1998 (3) TMI 102 - HC - Income Tax

Summary

Issues Involved:
1. Validity of notices issued u/s 143(2) of the Income-tax Act, 1961.
2. Jurisdiction of the Assessing Officer to proceed with regular assessment for the assessment year 1995-96.
3. Interaction between block assessment under Chapter XIV-B and regular assessment under section 143(3).

Summary:

Issue 1: Validity of Notices Issued u/s 143(2)
The petitioner-assessees challenged the notices issued u/s 143(2) by the Deputy Commissioner of Income-tax, Special Range II, Surat, requiring them to attend his office in connection with the returns of income for the assessment year 1995-96. The court found that the Assessing Officer is within his jurisdiction to issue these notices for regular assessment as per section 143(3) and make a regular assessment of the total income/loss of the previous year in question. The court held that there is no requirement for the Assessing Officer to provide reasons for issuing the notices u/s 143(2).

Issue 2: Jurisdiction of the Assessing Officer
The petitioners argued that the Assessing Officer had no jurisdiction to proceed with the regular assessment for the assessment year 1995-96 as the total income for this year was already computed in the block assessment under Chapter XIV-B. The court rejected this argument, stating that the block assessment of undisclosed income and the regular assessment of total income operate in different fields. The court emphasized that the block assessment does not affect the regular assessments or the orders of appellate or revisional authorities. The court concluded that the Assessing Officer has the jurisdiction to proceed with the regular assessment for the assessment year 1995-96.

Issue 3: Interaction between Block Assessment and Regular Assessment
The court explained that Chapter XIV-B lays down a special procedure for the assessment of undisclosed income detected as a result of search and does not affect the regular assessments. The court noted that the block assessment targets undisclosed income that was not disclosed and would not be disclosed, while the regular assessment assesses the total income or loss of the previous year. The court clarified that there is no overlapping between the block assessment and regular assessment, and both can operate together. The court also addressed the petitioners' concern about double taxation, stating that the assessed undisclosed income is taxed at a higher rate and there is no question of paying tax again in a regular assessment.

Conclusion:
The court found no merit in the petitions and rejected them, stating that the Assessing Officer is within his jurisdiction to proceed with the regular assessment for the assessment year 1995-96. The court also rejected the petitioners' request for a certificate of fitness for appeal to the Supreme Court, stating that there is no substantial question of law of general importance involved.