1997 (5) TMI 44 - HC - Income Tax

Assessment Proceedings Association Of Persons Original Assessment Reassessment Proceedings

Summary

Issues Involved:
1. Whether the Income-tax Officer can issue notice u/s 143(2) of the Income-tax Act, 1961, for an assessment year covered by the "block period" u/s 158B, where assessment has already been framed u/s 158BC.

Summary:
Issue 1: Jurisdiction of Income-tax Officer to Issue Notice u/s 143(2) Post Block Assessment
Facts: The petitioner, a commission agent, had their original assessment for 1988-89 completed on February 28, 1989. Subsequent notices and assessments led to a search and seizure operation on December 5, 1995. The petitioner filed a return for the block period April 1, 1985, to December 5, 1995, declaring nil undisclosed income. The assessing authority computed the total income for the block period, including undisclosed income, and issued notices u/s 143(2) for the assessment years 1988-89 and 1989-90.

Petitioner's Argument: The petitioner contended that after the completion of the block assessment u/s 158BC, the assessing authority had no jurisdiction to issue notice u/s 143(2) for the same years.

Respondent's Argument: The respondent argued that the notices were valid as concealment of income was detected before the search, and the provisions applicable to block assessments and regular assessments are different.

Court's Analysis: The court examined the purpose and provisions of Chapter XIV-B, introduced by the Finance Bill of 1995, which aimed to make the assessment of search cases more effective. The court highlighted that the total undisclosed income for a block period is to be assessed separately and taxed at a flat rate. The court emphasized that once an assessment is framed for a block period, no other assessment under any other provisions can be framed for the same period.

Conclusion: The court concluded that the income for the years 1988-89 and 1989-90 had already been determined under the block assessment, and no further assessment could be made u/s 143(2). The notices issued were without jurisdiction and unsustainable in law.

Judgment: The petition was accepted, and the impugned notices (annexures P-4, P-5, and P-8) were quashed. No costs were awarded.