (2) of section 132A of the Act it is incumbent upon the authority to whom a requisition has been made to deliver the books of account, other documents or assets to the requisitioning authority and therefore, it is not dependent upon the conclusion of the proceedings under section 132Aof the Act. He also referred to the provisions of section 158BE of the Act and submitted that the limitation is still available for making the assessment under Chapter XIV-B of the Act. According to him, as, admittedly, in the present case a requisition under section 132A of the Act has been made by the income-tax authority on March 27, 2002, requisitioning the books of account and other documents seized by the Central Excise Department, the proceeding under section 148 of the Act cannot be initiated and the only course available to the Department is to take proceedings under Chapter XIV-B of the Act which provide for special procedure for search cases and other allied matters. We have given our anxious consideration to various ple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in sub-section (2) of section 278D referred to as the requisitioning officer) to require the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer. (2) On a requisition being made under sub-section (1), the Officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, of that sub-section shall deliver the books of account, other documents or assets to the requisitioning officer either forthwith or when such officer or authority is of the opinion that it is no longer necessary to retain the same in his or its custody. (3) Where any books of account, other documents or assets have been delivered to the requisitioning officer, the provisions of sub-sections (4A) to (14) (both inclusive) of section 132 and section 132B shall, so far as may be, apply as if such books of account, other documents or assets had been seized under sub-section (1) of section 132 by the requisitioning officer from the custody of the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of this sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared that(a) the assessment made under this Chapter shall be in addition to the regular assessment in respect of each previous year included in the block period; (b) the total undisclosed income relating to the block period shall not include the income assessed in any regular assessment as income of such block period; (c) the income assessed in this Chapter shall not be included in the regular assessment of any previous year included in the block period. (3) Where the assessee proves to the satisfaction of the Assessing Officer that any part of income referred to in sub-section (1) relates to an assessment year for which the previous year has not ended or the date of filing the return of income under sub-section (1) of section 139 for any previous year has not expired, and such income or the transactions relating to such income are recorded on or before the date of search or requisition in the books of account or other documents maintained in the normal course relating to such previous years, the said income shall not be included in the block period. 158BB. Computation of undisclosed income of the block period. (1) The undisclosed income of the block period shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder clause (c) of section 158BC, on the basis of such assessment. Explanation.-For the purposes of determination of undisclosed income,- (a) the total income or loss of each previous year shall, for the purpose of aggregation, be taken as the total income or loss computed in accordance with the provisions of this Act without giving effect to set off of brought forward losses under Chapter VI or unabsorbed depreciation under sub-section (2) of section 32 : Provided that in computing deductions under Chapter VI-A for the purposes of the said aggregation, effect shall be given to set off of brought forward losses under Chapter VI or unabsorbed depreciation under sub-section (2) of section 32 ; (b) of a firm, retUrned income and total income assessed for each of the previous years falling within the block period shall be the income determined before allowing deduction of salary, interest, commission, bonus or remuneration by whatever name called to any partner not being a working partner: Provided that undisclosed income of the firm so determined shall not be chargeable to tax in the hands of the partners, whether on allocation or on account of enhancement; (c) assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, sub-sections (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 order of assessment and determine the tax payable by him on the basis of such assessment; (d) the assets seized under section 132 or requisitioned under section 132A shall be dealt with in accordance with the provisions of section 132B. 158BD. Undisclosed income of any other person.- Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents 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 Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be proceeded with by it, the period commencing on the date on which such application is made and ending with the date on which the order under sub-section (1) of section 245D is received by the Commissioner under sub-section (2) of that section, shall be excluded: Provided that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in sub-section (1) or sub-section (2) available to the Assessing Officer for making an order under clause (c) of section 158BC is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly. Explanation 2.-For the removal of doubts, it is hereby declared that the authorisation referred to in sub-section (1) shall be deemed to have been executed, (a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued; (b) in the case of requisition under section 132A, on the actual receipt of the books of account or other documents or assets by the Authorised Officer. 158BF. Certain interests a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmined by the Assessing Officer is in excess of the income shown in the return and in such cases the penalty shall be imposed on that portion of undisclosed income determined which is in excess of the amount of undisclosed income shown in the return. (3) No order imposing a penalty under sub-section (2) shall be made, (a) unless an assessee has been given a reasonable opportunity of being heard; (b) by the Assistant Commissioner or Deputy Commissioner or the Assistant Director or Deputy Director, as the case may be, where the amount of penalty exceeds twenty thousand rupees except with the previous approval of the Joint Commissioner or the Joint Director, as the case may be; (c) in a case where the assessment is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as otherwise provided in this Chapter, all other provisions of this Act shall apply to assessment made under this Chapter. 158BI. Chapter not to apply after certain date.- The provisions of this Chapter shall not apply where a search is initiated under section 132, or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003." From a reading of section 132A of the Act it is clear that sub-section (1) thereof empowers the various authorities to requisition books of account, documents or any assets either from the person to whom it belongs in case such authority has reason to believe that such person would not produce, or cause to be produced before the income-tax authorities or where it is in the custody of some other authority in law. Sub-section (2) of section 132A mandates the authority which has the custody of the books of account or other documents to deliver them to the requisitioning officer forthwith or when such officer or authority forms an opinion that it is no longer necessary to retain the same in its custody. Sub-section (3) of section 132A provides that after the books of account, other documents or asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r assessment in respect of each previous year included in the block period and it shall not include the income assessed in any regular assessment and the income assessed under this Chapter shall not be included in the regular assessment of any previous year included in the block period. Sub-section (3) of section 158BA of the Act excludes that part of the income from being taken into consideration while making block assessment which is recorded on or before the date of the search or requisition in the books of account or other documents maintained in the normal course relating to such previous years, where the previous year has not ended or the date of filing the return of income under sub-section (1) of section 139 for any previous year has not expired. Section 158BB of the Act provides for computing of undisclosed income of the block period. It provides for determination of the total income on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence, with certain other specifications. Section 158BC of the Act provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 271 or section 271A or section 271B. Section 158BFA of the Act deals with the levy of interest and penalty for not filing of the return and for other matters under this Chapter. Section 158BG of the Act provides that the assessment for the block period shall not be made by an Assessing Officer not below the rank of an Assistant Commissioner or Deputy Commissioner or an Assistant Director or Deputy Director, as the case may be. Under the proviso to section 158BG, it has been provided that, before passing the order, the previous approval of the Commissioner or Director in the case of search/requisition made before January 1, 1997 ; and the Joint Commissioner or the Joint Director in the case of search or requisition made on or after January 1, 1997, is required. Section 158BH of the Act makes all other provisions of the Act applicable in respect of assessment made under this Chapter except what has been specifically provided. Section 158BI of the Act, however, excludes the applicability of the Chapter XIV-B where search is initiated under section 132, or books of account, other documents or any assets are requisitioned under section 132A after May 31, 2003. As Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ratna Rao v. Ashalta S. Guram, [1986] 4 SCC 447, in the context of construction of non obstante clause, after noticing the observations made by the apex court in the cases of Aswini Kumar Ghosh v. Arabinda Bose [1953] SCR 377 ; AIR 1952 SC 369; and Dominion of India v. Shrinbai A. Irani [1955] 1 SCR 206 ; AIR 1954 SC 596, has observed as follows: "67. A clause beginning with the expression 'notwithstanding anything contained in this Act or in some particular provision in the Act or in some particular Act or in any law for the time being in force, or in any contract' is more often than not appended to a section in the beginning with a view to give the enacting part of the section in case of conflict an overriding effect over the provision of the Act or the contract mentioned in the non obstante clause. It is equivalent to saying that in spite of the provision of the Act or any other Act mentioned in the non obstante clause or any Contract or document mentioned the enactment following it will have its full operation or that the provisions embraced in the non obstante clause would not be an impediment for an operation of the enactment. See in this connection the observations of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fulfilled. We find that the Punjab and Haryana High Court in the case of Raja Ram Kulwant Rai v. Asst. CIT [1997] 227 ITR 187, has held that the purpose of introduction of Chapter XIV-B is that the undisclosed income detected as a result of any search initiated or any requisition made after June 30, 1995, shall be assessed separately as the income of the block years. Special procedure was introduced for framing of assessment of search cases. Section 158BA starts with a non obstante clause that notwithstanding anything contained in any other provisions of the Act after June 30, 1995, cases arising out of search and seizure under section 132 shall be assessed in accordance with the newly introduced Chapter XIV-B. The Madras High Court in the case of B. Noorsingh v. Union of India [2001] 249 ITR 378, has held that section 158BA provides that special procedure set out in Chapter XIV-B shall be adopted in search cases covered by the provisions "notwithstanding anything contained in any other provision of this Act". We are in respectful agreement with the view expressed by the learned judges of the Punjab and Haryana and Madras High Courts in the aforesaid decisions. Thus, where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me as a result of search and specified matters as provided under Chapter XIV-B is confined to the undisclosed material found therein and does not in any way affect the regular assessment provided under Chapter XIV of the Act in respect of the income not discovered or relatable to the search under section 132 or the requisition of documents under section 132A of the Act. The Kerala High Court in the case of Malayil Bankers v. Asst. CIT [1999] 236 ITR 869, the Gujarat High Court in the case of CIT v. Shambhulal C. Bachkaniwala [2000] 245 ITR 488 and the Calcutta High Court in the case of Deputy CIT v. Shaw Wallace and Co. Ltd. [2001] 248 ITR 81, has taken the view that in view of the plain language of section 158BA of the Act and the Explanation thereto, the Assessing Officer is not debarred from framing an assessment under section 143 even where an assessment has been framed for a block period under section 158BC of the Act. Thus, we are of the opinion that even where an assessment for a block period has been made or is to be made under Chapter XIV-B of the Act, regular assessment proceedings including reassessment under Chapter XIV of the Act are not barred. This would also be cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... block assessment under Chapter XIV-B of the Act pertains to the undisclosed income and the regular assessment under section 143(3) pertains to a regular income and both the proceedings can go on simultaneously as both have different types of income and one proceeding is for undisclosed income and the other proceeding under section 143(3) is for disclosed income. In the case of Rushil Industries Ltd. [2001] 251 ITR 608, the Gujarat High Court has held that a bare reading of the provisions of section 158BD would show that for taking action under the said section, the Assessing Officer is merely required to be satisfied that the books of account or other documents or assets found in the search show undisclosed income of a person other than the one against whom the search was conducted. In the case of Smt. Harbans Kaur Bhatia [2005] 274 ITR 298, the Madhya Pradesh High Court, on the facts found therein, has held that it was thus a clear case which falls in the wording of section 158B(b), i.e., "would not have been disclosed for the purpose of this Act" and the income in question has to be taxed in the hands of the assessee as per the provisions applicable to block assessment read w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t connote the same state of things in every particular case, and its various meanings are determinable in a specific instance by other facts, and it may mean that the vessel's title is taken,' as in condemnation proceeding, or her exclusive or partial use for the requisitioning Government, or merely that her ownership and earnings remain in her owner, but only for such voyages as are permitted or directed by the Government with a view to the national interest, Mitsubishi Shoji Kalsha Limited v. Societe Purfina Maritimme, C.C.A. Cal 133 F. 3d. 552, 556. The 'requisition' of a Belgian vessel by Belgian Government was not completed until such time as actual possession of vessel was taken by requisitioning Government, the word 'requisitioned' signifying a completed or executed requisition. The Laurent Meeus, D. C Cal., 43F. Supp. 807, 808." In Stroud's Judicial Dictionary of Words and Phrases, fifth edition, by 43 John S. James, Vol. 4, published by Sweet and Maxwell Limited, London, in 1986 at page 2256, various meanings of the word "requisition" have been given as follows: "Requisition: (1) As to conditions of sale, a 'requisition' (or 'inquiry', which is synonymous) on title, is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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