TaxTMI 
TaxTMI 
2022 (4) TMI 807
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....s petition, to stay the implementation and operation of the notice at Annexure-"A" to this petition and stay the further proceedings for the Assessment Year 2013-14; (C) Any other and further relief deemed just and proper be granted in the interest of justice; (D) To provide for the cost of this petition." 4. The facts, giving rise to this writ application, may be summarized as under; 4.1 The writ applicant is a Company incorporated under the Companies Act, 1956. It is engaged in the business of gold and jewellery. 4.2 During the financial year 2012-13 relevant to the Assessment year 2013-14 (i.e. the year under consideration), the writ applicant had made various purchases including the purchase from "Swastik Corporation". It is a case of the writ applicant that such purchase made by it from the "Swastik Corporation" have been duly shown and disclosed in the audited annual accounts. 4.3 The search action under Section 132 of the Act was carried out on 07.08.2013 in the cases of Amar Group of Surat wherein the case of the writ applicant herein was also covered. Later, a notice under Section 153A of the Act was issued by the then Assessing Officer dated ....
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....r under consideration. 4.9 The writ applicant, vide letter dated 20.08.2019, raised objections against the reopening. The objections came to be disposed of by the respondent vide order dated 13.09.2019. 4.10 In such circumstances, referred to above, the writ applicant is here before this Court questioning the legality and validity of the impugned notice issued under Section 148 of the Act, seeking to reopen an assessment which was undertaken under Section 153A of the Act. Submissions on behalf of the writ applicant:- 5. Mr. Tushar Hemani, the learned senior counsel appearing for the writ applicant submitted that the search assessment (i.e., the assessment framed under Sections 153A/153C respectively of the Act) cannot be reopened by issuing a reopening notice under Section 148 of the Act. 6. Mr. Hemani submitted that the legislature has consciously provided for separate schemes, i.e., for the "assessment in case of search or requisition" (under Sections 153A/153C of the Act) as well as 'reassessment" (under Section 147 of the Act). According to Mr. Hemani, both such schemes operate in different scenarios. Mr. Hemani would submit that assessment in the case of search ....
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....ible that some undisclosed income has escaped assessment. 10. Mr. Hemani would submit that the pivotal issue or the principal argument canvassed by him as such is no longer res integra in view of the pronouncement of this very High Court in the case of Cargo Clearing Agency (Gujarat) vs. Joint Commissioner of Income-tax, reported in (2008) 307 ITR 1 (Guj.). Mr. Hemani submitted that Cargo Clearing Agency (supra) considered and discussed the entire scheme as provided under Chapter- XIV-A of the Act. He would submit that in the case on hand, it is the scheme under Chapter-XIV that would be applicable but there is no difference as such between the two schemes. Mr. Hemani would submit that in Cargo Clearing Agency (supra), this Court took the view that once assessment has been framed under Section 158BA of the Act in relation to undisclosed income for the block period as a result of search, there is no question of the Assessing Officer issuing notice under Section 148 for reopening such assessment as the said concept is abhorrent to the special scheme of assessment of undisclosed income for the block period. He would submit that the same principle of law can be made applicable in th....
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....er to serve a "notice' to the person searched requiring him to furnish "return of income" in the prescribed form and in the prescribed manner. S.153A requires the Assessing Officer to serve a "notice" to the person searched requiring him to furnish "return of income" in the prescribed form and in the prescribed manner. Assessment in case of "other person" S.158BD provides for "assessment" in case of any "other person" (i.e. person other than person searched) in a case where material belonging to such "other person" is found during the course of search. S.153C provides for "assessment" in case of any "other person" (i.e. person other than person searched) in a case where material belonging to pertaining to/ relating to such "other person" as the case may be, is found during search. "Time limit" for framing assessment S.158BE provides for time limit for framing assessment u/s.158BC. Thus, time limit prescribed u/s153 for framing "normal assessment" has been given a go bye. S.153B provides for time limit for framing assessment u/s.153A. Thus, time limit prescribed u/s153 for framing "normal assessment" has been given a go bye. Prior approval of the prescr....
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....he Assessing Officer cannot be an officer below the rank of an Assistant Commissioner etc., but the order of assessment framed is scrutinized by the highest officer in the hierarchy to ensure that: (1) no undisclosed income escapes assessment, and (2) there is no high pitched assessment, only for the sake of making an assessment. Therefore, it would not be open to Revenue to content that income escaped scrutiny at the hands of two officers, one of them being a superior officer in the hierarchy. If the language of the statute is capable of a plain meaning without doing violence to the language, it is not open to add any words therein so as to give meaning which one or the other side thinks to be move appropriate. Therefore, if reopening is not contemplated, the same cannot be read into the statute. In a situation where there is conflict between the special provisions for search assessment and other provisions of the Act, it will be the special procedure which has to prevail. Once assessment has been framed under section 158BA (S.153A of the present scheme) of the Act in relation to undisclosed income for the block period as a result of search, there is no ....
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....asi-judicial controversies as it must in other spheres of human activity. So far as income-tax assessment orders are concerned, they cannot be reopened on the scope of income escaping assessment under section 147 of the Act of 1961 after the expiry of four years from the end of the assessment year unless there be omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. As already mentioned, 'this cannot be said in the present case. The appeal is consequently allowed; the judgment of the High Court is set aside and the impugned notices are quashed. The parties in the circumstances shall bear their own costs throughout." 16. Mr. Hemani also placed strong reliance on a decisions of this High Court in the case of Fun N Fud vs. GLK Associates, reported in AIR 2020 Guj. 153 for the purpose of explaining the true purport of a non-obstante clause as contained in Section 153A of the Act. The argument of Mr. Hemani is that Section 153A of the Act starts with a nonobstante clause excluding the applicability of provisions of Sections 139, 147, 148, 149, 151 and 153 respectively of the Act. He would submit that if the no....
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.... provision is enumerated. Undisclosed income shall be aggregate of the total income falling within the block period as reduced by the items stated in (a) to (f). Thus, complete computation mechanism is enumerated. As per second proviso to Section 153A, any pending assessment or reassessment on the date of initiation of search shall abate, meaning thereby the total income is required to be computed and thereby the total income is required to be computed and there is no computation mechanism, therefore necessarily requiring reference to other provisions of the Act. It is in this context that as per explanation to Section 153A, all other provisions of the Act are required to be made applicable to the assessment made under this section. 4. As per Section 113, tax to be levied at the rate of 60% As per explanation (ii) to Section 153 tax has to be charged at the rate applicable to such assessment year, i.e, normal Tax. 5. "Block Period' Six assessment years 6. Section 158BAAssessment only for undisclosed income Explanation- this assessment in addition to regular assessments. Therefore, two assessments, i.e,. one for regular and asstt. of undisclosed income ....
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....me is required to be computed and there is no computation mechanism like Section 158BA. It is in this context that as per explanation to Section 153A, all other provisions of the Act are required to be made applicable to the assessment made under Section 153A. 23. According to Mr. Bhatt, the argument of Mr. Hemani as regards the non obstante clause in Section 153A is absolutely fallacious. Mr. Bhatt would submit that the non obstante clause in Section 153A merely dispenses with the procedural aspect of Section 147 with regard to "reason to believe", "approval" etc. In this regard, Mr. Bhatt invited the attention of this Court to a decision of the Delhi High Court in the case of CIT vs. Anil Kumar Bhatia, reported in (2013) 352 ITR 593 (Delhi), wherein the effect of the non obstante clause as contained in Section 153A of the Act has been elaborately explained. 24. Mr. Bhatt would submit that the assessment under Section 153A will have to be framed under Section 143(3) read with Section 153A/153C as the case may be. He would argue that the decision of this High Court in the case of Cargo Clearing Agency (supra), more particularly, Para-24 therein itself spells out the fine dist....
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.... return under Section 139 is not correct. Mr. Bhatt would submit that if the argument canvassed on behalf of the assessee is accepted, it would mean that even in such cases, Sections 147/148 cannot be resorted. He would submit that similarly the provisions of Section 150, i.e, for making assessment or reassessment in consequence of or to give effect to any finding or direction contained in the order passed by any authority etc. would also be rendered nugatory. 30. Mr. Bhatt, in support of his aforesaid submissions, has placed reliance on the following case law; (i) Principal Commissioner of Income-Tax-IV vs. Saumya Construction Pvt. Ltd., (2016) 387 ITR 529 (Guj.); (ii) Zinzuwadia & Sons vs. Deputy Commissioner of Income Tax, Central Circle-2(3), (2019) 419 ITR 169 (Guj.) 31. In such circumstances, referred to above, Mr. Bhatt, the learned senior counsel appearing for the Revenue prays that the moot question which has been debated may be answered in favour of the Revenue and against the assessee. ANALYSIS 32. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our ....
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.... the order of such annulment by the Commissioner. Provided that such revival shall cease to have effect, if such order of annulment is set aside.] Explanation.- For the removal of doubts, it is hereby declared that- (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (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." 34. Thus, Section 153A referred to above starts with a non obstante clause relating to the normal procedure which is covered by Sections 139, 147, 148, 149. 151 and 153 respectively in respect of searches made after 31.05.2003. We must try to understand the effect of the non obstante clause as contained in Section 153A so as to appreciate the rival contentions canvassed on either side in this regard. According to Mr. Hemani, the non obstante clause excludes the very applicability of Sections 147 and 148 of the Act and, therefore, an assessment carried out under Section 153A cannot be reopened wi....
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....ent. See in this connection the observations of this Court in The South India Corporation (P.) Ltd., v. The Secretary, Board of Revenue, Trivandrum and Anr., (1964) AIR SC 207 at 215-[1964. 4 SCR 280." 39. In Vishin N. Kanchandani v. Vidya Lachmandas Khanchandani, (2000) AIR SC 2747, at Paragraph 11, the Supreme Court held that, "There is no doubt that by non-obstante clause the Legislature devices means which are usually applied to give overriding effect to certain provisions over some contrary provisions that may be found either in the same enactment or some other statute. In other words such a clause is used to avoid the operation and effect of all contrary provisions. The phrase is equivalent to showing that the Act shall be no impediment to measure intended. To attract the applicability of the phrase, the whole of the section, the scheme of the Act and the objects and reasons for which such an enactment is made has to be kept in mind." 40. In ICICI Bank Ltd. v. SIDCO Leathers Ltd.,2006 67 SCL 383 (SC), the Supreme Court, at Paragraphs 34, 36 and 37, held as follows: "34. Section 529-A of the Companies Act no doubt contains a nonobstante clause but in co....
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....6, Chandravarkar Sita Ratna Rao v. Ashalata S. Guram, (1986) 4 SCC 447 and observed: "... The non-obstante clause is appended to a provision with a view to give the enacting part of the provision an overriding effect in case of a conflict. But the non-obstante clause need not necessarily and always be co- extensive with the operative part so as to have the effect of cutting down the clear terms of an enactment and if the words of the enactment are clear and are capable of a clear interpretation on a plain and grammatical construction of the words the non-obstante clause cannot cut down the construction and restrict the scope of its operation. In such cases the non-obstante clause has to be read as clarifying the whole position and must be understood to have been incorporated in the enactment by the legislature by way of abundant caution and not by way of limiting the ambit and scope of the Special Rules." 45. In A.G. Varadarajulu v. State of Tamil Nadu, (1998) 4 SCC 231, the Supreme Court relied on Aswini Kumar Ghoses case. The Court while interpreting the non-obstante clause contained in Section 21-A of Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961 he....
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....stante clause is that in case of a conflict between the two parts, the enacting part will have full sway in spite of the contrary provisions contained in the non obstante clause. Therefore, the object and purpose of the enacting part should be first ascertained and then the assistance of the non obstante clause should be taken to nullify the effect of any contrary provision contained in the clause. 49. The enacting part of section 153A has three stipulations-(i) to issue notice calling for the returns of income for six assessment years (ii) to assess or reassess total income of each of the six assessment years and (iii) not to proceed with any pending assessment or reassessment as on the date of initiation of search as the same would abate. Since some of the provisions contained in the enacting part may come into conflict with the provisions contained in the non obstante clause, these impediments are removed by means of the non obstante clause. Thus, by enacting the non obstante clause in the section, the formalities of issuing notice u/s 139, application of the provisions of section 147, 148, 149 or 151 for reopening a case for escaped assessment, taking of approval from the co....
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....ars 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 provisions 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 be chargeable at the rate or rates as applicable ....
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....sfied 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." 52. A perusal of Section 153A as noted above shows that it starts with a non obstante clause relating to the normal assessment procedure which is covered by Sections 139, 147, 148, 149, 151 and 153 respectively in respect of sear....
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....nother significant feature of this Section is that the Assessing Officer is empowered to assess or reassess the "total income" of the aforesaid years. This is a significant departure from the earlier block assessment scheme in which the block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the "total income‟ of the six assessment years in question in separate assessment orders. This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. [See CIT vs. Anil Kumar Bhatia, (2012) 24 taxmann.com 98 (Delhi)] 54. A question may arise as to how the aforesaid is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either in Section 143(1)(a) or Section 143(3) of the Act. This has been answered by the Delhi High Court in the case of Anil Kumar Bhatia (supra) as under; "If such an order is already....
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....e, it has been provided in the second proviso of sub Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee which are pending on the date of initiation of the search or making requisition "shall abate". Once those proceedings abate, the decks are cleared, for the Assessing Officer to pass assessment orders for each of those six years determining the total income of the assessee which would include both the income declared in the returns, if any, furnished by the assessee as well as the undisclosed income, if any, unearthed during the search or requisition. The position thus emerging is that where assessment or reassessment proceedings are pending completion when the search is initiated or requisition is made, they will abate making way for the Assessing Officer to determine the total income of the assessee in which the undisclosed income would also be included, but in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee‟s total income and such orders are subsisting at the time when the search or the requisition is made, there is no question of....
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....heme of Chapter-XIV-B of the Act. Paras-27 and 28 of the said judgment are relevant. We quote the same as under; 27. Before we proceed to answer the question, it would be necessary to keep in mind the scheme of block assessment introduced in Chapter XIVB to Finance Act, 1995 w.e.f. 1st July, 1995. As already mentioned in brief by us, Chapter XIVB of the Act which deals with block assessment lays down a special procedure for search cases. The main reason for adding these provisions in the Act was to curb tax evasion and expedite as well as simplify the assessments in such search cases. Undisclosed incomes have to be related in different years in which income was earned under block assessment. This is because in such cases, the "block period" is for previous years relevant to 10/6 assessment years and also the period of the current previous year up to the date of the search, i.e., from April 1, 2000, to January 17, 2001, in this case. The essence of this new procedure, therefore, is a separate single assessment of the "undisclosed income", detected as a result of search and this separate assessment has to be in addition to the normal assessment covering the same period. Therefore,....
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....Chapter XIVB is also a part of total income and consequently Section 4 becomes the charging section in respect thereof as well. However, a little closer scrutiny leads us to conclude that that is not the position as per the scheme of Chapter XIVB. In the first place, income referred to in Section 5 talks of total income of any 'previous year'. As per Section 2(34) of the Act, 'previous year' means previous year as defined in Section 3. Section 3 lays down that previous year means 'the financial year immediately preceding the assessment year'. Undisclosed income referred to in Chapter XIVB is not relateable to the previous year. On the contrary, it is for the block period which may be 6 years or 10 years, as the case may be. Consequently, as already mentioned, while analyzing the scheme of Chapter XIVB, such Chapter is a complete code in respect of assessments of 'undisclosed income'. Not only it defines what is undisclosed income, it also lays down the block period for which undisclosed income can be taxed. Further, it also lays down the procedure for taxing that income. It is very pertinent to note at this stage that for this purpose, specific provi....
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....luding the period up to the date of commencement of such search, or as the case may be, the date of such requisition, in the year of search or requisition. This amendment came into effect from 01.06.2021. 58. In Cargo Clearing Agency (supra), this Court, in para- 13, has discussed the salient features of the block assessment scheme in determining the undisclosed income. Para-13 reads thus; "13. Thus, Chapter XIV-B, as the heading suggests, lays down a special procedure for assessment of search cases. Under this scheme, any undisclosed income which comes to light as a consequence of search u/s. 132 of the Act shall be assessed separately as income of a block of specified years. The assessment for the block period is to be made by an officer not below the rank of Assistant Commissioner of Income Tax with the prior approval of the Commissioner of Income Tax. The assessment is of the income of the block period consisting of previous years relevant to 10/6 assessment years preceding previous year in which the search was conducted u/s. 132 of the Act, and includes, in the year in which the search was conducted, the period upto the date of commencement of such search. The sali....
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....sessment. An Assessing Officer may assess or reassess any income chargeable to tax which has escaped assessment "for any assessment year" if the Assessing Officer has reason to believe that such income has escaped assessment. The power to assess or reassess such income and also any other income which is liable to tax and has escaped assessment is subject to provisions of sections 148 to 153 of the Act. Under section 147 of the Act, the Assessing Officer is empowered not only to assess or reassess income which has escaped assessment but also recompute the loss or depreciation allowance or any other allowance, as the case may be. Explanation 2 to section 147 of the Act lays down three classes of cases wherein it shall also be deemed to be a case where the income chargeable to tax has escaped assessment. Proviso to section 147 of the Act stipulates that no reassessment proceedings shall be commenced after the expiry of four years from the end of the relevant assessment year in a case where assessment has been framed u/s. 143(3) of the Act or u/s. 147 of the Act for the relevant assessment year, unless income has escaped assessment for such assessment year by reason of failure or omiss....
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.... procedure for assessment of search cases. This Court dismissed the stance of the revenue that Section 158BH of the Act permits all other provisions of the Act to apply to assessment made under Chapter-XIV-B of the Act. Chapter-XIV-B is in addition to the regular assessments in respect of each previous year included in the block period. The undisclosed income relating to the block period shall not include the income assessed in the regular assessment and the income in regular assessment shall not include the income of the block period assessed in the block assessment. Under Sections 153A to 153D, the assessment is year wise and not in a block. The assessment is in the nature of assessment or reassessment and includes the regular assessment or reassessment if pending. The income in regular assessment and undisclosed income are included in the assessment under Section 153A. 61. Under Section 158BB of the Act, 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 ....
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....provision has been made for adopting Sections 142, 143, 144 & 145 of the Act. Contra, where legislature does not want a provision, not falling within Chapter XIV-B of the Act, to be resorted to the two Provisos under clause (a) of section 158BC of the Act have specifically made this clear. The First Proviso stipulates that no notice u/s. 148 is required to be issued for the purpose of proceeding under Chapter XIV-B of the Act. The Second Proviso stipulates that no person, who has already furnished a return u/s. 158BC(a) of the Act, shall be entitled to file a revised return as provided for in section 139(5) of the Act. Thus, these provisions are inherent indicators in the special procedure scheme to show that section 158BH of the Act has limited application. 21. Time limit for completion of block assessment has been provided in section 158BE of the Act. It indicates that the same has to be within one year/two years from the end of the month in which the last of the authorisations for search under section 132 of the Act was executed etc. For the present, it is not necessary to refer to the other provisions of the said section. However, Explanation 2 as appearing in section ....
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..... One cannot envisage escapement of undisclosed income once a search has taken place and material recovered, on processing of which undisclosed income is brought to tax. Section 147 of the Act itself indicates that the same is in relation to income escaping assessment and applies in a case where either income chargeable to tax has escaped assessment by virtue of either non disclosure by way of non filing of return, or non disclosure by way of omission to disclose fully and truly all material facts for the purpose of assessment, or processing of material already available on record, if the same is within stipulated period of limitation. Therefore, to contend that undisclosed income has escaped assessment despite an assessment having been framed under Chapter XIV-B of the Act by adopting the special procedure prescribed by the said Chapter is to contend what is inherently not possible. It cannot be a case of non filing of return considering the provisions of section 158BC of the Act. It cannot be a case of non disclosure of material facts considering the fact that everything which was undisclosed has already been unearthed at the time of search and the definition of "undisclosed inco....
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....ment is framed the same is final unless and until disturbed in an appropriate proceeding taken before the higher forum." Emphasis supplied. 63. At this stage, we may look into Section 158BB of the Act. The same reads thus; "158-BB 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 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 Assessing Officer, 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, on the basis of such assessments; (b) where returns of income have been filed under section 139 or section 147 but assessments have not been made till the date of search or requisition, on the basis of the income disclosed in such returns; (c) w....
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....eciation under sub- section (2) of section 32 shall not be set off against the undisclosed income determined in the block assessment tinder this Chapter, but may be carried forward for being set off in the regular assessments." 64. As discussed in Cargo Clearing Agency (supra), the legislature has provided that the block assessment of the undisclosed income is to be based not only on the evidence found at the time of search, but also on the basis of the material and information gathered during the inquiries made after a search proceedings. However, on the basis of evidence found during the search proceedings, certain further inquiries may be undertaken by the Assessing Officer resulting in collection of material or information gathered during such inquiries. The assessment for the block period shall also include computation of such income as a consequence of such inquiries. However, insofar as the assessment or reassessment under Section 153A/153C of the Act is concerned, all that the section says is that in a case of a person where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132A, the Assessing Offic....
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.... there is a conflict between the two streams of procedure, as laid down by the Apex Court, provisions of Chapter XIV-B of the Act shall prevail and have primacy." 66. In Cargo Clearing Agency (supra), this Court referred to the decision of the Supreme Court in CIT v. Suresh N. Gupta, (2008) 297 ITR 322 (SC) and concluded as under: "In the light of this specific distinction in the statutory scheme brought about by specific definitions of the two terms, "assessment year" and "block period", the submission on behalf of the Revenue that the term "assessment year, wheresover it appears in the group of Sections 147 to 153 of the Act, be substituted by the term "block period" cannot be accepted, because on a plain reading o f the said provisions, viz., Section 147 to Section 153 of the Act, the entire scheme becomes unworkable. The principles of interpretation also do not permit such an exercise. Xxx As already noticed hereinbefore, the entire scheme under Chapter XIV of the Act, more particularly from Sections 147 to 153 of the Act pertaining to reassessment, and the special procedure for assessing the undisclosed income of the block period under Chapter XIV....
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....1) While block assessment assesses the 'undisclosed income' of the block period to be computed in the prescribed manner, regular assessment assesses the total income or loss. 2) There is no overlapping involved in block assessment and regular assessment [under section 153A, the regular assessment, if pending, abates and the total income is assessed under section 153A] 3) The pending regular assessment proceedings are not frozen by making of block assessment. [regular assessment proceedings abate and the total income is assessed under section 153A]. Both, the block assessment and regular assessment proceedings can go on simultaneously. [Regular assessment proceedings cannot go on simultaneously with assessment under section 153A. The pending assessment or re-assessment proceedings abate and the total income is assessed under section 153A] 4) Sections 153A to 153D fall within the Chapter XIV which provides for the 'procedure for assessment'. Thus, these provisions do not fall under a separate chapter. 5) There is no provision akin to section 158BH which says that save as otherwise provided in this Chapter, all other provisions of this Act shall app....
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....nt or reassessment of the total income of six assessment years. While in those cases, where an assessment order has already been framed under section 143(3) of the Act prior to initiation of proceedings under section 153A or 153C of the Act, it has been held that any addition made in those proceedings should be on the basis of the material found during the course of search. In other words, in case of reassessment, the addition has to be based upon material found during the course of search, but insofar as assessment is concerned, all available material can be taken into consideration, whether it is found during the course of search, requisition or survey or is otherwise available with the Assessing Officer. In case of assessment, the additions cannot be restricted to the material found during the course of search alone." Emphasis supplied. 71. In Saumya Construction Pvt. Ltd. (supra), the following questions of law were raised by the Revenue while questioning the legality and validity of the order passed by the Appellate Tribunal; "(A) Whether the order of Tribunal is right in law and on facts in deleting the addition made in assessment made u/s 153A of the Act? ....
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....ame. Since the assessment under section 153A of the Act is linked with search and requisition under sections 132 and 132A of the Act, it is evident that the object of the section is to bring to tax the undisclosed income which is found during the course of or pursuant to the search or requisition. However, instead of the earlier regime of block assessment whereby, it was only the undisclosed income of the block period that was assessed, section 153A of the Act seeks to assess the total income for the assessment year, which is clear from the first proviso thereto which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso makes the intention of the legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the sub-section pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Sub-section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under sub-section (1) i....
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....ase where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act." Emphasis supplied. 75. Thus, from the aforesaid decision, It is clearly established that even in respect of pending assessments which have abated, the AO can determine the total income of the assessee which will include the income declared in the returns, if any, as well as the undisclosed income, if any, unearthed during the search or requisition. 76. The debate on the pivotal issue may also be looked into and understood from a different angle. In the case on hand, the Assessing Officer seeks to reopen the assessment for the assessment year 2013-14. The search was carrie....
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....nai vs. Ajit Kumar, Civil Appeal Nos.10164, 10165 of 2010, 10917 of 2013, 4449, 5255 of 2015, decided on 02.05.2018. In the appeal before the Supreme Court, the question that was raised for consideration was whether the material found in the course of a survey in the premises of a builder could have been included in the block assessment of the assessee. The said question fell for the consideration of the Supreme Court in the following factual background; "The office and residence of a Tamil cine actor were searched on July 17, 2002. This search was concluded on August 21, 2002. Evidence was found during the search that the assessee had indulged in an understatement of his real income relating to the block period from 01.04.1996 to 17.07.2002. On the same day, a survey under section 133A of the Income Tax Act, 1961, was also conducted on the premises of M/s. Elegant Constructions and Interiors Ltd. (hereinafter referred to as "Elegant Constructions"). Elegant Constructions was also the builder and interior decorator who had constructed and decorated the assessee's residential house at Seaward Road, Valmiki Nagar, Thiruvanmiyur. The cost of this investment was disclosed ....
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....provisions under Chapter XIVB were devised to operate in the distinct field of undisclosed income and are clearly in addition to the regular assessments covering the previous year's falling in the block period, the Supreme Court held that under the power of Survey under Section 133A of the IT Act, any material or evidence found/collected in a Survey which has been simultaneously made at the premises of a connected person can be utilized while making the Block Assessment in respect of an assessee. 86. Under Section 158BB, read with Section 158BH of the IT Act, the material or evidence found under survey was read within Section 158BB under the words "and such other materials or information as are available with the Assessing Officer and relatable to such evidence". The impugned orders were set aside, and the orders passed by the Assessing Officer making the Block Assessment were restored. Emphasis supplied. 87. In the aforesaid context, we may also refer to a decision of the Supreme Court in CIT vs. Hotel Blue Moon, reported in (2010) 321 ITR 362 (SC). We are referring to this decision because the same has been relied upon in the case of Ajit Kumar (supra). The Supreme C....