2006 (4) TMI 79 - HC - Income Tax

Notices issued u/s 158BC and u/s 142 (2A) - By issuing notice u/s 158BC, the Assessing Officer has merely requested the petitioner to prepare a true and correct return of his total income including the undisclosed income assessable for the block period. notice issued under section 158BC cannot be treated as the notice issued for commencement of assessment proceedings. - The assessment proceeding cannot be independent of the search and seizure proceedings under Chapter XIV-B of the Act, which Chapter specifically deals with special procedure relating to assessment in search cases. In view of the same, it cannot be said that no proceedings are pending on the date of passing of order under section, 142 (2A) of the Act. Hence, I do not find any illegality in the impugned notice issued under section 142(2A)

Summary

Issues:
1. Validity of notice under section 158BC of the Income-tax Act, 1961.
2. Legality of notice under section 142(2A) of the Income-tax Act, 1961.

Issue 1: Validity of notice under section 158BC of the Income-tax Act, 1961:
The High Court found no illegality in the notice issued under section 158BC of the Income-tax Act. The Assessing Officer had requested the petitioner to prepare a true and correct return of total income, including undisclosed income assessable for the block period. The court held that the petitioner could file a statement in response to the notice, and therefore, no interference was warranted.

Issue 2: Legality of notice under section 142(2A) of the Income-tax Act, 1961:
The challenge to the notice issued under section 142(2A) of the Income-tax Act was based on the argument that the proceedings were not pending before the Assessing Officer at the time of issuing the notice. The petitioner contended that as the assessment proceedings commenced from the date of issuing the notice under section 158BC, the notice under section 142(2A) was premature. However, the court analyzed the provisions of section 142(2A) and noted that the Assessing Officer must consider the complexity of accounts and the interests of the Revenue before directing the assessee to get the accounts audited. The court found that the Assessing Officer had applied his mind and concluded that the accounts were complex, justifying the audit under section 142(2A). The court held that the assessment proceedings in search cases start from the date of search itself and cannot be independent of search and seizure proceedings under Chapter XIV-B of the Act. Therefore, the court dismissed the writ petition, stating that the notice under section 142(2A) was valid and not premature.

In conclusion, the High Court upheld the validity of the notice under section 158BC and section 142(2A) of the Income-tax Act, 1961, emphasizing that the assessment proceedings in search cases commence from the date of search and seizure, and the notices issued were in accordance with the law.