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of <h1>Once undisclosed block-period income is assessed under Chapter XIV-B, AO cannot reopen assessment via section 148 or 158BE notice</h1> HC held that once undisclosed income for a block period has been assessed under Chapter XIV-B, the special scheme and time-limits under that Chapter ... Computation of undisclosed income u/s 158BB(1) - validity of notice issued u/s 148 - escaped assessment within the meaning of section 147 - loose papers found from the residence of one of the partners during search - seeking to reassess the income for the block period - period of limitation prescribed under section 158BE - whether it is open to the assessing authority to issue Notice under section 148 of the Act in respect of an assessment framed for a block period under Chapter XIV-B of the Act - HELD THAT:- Once period of limitation has been prescribed under section 158BE of the Act the time limit for completion of assessment of undisclosed income has to be as provided under the said section. If the contention of revenue is accepted section 158BE becomes unworkable. The limitation prescribed from the date of last of the authorizations, or in case of requisition under section 132A of the Act, has already expired. This is one more inherent pointer which flows on a conjoint reading of the provisions of Chapter XIV-B of the Act to indicate that legislature does not intend to reopen assessments completed under Chapter XIV-B of the Act assessing the undisclosed income by adopting the special procedure provided in the said Chapter. 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 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 then the question of resolving the conflict would arise. But to the contrary, in the present case, in light of 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 in the case of Commissioner of Income Tax Vs. Suresh N. Gupta [2008 (1) TMI 396 - SUPREME COURT], provisions of Chapter XIV-B of the Act shall prevail and have primacy. Thus viewed from any angle, the stand of Revenue does not merit acceptance. Once assessment has been framed under section 158BA of the Act in relation to undisclosed income for the block period as a result of search there is no question of the Assessing Officer issuing notice under section 148 of the Act for reopening such assessment as the said concept is abhorrent to the special scheme of assessment of undisclosed income for block period. At the cost of repetition it is required to be stated and emphasised that the first Proviso under section 158BC(a) of the Act specifically provides that no notice under section 148 of the Act is required to be issued for the purpose of proceeding under Chapter XIV-B of the Act. Thus, impugned notice dated 16.04.1999 under Section 148 of the Act cannot be upheld and is hereby quashed and set aside. Issues: (i) Whether a notice under section 148 read with sections 147153 of the Income-tax Act, 1961 can be validly issued to reopen or reassess income where an assessment for undisclosed income has already been framed for a block period under Chapter XIV-B of the Income-tax Act, 1961.Analysis: Chapter XIV-B provides a special, self-contained procedure for assessment of undisclosed income resulting from search, defining 'block period' and prescribing computation (section 158BB), procedure (section 158BC) and limitation for block assessments (section 158BE), together with requirements such as assessment by an officer not below a specified rank and prior approval (section 158BG). Section 158BA contains a non-obstante clause directing that undisclosed income shall be assessed in accordance with Chapter XIV-B notwithstanding other provisions, while section 158BH makes other provisions of the Act applicable only 'save as otherwise provided in this Chapter.' The chapter expressly disapplies the need for a notice under section 148 for proceedings under Chapter XIV-B and preserves aggregation and computation concepts from Chapter IV where non-conflicting. Applying principles of statutory interpretation, where Chapter XIV-B provides a specific scheme and limitation for block assessment, invoking the reassessment machinery of sections 147153 (which are framed in terms of an 'assessment year' and linked limitation periods) would create conflict and render the special scheme unworkable; hence the special provisions prevail.Conclusion: Section 148 notice issued to reopen or reassess income already assessed for a block period under Chapter XIV-B is without jurisdiction and is quashed; the petitioners succeed and the impugned notices are set aside (decision in favour of the assessee).
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