TaxTMI 
TaxTMI 
2014 (5) TMI 1005
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....asi and at Kolkata. Based on this search and seizure, block assessment order dated 20.12.2004 was passed under Section 158 BC of the Act for the period 01.04.1996 to 03.10.2002 which covered the assessment years 1999-2000, 2000-01 and 2001-02. After passing of the block assessment order, the Additional Commissioner Income Tax, Varanasi issued a notice dated 15.12.2004 under Section 148 of the Act for the assessment years 1999-2000, 2000-01 and 2001-02 indicating therein that the Assessing Officer had reasons to believe that certain income chargeable to tax had escaped assessment for the year 1999-2000 and which has come to his notice subsequently and accordingly, directed the petitioner to submit his return of income within a specified period. Similar notice under Section 148 dated 15.12.2004 was issued for the assessment years 2000-01, 2001-02. In view of the decision of the Supreme Court in GKN Driveshafts (India) Ltd. Vs. Income Tax Officer and others 259 ITR 19, the petitioner moved an application dated 25.02.2005 requesting the authority to supply him the reasons for re-opening the assessment proceedings. In response to the said application, the Assessing Officer supplie....
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....d only be considered in block assessment proceedings under Section 158BC and that such material could not be brought within the ambit of Section 147/148 of the Act. It was urged that the reasons so recorded was nothing but a change of opinion which cannot be permitted in view of the settled law propounded by this Court as well as by the Supreme Court. The learned counsel consequently submitted that issuance of notice under Section 148 was patently illegal and was liable to be quashed. Sri Garg further submitted that the provision of Section 158 B(b) relating to "undisclosed income" has undergone a change by the Finance Act, 2002, which has amended the provision with retrospective effect from 01.07.1995. The learned counsel further submitted that the Finance Act has amended Section 158 B(b) to clarify that block assessment of "undisclosed income" is based on the evidence found in the search and seizure operation and the material or information recovered during post search enquiry. In the light of this amendment, the learned counsel submitted that the "reasons to believe" as well as the counter affidavit clearly indicates that the formation of the belief was the material found in ....
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.... cases have been given and if any amount of income has not been taxed and during the course of search, some "undisclosed" income was found on the basis of material seized, then, that should be treated as undisclosed income as per the scheme of special assessment under the said chapter. On the other hand, Sri Shambhoo Chopra, the learned counsel for the department submitted that the Assessing Officer had wide powers to re-open the assessment if he had reasons to believe that the income chargeable to income tax had escaped assessment. The learned counsel submitted that if the Assessing Officer has reason to believe that there has been a non-disclosure of the primary fact, which could have a material bearing on the question that the assessment so made was under assessed, in that event it would be sufficient to initiate proceedings for re-assessment. Sri Chopra further submitted that the assessment for the block period could be done on the basis of the books of account or document and such other material by which the information was available to the Assessing Officer. The learned counsel submitted that only "undisclosed income" found in proceedings under Section 132A of the Act c....
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.... and such other materials or information as are available with the Assessing Officer. Therefore, the income assessable in block assessment under Chapter XIV-B is the income not disclosed but found and determined as the result of search under section 132 or requisition under section 132A of the Act. The aforesaid view was observed by the Supreme Court in Hotel Blue Moon (Supra). Under Section 147 of the Act, proceedings initiated for re-assessment proceedings can only be done if the Assessing Officer had reasons to believe, namely, that any income chargeable to tax had escaped income in any assessment year. The question whether the Assessing Officer had reason to believe is a question of jurisdiction, which can always be investigated in a petition filed under Article 226 of the Constitution of India. The expression "reasons to believe" as contained in Section 147 of the Act does not mean purely subjective satisfaction on the part of the Assessing Officer but it means that the belief must be held in good faith and it is open to the Court to examine whether the reasons to believe have a rational connection or bearing to the formation of belief or is based on irrelevant or extraneou....
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.... found in the search. Block assessment is in addition to regular assessment and what is included in regular assessment cannot be assessed again in the course of block assessment and similarly, what is assessed in block assessment cannot be the subject matter of regular assessment. In the instant case, we find that the petitioner had disclosed the gift cheques in his return filed under Section 139 of the Act. It is pertinent to note here, that no notice was issued to the petitioner under Section 143(2) of the Act by the Assessing Officer and the returns were accepted by issuance of an intimation under Section 143(1) of the Act. Under Section 143 of the Act, it is the discretion of the Assessing Officer to accept the return as it is or to proceed further with the assessment of income. Once the Assessing Officer decides to proceed, he has to issue notice under Section 143(2) of the Act within the prescribed period, which in the instant case, at the relevant moment of time, was 12 months to make the petitioner aware that his return has been selected for scrutiny assessment. It may also be noticed here that when the petitioner filed his return under Section 139 of the Act, the ....