TaxTMI 
TaxTMI 
TaxTMI 
Assessing Authority in Search Cases : Clause 299 of the Income Tax Bill, 2025 Vs. Section 158BG of the Income Tax Act, 1961
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.... by empowering the tax administration to assess undisclosed income unearthed during such operations. The block assessment procedure, introduced in the mid-1990s, was a significant development in Indian tax law, providing a mechanism for the assessment of undisclosed income detected during searches. Over time, these provisions have evolved to address procedural lacunae and to keep pace with administrative changes. The Income Tax Bill, 2025, seeks to consolidate and update the law, and Clause 299 is a key provision in this context. The legislative intent behind both Clause 299 and Section 158BG is to ensure that assessments arising from search and seizure actions are handled by officers of appropriate seniority and with adeq....
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....search initiated or requisition made on or after the commencement of this Act. The order of assessment for the block period shall be passed by an Assessing Officer not below the rank of a Deputy Commissioner or an Assistant Commissioner or a Deputy Director or an Assistant Director, as the case may be: Provided that no such order shall be passed without the previous approval of the Additional Commissioner or the Additional Director or the Joint Commissioner or the Joint Director, as the case may be, in respect of search initiated u/s 132, or books of account, other documents or any assets requisitioned u/s 132A, on or after the 1st day of September, 2024. 3.2. Key Elements and Provisions (a) Assessing Officer's Rank * Both provi....
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....024) aligns the provision with current administrative hierarchies. * Clause 299, as presented in the Income Tax Bill, 2025, essentially carries forward the core framework of Section 158BG, with minor refinements to reflect the transition to the new Act and to maintain administrative continuity. 3.3. Interpretation and Ambiguities The language of both provisions is relatively clear, but certain interpretive issues may arise: * Definition of "Block Period": The term "block period" is a technical term defined elsewhere in the legislation. Its precise scope (e.g., number of years, overlap with regular assessments) can sometimes give rise to disputes, especially during the transition from the old to the new regime. * Scope of Approval: T....
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....sessing Officer, especially given the serious consequences of a block assessment, which can involve substantial tax demands and penalties. 4. Practical Implications 4.1. For Taxpayers * Taxpayers subjected to search and seizure operations face the prospect of block period assessments, which can result in significant tax liabilities and penalties. The requirement that such assessments be made by senior officers and with higher-level approval provides some assurance of procedural fairness. * Taxpayers can challenge the validity of block assessments on procedural grounds-such as lack of proper approval or assessment by an officer below the prescribed rank-if these requirements are not strictly complied with. 4.2. For Tax Authorities *....
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....s procedural safeguards to balance the need for effective tax enforcement with the rights of taxpayers. 5.2. Differences and Evolution * Temporal Applicability: Section 158BG applies to searches initiated or requisitions made on or after 1st September, 2024, whereas Clause 299 applies to cases arising after the commencement of the new Act. This reflects the transition to the new legislative regime. * Legislative Context: Clause 299 is part of a new, comprehensive Income Tax Bill, which may introduce other changes to the block assessment process, definitions, and procedures. Section 158BG is part of the existing Act, which has seen piecemeal amendments over the years. * Drafting Refinements: The language of Clause 299 is marginally mo....