TaxTMI 
TaxTMI 
2002 (10) TMI 231
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....ssessment order and details filed during the course of assessment proceedings, the total unrecorded expenses as per loose leaf papers were as under:-- Sept. 94 to March 95 April 95 to Nov. 95 Purchase of raw material Rs. 1,37,65,918 Rs. 1,85,81,477 Repairs and Maintenance Rs. 22,30,204 Rs. 29,22,504 Factory expenses Rs. 34,59,258 ....
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....sp; Rs. 1.94,55,380 Rs. 2,51,60,350 (1) M/s Irani Foods & Rs. 77,82,152 Rs. 1,00,64,140 Investment Co. Pvt. Ltd. (being 40%) (2) M/s Western India Bakers' Rs. 38,91,076 Rs. 52,30,070 Pvt. Ltd. (being 20%) (3) M/s Model Bakers & Confectioners (being 20%) Rs. 38,91,076 Rs. 50,32,070 (4) M/s Hygienic Bakery (being 20%) Rs. 38,91,076 Rs. 50,32,070 7. At the time of hearing Shri Dave produced before us reason....
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....tion 40A(3) of the Act. 11. Shri Dave, learned CIT (DR) argued the first issue. In regard to the second and third issues he relied on the orders of the Assessing Officer. 12. We have considered the various precedents appropos the invocation of the reassessment proceedings. We have also perused the scheme of block assessment. Section 147 authorizes an Assessing Officer to assess or reassess income chargeable to tax, if he has any reason to believe that the said income for any assessment year has escaped assessment. The expression "escaped assessment" clearly connotes a very basic postulate that the income for a particular assessment year went un-noticed by the Assessing Officer and because of it not being noticed by him for any reason, it escaped assessment. The meaning of the expression "escaped assessment" is so simple and straight that it does not leave anyone in doubt that power under section 147 could be invoked by the Assessing Officer if it is a case of escape of assessment of income for a particular year. 13. The Finance Act, 1995, introduced a scheme of assessment of undisclosed income determined as a result of search. Under this scheme, the undisclosed income dete....
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....ot be applied in relation to block period. Similarly, time limit for completion of assessment and reassessment, as mentioned under section 153, cannot be fitted with the scheme of Chapter XIV-B. These provisions cannot be applied even mutatis mutandis. Section 158BC speaks about the procedure of block assessment. It is stipulated under sub-section (b) of section 158 that Assessing Officer shall proceed to determine the undisclosed income of the block period laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143, shall, so far as may be apply. There is no mention of section 147. In the Circular reproduced at Para 17, it has been mentioned that Assessing Officer shall not be required to issue any notice under section 148 for the purposes of proceedings under Chapter XIV-B. 16. Adverting to the cases relied on by the learned DR, we find that these are not relevant in deciding the issue. We discuss briefly the ratio laid down in these cases. In the case of Dy. CIT v. Shaw Wallace & Co. Ltd. [2001] 248 ITR 81 (Cal.), it was held that regular assessment of disclosed income can be made in addition to assessment under Chapter XIV-B. In the ....
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....g Officer shall serve a notice on such person requiring him to furnish within such time, not being less than 15 days, as may be specified in the notice, a return in the prescribed form and verified in the same manner as a return under clause (i) of sub-section (1) of section 142 setting forth his total income including undisclosed income for the block period. The officer shall proceed to determine the undisclosed income of the block period and the provisions of section 142, sub-sections (2) and (3) of section 143 and section 144 shall apply accordingly. The Assessing Officer shall not be required to issue any notice under section 148 for the purpose of proceedings under this Chapter. Though the block period can be extended up to ten years in a case where the assessee has not disclosed undisclosed income in anyone or more of the previous years in the block periods and the Assessing Officer also does not find any material indicating undisclosed income in anyone or more of the previous years comprised in the block period, it will not be necessary to do the exercise of computing the undisclosed income for the relevant years and the exercise may be limited to the years in respect of whi....
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....hese clauses are seldom used to construe the Act. Saving repugnant to the enactment would be void. When two interpretations are sought to be put upon a provision, that which fits the description which the Legislature has chosen is to be applied. In spelling out the meaning of the words in a section, one must take into consideration the setting in which those terms are used and the purpose they are intended to serve as has been laid down. The provision wholly un-applicable cannot be applied in the guise of a saving provision. 22. Chapter XIV-B enacts a special procedure to deal with the search cases. The assessment pursuant to search cases cannot be equated with the ordinary assessment. The purpose of section 147 is to bring to tax the escaped income. Section 147 is a device to detect the escaped income under the normal assessment procedure. Normal assessment is being done on the basis of material and evidence available on record. In the normal assessment procedure, Assessing Officer sees the facts through the records. In the search cases facts get exposed directly. If you go to a Doctor, he will first examine you through his stethoscope. If doubt persists, he will advise X-ray, ....
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....ase we find that the assessee did disclose all the material facts necessary for assessment. 25. Assuming that re-opening is possible, Assessing Officer is required to issue the proper notice. Assessment cannot be re-opened without the issuance of proper notice. In the present case we find that Assessing Officer did issue only one notice for all the years. As such, there was no proper notice and the assessment made pursuant to that notice is bad in law. 26. We have also noticed that the case was reopened on the basis of audit party objection. In the present case, apart from the information furnished by the audit party, Assessing Officer did not have any other information for re-opening the assessment. The opinion expressed by the audit party would go to show that they had pointed out to the Assessing Officer that he failed to apply the provisions of section 40A(3) of the Act. This would amount to pointing out the law and the interpretation of the provisions contained in section 40A(3), which is clearly barred in view of the decision of the Apex Court rendered in the case of Indian & Eastern Newspaper Society v. CIT [1979] 119 ITR 9961 (SC). 27. In view of this we hold that ....