TMI Blog2007 (2) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... arch or requisition as contemplated hereinabove. The search and seizure was initiated by the respondents on August 24, 2006, which was carried out by various authorised officials. Thereafter, as admitted by the respondents in their counter affidavit, no notice as required u/s 153A was issued to the petitioner for the six assessment years, i.e., from 2001-02 to 2006-07. It has not been disputed by the respondents that the date on which the search was initiated the assessment proceeding was pending on the basis of the return furnished by the petitioner. Consequently, therefore, the pending assessment proceeding stood abated by virtue of the second proviso to section 153A of the said Act. Instead of complying with the requirements of section 153A of the Act, the respondents proceeded with the pending assessment proceeding for the assessment year 2004-05 and passed an assessment order during the pendency of the instant writ application. The said impugned order has also been challenged by the petitioner by filing amendment petition. In the aforesaid facts and circumstances of the case, I am of the definite opinion that the entire action of the respondents in proceeding with the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials of the Income-tax Department and the investigation wing at the offices and residence of the petitioner, which continued for a number of days. Respondent No. 3, thereafter, issued notice to the petitioner under section 142 of the Act asking him to file his Income-tax return for the assessment year 2004-05 and to produce the books of account, bank passbooks and vouchers, etc., for the financial year ending March 31, 2004. The authorised representative of the petitioner appeared before respondent No.3 and drew his attention to the fact that the petitioner has already filed his return for the financial year 2004-05 accompanied with all the documents of profit and loss account. The petitioner also submitted to respondent No. 3 that no notice under section 153A of the Act had been issued to the petitioner asking him to file his Income-tax return for the sixth assessment year as contemplated in the said section and further stated that the assessment proceeding for the assessment year 2004-05 which was pending on the date of initiation of search and seizure under section 132 of the Act has already abated and continuation of the impugned assessment proceeding is wholly without jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the writ petitions is absolutely illegal and wholly without jurisdiction. 5. After considering the facts of the case and the submission made by learned counsel for the parties, the only question that falls for consideration is as to whether the assessment proceeding for the year 2004-05 and the final order passed in the said assessment proceeding is vitiated in law for non-compliance with the provisions of section 153A of the Act ? 6. Before answering the aforesaid question, I would first like to refer to some of the relevant provisions of the Act. 7. Section 132 of the Act lays down the provisions of search and seizure. Under this section, the Director General or Director or Chief Commissioner or Commissioner or Joint Commissioner may be empowered by the Board to make search and seizure when they have reason to believe that any person to whom summonses or notices have been issued under the provisions of the Act referred to therein have failed to produce books of account or any other documents relevant for any assessment proceeding. The provision of section 132 underwent a series of amendments with a view to enlarge the power of search and seizure vested in the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of current previous year up to the date of search. The undisclosed income is taxed at a flat rate of 60 per cent. Under this provision, the authority competent to make the block assessment shall be an Assessing Officer not below the rank of the Assistant Commissioner and the time limit for completion of block assessment is within one year from the end of the month in which the last authorisation for search under section 132 and requisition under section 132A was executed. In 2003, new provisions, i.e., sections 153A, 153B and 153C have been inserted in the Finance Act, 2003 (32 of 2003), relating to assessment in the case of search or requisition made on or after June, 1, 2003, specifying the time limit for completion of assessment or reassessment of income. By virtue of the aforesaid amendments, the assessment in the case of search or requisition made on or after June 1, 2003, is to be governed by the provisions contained in the new sections 153A, 153B and 153C and not by the provisions contained in Chapter XIV-B, i.e, sections 158B to section 158BH. 10. For better appreciation, sections 153A, 153B and 153C are reproduced herein below : 153A. Assessment in case of search or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted ; (b) in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed : Provided that in case of other person referred to in section 153C, the period of limitation for making the assessment or reassessment shall be the period as referred to in clause (a) or clause (b) of this sub-section or one year from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later : Provided further that in the case where the last of the authorisations for search under section 132 or for requisition under section 132A was executed during the financial year commencing on the 1st day of April, 2004 or any subsequent financial year, (i) the provisions of clause (a) or clause (b) of this sub-section shall have effect as if for the words ' two years&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n referred to in clause (a) or clause (b) of this sub-section available to the Assessing Officer for making an order of assessment or reassessment, as the case may be, 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. (2) The authorisation referred to in clause (a) and clause (b) of 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. 153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized of requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is clear that this provision provides for a single assessment of undisclosed income of a block period in a case where search is conducted. In other words, in a case where search is conducted there shall be a block assessment for the period comprising previous years relevant to six assessment years preceding the previous year in which the search was conducted and also includes the period up to the date of commencement of such search. In such cases, the Assessing Officer shall issue notice to the assessee requiring him to furnish return of income in respect of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted under section 132 or requisition was made under section 132A. The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Section 153B provides the time limit for completion of assessment. It provides that the Assessing Officer shall make the order of assessment or reassessment in respect of the each assessment year falling within the six assessment years under section 153A within a period of two years from the end of the financial year in which search u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B and section 153C, all other pro visions of this Act shall apply to the assessment or reassessment made under section 153A. It is also clarified that assessment or reassessment made under section 153A shall be subject to interest, penalty and prosecution, if applicable. In the assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 65.6 The new section 153B provides for the time limit for completion of search assessments. It provides that the Assessing Officer shall make an order of assessment or reassessment in respect of each assessment year, falling within six assessment years under section 153A within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed. 65.7 This section also provides that assessment in respect of the assessment year relevant to the previous year in which the search is conducted under section 132 or requisition is made under section 132A shall be completed within a period of two years from the end of the financial ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32B, 140A, 234A, 234B, 246A and 276CC to give reference to section 153A in these sections. 65.12 These amendments will take effect from June 1, 2003. 14. From a bare reading of the provisions of sections 153A, 153B and 153C of the Act and the Departmental Circular dated September 5, 2003 (see [2003] 263 ITR (St.) 62 ), it is manifestly clear that after May 31, 2003, the earlier provision of block assessment in the case of search initiated against the assessee, shall not apply. Instead, the provision that there shall be single assessment on undisclosed income comprising previous years relating to six assessment years preceding in which the search was conducted, shall apply. It further provides that the Assessing Officer shall issue notice to such person requiring him to furnish return of income in respect of six assessment years immediately preceding the assessment year relating to the previous year in which the search was conducted under section 132 or requisition was made under section 132A of the Act. 15. The second proviso to section 153A makes it clear that assessment or reassessment relating to any assessment year falling within the period of six assessment years pen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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