D.A. Mehta, J.@mdashAll these petitions have been heard together as it is an accepted position that the issue involved is common. Special Civil
Application No. 6215 of 1999 has been taken as the lead matter and accordingly detailed facts are taken from the said petition.
2. The petitioner was a Firm comprised of four partners. The Firm continued business up to 31.03.1992 i.e. the day on which the Firm was
dissolved. In the subsequent period, viz. previous year relevant to Assessment Year 1993-94 certain transactions were carried out and hence, a
return of income in the status of Association of Persons (AOP) declaring income of Rs. 5,05,087/- came to be filed.
3. On 24.11.1995 search proceedings u/s 132 of the Income Tax Act, 1961 (the Act) were carried out at the residential premises of three
erstwhile partners of the petitioner Firm. Certain loose papers were found from the residence of one of the partners Mr. T.V. Sujan. The said
documents were seized and statement of Mr. Sujan was recorded. An order u/s 158BD of the Act came to be made on 31.03.1997 for the block
period ending on 24.11.1995 in the status of AOP. The assessment was made pursuant to return of income for the block period filed on
03.03.1997 showing total undisclosed income at Rs. 30 lacs. The assessment was made after various details and explanation were called for vide
Notice dated 05.03.1997 to which a detailed reply was filed on 12.03.1997. The assessment was framed on a total income of Rs. 40,50,900/-
after taking approval of Commissioner of Income Tax, Rajkot.
4. On 16.04.1999 Notice u/s 148 of the Act came to be issued seeking to reassess the income for the block period ending on 24.11.1995 by
stating that the respondent had reason to believe that the income for the block period ending on 24.11.1995 had escaped assessment within the
meaning of Section 147 of the Act. The impugned Notice further stated that the Notice was being issued after obtaining necessary satisfaction of
the Commissioner of Income Tax. Thereafter correspondence ensued between some of the erstwhile partners of the petitioner Firm and the
respondent authority. Though repeated letters were addressed by the partners asking for the reasons recorded u/s 148(2) of the Act, the same
were not supplied. Some of the partners also made a grievance that the Notice u/s 148 of the Act had not been served upon them and they were
not in receipt of any Notice. The last such correspondence resting with communication dated 28.07.1999 from the respondent authority to one of
the ex-partners wherein it is stated that it was not obligatory to supply reasons recorded and the addressee was directed to file return immediately.
It is at this stage that the petitioner has approached this Court challenging the impugned Notice issued u/s 148 of the Act.
5. The principal issue raised in this petition and other cognate petitions is whether it is open to the assessing authority to issue Notice u/s 148 of the
Act in respect of an assessment framed for a block period under Chapter XIVB of the Act.
6. Learned Senior Advocate Mr. S.N. Soparkar as well as Mr. K.H. Kazi, learned Advocate appearing for the petitioners have been heard. The
Revenue was represented by Mr. M.R. Bhatt, learned Senior Standing Counsel.
7. On behalf of the petitioners it was contended that Section 147 of the Act permits an Assessing Officer to reassess an income which has escaped
assessment ''for any assessment year''. Emphasing the language of the provision, it was contended that in case of a ''Block Period'' the same is not
in respect of any assessment year and once the assessment of income is for the entire block period the Assessing Officer can never form a belief
that any income chargeable to tax for any assessment year has escaped assessment.
7.1. The next contention was based on provisions of Section 147 of the Act as well as the Proviso to Section 147 of the Act to submit that where
the limitation has been prescribed for issuance of Notice reckoned from the end of a particular assessment year the scheme would fail in case of
assessment for the block period because it was not possible to specify the assessment year from the end of which the time limit could be
computed.
7.2. Similarly provisions of Sections 151 & 153 of the Act were also pointed out to reiterate submission that in a case where the sanction was
required as provided by Section 151 of the Act, again same was from the expiry of four years from the relevant assessment year and the
conditions could not be fulfilled. Similarly Section 153 of the Act also provided different period of limitation as against the provisions of Section
158BE of the Act which provides for time limit for completion of block assessment.
7.3. Another contention was that the assessment framed under Chapter XIV-B of the Act had to be framed after the final order was approved by
the Commissioner of Income Tax and a subordinate authority cannot seek to re-open such assessment, as in the present case where the impugned
Notice has been issued by the Joint Commissioner of Income Tax.
7.4. The period of limitation prescribed u/s 158BE of the Act was less than the period of limitation prescribed u/s 153 of the Act and therefore
also the scheme did not permit such an exercise.
8. On behalf of the respondent authority it was submitted that Section 158BH of the Act specifically provided that save as otherwise provided in
Chapter XIV-B, all other provisions of the Act shall apply to assessment made under Chapter XIV-B. It was therefore contended that when one
considered the definition of ''block period'' as provided in Section 158B(a) of the Act, it was clear that the said term covered the period
comprising previous years relevant to 10/6 assessment years preceding the previous year in which the search was conducted u/s 132 of the Act
and therefore, wherever the words ''assessment year'' appear in Chapter XIV of the Act relating to Procedure for assessment the term block
period had to be read in place of assessment year to make the scheme workable.
8.1. Referring to Sub-section (2) of Section 158BA of the Act, it was submitted that for the purpose of charging tax not only Section 113 of the
Act was material but even Section 4 had to be considered as laid down by the Apex Court in the case of Commissioner of Income Central II Vs.
Suresh N. Gupta, . It was submitted that the Apex Court has considered the entire scheme of Chapter XIV-B of the Act and come to the
conclusion that computation of undisclosed income had to be made u/s 158BB in the manner provided in Chapter IV of the Act and therefore the
said Chapter is not ruled out by provisions of Chapter XIV-B of the Act. That the non-obstante clause appearing in Section 158BA of the Act had
to be read in juxtaposition with Section 158BH of the Act. That the concepts of ''previous year'' and ''total income'' were retained in Chapter XIV-
B of the Act and therefore Chapter IV of the Act cannot be ruled out from block assessment procedure. The following extract from the Apex
Court decision was read and emphasized by the learned Counsel:
11. Reading of the relevant provisions of Chapter XIV-B one finds that Section 158BA deals with assessment of ''undisclosed income'' as a result
of search whereas computation of such income falls u/s 158BB. The procedure for block assessment falls in Section 158BC. Section 158BA
begins with a non obstante clause. It states that nothing contained in any other provisions of the 1961 Act, where search is initiated after June 30,
1995, u/s 132 or in cases of requisition u/s 132A after the cut off date, the Assessing Officer shall proceed to assess the undisclosed income in
accordance with the provisions of Chapter XIV-B.
12. Relying on Section 158BA(1) the assessee claims that Chapter XIV-B is a special procedure for assessment of cases; that it constitutes a self-
contained mechanism and, hence, it falls outside the scope of Section 4(1) of the 1961 Act, particularly when Section 4(1) imposes a charge on
the ''total income'' and not on the undisclosed income and, particularly when Section 158BA(2) is an independent charging section in contrast to
Section 4(1) of the 1961 Act, which imposes a charge on the ''total income'' of the previous year. According to the assessee, the charge u/s
158BA(2) is on the ''block period'' and not on the total income of the ''previous year''. Therefore, according to the assessee, Chapter XIV-B is a
self-contained mechanism.
13. As stated above, these arguments advanced on behalf of the assessee have no merit. Section 158B defines ''block period'' to mean the period
comprising the previous years relevant to 10/6 assessment years preceding the previous year in which the search was conducted u/s 132. It also
includes the period up to the date of commencement of such search or date of requisition. u/s 4, the subject of charge is the income of the previous
year and not the income of the assessment year. Thus, tax is levied on the actual income of the previous year. Each ''previous year'' is a distinct unit
of time for the purposes of assessment. However, when we come to Section 158BA, we find that Parliament has taken the block period to mean
the period comprising previous years relevant to 10/6 assessment years preceding the previous year in which the search is conducted. In other
words, Parliament has in search cases expanded the unit of time for block assessment purposes from 1 year to 10/6 previous years. However, it is
important to note that the unit of time remains constant. It is open to Parliament to treat the unit of time as one year in normal assessment cases
and, at the same time, it is also open to Parliament to treat 10/6 previous years as a unit of time for the block assessment period. The important
thing to be noted is that the block assessment computation in Section 158BB does not exclude the concept of ''previous years'' as well as the
concept of ''total income''. Those concepts are retained. Further, we need to examine the scheme of Chapter XIV-B. The said Chapter has three
parts consisting of assessment, computation and procedure for making block assessment. Assessment of undisclosed income as a result of search
stands covered by Section 158BA whereas computation of undisclosed income of the block period falls in Section 158BB and procedure for
block assessment falls in Section 158BC. In this case, we are mainly concerned with computation of undisclosed income u/s 158BB(1). This
Section incorporates the principle of aggregation of total income of the previous years falling within the block period computed in accordance with
the provisions of Chapter IV. The important thing to be noted is that the computation has to be done even u/s 158BB of ''undisclosed income'' in
the manner provided for in Chapter IV of the 1961 Act which deals with ''computation of total income''. Chapter IV deals with computation in
cases of normal assessment. Chapter IV is not ruled out by the provisions of Chapter XIV-B. In this connection, we may also take note of Section
158BH which deals with application of other provisions of the 1961 Act to the block assessment procedure in Chapter XIV-B. Section 158BH
makes it clear that save as otherwise provided in Chapter XIV-B, all other provisions of the 1961 Act shall equally apply to block assessment.
Therefore, one has to read the non obstante clause in Section 158BA in juxtaposition with Section 158BH. Keeping in mind the provisions of
Section 158BB and keeping in mind the Chapter XIV-B, we are of the view that Chapter IV is not ruled out from block assessment procedure
and, therefore, one has to read Section 158BB with Section 4 of the 1961 Act.
14. There is one more fact which needs to be noted. A bare reading of the provisions of Section 158BA and Section 158BB indicates that the
searches conducted by the Department are an important means of unearthing black money. However, undisclosed income has to be related to the
different years in which the income was earned. The essence of the block assessment procedure, therefore, is a separate single assessment of
undisclosed income, detected as a result of a search. This separate assessment is in addition to normal or regular assessment covering the same
period. A separate return is a pre-requisite for making a ''block-assessment''. However, in the matter of computation, the principle of aggregation
of total incomes, is inbuilt into Section 158BB. We have to subtract one aggregate from the other. Further, while applying the principle of
aggregation of the total incomes, computation is required to be done in accordance with the provisions of Chapter IV. Therefore, in our view,
Section 4 has to be read with Section 158BB. That section is not ruled out by Section 158BB. If Section 4 has to be read with Section 158BB for
computing undisclosed income then the provisions of the relevant Finance Act have got to be read into the block assessment scheme under
Chapter XIV-B, even prior to June 1, 2002.
15. u/s 158BB, there is the theory of ''block period''. It is based on ''the principle of aggregation of total incomes''. Under that section, the first
aggregate to be computed is the total income of the previous years falling within the block period including returned/assessed incomes as per
regular returns and regular assessments. The second aggregate to be computed is the aggregate of the total incomes/losses of the previous years
determined in terms of Clauses (a) to (f) of Section 158BB(1). The difference between the first aggregate and the second aggregate is described in
Section 158B(b) as the ''undisclosed income'' to be taxed under the provisions of Section 113 of the 1961 Act at the special rates prescribed.
Further, Clause (a) of the Explanation to Section 158BB clarifies that the total income/loss of each previous years shall, for the purpose of
aggregation, be taken as the total income or loss computed in accordance with the provisions of Chapter IV without giving effect to set off of
brought forward losses under Chapter VI or unabsorbed depreciation u/s 32(2) of the 1961 Act. Hence, one has to read Section 158BB with
Section 4 of the 1961 Act. There is no conflict between the computation machinery under Chapter XIV-B and normal computation machinery
under Chapter IV. This is the importance behind enactment of Section 158BH which inter alia states that if there is no conflict between the
provisions of Chapter XIV-B and any other provisions of the 1961 Act, then the latter will operate. There is a fallacy in the argument of the
assessee that the concepts of ''total income'' and ''previous year'' are given a go by in Chapter XIV-B. The above analysis of Section 158BB
indicates that both the concepts are retained in Chapter XIV-B. The only difference is that Section 4 of the 1961 Act charges the total income of a
person of one single previous year (unit of assessment) whereas Section 158BA(2) levies a charge on the income of a person for the block period
of previous years relevant to 10/6 assessment years. In our view, the words ''block period'', as defined in Section 158B(a), comprises previous
years relevant to 10/6 assessment years as one unit of time for the purposes of assessment. As stated above, the object behind the enactment of
Chapter XIV-B is to assess and compute ''undisclosed incomes'' relatable to different accounting years in which the income is earned. Therefore, if
the block period comprising of previous years relevant to 10/6 assessment years is treated by Parliament as one unit of time for assessment
purposes, one has to correlate ''undisclosed income'' to each of the years in which income was earned by the assessee. It is true that under
Chapter XIV-B, computation of regular income and computation of undisclosed income has to be worked out separately. However, to arrive at
the figure of undisclosed income, the said parallel calculations have to converge in order to work out the difference between the first and the
second aggregates of the total incomes/losses of the previous year, in which undisclosed income is taxed u/s 113. Therefore, in our view, the
concept of a charge on the ''total income'' of the previous year under the 1961 Act is retained even under Chapter XIV-B. Therefore, Section
158BB which deals with computation of undisclosed income of the block period has to be read with computation of total income under Chapter
IV of the 1961 Act.
(emphasis supplied)
9. In rejoinder, the learned Counsel appearing for the petitioner has placed reliance on decision of High Court of Rajasthan in the case of
Commissioner of Income Tax v. Ramesh Chand Soni (2005) 194 CTR (Raj) 84. It was reiterated that Section 158BE of the Act was a complete
code on the subject of prescribing and computing limitation for the purpose of completing block assessment and hence other provisions of the Act,
like Section 153 of the Act, had to be necessarily excluded.
10. When Chapter XIV-B was introduced the Memorandum Explaining the Provisions in the Finance Bill,1995 stated the purpose and the object
for introducing the said chapter in following terms:
Special Procedure for Assessment of Search Cases.
Searches conducted by the Income Tax Department are important means of unearthing black money. However, under the present scheme,
valuable time is lost in trying to relate the undisclosed incomes to the different years. Tax evaders generally manage to divert the focus to
procedural and legal issues and often invent new evidence to explain undisclosed income. By the time search-related assessments are completed,
the effect of the search is considerably diluted. Legal battles continue for many years to decide which income is assessable in which assessment
year. No finality is reached and the seized assets remain with the Department for a long time.
In order to make the procedure of assessment of search cases cost-effective efficient and meaningful, it is proposed to introduce a new scheme of
assessment of undisclosed income determined as a result of search u/s 132 or requisition u/s 132A. Under this scheme, the undisclosed income
detected as a result of any search initiated, or requisition made, after 30-6-1995, shall be assessed separately as income of a block of years.
Where the previous year has not ended or the due date for filing a return of income for any previous year has not expired, the income recorded on
or before the date of the search or requisition in the books of account or other documents, maintained in the normal course, relating to such
previous years shall not be included in the block.
11. Therefore, this is a pointer to the fact that undisclosed income, in other words, the income which has not been disclosed and which has not
been taxed, has to be assessed by adopting a special procedure. The special procedure has been evolved to save valuable time which is otherwise
lost in the process of co-relating the undisclosed income to different assessment years by obviating the legal battles involving issues of procedure
and interpretation of law. The legislature found it necessary to arrive at a cost effective, efficient and meaningful procedure to avoid litigations which
continue for many years to decide which income, or part of income, is assessable in which assessment year. The entire present controversy has to
be considered and the submissions appreciated in light of the aforesaid legislative intent.
12. Chapter XIV-B of the Act lays down a Special Procedure for Assessment of Search Cases. The legislative history of the said Chapter,
inclusive of all relevant amendments till date, may be borne in mind to appreciate the controversy. The said Chapter was inserted by the Finance
Act, 1995. The scope and effect of the said Chapter has been explained by Central Board of Direct Taxes (CBDT) by issuing Circular No. 717
dated 14.08.1995. The relevant extract of the said Circular reads as under:
Special Procedure for assessment of search cases.- 39.1 Searches conducted by the Income Tax Department are important means for unearthing
black money. However, under the present scheme, valuable time is lost in trying to relate the undisclosed incomes to the different years. Tax-
evaders generally manage to divert the focus to procedural and legal issues and often invent new evidence to explain undisclosed income. By the
time search-related assessments are completed, the effect of the search is considerably diluted. Legal battles continue for many years to decide
which income is assessable in which assessment year. No finality is reached and the seized assets remain with the Department for a long time.
39.2. In order to make the procedure of assessment of search cases cost-effective, efficient and meaningful, a new scheme has been introduced for
the assessment of undisclosed income determined as a result of search u/s 132 or requisition u/s 132A. Under this scheme, the undisclosed income
detected as a result of any search initiated, or requisition made, after 30-6-1995 shall be assessed separately as income of a block of years.
Where the previous year has not ended or the due date for filing a return of income for any previous year has not expired, the income or the
transaction recorded on or before the date of the search or requisition in the books of account or other documents maintained in the normal course
of business relating to such previous years shall not be included in the block assessment.
39.3. The salient features of this scheme are as under:
(a) Block period. - The undisclosed income of a person shall be assessed as the income of the block period consisting of a period of 10 previous
years, preceding the previous year in which the search was conducted or the books of accounts, assets, etc. were requisitioned. The period of the
current year upto the date of the search will also form part of the block period.
(b) Undisclosed income.- The undisclosed income has been defined in Clause (b) of Section 158B. The term ''undisclosed income'' includes any
money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or
transactions where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents
wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act.
(ii) The undisclosed income of the block period, therefore, shall be aggregate of the total income of the previous years falling within the block
period, computed on the basis of evidence found as a result of search and such other enquiries as the assessing officer may make and such other
materials or information as are available with him, as reduced by the aggregate of the total income, or as increased by the losses
returned/determined earlier in respect of such previous years.
(iii) Where assessments u/s 143, 144 or 147 have been concluded or determination of income has been made u/s 143(1A) or 143(1B), the same
will be reduced for determining the undisclosed income.
(iv) Where returns of income have been filed under any Sub-section of Section 139 or in response to a Notice issued u/s 142(1) or u/s 148 but
assessments have not been made till the date of search, the incomes disclosed in such returns of income shall be reduced for computing the
undisclosed income.
(v) In a case where due date for filing a return of income has expired but no return of income has been filed there will be no reduction of any
amount for determining the undisclosed income stated above.
(vi) Where the previous year has not ended or the date of filing the return of income u/s 139(1) for any previous year has not expired, the income
determined on the basis of transactions recorded on or before the date of search in the books of account or other documents maintained in the
normal course relating to such previous years shall be reduced.
(vii) However, in a case where undisclosed income has been determined in any earlier block assessment, the same will be reduced from the total
income for determining the undisclosed income.
(viii) Where any order of settlement u/s 245D has been passed by the Settlement Commission, the income determined in such order shall be
reduced accordingly.
(ix) It may again be emphasised that the use of the words ''such previous years'' shows that the exercise shall be restricted to years in respect of
which the undisclosed income has been found and need not be undertaken for all the 10 years comprised in the block period.
(c) Applicability of the provisions.- The special procedure for assessment of search cases as prescribed in Chapter XIVB shall apply in cases
where search is initiated u/s 132 or a requisition is made u/s 132A after 30th June, 1995. Proceedings u/s 132(5) or 132(7) will no longer be
necessary for searches initiated on or after 1st July, 1995. Proceedings u/s 132(5) or 132(7) will however, be required where initial search was
conducted prior to 1st July, 1995 irrespective of the last search or consequential searches which may have continued and concluded on or after
that date i.e. 1st July, 1995.
(ii) The order of assessment for the block period shall be passed within one year from the end of the month in which last of the search warrants is
executed. Though the term execution has not been defined in Chapter XIVB, it will take its usual meaning which means the date on which the
search has been completed. Where consequential searches or requisitions have been made, the period of limitation of one year shall start from the
end of the month in which the last of such consequential operations were concluded.
(iii) The assessment order for the block period shall be passed by an assessing officer not below the rank of Assistant Commissioner of Income
Tax with the prior approval of the Commissioner of Income Tax.
xxx xxx xxx xxx xxx
(e) Procedure for making block assessment.- The assessing 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 varied in the same manner as a return under
Clause (1) 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 provisions of Section 142, Sub-section (2) and (3) of Section 143 and
Section 144 shall apply accordingly. The assessing officer shall not be required to issue any Notice u/s 148 for the purpose of proceedings under
this Chapter. Though the block period can be extended upto 10 years in a case where the assessee has not disclosed undisclosed income in any
one or more of the previous years in the block periods and the assessing officer also does not find any material indicating undisclosed income in
any one 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 which the undisclosed income has been found. On
determination of the undisclosed income of the block period, the assessing officer shall issue an order of assessment and determine the demand
payable by him on the basis of such assessment. The assets seized in the course of search or taken possession of as a result of requisition u/s 132A
shall be retained to the extent necessary and shall be dealt with in the manner laid down u/s 132B.
(ii) In computing the undisclosed income for the block period, the provisions of Sections 68, 69, 69A, 69B and 69C shall, mutatis mutandis apply
and the term ''financial year'' mentioned in these sections shall be taken to mean the relevant financial years falling within block period.
(iii) Before the adoption of uniform previous year the assessees were allowed to have any accounting period as their previous year. In working out
the block period, therefore, there may be cases in which a part of a particular financial year may go beyond the block period or during the
transitional period of switching over from the old system to uniform previous year part of a financial year may not fall in the previous year covered
in the block period. In such cases, the ''10 previous years preceding the previous year in which the search has been initiated'' shall be taken as the
previous years relevant to the 10 assessment years immediately preceding the year relevant to the previous year in which the search has taken
place irrespective of the fact whether the assessments for all these assessments years have already been made or not. For example, when a search
has taken place on 11-7-1995, the block of 10 previous years shall be block relevant to assessment years 1986-87 to 1995-96 plus the period
upto date of search i.e. from 1-4-1995 to 11-7-1995.
(iv) Where the assessee offers no explanation about the nature of source of acquisition of certain assets or the explanation offered by him is not, in
the opinion of the Assessing Officer, satisfactory, the value of such assets may be deemed to be income of the relevant previous year as mentioned
in Section 158BB(2). The onus of proving to the satisfaction of the assessing officer that any undisclosed assets including the income from
undisclosed property has already been disclosed in any return of income filed by the assessee before the initiation of the search shall be on the
assessee.
12.1. Subsequently by the Finance (No. 2) Act, 1996 certain amendments in Chapter XIV-B of the Act came to be made with retrospective
effect from 01.07.1995 i.e. the date on which Chapter XIV-B of the Act was made effective. The scope and effect of the amendments have been
explained by CBDT vide Circular No. 762 dated 18.02.1998. The relevant extract reads as under:
Rationalisation of special procedure for assessment of search cases.- 50.1 The Finance Act, 1995 introduced a new scheme of assessment of
undisclosed income determined as a result of search. Under this scheme, the undisclosed income detected as a result of a search initiated after 30-
6-1995 is assessed separately as the income of a designated period (block) consisting of ten previous years prior to the previous years in which
the search was conducted and also the period of the current previous year upto the date of search. The undisclosed income is taxed at a flat rate of
60 per cent.
xxx xxx xxx xxx
(b) Assessment procedure
(i) The authority competent to made the block assessment has been laid down in Section 158BG of the Income Tax Act. As per this section, the
order of assessment for the block period shall be passed by an Assessing Officer not below the rank of an Assistant Commissioner.
(ii) The time limit for completion of block assessment is prescribed in Section 158BE of the Income Tax Act. As per this section, the order u/s
158BC shall be passed within one year from the end of the month in which the last of the authorisations for search u/s 132 or for requisition u/s
132A, as the case may be, was executed.
(iii) In order to facilitate the assessment process, and to ensure that the investigation is carried to its logical conclusion in a focused manner Section
2(7A) of the Act has been amended to include the Assistant Director of Income Tax within the meaning of ''Assessing Officer'', enabling him to
discharge the assessment functions also. As a corollary to this, Section 158BG has also been amended to provide that the block assessment order
shall be passed after obtaining the approval of the Director of Income Tax in cases where the ADIT (Inv.) acts as the Assessing Officer.
(iv) The amendments will take effect from 1st October, 1996.
(c) Definition of ''block period''
(i) u/s 158B(a), the block period has been defined to include ten previous years preceding the previous year in which the search was conducted u/s
132. Before the adoption of the uniform previous year, assessees were allowed to have any accounting period as the previous year u/s 3 of the
Income Tax Act. Consequently, the block period would be different in different cases depending upon the previous years adopted by the
assessees before 1-4-1989.
(ii) In view of this, the Act amends the definition of block period as consisting of previous years relevant to ten assessment years. This will make
the block period uniform in case of all assessees.
(iii) The amendment will take effect retrospectively from 1st July, 1995.
12.2. Again by the Finance (No. 2) Act, 1998 certain further amendments were made in Chapter XIV-B of the Act and the same have been
explained by CBDT vide Circular No. 772 dated 23.12.1998. The relevant extract reads as under:
53. Clarificatory amendments in procedure for block assessment.-53.1 To set at rest the controversy as to whether block assessment subsumes
the regular assessments or is independent of the latter, the Act has inserted an Explanation after Sub-section (2) of Section 158BA of the Income
Tax Act clarifying that assessments completed under Chapter XIV-B shall be in addition to regular assessments in respect of each previous year
included in the block period. Further, undisclosed income relating to the block period shall not include the income assessed in regular assessment.
Similarly income in regular assessment shall not include the income of the block period assessed in block assessment.
53.2. To settle the controversy regarding meaning of the word ''execution'' while calculating the period of limitation in Section 158BE of the
Income Tax Act, the Act has inserted a new clarificatory Explanation. An authorisation is deemed to have been executed in the case of search on
the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been
issued. In regard to requisition u/s 132A of the Income Tax Act, the authorisation would be deemed to have been executed on actual receipt of
books of account or other documents or assets by the authorised officer.
53.3. The above amendments will take effect retrospectively from 1st July, 1995 and will, accordingly, apply in relation to the assessment year
1996-97 and subsequent years.
12.3. The Finance Act, 2001 carried out certain amendments in Chapter XIV-B of the Act. But the said amendments were made effective from
01.06.2001. The relevant extract of CBDT Circular No. 14/2001-04 dated 12.12.2001 reads as under:
69. Rationalising the block period-69.1 Under the existing provisions contained in Clause (a) of Section 158B of the Income Tax Act relating to
assessment in cases of search or requisition, ''block period'' means the previous years relevant to ten assessment years preceding the previous year
in which the search was conducted u/s 132 or any requisition was made u/s 132A, and includes, in the year in which the search was conducted or
requisition was made, the period up to the date of commencement of such search or as the case may be, the date of such requisition.
69.2. In line with the amendment proposed in Section 149, to reduce the maximum time period for issue of Notice u/s 148 for initiating
reassessment proceedings., etc., from ten years to six years, the Act has amended the definition of ''block period'' to mean the period comprising
the previous years relevant to six assessment years preceding the previous year in which the search was conducted or any requisition was made
and including 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.
69.3. The amendment takes effect from 1st June, 2001, and will apply in relation to searches initiated or requisitions made on or after that date.
12.4. The last amendment came to be made by the Finance Act, 2002 which has been explained in Circular No. 8/2002 dated 27.08.2002. The
relevant extract of the said Circular reads as under:
61. Rationalisation of the provisions of Chapter XIV-B relating to block assessments in caes of search and requisiton. - 61.1 The existing
provisions contained in Chapter XIV-B of the Income Tax Act provide for a single assessment of undisclosed income of a block period of six
years, in case of search u/s 132 or requisition u/s 132A and lay down the manner in which such income is to be computed, and the interest or
penalty which may be levied in certain circumstances.
xxx xxx xxx
61.3.1. Some appellate authorities have held that income which can be included in the block assessment is only such income which is directly
evidenced by material found during the search and does not include income which has been discovered on the basis of post-search inquiries made
during the block assessment proceedings. This is contrary to the intention that any undisclosed income discovered as a result of search is to be
included in the block assessment as long as such income has been detected as a result of evidence gathered during the search.
61.3.2. The Finance Act, 2002, has amended Section 158BB to clarify that the block assessment of undisclosed income is to be based on the
evidence found in the search and material or information gathered in post-search inquiries made on the basis of evidence found in the search.
xxx xxx xxx xxx
61.9. These amendments take effect retrospectively from 1st day of July, 1995 and accordingly apply to block assessments in cases of search u/s
132 or requisition u/s 132A made on or after 1st day of July, 1995.[Sections 64, 65 and 66]
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 salient features of the block assessment scheme
for determining undisclosed income can be stated thus:
[a] A single Notice is required to be issued u/s 158BC of the Act for the entire block period of 10/6 years going backward from the year of
search, plus the broken period of the year of search ending on the date of search. This saves the Assessing Officer from being required to obtain
prior approval of the higher authorities for initiation of assessment/reassessment proceedings for past years falling within the block period.
[b] Under the first Proviso below Clause (a) of Section 158BC of the Act it is provided that no Notice u/s 148 of the Act is required to be issued
for the purpose of proceeding under Chapter XIV-B of the Act.
[c] The order of assessment would be a consolidated order for the entire block period obviating need for multiple assessments for each of the
assessment years included in the block period.
[d] The definition of block period indicates that what is material is, to constitute the block period, the specified 10/6 years i.e. preceding the
previous year in which search was conducted and includes remainder period up to the date of search. In other words the term block period does
not have any nexus with any particular assessment year.
(e) The assessment for the block period has to be framed within one year/two years from the end of the month in which the last of the
authorisations for search u/s 132 of the Act was executed. The authorisation is deemed to have been executed on the conclusion of search as
recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued.
[f] For completing block assessment in the case of other person referred to in Section 158BD of the Act the period of limitation will be similarly
one year/two years from the end of the month in which the Notice under Chapter XIV-B of the Act was served on such other person.
14. Chapter XIV of the Act, in juxtaposition, provides for Procedure For Assessment. The salient features, as are necessary for the present, may
be stated.
[a] Section 147 of the Act deals with Income escaping assessment. 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. u/s 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 omission to either file return u/s 139 of
the Act, or in response to Notice u/s 142(1) or Section 148 of the Act, or to disclose fully and truly all material facts necessary for the assessment
of that assessment year.
[b] u/s 148 of the Act, the Assessing Officer is required to serve on the assessee a Notice requiring the assessee to furnish within the prescribed
period a return of income, but even before issuing such Notice u/s 148 of the Act, the Assessing Officer is mandated under Sub-section (2) of
Section 148 of the Act to record reasons. The return of income which an Assessing Officer may call for from an assessee is in relation to income
which has escaped assessment, for which an assessee is assessable under the Act during the previous year corresponding to the relevant
assessment year.
[c] Section 149(1) of the Act prescribes time limit for issuance of Notice u/s 148 of the Act, again for the relevant assessment year; in either of the
Clauses (a) or (b) the period that is prescribed is from the end of the relevant assessment year. Similarly under Sub-section (3) if the reassessment
is proposed in case of a person treated as an Agent of a non-resident, notice u/s 148 of the Act cannot be issued after the expiry of prescribed
period from the end of the relevant assessment year.
[d] Similarly Section 151 of the Act provides for sanction for issue of Notice and there also the concept of relevant assessment year and the
limitation from the end of the relevant assessment year has been laid down.
[e] Section 153 of the Act which provides for time limit for completion of assessments and reassessments, provides under Sub-section (2), the
limitation period of one year from the end of the financial year in which the notice u/s 148 was served for making assessment/reassessment u/s 147
of the Act.
15. In the aforesaid circumstances, when one considers the entire scheme relating to procedure for assessment/reassessment as laid down in the
group of sections from Section 147 to Section 153 of the Act and compares the same with special procedure for assessment of search cases
under Chapter XIV-B of the Act it becomes apparent that the normal procedure laid down in Chapter XIV of the Act has been given a go bye
when Chapter XIV-B of the Act itself lays down that the said Chapter provides for a special procedure for assessment of search cases. The stand
of revenue that Section 158BH of the Act permits all other previsions of the Act to apply to assessment made under Chapter XIV-B of the Act
does not merit acceptance.
16. Section 158BH of the Act begins with the words ''Save as otherwise provided in this Chapter....'' Therefore, before going to any other
provision of the Act one has to consider whether any provision has been made in Chapter XIV-B which is dealing with the assessment of
undisclosed income so as to warrant exclusion of other provisions of the Act. Not only this, the Chapter heading indicates that the Chapter is
relatable to a distinct self contained procedure for assessment of search cases, and when one considers the relevant provisions of the Chapter this
becomes abundantly clear.
17. As great emphasis has been laid on Section 158BH of the Act, one may consider the same. The said provision reads as under:
Application of other provisions of this Act.
158BH. Save as otherwise provided in this Chapter, all other provisions of this Act shall apply to assessment made under this chapter.
On a plain reading it becomes apparent that once a provision has been made for assessment under Chapter XIV-B of the Act no other provision
of the Act shall be applicable, but if there is no provision made in Chapter XIV-B of the Act all other provisions of the Act shall apply to
assessment made under Chapter XIV-B of the Act. The section does not stipulate application of other provisions of the Act to an assessment to
be made under Chapter XIV-B of the Act, but requires applicability of other provisions of the Act to an assessment already made under Chapter
XIV-B of the Act. The said provision, by adopting the principle of incorporation, provides for applicability of other provisions of the Act to an
assessment which is already made to ensure that the machinery provisions, like provisions for recovery etc., have not to be engrafted in Chapter
XIV-B of the Act.
18. u/s 158B of the Act ''Block period'' and ''Undisclosed income'' have been defined. Section 158BA of the Act opens with nonobstante Clause
and provides that in a case of search initiated after 30.06.1995 the Assessing Officer shall proceed to assess the undisclosed income in accordance
with provisions of Chapter XIV-B of the Act, notwithstanding anything contained in any other provisions of the Act. Therefore, provisions of
Section 158BA(1) of the Act have to be read in conjunction with Section 158BH of the Act. The legislature has provided a special procedure for
assessment of search cases and assessment has to be framed in accordance with the provisions of Chapter XIV-B of the Act. On a harmonious
reading of both Sections 158BA and Section 158BH of the Act it becomes clear that only where a provision is not made in Chapter XIV-B of the
Act providing for a special procedure for assessment will other provisions of the Act be made applicable.
19. Section 158BB of the Act provides for modality of computation of undisclosed income of the block period. Such undisclosed income of the
block period has to be the aggregate of the total income of the previous years falling within the block period. If the different aggregates which are
provided for in Clauses ''(a)'' to ''(f)'' are seen, it becomes clear that the computation of undisclosed income is first made in accordance with the
provisions of the Act, thereafter reduction or increase as is provided in different clauses has to be made, and the Explanation indicates the
exceptions. Clause (f) under Sub-section (1) of Section 158BB of the Act provides for reducing the aggregate total income computed for the
block period by the aggregate of the total income, in case where assessment for undisclosed income had been made earlier under Clause (c) of
Section 158BC, on the basis of such assessment. In other words, it only means that where previous assessment has been framed under Chapter
XIV-B of the Act the aggregate of such total income assessed for the block period in case of a search where block period is a different block
period from the earlier block period, while assessing for a subsequent block period, such earlier aggregate has to be deducted. When this
provision is read in context of Section 158BC, more particularly the first Proviso thereunder, it becomes clear that the legislature does not intend to
reopen a block assessment. Any such interpretation would run counter to the legislative intent as noted hereinbefore from the contemporaneous
exposition through the Memorandum Explaining the Finance Bill as well as various Circulars issued by CBDT explaining different amendments.
20. Section 158BC of the Act itself indicates that where legislature wanted to incorporate other provisions of the Act a specific mention has been
made, when a 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 u/s 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 158BE of the Act gives an
indication as to what would be the date on which an authorisation shall be deemed to have been executed. Under Clauses (a) and (b) of
Explanation 2 different points of time have been specified. But in no case, can one envisage the applicability of period of limitation prescribed u/s
153 of the Act for completion of assessments and reassessments. The Revenue cannot contend that for the purpose of reassessing the so called
escaped undisclosed income revenue will resort to the limitation u/s 153 of the Act, because undisclosed income has to be assessed in the manner
provided and by adopting the procedure provided in Chapter XIV-B of the Act. Nor is it possible to resort to limitation u/s 158BE of the Act
because the said period of limitation has already expired. At the cost of repetition in this context one has to refer to the language employed in
Section 158BA of the Act where there is a positive mandate to the Assessing Officer to assess the undisclosed income in accordance with the
provisions of Chapter XIV-B of the Act, notwithstanding anything contained in any other provisions of the Act. As against that Section 158BH
states that except as otherwise provided in Chapter XIV-B of the Act, all other provisions of the Act shall apply to assessment made under
Chapter. Therefore, once period of limitation has been prescribed u/s 158BE of the Act the time limit for completion of assessment of undisclosed
income has to be as provided under the said section. If the contention of revenue is accepted Section 158BE becomes unworkable. The limitation
prescribed from the date of last of the authorizations, or in case of requisition u/s 132A of the Act, has already expired. This is one more inherent
pointer which flows on a conjoint reading of the provisions of Chapter XIV-B of the Act to indicate that legislature does not intend to reopen
assessments completed under Chapter XIV-B of the Act assessing the undisclosed income by adopting the special procedure provided in the said
Chapter.
22. There is one more aspect of the matter. Entire Chapter XIV-B of the Act relates to assessment of search cases, viz., undisclosed income found
as a result of search. 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 income'' itself indicates that not only what has been seized or recovered, but even income or
property which has not been or would not have been disclosed for the purpose of the Act has been roped in. Furthermore, Section 158BB of the
Act also provides for not only for requisition of Books of Accounts or other documents, but on the basis of evidence found as a result of search
and such other materials or information as are available with the Assessing Officer, undisclosed income of the block period shall be computed.
Therefore, even if, assuming for the sake of argument, some income has not been disclosed in the return furnished u/s 158BC of the Act, the
Assessing Officer is bound to assess all undisclosed income after processing the entire material available with Assessing Officer. The Assessing
Officer cannot be heard to state that undisclosed income has escaped assessment because the officer failed to apply his mind to the material
available on record, there being no lack of disclosure.
23. The last of the amendments made by Finance Act, 2002 as explained in CBDT Circular No. 8/02 dated 27.08.2002 further goes to support
the stand of the petitioners. The legislature has provided that the block assessment of undisclosed income is to be based not only on the evidence
found at the time of search, but also on the basis of material and information gathered during the inquiries made after the search proceedings.
However, on the basis of evidence found during the search proceedings certain further inquiries are 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. Thus, there would be no scope for any income escaping or remaining undisclosed when the special
procedure laid down by Chapter XIV-B of the Act is resorted to. The contention, on behalf of the Revenue, that there might be income which
might have yet escaped assessment from the block assessment cannot be accepted because the scheme itself provides for bringing to tax all
undisclosed income, whether recovered during the course of search proceedings or recovered in the course of post search inquiries made on the
basis of material collected during search. Hence, the legislative intent is clear. Once a block assessment is framed the same is final unless and until
disturbed in an appropriate proceeding taken before the higher forum.
24. The provisions of Chapter XIV-B of the Act, more particularly Section 158BG of the Act provides for a situation where no order of
assessment for the block period shall be passed without the previous approval of either the Commissioner or Director (as the case may be) in
respect of search cases. In other words, not only the Assessing Officer cannot be an officer below the rank of an Assistant Commissioner etc., but
the order of assessment framed is scrutinised 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. It would not be open to Revenue to contend that despite
material being available on record the same escaped scrutiny at the hands of two officers, one of them being a superior officer in the hierarchy.
25. As already noted hereinbefore, the entire scheme for bringing to tax income which has escaped assessment under Sections 147 to 153 of the
Act specifically relates to a specific assessment year and different time limits are provided at different stages which are all inter-linked and
commence from the end of the relevant assessment year. The definition of ''assessment year'' as provided in Section 2(g) of the Act means the
period of 12 months commencing on the first day of April every year. This definition cannot by any stretch of imagination be made applicable to the
term ''block period'' which has been defined by Section 158B(a) of the Act. On a plain reading the concept of block period cannot take within its
fold the meaning of an assessment year. Similarly the term ''assessment year'' by its very definition, cannot be read to mean ''block period''.
26. In 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 Revenue that the term ''assessment year'', wheresoever 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 of 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.
27. It is well settled that a Court is not empowered to either add words to a statute or substitute words while interpreting a provision. The Court
can only read and interpret the language employed by the statute. Only in the event of a provision not conveying the intended meaning, in other
words, a plain reading resulting in absurd situation, can the Court import words to make sense out of the provision. However, at the same time,
even a purposive interpretation does not permit the Court to substitute the statutory language unless and until the provision as it stands would not
result in the provision being workable. 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 more appropriate.
28. In the present case none of the exceptional contingencies exist. As already noticed, on a plain reading it becomes discernible that there are two
separate streams of procedure provided by the legislature : (1) under Chapter XIV of the Act which provides for ''Procedure for Assessment'',
and (2) under Chapter XIV-B of the Act which provides for ''A Special Procedure for Assessment of Search Cases''. Only in the event the special
procedure for assessment has not provided for some procedure for assessment can one refer to the procedure under Chapter XIV of the Act.
Therefore, the interpretation sought to be placed by Revenue on the provisions of the Act so as to read in the term ''block period'' for the purpose
of invoking and applying Sections 147 to 153 of the Act cannot be countenanced. Neither does a plain reading of the provisions permit such an
exercise, nor is there any lacuna in the provisions which is required to be filled up.
29. In Chapter XIV-B of the Act the only place where one finds the use of the term ''assessment year'' is in the definition of the term ''block
period''. This itself indicates that if the ''block period'' was equivalent to ''assessment year'' the definition of block period would not have provided
that ''block period'' means period comprising previous years relevant to 10/6 assessment years. To put it differently, reference to the number of
assessment years is only a means, a measure to indicate and specify the period of previous years which would comprise block period. Revenue,
therefore, cannot contend successfully that wherever the term ''assessment year'' is used in the group of Sections from Section 147 to 153 of the
Act the said term has to be replaced by the term ''block period''. Furthermore, the amendment which is retrospectively made in the definition of the
block period by The Finance (No. 2) Act, 1996, itself indicates that originally the term block period meant as 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, but, before adoption
of uniform previous year, in case of different assesses, ''block period'' would be different depending on the accounting period adopted in terms of
Section 3 of the Act. To obviate this situation the definition of block period was amended. This becomes clear from Circular No. 762 dated
18.02.1998 issued by CBDT extracted hereinbefore.
30. The Apex Court decision on which great emphasis has been placed on behalf of Revenue in fact goes to support the view adopted in the
present case. The controversy before the Apex Court was in relation to the rate of tax which was to be applied to the undisclosed income
assessed in terms of Chapter XIV-B of the Act. The Apex Court itself has observed, as can be seen from the portion wherein emphasis is supplied
by this Court, that the Supreme Court was concerned mainly with computation of undisclosed income u/s 158BB(1) of the Act. This Court has
already noticed that Section 158BH of the Act provides for invoking other machinery provisions to an assessment made under Chapter XIV-B of
the Act and does not require other provisions of the Act to be applied to a block assessment to be made under Chapter XIV-B of the Act.
31. The Apex Court decision also provides for a harmonious construction on the basis of reading of the mode of computation provided in Chapter
IV of the Act and provided under Chapter XIV-B of the Act by stating that Section 158BH interalia provides that other provisions of the Act shall
apply if there is no conflict between the provisions of Chapter XIV-B of the Act and other provisions of the Act. This becomes clear from the
extracted portion wherein emphasis has been supplied. To put it differently, in a situation where there is a conflict between the provisions of block
assessment procedure prescribed under Chapter XIV-B of the Act and other provisions of the Act, it will be the special procedure prescribed
under Chapter XIV-B of the Act which has to prevail.
32. 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-B of the Act
are not only separate and distinct from each other, but if an effort is made to incorporate the scheme under Chapter XIV of the Act for the
purpose of assessment of the block period there is a conflict between the provisions which becomes apparent on a plain reading. In the
circumstances, as per established rules of interpretation, unless and until a plain reading of the two streams of assessment procedure does not result
in the procedures being independently workable, only then the question of resolving the conflict would arise. But to the contrary, in the present
case, in light of provisions of Section 158BH of the Act, once 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.
33. Thus viewed from any angle, the stand of Revenue does not merit acceptance. Once assessment has been framed u/s 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 u/s 148 of the
Act for reopening such assessment as the said concept is abhorrent to the special scheme of assessment of undisclosed income for block period.
At the cost of repetition it is required to be stated and emphasised that the first Proviso u/s 158BC(a) of the Act specifically provides that no notice
u/s 148 of the Act is required to be issued for the purpose of proceeding under Chapter XIV-B of the Act.
34. In the circumstances, impugned notice dated 16.04.1999 u/s 148 of the Act cannot be upheld and is hereby quashed and set aside. In the view
that the Court has adopted it has not been found necessary to go into the facts of the case and examine whether the reasons recorded by the
respondent authority are germane or not as the matter has been decided only on the point of absence of jurisdiction in a case of block assessment.
Special Civil Application No. 4380 of 1999.
35. This petition challenges notice dated 22.04.1999 issued u/s 148 of the Act for the block period 1985-86 to 22.09.1995. It is an accepted
position between the parties that the contentions of both the sides are identical to those raised in Special Civil Application No. 6215 of 1999 in the
case of Kapurchand Kakaram Bansal v. Dy. (now Joint) Commissioner of Income Tax.
35.1. Hence, for the reasons recorded in judgment of even date in Special Civil Application No. 6215 of 1999 impugned notice dated 22.04.1999
is hereby quashed and set aside.
Special Civil Application No. 4387 of 1999.
36. This petition challenges notice dated 22.04.1999 issued u/s 148 of the Act for the block period 1985-86 to 22.09.1995. It is an accepted
position between the parties that the contentions of both the sides are identical to those raised in Special Civil Application No. 6215 of 1999 in the
case of Kapurchand Kakaram Bansal v. Dy. (now Joint) Commissioner of Income Tax.
36.1. Hence, for the reasons recorded in judgment of even date in Special Civil Application No. 6215 of 1999 impugned notice dated 22.04.1999
is hereby quashed and set aside.
Special Civil Application No. 919 of 2000.
37. This petition challenges notice dated 22.02.1999 issued u/s 148 of the Act for the block period 1985-86 to 16.11.1995. It is an accepted
position between the parties that the contentions of both the sides are identical to those raised in Special Civil Application No. 6215 of 1999 in the
case of Kapurchand Kakaram Bansal v. Dy. (now Joint) Commissioner of Income Tax.
37.1. Hence, for the reasons recorded in judgment of even date in Special Civil Application No. 6215 of 1999 impugned notice dated 22.04.1999
is hereby quashed and set aside.
38. In light of what is stated hereinbefore each of the petitions is allowed accordingly. Rule made absolute in each of the petitions in the aforesaid
terms with no order as to costs.
