1999 (8) TMI 45 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction and authority of the Assessing Officer to issue notices under section 158BC/BD.
2. Assessment of undisclosed income.
3. Parallel proceedings before the Settlement Commission and the Assessing Officer.
4. Validity of notice issued under section 158BC/BD.
5. Exclusive jurisdiction of the Settlement Commission over pending cases.

Issue-Wise Detailed Analysis:

1. Jurisdiction and Authority of the Assessing Officer to Issue Notices under Section 158BC/BD:
The petitioner challenged the notice dated December 24, 1997, issued under section 158BC/BD of the Income-tax Act, 1961. The petitioner argued that the Assessing Officer had no right, power, or jurisdiction to issue the notices when the matter was pending before the Settlement Commission. The court noted that the Assessing Officer must first determine whether there is "undisclosed income" before issuing notices under section 158BC/BD.

2. Assessment of Undisclosed Income:
The petitioner contended that the Assessing Officer lacked material evidence to conclude that the petitioner had any undisclosed income. The court emphasized that under Chapter XIV-B, the assessment of "undisclosed income" requires clear evidence. The definition of "undisclosed income" under section 158B includes any money, bullion, jewelry, or income not disclosed for tax purposes. The court found that the Assessing Officer had not pointed out any specific undisclosed income of the petitioner.

3. Parallel Proceedings Before the Settlement Commission and the Assessing Officer:
The court highlighted that the petitioner had approached the Settlement Commission for the assessment years 1995-96, 1996-97, and 1997-98. The Settlement Commission had admitted the application, and the matter was pending. The court questioned how the Assessing Officer could proceed with the assessment when the income for these years was already under consideration by the Settlement Commission. The court noted that the Settlement Commission has exclusive jurisdiction over cases admitted to it, and no other authority can assess the same income concurrently.

4. Validity of Notice Issued under Section 158BC/BD:
The court examined the validity of the notice issued to the petitioner under section 158BC/BD. It found that the notice was issued based on papers seized during a search at Super Forgings and Steels Ltd., not the petitioner. The court noted that the Settlement Commission was already handling the case of Super Forgings and Steels Ltd., and the Assessing Officer was not proceeding with the assessment of that company. Therefore, issuing a notice to the petitioner for the same income was unjustified.

5. Exclusive Jurisdiction of the Settlement Commission Over Pending Cases:
The court reiterated that the Settlement Commission has all the powers of an income-tax authority regarding cases admitted to it. It has exclusive jurisdiction to assess the income in such cases. The court emphasized that allowing the Assessing Officer to proceed with the assessment while the matter was pending before the Settlement Commission would lead to absurdity and potential conflicts in income assessment.

Conclusion:
The court concluded that the Assessing Officer had no material to justify the issuance of the notice under section 158BC/BD. The search was conducted at Super Forgings and Steels Ltd., and the matter was pending before the Settlement Commission. The court quashed the notice dated December 24, 1997, issued under section 158BC/BD, and allowed the petition.