1999 (1) TMI 30

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.... a firm carrying on the business of money-lending. In the assessment years 1995-96 and 1996-97, the petitioner filed the return under section 139 of the Income-tax Act showing loss for the four years. While the assessment is being processed the first respondent passed an order on December 20, 1996, under section 131(3) of the Income-tax Act to conduct a survey under section 133A of the Income-tax Act in the premises of the petitioner and impounded the books as per exhibit-P-2 order. The Commissioner of Income-tax by exhibit-P-3 order impounded the books of account and issued further orders to freeze the bank accounts of the petitioner. A compulsory audit was ordered under section 142(2A) of the Act. In the course of all these proceedings, t....

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....es that the total undisclosed income relating to the block period shall be charged to tax. Therefore, by a plain reading of section 158BA and the heading, it is clear that this provision is intended to assess the undisclosed income in contradistinction with a regular assessment. This section though refers to a block period, cannot make an assessment other than the undisclosed income. The Explanation inserted by the Finance (No. 2) Act of 1998, with effect from July 1, 1995, clears all the doubts, if any, on the issue. Explanation (a) states that the assessment made under this Chapter shall be in addition to the regular assessment. Explanation (b) states that the total undisclosed income relating to the block period shall not be included in ....

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....of block period may have to assess all the ten preceding previous years and part of the current year up to the date of search by reopening them which will have an undesirable effect on the assessees in general. The very purpose of making procedure for assessment in such cases simple and effective would become unwieldy and protracted. The decision cited by learned counsel for the petitioner reported in Kelappan Nair v. Payingaten [1961] KLT 527, held that the Explanation does not explain or add to the scope of the original section. The Explanation in this case is inserted probably in the light of the two decisions referred to by learned counsel for the petitioner and for removal of doubts. It is the declaration of the intention of the Leg....