Once undisclosed block-period income is assessed under Chapter XIV-B, AO cannot reopen assessment via section 148 or 158BE notice

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 prevail and an assessing officer cannot reopen that assessment by issuing a notice under section 148. The limitation under section 158BE had expired and incorporating Chapter XIV reassessment provisions would render the block assessment procedure unworkable. The impugned notice issued under section 148 was quashed and set aside.

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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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