TMI Blog1997 (5) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... 21, 1992, the petitioner filed its return of income declaring the net taxable income of Rs. 97,060. The assessing authority assessed the taxable income at Rs. 10,00,070. The petitioner challenged the said assessment order in appeal before the Commissioner of Income-tax (Appeals), Batinda, who vide its order dated February 23, 1995, set aside the assessment order and remitted the case to the Assessing Officer with certain directions and to pass a fresh order in accordance with the directions issued. The assessing authority did not pass any fresh order for the assessment year 1988-89. For the assessment year 1988-89, the assessing authority had completed the assessment on an income of Rs. 1, 11,350 which became final as no appeal was carried against that assessment order to the appellate authority. On December 5, 1995, search and seizure operations in the case of the petitioner firm were conducted. As the provisions of Chapter XIV-B of the Act were applicable to the search having been initiated after June 30, 1995, notice under section 158BC of the Act was issued on February 12, 1996. The return in Form No. 2-B for the block period April 1, 1985, to December 5, 1995, was filed de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the issuance of notice under section 143(2) be dropped. The objections filed by the petitioner were not accepted. The assessing authority continued the proceedings and asked the petitioner to appear before it on March 4, 1997. A copy of the communication dated February 12, 1997, is attached as annexure P-8. The petitioner has challenged the impugned notices under section 143(2), annexures P-4 and P-5, and the communication, annexure P-8, requiring the petitioner to appear before the assessing authority on March 4, 1997, in response to the notices, annexures P-4 and P-5. The case of the petitioner in a nutshell is that after completion of the assessment for a block period of ten years under section 158BC of the newly introduced Chapter XIV-B of the Act, which included the assessment years 1988-89 and 1989-90, the assessing authority had no jurisdiction to issue notice under section 143(2) of the Act in relation to the return filed earlier. The written statement has been filed. The facts as regards the search and seizure and framing of assessment for the block years including the years in question are admitted. The facts given in respect of the assessment year 1988-89 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are that the total undisclosed income of a person shall be assessed as the income of a block period consisting of previous years relevant to ten assessment years preceding the previous year in which the search was conducted or requisition was made and also the period of the current previous year up to the date of the search or the requisition. The undisclosed income of the block period is to be taxed at a flat rate of 60 per cent. as given in section 113. The order of assessment for the block period is to be passed within one year from the end of the month in which the last authorisation for the search or the requisition was executed. Prior to insertion of Chapter XIV-B estimation of the undisclosed income was made in a summary manner under sections 132(5) and 132(7). Chapter XIV-B was in substitution of section 132(5) with an extension of scope. " Block period " as defined in section 158B means the previous years relevant to ten assessment years preceding the previous year in which the search was conducted under section 132 or any requisition was made under section 132A, and includes, in the previous year in which such search was conducted or requisition made, the period up to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition relating to such previous years ; (e) where any order of settlement has been made under sub-section (4) of section 245D, on the basis of such order ; (f) where an assessment of undisclosed income had been made earlier under 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 Chapter IV without giving effect 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 : Provided that undisclosed income of the firm so determined shall not be chargeable to tax in the hands o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 retained to the extent necessary and the provisions of section 132B shall apply subject to such modification as may be necessary and the references to ' regular assessment ' or ' reassessment ' in section 132B shall be construed as references to ' block assessment '." A perusal of this section would show that the Assessing Officer has to serve a notice to the concerned person requiring him to furnish within a specified time (not less than fifteen days) in the notice, a return in the prescribed form setting forth his total income including the undisclosed income for the block period. No notice under section 148 is required to be issued for the purposes of proceeding under Chapter XIV-B. The Assessing Officer thereafter shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB. The Assessing Officer on determination of the undisclosed income of the block period in accordance with Chapter XIV-B then passes an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss or has not underpaid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return. The purpose of introducing of Chapter XIV-B which provides for special procedure for framing of assessment orders for a block period of ten years would be lost if the Assessing Officer is allowed to proceed under section 143 on a return filed under section 139 or in response to a notice under section 142(1), Certainly two assessments cannot be framed for the same assessment year on an assessee. Once an assessment has been framed for a block period under section 158BC which includes the years in question, the Income-tax Officer stands debarred from framing an assessment under section 143 on the basis of returns already filed under section 139. After framing of assessment under section 158BC for a block period of ten years, income of any year covered by any block period could not be determined afresh as all pending assessments of those years stood merged in the collective assessment under section 158BC(c) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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