TMI Blog2022 (4) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... he earlier return that may be filed for the purpose of assessment which is pending would be treated as non est in law. Further, section 153A (1) of the Act itself provides that on filing of the return consequent to the notice, the provision of the Act will apply to the return of income so filed. Consequently, the return filed under Section 153A(1) of the Act is a return furnished under Section 139 of the Act. Consequently, the assessee is being assessed in respect of abated assessment for the first time under the Act. Therefore, the provisions of the Act which would be otherwise applicable in case of return filed in the regular course under Section 139(1) of the Act would also continue to apply in case of return filed under Section 153A of the Act. Whether the material found in the course of the survey in the premises of the builder could be used in Block Assessment of the assessee? - A block assessment under Chapter XIVB of the Act is for bringing to tax undisclosed income which is computed on the basis of evidence found as a result of search and/or other information as is available with the AO which is relatable to such evidence. Final conclusion on the issue in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by Section 153A. We have to remember that with the advent of Section 153A we are taken back to the pre-chapter XIV-B situation, where assessments were made on the basis of material and evidence collected during search. (c) To say that the assessment undertaken u/s 153A of the Act can never be reopened under Section 147 of the Act, would be an incorrect statement of law. The matters shall now be placed for further hearing so as to determine on facts whether any case has been made out by the Revenue for the purpose of reopening of the assessments undertaken u/s 153A of the Act. - R/SPECIAL CIVIL APPLICATION NO. 17598 of 2019, 17787 of 2018 & 20337 of 2018 - - - Dated:- 31-1-2022 - HONOURABLE MR. JUSTICE J.B.PARDIWALA AND HONOURABLE MS. JUSTICE NISHA M. THAKORE MS VAIBHAVI K PARIKH FOR THE PETITIONER MRS KALPANAK RAVAL FOR THE RESPONDENT JUDGMENT PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA 1. Since one of the issues being pivotal raised in all the captioned writ applications is the same, those were taken up for hearing analogously for the purpose of deciding the said pivotal issue first. 2. For the sake of convenience, the Special Civ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) read with Section 153A of the Act without making any addition in respect of the purchases. 4.6 It appears that, thereafter, the respondent herein issued the impugned notice dated 28.03.2019 under Section 148 of the Act, seeking to reopen the case of the writ applicant for the year under consideration. 4.7 The writ applicant filed its return of income on 16.04.2019 in response to the impugned notice and brought the said fact to the notice of the respondent herein vide the letter dated 17.04.2019. The writ applicant vide the very same letter, requested the respondent to furnish a copy of reasons for reopening. 4.8 It appears on perusal of the copy of reasons that the Assessing Officer thought fit to do so on the ground that the purchases of ₹ 29,94,000/- made by the writ applicant from the Swastik Corporation are bogus. The case of the revenue is that it received information from the Investigation Wing (Mumbai) as well as the Investigating Wing (Surat) that one Shri Bijal Ashok Shah, proprietor of M/s. Swastik Corporation stated in his statement recorded during the survey proceedings that he provides accommodation entries. Prima facie, it appears that the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould argue that Section 147 of the Act confers jurisdiction to an Assessing Officer for the purpose of reassessment in a case where Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment . In such circumstances, the Assessing Officer would be justified in issuing notice under Section 148 of the Act provided there is some tangible material with the Assessing Officer in that regard. 8. Mr. Hemani would submit that once a search action under Section 132 of the Act has been carried out and material has been recovered from an assessee, the undisclosed income shall be brought to tax. Once that happens, it is impossible to envisage escapement of income chargeable to tax within the meaning of Section 147 of the Act so as to invoke the reassessment jurisdiction. Mr. Hemani would argue that Section 147 of the Act indicates that the same is in relation to income escaping assessment and applies in a case where either the income chargeable to tax has escaped assessment by virtue of non-disclosure by way of non-filing of return of income or non-disclosure by way of omission to disclose fully and truly all the material facts for the purpose of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des for Assessment in case of search or requisition . Thus, there is a specific provision (self-contained code) which deals exclusively with provisions relating to assessment pursuant to search. Non-obstante clause S.158BA is a nonobstante clause since it starts with the following words; (1) Notwithstanding anything contained in any other provisions of this Act .. Thus, where a search action is carried out, assessment is to be framed strictly in accordance with the specific provisions meaning thereby that the normal provisions for assessment have been given a go bye. S.153A is a nonobstante clause since it starts with the following words; (1)Notwithstandi ng anything contained in section 139, section 147, section 148, section 149, section 151 and section 153 . Thus, where a search action is carried out, assessment is to be framed strictly in accordance with the specific provisions meaning thereby that the normal provisions for assessment have been given a go bye. Period of assessment S.158BB provides for computation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment shall be passed by an AO below the rank of JCIT except with the prior approval of the JCIT . Save as otherwise provides, all other provisions of the Act shall apply. S.158BH provides as follows: Save as otherwise provides in this Chapter, all other provisions of this Act shall apply to assessment made under this Chapter . Clause (i) of Explanation to S.153A provides as follows; (i) save as otherwise provides in this section, all other provisions of this Act shall apply to the assessment made under this section. Applicability of provisions relating to search. S.158BI provides that the provisions contained in Chapter XIV-B (S.158B to S.158BI) would not apply in a case where search is initiated u/s 132 or books of accounts, other documents are requisitioned u/s 132A after 31.05.03 i.e., these provisions are applicable for search upto 31.05.03. S.153A(1) provides for provisions relating to assessment in a case where search is initiated u/s.132 or books of accounts, other documents are requisitioned u/s.132A after 31.05.03. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment is framed for Block Period comprising of 6 years whereas reassessment is only for one of the years. Therefore, also, such an act was held to be not permissible. (Note: In the present case also once search takes place, 6 years are automatically reopened and assessment of all the 6 years is taken up together. Individual year therefore is not allowed to be framed separately u/s 153A of the Act). 13. Thus, according to Mr. Hemani, the erstwhile scheme (Chapter-XIV-A) and the existing scheme (Chapter-XIV) are identical or rather similar. 14. Mr. Hemani also laid much emphasis on the fact that if a concluded assessment under Section 153A of the Act is also to be reopened by issuing a notice under Section 148 of the Act applying the principles of Section 147 of the Act, then there would be no end of the proceedings. He would submit that the policy of law is that there must be a point of finality in all the legal proceedings. He would submit that the assessment under Section 153-A of the Act is also infallible, and in such circumstances, it is not permissible in law to reopen such assessment by issuing a notice under Section 148 of the Act. 15. In the aforesaid cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e non obstante clause in Section 153A of the Act gives an overriding effect to certain provisions stated therein. 17. In such circumstances, referred to above, Mr. Hemani prays that there being merit in the principle contention raised by him, the same may be accepted and the writ application may be allowed on this count alone, i.e, an assessment under Section 153A of the Act cannot be reopened by issue of a notice under Section 148 of the Act. 18. The aforesaid submissions canvassed by Mr. Hemani have been adopted by all other learned counsel appearing for the writ applicants in the connected matters. Submissions on behalf of the Revenue; 19. On the other hand, Mr. M.R. Bhatt, the learned senior counsel assisted by Mr. Karan Sanghani, the learned counsel appearing for the Revenue has vehemently argued that the scheme of Chapter-XIV-B cannot be compared with the Scheme of Chapter-XIV of the Act. According to Mr. Bhatt, both the schemes are altogether different. Mr. Bhatt would submit that the principles of law as explained by this High Court in the case of Cargo Clearing Agency (supra) are not applicable to the case on hand as in Cargo Clearing Agency (supra), this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n- this assessment in addition to regular assessments. Therefore, two assessments, i.e,. one for regular and asstt. of undisclosed income for the block period. 153-A-proviso- only one assessment in respect of six Ays for undisclosed income found as a result of search, as also in respect of regular income. Second proviso-pending assessment therefore abate. 7. Section 158BB-Special computation provision only for undisclosed income. No such special provision-entire income to be computed as per normal provisions. 8. Section 158BB (4)- Brought forward losses, unabsorbed depreciation, not allowed to be set off. No such Provision. 9. Second Proviso to section 158BC(a)- No revised return permissible No such Provision. 10. Section 158BE- Special Limitation provision- Explanation 1- Only four exclusions Section 153B- Explanation- Exclusions similar to explanation 1 to Section 153. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Anil Kumar Bhatia, reported in (2013) 352 ITR 593 (Delhi), wherein the effect of the non obstante clause as contained in Section 153A of the Act has been elaborately explained. 24. Mr. Bhatt would submit that the assessment under Section 153A will have to be framed under Section 143(3) read with Section 153A/153C as the case may be. He would argue that the decision of this High Court in the case of Cargo Clearing Agency (supra), more particularly, Para-24 therein itself spells out the fine distinction between Chapter-XIV and Chapter-XIV-B. He pointed out that Para-29 of the judgment details the modality of computation which is self-contained in Section 158BB. This, according to Mr. Bhatt, is wholly absent in Section 153A. 25. Mr. Bhatt invited the attention of this Court to Para- 31 of Cargo Clearing Agency (supra), wherein the aspect of limitation under Section 158BE has been noted in the case of block period. The Court held that on the concept of block period, the limitation period prescribed is not in consonance with Section 153 of the Act. However, in the case of 153A, different assessment years being identifiable, the requirement of Sections 147/148, i.e., within fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Zinzuwadia Sons vs. Deputy Commissioner of Income Tax, Central Circle-2(3), (2019) 419 ITR 169 (Guj.) 31. In such circumstances, referred to above, Mr. Bhatt, the learned senior counsel appearing for the Revenue prays that the moot question which has been debated may be answered in favour of the Revenue and against the assessee. ANALYSIS 32. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the law permits the Assessing Officer to reopen an assessment carried out under Section 153A of the Act by issuing a notice under Section 148 of the Act. 33. Section 153A was introduced into the Act by the Finance Act, 2003 w.e.f. 1.6.2003 along with Sections 153B and 153C. Section 153A provides for assessment in case of search or requisition‟. It runs as follows: 153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by Sections 139, 147, 148, 149. 151 and 153 respectively in respect of searches made after 31.05.2003. We must try to understand the effect of the non obstante clause as contained in Section 153A so as to appreciate the rival contentions canvassed on either side in this regard. According to Mr. Hemani, the non obstante clause excludes the very applicability of Sections 147 and 148 of the Act and, therefore, an assessment carried out under Section 153A cannot be reopened with the aid of Sections 147 and 148 of the Act. On the other hand, Mr. Bhatt would submit that the non obstante clause in Section 153A merely dispenses with the procedural aspect of Section 147 with regard to the reason to believe , approval etc. Non obstante clause 35. In State of West Bengal v. Union of India, (1963) AIR SC 1241 , it is observed as under:- The Court must ascertain the intention of the legislature by directing its attention not merely to the clauses to be construed but to the entire statute; it must compare the clause with the other parts of the law and the setting in which the clause to be interpreted occurs. 36. In Union of India v. Maj I.C. Lala, (1973) AIR SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equivalent to showing that the Act shall be no impediment to measure intended. To attract the applicability of the phrase, the whole of the section, the scheme of the Act and the objects and reasons for which such an enactment is made has to be kept in mind. 40. In ICICI Bank Ltd. v. SIDCO Leathers Ltd.,2006 67 SCL 383 (SC), the Supreme Court, at Paragraphs 34, 36 and 37, held as follows: 34. Section 529-A of the Companies Act no doubt contains a nonobstante clause but in construing the provisions thereof, it is necessary to determine the purport and object for which the same was enacted.... 36. The non-obstante nature of a provision although may be of wide amplitude, the interpretative process thereof must be kept confined to the legislative policy.... 37. A non-obstante clause must be given effect to, to the extent the Parliament intended and not beyond the same. 41. The Supreme Court, in the case of Central Bank of India v. State of Kerala, (2009) 4 SCC 94 , held as follows:- 103. A non-obstante clause is generally incorporated in a statute to give overriding effect to a particular section or the statute as a whole. While interpreting no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e read as clarifying the whole position and must be understood to have been incorporated in the enactment by the legislature by way of abundant caution and not by way of limiting the ambit and scope of the Special Rules. 45. In A.G. Varadarajulu v. State of Tamil Nadu, (1998) 4 SCC 231 , the Supreme Court relied on Aswini Kumar Ghoses case. The Court while interpreting the non-obstante clause contained in Section 21-A of Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961 held :- It is well settled that while dealing with a non-obstante clause under which the legislature wants to give overriding effect to a section, the court must try to find out the extent to which the legislature had intended to give one provision overriding effect over another provision. Such intention of the legislature in this behalf is to be gathered from the enacting part of the section. In Aswini Kumar Ghose v. Arabinda Bose, (1952) AIR SC 369, Patanjali Sastri, J. observed: The enacting part of a statute must, where it is clear, be taken to control the non obstante clause where both cannot be read harmoniously; 46. A non-obstante clause is generally appended to a sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f initiation of search as the same would abate. Since some of the provisions contained in the enacting part may come into conflict with the provisions contained in the non obstante clause, these impediments are removed by means of the non obstante clause. Thus, by enacting the non obstante clause in the section, the formalities of issuing notice u/s 139, application of the provisions of section 147, 148, 149 or 151 for reopening a case for escaped assessment, taking of approval from the concerned authorities for reopening the assessment and the time limit for completion of regular assessment have been done away with. Thus, assumption of jurisdiction by the Assessing Officer u/s 153A has been made simple and easy. 50. Section 153A is a self-contained code for each assessments. The section states that on initiation of search, the Assessing Officer can issue a notice calling for the returns of income for six assessment years preceding the previous year in which the search has taken place. The non obstante clause obviates the need to comply with the requirement of the regular provisions. 51. The three sections introduced w.e.f. 1.6.2003 replaced the Post Search Block Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided in the proposed section 153A, section 153B and section 153C, all other provisions 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Consequential amendments have also been made in sections 132, 132B, 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. 52. A perusal of Section 153A as noted above shows that it starts with a non obstante clause relating to the normal assessment procedure which is covered by Sections 139, 147, 148, 149, 151 and 153 respectively in respect of searches made after 31.5.2003. These Sections, the applicability of which has been excluded, relate to returns, assessment and reassessment provisions. Prior to, the introduction of these three Sections, there was Chapter XIV-B of the Act which took care of the assessment to be made in cases of search and seizure. Such an assessment was popularly known as the block assessment‟ because the Chapter provided for a single assessment to be made in respect of a period of a block of ten assessment years prior to the assessment year in which the search was made. In addition to these ten assessment years, the broken period up to the date on which the search was conducted was also included in what was known as the block period‟. Though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to tax. [See CIT vs. Anil Kumar Bhatia, (2012) 24 taxmann.com 98 (Delhi)] 54. A question may arise as to how the aforesaid is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either in Section 143(1)(a) or Section 143(3) of the Act. This has been answered by the Delhi High Court in the case of Anil Kumar Bhatia (supra) as under; If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would also be included, but in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee‟s total income and such orders are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In this latter situation, the Assessing Officer will reopen the assessments or reassessments already made (without having the need to follow the strict provisions or complying with the strict conditions of Sections 147, 148 and 151) and determine the total income of the assessee. Such determination in the orders passed under Section 153A would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income. In such a case, to reiterate, there is no question of any abatement of the earlier proceedings for the simple reason that no proceedings for ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is for previous years relevant to 10/6 assessment years and also the period of the current previous year up to the date of the search, i.e., from April 1, 2000, to January 17, 2001, in this case. The essence of this new procedure, therefore, is a separate single assessment of the undisclosed income , detected as a result of search and this separate assessment has to be in addition to the normal assessment covering the same period. Therefore, a separate return covering the years of the block period is a prerequisite for making block assessment. Under the said procedure, the Explanation is inserted in section 158BB, which is the computation section, explaining the method of computation of undisclosed income of the block period. It is now well accepted that this Chapter is a complete code in itself providing for self-contained machinery for assessment of undisclosed income for the block period of 10 years or 6 years, as the case may be. In case of regular assessments for which returns are filed on yearly basis, Section 4 of the Act is the charging section. However, at what rate the income is to be taxed is specified every year by the Parliament in the Finance Act. In contradisti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Consequently, as already mentioned, while analyzing the scheme of Chapter XIVB, such Chapter is a complete code in respect of assessments of 'undisclosed income'. Not only it defines what is undisclosed income, it also lays down the block period for which undisclosed income can be taxed. Further, it also lays down the procedure for taxing that income. It is very pertinent to note at this stage that for this purpose, specific provision in the form of Section 158BA(2) is inserted making it a charging section. Thus, a diagnostic of Chapter XIVB of the Act leads to irresistible conclusion that it contains all the provisions starting from charging section till the completion of assessment, by prescribing special procedure in relation thereto, making it a complete Code by itself. Looking it from this angle, the character and nature of 'undisclosed income' referred to in Chapter XIVB becomes quite distinct from 'total income' referred to in Section 5. It is of some significance to observe that when a separate charging section is introduced specifically, to assess the undisclosed income, notwithstanding a provision in the nature of Section 4 already on the statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer not below the rank of Assistant Commissioner of Income Tax with the prior approval of the Commissioner of Income Tax. The assessment is of the income of the block period consisting of previous years relevant to 10/6 assessment years preceding previous year in which the search was conducted u/s. 132 of the Act, and includes, in the year in which the search was conducted, the period upto the date of commencement of such search. The salient features of the block assessment scheme for determining undisclosed income can be stated thus :- [a] A single Notice is required to be issued u/s. 158BC of the Act for the entire block period of 10/6 years going backward from the year of search, plus the broken period of the year of search ending on the date of search. This saves the Assessing Officer from being required to obtain prior approval of the higher authorities for initiation of assessment/reassessment proceedings for past years falling within the block period. [b] Under the first Proviso below clause (a) of section 158BC of the Act it is provided that no Notice u/s. 148 of the Act is required to be issued for the purpose of proceeding under Chapter XIV-B of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to tax has escaped assessment. Proviso to section 147 of the Act stipulates that no reassessment proceedings shall be commenced after the expiry of four years from the end of the relevant assessment year in a case where assessment has been framed u/s. 143(3) of the Act or u/s. 147 of the Act for the relevant assessment year, unless income has escaped assessment for such assessment year by reason of failure or omission to either file return u/s. 139 of the Act, or in response to Notice u/s.142(1) or section 148 of the Act, or to disclose fully and truly all material facts necessary for the assessment of that assessment year. [b] Under section 148 of the Act, the Assessing Officer is required to serve on the assessee a Notice requiring the assessee to furnish within the prescribed period a return of income, but even before issuing such Notice u/s. 148 of the Act, the Assessing Officer is mandated under sub-section (2) of section 148 of the Act to record reasons. The return of income which an Assessing Officer may call for from an assessee is in relation to income which has escaped assessment, for which an assessee is assessable under the Act during the previous year corresp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in regular assessment and undisclosed income are included in the assessment under Section 153A. 61. Under Section 158BB of the Act, the undisclosed income of the block period shall be the aggregate of the total income of the previous years falling within the block period computed in accordance with the provisions of this Act, 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 as reduced by the aggregate total income or as the case may be as increased by the aggregate of the losses of such previous year, determined as provided thereunder. In Paras-19,20 and 21 of Cargo Clearing Agency (supra), the Court has set out reasons as to why the legislature does not intend to reopen a block assessment. Paras-19,20 and 21 reads thus; 19. Section 158BB of the Act provides for modality of computation of undisclosed income of the block period. Such undisclosed income of the block period has to be the aggregate of the total income of the previous years falling within the block period. If the different aggregates which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpletion of block assessment has been provided in section 158BE of the Act. It indicates that the same has to be within one year/two years from the end of the month in which the last of the authorisations for search under section 132 of the Act was executed etc. For the present, it is not necessary to refer to the other provisions of the said section. However, Explanation 2 as appearing in section 158BE of the Act gives an indication as to what would be the date on which an authorisation shall be deemed to have been executed. Under clauses (a) and (b) of Explanation 2 different points of time have been specified. But in no case, can one envisage the applicability of period of limitation prescribed under section 153 of the Act for completion of assessments and reassessments. The Revenue cannot contend that for the purpose of reassessing the so called escaped undisclosed income revenue will resort to the limitation under section 153 of the Act, because undisclosed income has to be assessed in the manner provided and by adopting the procedure provided in Chapter XIV-B of the Act. Nor is it possible to resort to limitation under section 158BE of the Act because the said period of limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecial procedure prescribed by the said Chapter is to contend what is inherently not possible. It cannot be a case of non filing of return considering the provisions of section 158BC of the Act. It cannot be a case of non disclosure of material facts considering the fact that everything which was undisclosed has already been unearthed at the time of search and the definition of undisclosed income itself indicates that not only what has been seized or recovered, but even income or property which has not been or would not have been disclosed for the purpose of the Act has been roped in. Furthermore, section 158BB of the Act also provides for not only for requisition of Books of Accounts or other documents, but on the basis of evidence found as a result of search and such other materials or information as are available with the Assessing Officer, undisclosed income of the block period shall be computed. Therefore, even if, assuming for the sake of argument, some income has not been disclosed in the return furnished under section 158BC of the Act, the Assessing Officer is bound to assess all undisclosed income after processing the entire material available with Assessing Officer. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch previous years, determined,- (a) where assessments under section 143 or section 144 or section 147 have been concluded, on the basis of such assessments; (b) where returns of income have been filed under section 139 or section 147 but assessments have not been made till the date of search or requisition, on the basis of the income disclosed in such returns; (c) where the due date for filing a return of income has expired but no return of income has been filed, as nil,. (d) where the previous year has not ended or the date of filing the return of income under sub- section (1) of section 139 has not expired, on the basis of entries relating to such income or transactions as 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 undisclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such income as a consequence of such inquiries. However, insofar as the assessment or reassessment under Section 153A/153C of the Act is concerned, all that the section says is that in a case of a person where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132A, the Assessing Officer shall issue notice to such person to furnish the return of income in respect of each of the six assessment years; and assess or reassess the total income of six assessment years. Thus, what we have noticed is that there is no provision akin to Section 158BB which provides for the computation of income on the basis of the material and information gathered during the inquiries made after the search proceedings. In the aforesaid context, Para-25 of Cargo Clearing Agency (supra) is also relevant. We quote Para-25 as under; 25. As already noted hereinbefore, the entire scheme for bringing to tax income which has escaped assessment under sections 147 to 153 of the Act specifically relates to a specific assessment year and different time limits are provided at different stages which are all inter-linked and commence from the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciples of interpretation also do not permit such an exercise. Xxx As already noticed hereinbefore, the entire scheme under Chapter XIV of the Act, more particularly from Sections 147 to 153 of the Act pertaining to reassessment, and the special procedure for assessing the undisclosed income of the block period under Chapter XIV-B of the Act are not only separate and distinct from each other, but if an effort is made to incorporate the scheme under Chapter XIV of the Act for the purpose of assessment of the block period there is a conflict between the provisions which becomes apparent on a plain reading. In the circumstances, as per the established rules of interpretation, unless and until, a plain reading of the two streams of assessment procedure does not result in the procedures being independently workable, only when the question of resolving the conflict would arise. But to the ontrary, in the present case, in the light of the provisions of Section 158BH of the Act, once there is a conflict between the two streams of procedure, as laid down by the Apex Court, the provisions of Chapter XIV-B of the Act shall prevail and have primacy. Thus, viewed from any an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) Sections 153A to 153D fall within the Chapter XIV which provides for the procedure for assessment . Thus, these provisions do not fall under a separate chapter. 5) There is no provision akin to section 158BH which says that save as otherwise provided in this Chapter, all other provisions of this Act shall apply to assessment made under this Chapter. 70. In the aforesaid context, the judgment of this High Court in the case of Zinzuwadia Sons (supra) assumes importance. We quote the relevant observations; 17. Insofar as the contention that the additions have been made on the basis of the material found during the course of survey and not during the course of search is concerned, the learned counsel for the respondent has placed reliance upon the decision of the Supreme Court in Commissioner of Income Tax, Chennai v. S. Ajit Kumar, (2018) 404 lTR 526, wherein it has been held thus: 15. The power of survey has been provided under Section 133-A of the IT Act. Therefore, any material or evidence found/collected in a survey which has been simultaneously made at the premises of a connected person can be utilised while making the block assessment in respect of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. (supra), the following questions of law were raised by the Revenue while questioning the legality and validity of the order passed by the Appellate Tribunal; (A) Whether the order of Tribunal is right in law and on facts in deleting the addition made in assessment made u/s 153A of the Act? (B) Whether the Tribunal is right in law in holding that the addition should be based on the incriminating material found during the course of search under new procedure of assessment u/s 153A which is different from earlier procedure u/s 158BC r.w.s. 158BB of the Act and by reading into the section, the words 'the incriminating material found during the course of search' which are not there in section 153A? (C) Whether the Tribunal erred in relying on the ITAT order in Sanjay Aggarwal Vs. DCIT (2014) 47 Taxmann.Com 210 (Del) which has interpreted undisclosed income unearthed during the search to imply incriminating material, as against the finding of the Delhi High Court in Filatex India Ltd. Vs. CIT-IV (2015) 229 Taxman 555 (Delhi) wherein it is held that during the assessment u/s 153A additions need not be restricted or limited to incriminating material found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to in the sub-section pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Sub-section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub-section (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the six assessment years prior to the search or requisition stands abated and the total income of the assessee is required to be determined under section 153A of the Act. Similarly, subsection (2) provides for revival of any assessment or reassessment which stood abated, if any proceeding or any order of assessment or reassessment made under section 153A of the Act is annulled in appeal or any other proceeding. 16. Section 153A bears the heading Assessment in case of search or requisition . It is well settled as held by the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed income, if any, unearthed during the search or requisition. 76. The debate on the pivotal issue may also be looked into and understood from a different angle. In the case on hand, the Assessing Officer seeks to reopen the assessment for the assessment year 2013-14. The search was carried out on 07.08.2013. As a result of the search, notice under Section 153A of the Act was issued by the Assessing Officer on 19.08.2014 for the year under consideration. The Assessing Officer framed the assessment vide order dated 28.03.2016 under Section 143(3) read with Section 153A of the Act. The consequence of notice under Section 153A (1) of the Act is that the assessee is required to furnish fresh return of income in each of the six assessment years in regard to which a notice has been issued. It is this return which is filed consequent to the notice which would be subject of assessment by the revenue for the first time in the case of abated assessment proceedings. Consequent to the notice under Section 153A of the Act, the earlier return that may be filed for the purpose of assessment which is pending would be treated as non est in law. Further, section 153A (1) of the Act itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interiors Ltd. (hereinafter referred to as Elegant Constructions ). Elegant Constructions was also the builder and interior decorator who had constructed and decorated the assessee's residential house at Seaward Road, Valmiki Nagar, Thiruvanmiyur. The cost of this investment was disclosed to the Revenue department in the course of regular return filed by the assessee. In the course of survey operation, it was learned that Elegant Constructions had received payment in cash in addition to cheque payment and both cash and cheque payments were recorded in the books of Elegant Constructions. However, the books of accounts of the assessee showed only cheque payment. It was found that the assessee had paid a sum of ₹ 95.16 lakh in cash which was not accounted for. The Assessing Officer, vide order dated August 31, 2004, after having regard to the facts and circumstances of the case, completed the block assessment and, inter alia, held that the said amount is liable to tax as undisclosed income of the block period. Aggrieved by this order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). 80. The main contention was whether the material found in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stored. Emphasis supplied. 87. In the aforesaid context, we may also refer to a decision of the Supreme Court in CIT vs. Hotel Blue Moon, reported in (2010) 321 ITR 362 (SC). We are referring to this decision because the same has been relied upon in the case of Ajit Kumar (supra). The Supreme Court has observed as under; 12. Chapter XIV-B provides for an assessment of the undisclosed income unearthed as a result of search without affecting the regular assessment made or to be made. Search is the sine qua non for the Block assessment. The special provisions are devised to operate in the distinct field of undisclosed income and are clearly in addition to the regular assessments covering the previous years falling in the block period. The special procedure of Chapter XIV-B is intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. It is not intended to be substitute for regular assessment. Its scope and ambit is limited in that sense to materials unearthed during search. It is in addition to the regular assessment already done or to be done. The assessment for the block period can only be done on the basis of eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repeat, there is no condition in this Section that additions should be strictly made on the basis of evidence found in the course of the search or other post-search material or information available with the Assessing Officer which can be related to the evidence found. This, however, does not mean that the assessment under Section 153A can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. The question, however, is whether the seized material can be relied upon to also draw the inference that there can be similar transactions throughout the period of six years covered by Section 153A. We have to remember that with the advent of Section 153A we are taken back to the pre-chapter XIV-B situation, where assessments were made on the basis of material and evidence collected during search. (c) To say that the assessment undertaken under Section 153A of the Act can never be reopened under Section 147 of the Act, would be an incorrect statement of law. 90. The matters shall now be placed for further hearing so as to determine on facts whether any case has been mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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