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Issues involved: Challenge to the constitutional validity of section 158BB(1)(c) of the Income-tax Act, 1961.
Summary: The petitioner challenged the constitutional validity of section 158BB(1)(c) of the Income-tax Act, 1961, which is part of Chapter XIV-B governing the special procedure for assessment of search cases. The provision defines a block period, undisclosed income, and outlines the special procedure to be followed, including the computation of undisclosed income based on evidence found during search or requisition. The petitioner argued that the provision deprived honest assesses of deductions and rights under other sections, particularly in cases where returns were filed after the due date but within the extended period allowed by section 139(4). The court held that Parliament has the authority to classify taxpayers and treat them differently based on their compliance with tax laws. Chapter XIV-B was inserted in the Income-tax Act to address cases where taxpayers fail to disclose their full taxable income. The court found the assumption that taxpayers coming forward with information after a search do so due to the detection already made during the search to be reasonable. The special procedure under Chapter XIV-B applies to all such cases, overriding other provisions of the Act. The court emphasized that there is no fundamental right for an assessee to breach the law, and Chapter XIV-B provides similar treatment to all individuals falling under its purview. The court rejected the petitioner's argument regarding the intent to disclose income based on advance tax payments, stating that disclosure is only valid through filing a return. The provision in question, section 158BB(1)(c), was deemed constitutional, and the writ petition was dismissed. Judge's Separate Judgment: None.
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