Block assessment does not bar regular assessment when disclosed income remains assessable during Chapter XIV-B proceedings.

After a search under section 132 and initiation of Chapter XIV-B block assessment proceedings, the High Court held that the Assessing Officer was not barred from continuing regular assessment for the relevant year or from issuing notice under section 143(3) or section 144. Section 158BA was read as making block assessment of undisclosed income operative notwithstanding other provisions, while its Explanation preserved regular assessment as a separate and additional process for disclosed income. Accordingly, pendency of block proceedings did not oust jurisdiction to complete the regular assessment, and the notice proposing assessment was valid.

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Issues: Whether, after a search under section 132 and initiation of proceedings under Chapter XIV-B, the Assessing Officer was barred from continuing the regular assessment for the relevant assessment year and from issuing notice proposing assessment under section 143(3) or section 144.

Analysis: Section 158BA expressly provides that assessment of undisclosed income in the block period is to be made notwithstanding other provisions of the Act, but the Explanation makes clear that such assessment is in addition to the regular assessment. The Court relied on the distinction between block assessment of undisclosed income and regular assessment of disclosed income, and accepted the view that pendency or initiation of Chapter XIV-B proceedings does not oust jurisdiction to proceed with a regular assessment for a year falling within the block period.

Conclusion: The Department was not barred from continuing the regular assessment, and the notice proposing assessment under section 143(3) or section 144 was valid. The decision was against the assessee and in favour of the Revenue.

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