TMI Blog1998 (4) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... e block period on 28-11-97. On 27-8-96, the date on which the search commenced, the assessments for the two assessment years, namely, 1994-95 and 1995-96 were pending. The Assessing Officer made the regular assessment for the assessment year 1994-95 on 31-3-97 under section 143(3). While making the block assessment order dated 28-11-97 the Assessing Officer took, in the assessment year 1994-95, the assessed income, that is the income assessed in the regular assessment on 31-3-97. Similarly the Assessing Officer while making the said block assessment order took, for the assessment year 1995-96, the returned income observing that the assessment for the assessment year 1995-96 was pending under scrutiny and the assessment order under section 143(3) was yet to be passed. The Assessing Officer passed the block assessment order after obtaining previous approval of the Commissioner of IT, under section 158BG determining the total undisclosed income for the block period at Rs. 298 crores. Hence aggrieved, the assessee has preferred this appeal before the Tribunal. 3. We have heard the arguments of both the sides, through presently only on two preliminary issues being (i) that the block a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment as revealed from page 215 of the block assessment order. He has also contended that similarly separate regular assessment under section 143(3) for the assessment year 1995-96 was being contemplated by the department and accordingly the returned income for the assessment year 1995-96 was taken into consideration for the block assessment as is evident from page 216 of the block assessment order. In this regard he has also drawn our attention to para 11.7 on page 91 of the block assessment order wherein it has been observed that the assessment for the assessment year 1995-96 is pending under scrutiny and the order under section 143(3) is yet to be passed. Therefore, in the block assessment, the returned income of the assessee for the assessment year 1995-96 will be considered for computation of undisclosed income of the assessee under section 158BB of the IT Act, 1961. The ld. A.R. of the assessee has contended that this procedure militates against the special procedure provided under Chapter XIV-B of the Act whereunder one comprehensive assessment for the block period is to be made. He has taken us through the provision of section 158BB and contended that for computation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns have been filed but assessment has not been made till the date of search, the undisclosed income of the block period cannot be computed and so the computation of the total income of those assessment years also forms part of the block assessment to be made under section 158BC and the total income being computed under section 158BB. The ld. A.R. has contended that this is a special procedure provided under Chapter XIV-B and is applicable to all search cases which are covered within Chapter XIV-B and this special procedure overrides general procedure laid down in Chapter XIV. He has therefore contended that in accordance with provisions of Chapter XIV-B there has to be only one comprehensive block assessment comprising also the assessment or for that matter the computation of total income of the assessment years relevant to the previous years falling within block period in respect of which the returns have been filed but the assessments have not been made till the date of search. He has contended that in respect of those previous years falling within the block period there cannot be separate regular assessments independent of the block assessment under Chapter XIV-B. He has therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve not been made then in regard to this, the jurisdiction under Chapter XIV-B is limited to the returned income and the assessment in respect of the same is to be made according to the return. He has contended that this means that there has to be one regular assessment separately to be made for every assessment year and that is appealable and not one single comprehensive assessment only for all 10 years of the block year. He has also contended that there is no scheme of merger of Chapter XIV and Chapter XIV-B and that they both have been kept existing and the two are separate. He has contended that so far as Chapter XIV-B is concerned it is confined to undisclosed income (as a result of search). He has also contended that the present assessee has also filed separate appeal for the regular assessment made for the assessment year 1994-95, before any other authority, which also shows that the ld. A.R. also agrees with his view that there should be two separate assessments. 7. We have considered the rival contentions as also the materials placed on record and have also gone through the cited decisions. From the perusal of the provisions of Chapter XIV-B and in particular provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod, of course in accordance with Chapter IV of the Act, the determination of the total income of the said previous year again by way of separate regular assessment will simply spell duplicity and that too for no purposes at all. Such an uncalled for duplicity can hardly be the intent/spirit of the Legislature. The determination of total income under section 158BB(1) of other previous years in respect of which regular assessments have already been made up to the date of search is however obviously understandable for the reason that this determination under section 158BB(1) though being made again, is on the basis of evidence found as a result of search and the earlier regular assessments in respect of these previous years were made without taking into consideration the evidence found as a result of the present search. But the determination of total income or for that matter the assessment of total income of the previous years falling within the block period and in respect of which though the returns were filed but assessment were not made till the date of search, being made under section 158BB(1), is after taking into consideration the evidence found as a result of search etc. in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... block assessment. Accordingly in the present case the assessment years 1994-95 and 1995-96 being covered within the block period and the returns of income in respect of these two assessment years having had been filed and the assessments having had not been made till the date of search, the assessments of these two assessment years has to be comprised within the block assessment of the block period under consideration in appeal and the total incomes of the said two assessment years has to be determined under section 158BB(1) while computing the undisclosed income of the block period under Chapter XIV-B and not separately by separate regular assessments. The impugned block assessment order dated 28-11-97 obviously contravenes the special procedure provided in Chapter XIV-B inasmuch as the same does not comprise within itself determination of the total income of the two assessment years 1994-95 and 1995-96 failing within the block period under consideration, and the assessments in respect of which two assessment years has been excluded from the compass of the block assessment under section 158BC and computation of undisclosed income of the block period under section 158BB. The impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in this respect he has drawn our attention to an extract copy of order-sheet dated 18-11-97, a copy of which has been furnished on record. He has also referred to the assessee's letter dated 27-11-97 to the CIT placed on page 342 of paper book no.I. In this letter the assessee has informed the Commissioner that the copies of certain documents as requested in the assessee's letter dated 25-11-97 including the copy of the draft assessment order had not been received. He has contended that the ld. CIT granted approval on 28-11-97. He has contended that the said approval is without application of mind inasmuch as the assessee having been granted an opportunity of hearing at 3 P.M. on 26-11-97 the time after that and up to 28-11-97, the date on which approval was given was too short for the ld. CIT to go through voluminous block assessment order contained in 219 pages. He has also contended that the opportunity granted by CIT on 26-11-97 was also a mere formality inasmuch as the assessee did not have ample time to prepare for their representation and also did not have copies of certain documents and even the copy of draft assessment order of the block period. He has, therefore, conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... block assessment order has been passed, so there should be an end to agitation about approval. He has contended that in this case notice was given to the assessee under section 158BC specifying items. In this regard he has referred to the assessee's letter dated 29-4-97 placed on pages 12 to 17 of the paper book no. I. He has contended that several letters were also issued by the Assessing Officer to the assessee whereby various matters involved in the block assessment were brought to the notice of the assessee. Referring to the assessee's letter dated 19-11-97 (page 323 of paper book no.I) he has contended that the opportunity sought for is unwanted by the law. He has contended that in appeal against the block assessment order it is open to the assessee to assail the assessment and pointed out the mistakes in the order and convince the Tribunal that the assessment order is bad then the Tribunal is there to exercise its jurisdiction and grant appropriate relief. He has contended that the same issues as raised by the assessee regarding the approval etc. have also been taken by way of grounds before the Tribunal. The ld. D.R. has refer-red to the assessee's letter dated 25-11-97 plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment being in a case of search and seizure and involving the block period of 10 years. It is from this angle that the Board's instructions contained in its Circular letter dated 2-1-96 directs the CITs to keep themselves involved in search assessment proceedings right from the beginning and that for proper monitoring of search cases and internal correspondence folder should be maintained. While considering the giving of approval under section 158BG the Commissioner may on perusal of record consider some part of the draft assessment order to need a modification or some addition not to be made, and to advise/ instruct the Assessing Officer accordingly. This process may rid the appellate authority of some of its excercise. Therefore, even if there happens to be some irregularity in giving approval the same hardly has any fatal consequence inasmuch as the resultant block assessment order remains very much assailable in appeal before the Tribunal and thus approval hardly entails any material prejudice to the assessee. Such approval, even if laconic in some aspects, will not invalidate/vitiate the assessment itself. The only understandable impact seems to be that it may necessitate so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gandhi II v. Union of India AIR 1978 SC 597 referred to in the assessee's letter dated 21-11-97 placed on pages 330 and 331 of the assessee's paper book no. 1. From the above citations also the assessee in our view, hardly gets any advantage in the context. In A.K. Kraipak's case it has been held that 'these rules can operate only in areas not covered by any law validly made', as has also been quoted in the assessee's said letter. In the present case the area involved is not of the type categorised above. Here there is a law validly made covering the area, and so assessee gets no benefit from this citation. In Smt. Menaka Gandhi's case the appellant's fundamental right was involved. Menaka Gandhi's pass-port was impounded without affording an opportunity of hearing to her and even the reasons for impounding were not furnished to her despite request made by her. It was in that context that the Hon'ble Supreme Court held that impounding of pass-port of the petitioner was in violation of rule of natural justice embodied in the maxim audi alteram partem was clearly violated. In W.N. Chadha's case Hon'ble Apex Court held that "The rule of audi alteram partemis not attracted unless the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
