TaxTMI 
TaxTMI 
2007 (2) TMI 169
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....section 139(1) of the Act along with their profit and loss account drawn for the financial year ending on March 31, 2004. After the return was filed on May 17, 2004, the petitioner' s authorised representative appeared before respondent No. 3, the Assistant Commissioner of Income-tax, and filed the petitioner' s letter dated June 25, 2005, along with various details in respect of income, receipt, expenses, assets and liabilities as reflected from the profit and loss account and the balance-sheet. On August 24, 2006, search and seizure operations were carried out by the officials of the Income-tax Department and the investigation wing at the offices and residence of the petitioner, which continued for a number of days. Respondent No. 3, thereafter, issued notice to the petitioner under section 142 of the Act asking him to file his Income-tax return for the assessment year 2004-05 and to produce the books of account, bank passbooks and vouchers, etc., for the financial year ending March 31, 2004. The authorised representative of the petitioner appeared before respondent No.3 and drew his attention to the fact that the petitioner has already filed his return for the financial ....
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....in provisions of section 153A of the Act assessment or reassessment, if any, relating to any assessment year falling within the period of any of the sixth assessment year ending on the date of initiation of search under section 132 of the Act by making requisition under section 132A of the Act, shall abate. Learned counsel submitted that in terms of section 153A of the Act notice was required to be issued to the petitioner for the sixth assessment year, i.e., 2001-02 to 2004-05. Learned counsel submitted that the impugned assessment order passed by the respondent pending hearing of the writ petitions is absolutely illegal and wholly without jurisdiction. 5. After considering the facts of the case and the submission made by learned counsel for the parties, the only question that falls for consideration is as to whether the assessment proceeding for the year 2004-05 and the final order passed in the said assessment proceeding is vitiated in law for non-compliance with the provisions of section 153A of the Act ? 6. Before answering the aforesaid question, I would first like to refer to some of the relevant provisions of the Act. 7. Section 132 of the Act lays down the provisi....
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....on 153 of the Act specifies the limit within which assessment or reassessment shall be completed. 9. In the year 1995, the special procedure for assessment of search cases was introduced by the Finance Act, 1995 (22 of 1995). Chapter XIV-B containing section 158B to section 158BH was inserted. Under the said scheme, the undisclosed income detected as a result of search initiated after June 30, 1995, is assessed separately as the income of the designated period (block) consisting of 10 previous years prior to the previous year in which the search was conducted and also the period of current previous year up to the date of search. The undisclosed income is taxed at a flat rate of 60 per cent. Under this provision, the authority competent to make the block assessment shall be an Assessing Officer not below the rank of the Assistant Commissioner and the time limit for completion of block assessment is within one year from the end of the month in which the last authorisation for search under section 132 and requisition under section 132A was executed. In 2003, new provisions, i.e., sections 153A, 153B and 153C have been inserted in the Finance Act, 2003 (32 of 2003), relating to asse....
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....ection ; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. 153B. (1) Notwithstanding anything contained in section 153, the Assessing Officer shall make an order of assessment or reassessment,- (a) in respect of each assessment year falling within six assessment years referred in clause (b) of section 153A, within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed ; (b) in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period of two years from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed : Provided that in case of other person referred to in section 153C, the period of limitation for making the assessment or reassessment shall be the period as referred to in clause (a)....
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.... the period commencing from the date on which an application is made before the Authority for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the order rejecting the application is received by the Commissioner under sub-section (3) of section 245R, or (vi) the period commencing from the date on which an application is made before the Authority for Advance Rulings under sub-section (1) of section 245Q and ending with the date on which the advance ruling pronounced by it is received by the Commissioner under sub-section (7) of section 245R, shall be excluded : Provided that where immediately after the exclusion of the afore said period, the period of limitation referred to in clause (a) or clause (b) of this sub-section available to the Assessing Officer for making an order of assessment or reassessment, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly. (2) The authorisation referred to in clause (a) and clause (b) of sub-section (1) shall be deemed to have been executed,- ....
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.... before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having juris diction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A." 11. For giving effect to the above newly inserted provision section 158BI has also been inserted by the Finance Act of 2003 which provides that the provisions of Chapter XIV-B, section 158B to section 158BH, shall not apply where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A of the Act after May 31, 2003. 12. From a reading of the provisions of section 153A, it is clear that this provision provides for a single assessment of undisclosed income of a block period in a case where search is conducted. In other words, in a case where search is conducted there shall be a block assessment for the period comprising previous years relevant to six assessment years preceding the previous year in which the search was conducted and also includes the period up to the date....
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.... return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted under section 132 or requisition was made under section 132A. 65.5 The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or requisition under section 132A, as the case may be, shall abate. It is clarified that the appeal, revision or rectification proceedings pending on the date of initiation of search under section 132 or requisition shall not abate. Save as otherwise provided in the proposed section 153A, section 153B and section 153C, all other pro visions of this Act shall apply to the assessment or reassessment made under section 153A. It is also clarified that assessment or reassessment made under section 153A shall be subject to interest, penalty and prosecution, if applicable. In the assessment or reassessment made in respect of an assessment year under this section, the tax shall....
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....3C provides that where an Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong or belongs to a person other than the person referred to in section 153A, then the books of account, or documents 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 against such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A. 65.10 An appeal against the order of assessment or reassessment under section 153A shall lie with the Commissioner of Income-tax (Appeals). 65.11 Consequential amendments have also been made in sections 132, 132B, 140A, 234A, 234B, 246A and 276CC to give reference to section 153A in these sections. 65.12 These amendments will take effect from June 1, 2003." 14. From a bare reading of the provisions of sections 153A, 153B and 153C of the Act and the Departmental Circular dated September 5, 2003 (see [2003] 263 ITR (St.) 62 ), it is m....