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TMI Blog2009 (5) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... block return for the period 1986-87 to 1996-97 showing undisclosed income of Rs. 60 lakhs. The assessment was completed under section 158BC of the Act on September 30, 1996, determining an undisclosed income of Rs. 1,17,25,416. The respondent-assessee filed a first appeal before the learned Tribunal against the aforesaid order of assessment which was partly allowed by order dated August 28, 2000. In terms of the direction of the learned Tribunal the undisclosed income for the block period was revised to Rs. 24,37,850 by order dated July 30, 2001, of the Assessing Officer. Subsequently, it was found by the Assessing Officer that in the case of another group company, i.e., M/s. Baid Commercial Enterprises, for the same block period, i.e., 1986-87 to 1996-97, the learned Tribunal by order dated February 27, 2002, had observed that some of the documents seized in the said case pertained to the respondent-assessee. Accordingly, the Assessing Officer issued a letter dated December 12, 2002, asking the assessee to explain why the amount of Rs. 59,18,246 covered by the aforesaid seized documents or any part thereof should not be added to the total income of the assessee for the block peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch assessments, reassessments/recomputations has to be completed. Section 153(2) of the Act deals with the period within which reassessments under section 147 are to be completed. Section 153(2A) removes the embargo imposed by sub-sections (1),(1A), (1B) and (2) of section 153 when an assessment is set aside or can celled and a fresh assessment is required to be made in pursuance of an order under section 250, 254, 263 or 264 of the Act. 8. Section 153(3) also removes the bar imposed by sub-sections (1), (1A), (1B) and (2) of section 153 and permits assessments, reassessments and re-computations to be completed at any time where such assessment, re-assessment or re-computation is required to be made in consequence of or to give effect to any finding or direction contained in an order under sections 250, 254, 260, 262, 263 or 264 of the Act or in any order of the court in a proceeding otherwise than by way of appeal or reference under the Act. Explanation 3 to sub-section (3) of section 153 of the Act contemplates that if an order under section 250, 254, 260, 262, 263 or 264 of the Act is passed excluding any income from the total income of one person and holding such income to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d March 26, 2003, of the Assessing Officer making the aforesaid addition. The aforesaid extract being relevant is conveniently reproduced here in below: "We have heard the rival submission and gone through the records. On a careful consideration of the facts of the case and the evidence on record we have noticed that the learned authorised representative has tried to explain each components of the receipt as well as payment side of the seized document being CN 121, 122, 125 and 126. We have also found that at pages 168 to 173 of the paper book summary of seized document giving the relevant page numbers of. . . comprises term like National Transport (N.T.)(C.T.)" "It was brought to our notice by the learned counsel that National Transport (NT) belongs to Shri Jodhraj Baid and Capital Travels (CT) belongs to Peerchand Ratanlal Baid (HUF) who shares same office as the assessee-company and searches were conducted and panchnamas were drawn in their names along with that of the assessee-com pany. Regard having been given to the contention and the facts of the case, we are of the opinion that the said sum of Rs. 59,18,246 cannot be the subject-matter of addition in the hands of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be called for. For instance, where the facts show that the income can belong either to A or B and to no one else, a find ing that it belongs to be or does not belong to B would be determinative of the issue whether it can be taxed as A's income. A finding respecting B is intimately involved as a step in the process of reaching the ultimate finding respecting A. If, however, the finding as to A's liability can be directly arrived at without necessitating a finding in respect of B, then a finding made in respect of B is an incidental finding only. It is not a finding necessary for the disposal of the case pertaining to A. The same principles seem to apply when the question is whether the income under enquiry is taxable in the assessment year under consideration or any other assessment year. As regards the expression 'direction' in section 153(3) (ii) of the Act, it is now well settled that it must be an express direction necessary for the disposal of the case before the authority or court. It must also be a direction which the authority or court is empowered to give while deciding the case before it. The expressions 'finding' and 'direction' in section 153(3) (ii) of the Act mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the respondent-assessee. On such consideration we are of the view that the present order, without recording our views in the matter raised, will be incomplete and, therefore, we have proceeded to answer the said question raised before us. 16. We have read the judgment of the hon'ble High Court of Gujarat in the case of Cargo Clearing Agency (Gujarat) [2008] 307 ITR 1. We have noticed that the answer provided in the negative by the hon'ble High Court of Gujarat in the aforesaid case proceeds on the following basis. (1) While section 147 of the Act permits reassessment of income that has escaped assessment for any assessment year, assessment under Chapter XIV-B of the Act is for a block period of 10/6 years without reference to any particular assessment year. (2) Reassessment of escaped income under section 147 of the Act is made where income chargeable to tax has escaped assessment either due to the failure of the assessee to file return or failure to disclose fully or truly all material facts for the purposes of assessment or where material already on record had not been processed. In a case of block assessment under Chapter XIV-B of the Act escapement of undisclosed incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing contained in any other provisions of the 1961 Act, where search is initiated after June 30, 1995, under section 132 or in cases of requisition under section 132A after the cut off date, the Assessing Officer shall proceed to assess the undisclosed income in accordance with the provisions of Chapter XIV-B. 13. Relying on section 158BA(1) the assessee claims that Chapter X1V-B is a special procedure for assessment of cases; that it constitutes a self-contained mechanism and, hence, it falls outside the scope of section 4(1) of the 1961 Act, particularly when section 4(1) imposes a charge on the 'total income' and not on the undisclosed income and, particularly when section 158BA(2) is an independent charging section in contrast to section 4(1) of the 1961 Act, which imposes a charge on the 'total income' of the previous year. Accord ing to the assessee, the charge under section 158BA(2) is on the 'block period' arid not on the total income of the 'previous year'. Therefore, according to the assessee, Chapter XIV-B is a self-contained mechanism. 14. As stated above, these arguments advanced on behalf of the assessee have no merit. Section 158B defines 'block period' to mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of Chapter XIV-B. In this connection, we may also take note of section 158BH which deals with application of other provisions of the 1961 Act to the block assessment procedure in Chapter XIV-B. Section 158BH makes it clear that save as otherwise provided in Chapter XIV-B, all other provisions of the 1961 Act shall equally apply to block assessment. Therefore, one has to read the non obstante clause in section 158BA in juxtaposition with section 158BH. Keeping in mind the provisions of section 158BB and keeping in mind the retention of the concepts of 'previous years' and 'total income' in Chapter XIV-B, we are of the view that Chapter 1V is not ruled out from block assessment procedure and, therefore, one has to read section 158BB with section 4 of the 1961 Act. 15. There is one more fact which needs to be noted. A bare reading of the provisions of section 158BA and section 158BB indicates that the searches conducted by the Department are an important means of unearthing black money. However, undisclosed income has to be related to the different years in which the income was earned. The essence of the block assessment procedure, therefore, is a separate single assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 961 Act, then the latter will operate. There is a fallacy in the argument of the assessee that the concepts of 'total income' and 'previous year' are given a go by in Chapter XIV-B. The above analysis of section 158BB indicates that both the concepts are retained in Chapter X1V-B. The only difference is that section 4 of the 1961 Act charges the total income of a person of one single previous year (unit of assessment) whereas section 158BA(2) levies a charge on the income of a person for the block period of previous years relevant to 10/6 assessment years. In our view, the words 'block period', as defined in section 158B(a), comprises previous years relevant to 10/6 assessment years as one unit of time for the purposes of assessment. As stated above, the object behind the enactment of Chapter XIV-B is to assess and compute 'undisclosed incomes' relatable to different accounting years in which the income is earned. Therefore, if the block period comprising of previous years relevant to 10/6 assessment years is treated by Parliament as one unit of time for assessment purposes, one has to correlate 'undisclosed income' to each of the years in which income was earned by the assessee. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uation that has arisen in the present case, details of which have been set out herein above. We, therefore, deem it appropriate to understand that the view expressed in Cargo Clearing Agency [2008] 307 1TR 1 (Guj) cannot be considered to be comprehensive covering all situations to justify exclusion of the power under section 147/148 from the provision of the special procedure for block assessments contemplated by Chapter XIV-B of the Act. 21. The question of limitation dealt with by the hon'ble High Court of Gujarat, in our considered view, has to be understood in the context of the separate period of limitation provided by section 158BE of the Act for completion of block assessments and not for reopening such assessment for the block period. In the absence of any separate and specific period of limitation for reopening of block assessments in Chapter XIV-B, on the ratio of the judgment in CIT v. Suresh N. Gupta [2008] 297 ITR 322, the provisions contained in Chapter XIV prescribing the period of limitation for reopening of assessment must be understood to be applicable to assessments under Chapter XIV-B of the Act. Such application will not bring in any conflict between the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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