TaxTMI 
TaxTMI 
2006 (8) TMI 139
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....e facts giving rise to the present petition are as follows: According to the petitioner, Chandra Prakash Agrawal, he is a partner of M/s. Sri Ram Chandra Prakash, situate at Kayamganj in the district of Farrukhabad and is the head of group of business houses, functioning in the name and style of M/s. J. M. Tobacco Company, M/s. J. M. Agrawal Tobacco Company Private Limited and M/s. Satya Prakash and Company. For the assessment year 2000-01 he had filed his return of income showing an income of Rs. 16,82,676 and agricultural income of Rs. 1,24,582. He had paid the tax of Rs. 5,14,583. The return of income so filed was accepted under the provisions of section 143(1)(a) of the Act by the assessing authority on January 1, 2001. A search was conducted on June 7, 2001, by the officers of the Directorate General, Central Excise, New Delhi, at the business premises of the petitioner, which prepared a panchnama on June 8, 2001. Certain documents were seized by the search party, which finds mention in the said panchnama. On the basis of the search conducted by the Central Excise Department, the Deputy Director of Income-tax (Investigation), Agra, initiated proceedings under section 132A by ....
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....sessment under section 148 of the Act. Respondent No.1, vide notice dated November 10, 2005, issued under section 142(1) of the Act, asked the petitioner to appear and produce certain documents to which he filed detailed objections. Respondent No.1 had supplied the reasons vide letter dated December 9, 2005. The notice dated March 22, 2005, issued under section 148 of the Act is under challenge in the present writ petition on various grounds, inter alia, that the proceeding under section 148 of the Act is not meant for a roving and fishing enquiry and the assessing authority had no jurisdiction to reopen the assessment in respect of different firms to iron out the actual alleged suppression of income as he had disclosed its income truly and faithfully at the time of furnishing the return. Further, the assessing authority had no reason to believe before issuing the notice in question and from the perusal of the reasons it is apparent that the names of the parties who are said to liave taken the loan/milk account and corroborated the transaction, are missing and therefore, it cannot be said that any income has escaped assessment. The notice in question has also been challenged on the....
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....Act. The proceedings, if any, could have been taken only under section 158BA of the Act read with the other provisions of the said Chapter, as section 158BA which starts with a non obstante clause, completely excludes the assessment of undisclosed income under any other provision of the Act in case where the search has been initiated under section 132 or the books of account, other documents or any asset are requisitioned under section 132A of the Act. He has relied upon a decision of the Gujarat High Court in the case of Rushil Industries Ltd. v. Harsh Prakash [2001] 251 ITR 608, and the Madhya Pradesh High Court in the case of Smt. Harbans Kaur Bhatia v. CIT [2005] 274 ITR 298. Sri A. N. Mahajan, learned standing counsel, on the other hand, submitted that even though a requisition under section 132A of the Act was sent on March 27, 2002, to the Central Excise Department for delivering the seized books of account and other documents, yet full documents have not been delivered as would be clear from the record of proceedings, filed as annexure 3A to the writ petition. According to him, the requisition would be complete only when the entire seized documents and books of account ar....
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....ble to the Department is to take proceedings under Chapter XIV-B of the Act which provide for special procedure for search cases and other allied matters. We have given our anxious consideration to various pleas raised by learned counsel for the parties. For adjudicating upon the issue involved in the present writ petition, we feel it proper, for ready reference, to reproduce the provisions of section 132A and Chapter XIV-B of the Act which contains sections 158B to 158BI: "132A. Power to requisition books of account, etc.-(l) Where the Director General or Director or the Chief Commissioner or Commissioner, in consequence of information in his possession, has reason to believe that (a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under subsection (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section. (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents, as requi....
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....nder sub-section (1) of section 132 by the requisitioning officer from the custody of the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of this section and as if for the words 'the authorised officer' occurring in any of the aforesaid sub-sections (4A) to (14), the words 'the requisitioning officer' were substituted. CHAPTER XIV-B Special procedure for assessment of search cases. 158B. Definitions.-In this Chapter, unless the context otherwise requires, (a)'block period' means the period comprising previous years relevant to six assessment years preceding the previous year in which the search was conducted under section 132 or any requisition was made under section 132A and also includes the period up to the date of the commencement of such search or date of such requisition in the previous year in which the said search was conducted or requisition was made: Provided that where the search is initiated or the requisition is made before the 1st day of June, 2001, the provisions of this clause shall have effect as if for the words 'six assessment years', the words 'ten assessment years' had been substituted; (b) 'undisclosed....
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....s years, the said income shall not be included in the block period. 158BB. Computation of undisclosed income of the block period. (1) The undisclosed income of the block period shall be the aggregate of the total income of the previous years falling within the block period computed, in accordance with the provisions of this Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence, as reduced by the aggregate of the total income, or, as the case may be, as increased by the aggregate of the losses of such previous years, determined, (a) where assessments under section 143 or section 144 or section 147 have been concluded prior to the date of commencement of the search or. the date of requisition, on the basis of such assessments; (b) where returns of income have been filed under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 but assessments have not been made till the date of search or requisition, on the basis of the income disclosed in such returns; (c) where ....
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....disclosed income of the firm so determined shall not be chargeable to tax in the hands of the partners, whether on allocation or on account of enhancement; (c) assessment under section 143 includes determination of income under sub-section (1) or sub-section (lB) of section 143. (2) In computing the undisclosed income of the block period, the provisions of sections 68, 69, 69A, 69B and 69C shall, so far as may be, apply and references to 'financial year' in those sections shall be construed as references to the relevant previous year falling in the block period including the previous year ending with the date of search or of the requisition. (3) The burden of proving to the satisfaction of the Assessing Officer that any undisclosed income had already been disclosed in any return of income filed by the assessee before the commencement of search or of the requisition, as the case may be, shall be on the assessee. (4) For the purpose of assessment under this Chapter, losses brought forward from the previous year under Chapter VI or unabsorbed depreciation under sub-section (2) of section 32 shall not be set off against the undisclosed income determined in the block assessment unde....
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....ocuments or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed under section 158BC against such other person and the provisions of this Chapter shall apply accordingly. 158BE. Time limit for completion of block assessment.- (l) The order under section 158BC shall be passed, (a) within one year from the end of the month in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997; (b) within two years from the end of the month in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January, 1997. (2) The period of limitation for completion of block assessment in the case of the other person referr....
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....tion 132A, on the actual receipt of the books of account or other documents or assets by the Authorised Officer. 158BF. Certain interests and penalties not to be levied or imposed.-Nointerest under the provisions of section 234A, 234B or 234C or penalty under the provisions of clause (c) of sub-section (1) of section 271 or section 271A or section 271B shall be levied or imposed upon the assessee in respect of the undisclosed income determined in the block assessment. 158BFA. Levy of interest and penalty in certain cases.-(1) Where the return of total income including undisclosed income for the block period, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of January, 1997, as required by a notice under clause (a) of section 158BC, is furnished after the expiry of the period specified in such notice, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent. of the tax on undisclosed income, determined under clause (c) of section 158BC, for every month or part of a month comprised in the period commencing on the day immediately fol....
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....the month in which the order of the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Chief Commissioner or the Commissioner, whichever period expires later; (d) in a case where the assessment is the subject-matter of revision under section 263, after the expiry of six months from the end of the month in which such order of revision is passed; (e) in any case other than those mentioned in clauses (c) and (d), after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later; (f) in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, after the 30th day of June, 1995, but before the 1st day of January, 1997. Explanation.-In computing the period of limitation for the purpose of this section, (i) the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129; (ii) the period during which the immunity granted....
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....its custody. Sub-section (3) of section 132A provides that after the books of account, other documents or assets which have been requisitioned, have been delivered to the requisitioning officer, the provisions of sub-sections (4A) to (14) of section 132 and section 132B shall mutatis mutandis apply. Thus, it is clear that the requisition is complete only when the seized books of account and other documents, which have been requisitioned, have been delivered to the requisitioning authority. Chapter XIV-B containing sections 158B to 158BH has been inserted by the Finance Act, 1995, with effect from July 1, 1995. As is clear from the heading given under Chapter XIV-B, it introduced a new scheme of assessment of undisclosed income determined as a result of search which is assessed separately as the income of a designated period consisting of ten previous years, now reduced to six previous years by the Finance Act, 2001, with effect from June 1, 2001, preceding the previous year in which the search was conducted and also the previous year of the current year up to the date of search. Chapter XIV-B of the Act provides for special procedure for the assessment of search cases. It deals w....
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....ficer and relatable to such evidence, with certain other specifications. Section 158BC of the Act provides for the procedure for block assessment. Section 158BD of the Act deals with the assessment of undisclosed income of any other person which is found belonging to any other person than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A. It provides that the relevant books of account, other documents or assets would be handed over to the Assessing Officer having jurisdiction over such other person and the provisions of this Chapter including section 158BC of the Act have been made applicable. Section 158BE of the Act provides for the time-limit for completion of block assessment. It provides for a limitation of one year from the end of the month in which the last of the authorisations in a case where search under section 132 or for requisition under section 132A, was executed after June 30, 1995, but before January 1, 1997, and two years where the search or requisition has been made on or after January 1, 1997. It also provides for limitation of completion of block a....
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....unt, other documents or any assets are requisitioned under section 132A after May 31, 2003. As Chapter XIV-B deals with the special procedure for assessment of undisclosed/concealed income in respect of a block period of ten/six years, the authorities have to proceed in accordance with the provisions laid down in this Chapter where the conditions mentioned in section 158BA of the Act are fulfilled. It may be mentioned here that section 158BA starts with a non obstante clause which will have an overriding effect. The learned author, Justice G. P. Singh, in Principles of Statutory Interpretation, Ninth edition, 2004, at page 318, while dealing with the non obstante clause, has stated as follows: "A clause beginning with 'notwithstanding anything contained in this Act or in some particular provision in the Act or in some particular Act or in any law for the time being in force', is sometimes appended to a section in the beginning, with a view to give the enacting part of the section in case of conflict an overriding effect over the provision or Act mentioned in the non obstante clause. It is equivalent to saying that in spite of the provision or Act mentioned in the non obstante c....
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.... impediment for an operation of the enactment. See in this connection the observations of this court in South India Corporation P. Ltd. v. Secretary, Board of Revenue [1964] 4 SCR 280. 68. It is well-settled that the expression 'notwithstanding' is in contradistinction to the phrase 'subject to', the latter conveying the idea of a provision yielding place to another provision or other provisions to which it is made subject. This will be clarified in the instant case by the comparison of sub-section (1) of section 15 with sub-section (1) of section 15A. We are therefore unable to accept, with respect, the view expressed by the Full Bench of the Bombay High Court as relied on by the learned single judge in the judgment under appeaL". The apex court in the case of Smt. Parayankandiyal Eravath Kanapravan Kalliani Amma v. K. Devi [1996] 4 SCC 76, has observed as follows: "77. Non obstante clause is sometimes appended to a section in the beginning, with a view to give the enacting part of the section, in case of conflict, an overriding effect over the provision or Act mentioned in that clause. It is equivalent to saying that in spite of the provisions or Act mentioned in the non obsta....
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.... Punjab and Haryana and Madras High Courts in the aforesaid decisions. Thus, where the search has been initiated under section 132 of the Act or the books of account, other documents or assets are requisitioned under section 132A of the Act between June 30, 1995, and May 30, 2003, assessment of undisclosed income for the block period can only be made under Chapter XIV-B and not Chapter XN of the Act. Prior to insertion of the Explanation to sub-section (2) of section 158BA by the Finance (No.2) Act, 1998, retrospectively, with effect from July 1, 1995, i.e., when Chapter XIV-B was introduced, there was a divergence of opinion among the various High Courts on the question whether any assessment under Chapter XIV can be made when assessment under Chapter XIV-B has to be made. The Punjab and Haryana High Court, in the case of Raja Ram Kulwant Rai [1997] 227 ITR 187 has held that once an assessment is framed qua a particular year falling within the block period of 10 years, then no other assessment under any other provisions of the 1961 Act can be framed, meaning thereby under the block period of 10 years income of any year, covered by the block period, could not be determined afresh ....
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....ng reassessment under Chapter XIV of the Act are not barred. This would also be clear from a reading of sub-section (1) of section 158BB of the Act. Prior to substitution of the phrase "in accordance with the provisions of Chapter IV, on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with the Assessing Officer" occurring in sub-section (1) of section 158BB of the Act by the Finance Act, 2002, with retrospective effect from July 1, 1995, by the following phrase "in accordance with the provisions of this Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence", it could have been said that the income which can be included in the block assessment is only such income which is directly evidenced by the material found during the search and does not include the income which has been discovered on the basis of post-search enquiries made during the block assessment proceeding. However, after the amendment made by th....
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....nds of the assessee as per the provisions applicable to block assessment read with section 113 of the Act treating the income to be an income from undisclosed one as defined under section 158B(b). Having discussed the scheme of various provisions of Chapter XIV - B of the Act, we now come to the issue as to whether the provisions of the aforesaid Chapter are attracted in the present case or not. The crucial words for the applicability of Chapter XlV-B of the Act are contained in sub-section (1) of section 158BA of the Act. It is applicable in cases where a search is initiated under section 132 of the Act or books of account, other documents or any assets are requisitioned under section 132A of the Act. It is not in dispute that in the present case no search under section 132 has been conducted by the Income-tax Department. The search, if any, was conducted on June 7/8, 2001, by the Central Excise Department. The Income-tax Department had sent a requisition on March 27, 2002, under section 132A of the Act requisitioning the books of account and other documents seized by the Central Excise Department. The record of the proceeding dated April 18, 2002, shows that the requisition was ....
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....of sale, a 'requisition' (or 'inquiry', which is synonymous) on title, is a request based on a defect in title (or its evidence) arising on the abstract; an 'objection' may arise aliunde (per Blackburn J., Waddell v. Woolfe [1874] L.R. 9 QB 515). (2) 'Requisition' in regulations made under Emergency Powers Act 1920 (c. 55) : (3) 'Requisition' includes the taking of property in full ownership, the taking of the possession of property, and the acquisition of a right to have the property used in a particular manner without any taking of possession (per Latham c.J., in Australasian United Steam Navigation Co. v. Shipping Control Board [1946] V. L.R. 82, 85). (4) 'Requisitioning' is not a term of art and has different meanings. Its usual meaning is nothing more than hiring without taking the property out of the owner although the owner has no alternative whether he will accept the proposition of hiring or not. It may, however, involve the taking over of the actual domination of a chattel. Thus, one of the meanings which can be assigned to the word "requisition" is taking of actual possession of all the items. We are fortified in our aforesaid view with the provisions made in sectio....