Back
IN THE HIGH COURT AT CALCUTTA
Yad Ram Meena and Mr. Justice Ranjan Kumar Muzumdar
Deputy Commissioner of Income Tax & Ors. - Appellants
Versus
Shaw Wallace & Co. Limited - Respondent
G.A. No. 3766 of 1999, A.P.O.T. No. 682 of 1999 & W. P. No. 443 of 1999
Decided on : November 17, 2000
INCOME TAX - Assessment of undisclosed income - Regular assessment - Whether Assessing Officer can issue notice under Section 143(2) and Section 142 of the Income Tax Act, 1961, while the block assessment is pending, for assessing the income, for a 'block period' under Chapter XIV-B of the Act.
Fact of the Case:
Revenue/appellant challenged the impugned order and judgment dated February 23, 1999, wherein the learned Single Judge held the notices under Sections 142 and 143(2) of the Income Tax Act, 1961 (hereinafter called the Act 1961) bad in law and set aside the assessment of the assessment year 1995-96. The assessee company's office premises were searched under Section 132 of the Act 1961, and various documents and records were seized. The Assessing Officer passed the order of block assessment for the assessment year 1986-87 to August 27, 1996, which included part of the assessment year 1995-96 for which the return was filed before the date of search was pending before the Assessing Officer. The Assessing Officer, after completing the block assessment, issued notices under Sections 142(1) and 143(2) for assessment year 1995-96 to complete the regular assessment.
Finding of the Court:
The Court held that the Assessing Officer can issue a notice under Section 143(2) and under Section 142 of the Act 1961, while the block assessment is pending, for assessing the income, for a 'block period' under Chapter XIV-B of the Act. The Court found that Chapter XIV-B of the Act 1961 deals with the assessment of undisclosed income as a result of search, and the undisclosed income for a block period is assessable under the provisions of Chapter XIV-B of the Act 1961. The Court further found that the assessment made under Chapter XIV-B is in addition to the regular assessment in respect of each previous year included in the block period, and the total undisclosed income relating to the block period shall not include the income assessed in any regular assessment, as income of such block period.
Issues: 1. Whether the Assessing Officer can issue a notice under Section 143(2) and under Section 142 of the Act 1961, while the block assessment is pending, for assessing the income, for a 'block period' under Chapter XIV-B of the Act? 2. Whether the assessment made under Chapter XIV-B is in addition to the regular assessment?
Ratio Decidendi: 1. The Court held that the Assessing Officer can issue a notice under Section 143(2) and under Section 142 of the Act 1961, while the block assessment is pending, for assessing the income, for a 'block period' under Chapter XIV-B of the Act, because: a) Chapter XIV-B of the Act 1961 deals with the assessment of undisclosed income as a result of search, and the undisclosed income for a block period is assessable under the provisions of Chapter XIV-B of the Act 1961. b) The assessment made under Chapter XIV-B is in addition to the regular assessment in respect of each previous year included in the block period, and the total undisclosed income relating to the block period shall not include the income assessed in any regular assessment, as income of such block period. 2. The Court held that the assessment made under Chapter XIV-B is in addition to the regular assessment, because: a) The explanation inserted in Section 158BA of the Act 1961 clarifies that the assessment made under Chapter XIV-B shall be in addition to the regular assessment in respect of each previous year included in the block period.
Final Decision: The Court allowed the appeal and set aside the judgment of the learned Single Judge holding that there can be a regular assessment under Section 143(3) for the year for which returns filed under Section 139 or Section 147 but assessment have not been made till the date of search or requisition. The Court also held that the assessment order made for the assessment year 1995-96 in pursuance of the return filed under Section 139 stands and the appeal arising out of that and pending before the Commissioner of Income Tax, shall also stand restore.
Meena, J.:
1. This appeal is directed against the impugned order and judgment dated February 23, 1999. Revenue/appellant has raised the grievance that learned Single Judge has wrongly held, the notices under Section 142 and Section 143(2) of the Income Tax Act, 1961 (hereinafter called the Act 1961) bad in law and set aside the assessment of the assessment year 1995-96 and further directed that regular assessment for the assessment year 1995-96 shall be completed within 6 months of finalisation of the block assessment on the basis of the return filed by the assessee for that assessment year and while making adjustment in the block income assessed for assessment year 1995-96, the Assessing Officer should accept the return for the assessment year 1995-96, except to correct some arithmetical mistakes or clarical mistake as allowed under Section 143(1) of the Act 1961. On August 27, 1996 search was conducted at the office premises of the assessee company under Section 132 of the Act 1961, in the course of which various documents and records were seized. On November 28, 1997 Assessing Officer passed the order of block assessment for the assessment year 1986-87 to August 27, 1996. That said block assessment includes part of the assessment year 1995-96 for which the return was filed before the date of search was pending before the Assessing Officer.
2. The Assessing Officer after completing the block assessment issued the notice under Sections 142(1) and 143(2) for assessment year 1995-96 to complete the regular assessment. Those notices challenged by way of writ petition No. 443 of 1999. Learned Single Judge has allowed the petition directing not to proceed with the notices under Sections 142(1) and 143(2).
3. While considering the various arguments the learned Single Judge has observed in his judgment that once the two total incomes under Section 158BB are computed, no further scope remains for Assessing Officer to make any further computation for the purpose of making the regular assessment. That regular assessment for the assessment year pending and falling within the block periods must be on the basis of the return filed under Section 139 and no other basis save and except adjustment of arithmetical errors or matters beyond doubt and dispute, That the computation of the second total income under Section 158BB binds the Assessing officer for making assessment of tax in regular assessment under Section 143(3) and the Assessing Officer had no jurisdiction to arrive at one computation of the second total income under Section 158BB, at least in so far as Section 158BB(1) (c) and to arrive at a different computation of total income for the purpose of Section 143(3). That is not possible to permit the Assessing Officer to have free playas regards completion of filed returns in regard to the assessment years included in the block period. That block assessment must be precede regular assessment and only after completion of the block assessment to make the regular assessment under Section 143(3) on the basis of the return filed. Prior to making block assessment regular assessment is ruled out.
4. That Assessing Officer might convert the pending return in any other manner than on the basis of the return under Section 158BB. Assessing Officer might convert the pending return into the assessed return, there by causing no prejudice either to the revenue or to the assessee. Assessing Officer, to save limitation even before the block assessment can make the regular assessment for unassessed return in exceptional case, but on the basis of return itself without entering into scrutiny. That notices under Section 142 and Section 143(2) were bad in law, since these notices should not have been issued in regard to the regular assessment. That block assessment would have to be completed first and, thereafter, regular assessment to be made within six months of finalisation of the block assessment on the basis of making practically an ex parte ass
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
