9911796707
TMI Blog2014 (10) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... returns year after year under the Income Tax Act, 1961 (for short, the Act). The respondents in I.T.T.A.Nos.10 and 12 of 1999 are its Managing Director and Executive Director, respectively, of the Company. They too are the assesses under the Act. A search was conducted in the premises of the Company on 23.01.1996 under Section 132 of the Act. On the basis of the recoveries said to have been made in the search, the respondents were required to file returns for the block period 1986-87 to 1996-97. In the process, the respondents themselves came forward with a plea that there was an undisclosed income to a tune of Rs. 35.00 lakhs. The assessing officer, however, took the view that the share certificates pertaining to the Company are in the premises or in the custody of the Directors, though issued in the name of some third parties. The value of these shares was treated as undisclosed income. The assessing officer has also disallowed certain perquisites, which were claimed by the Managing Director and Executive Director, and treated that amount as undisclosed income. A block assessment order was passed, levying the corresponding tax. Aggrieved by that, the respondents filed I.T.A.Nos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s conferred with the power to cause suo motu revision under Section 263 of the Act. The methods, referred to above, are mostly on the basis of the facts and figures furnished in the returns and the result is almost in the form of re-verification. Section 132 of the Act empowers the authorities of the Company to conduct a search in the premises of not only an assessee, but also of the persons associated with him. If, during the course of the search, any incriminating material or undisclosed income is noticed, a block assessment order covering a period of ten years (which, at present is six years), is to be passed. The procedure, to be followed in this regard, is broadly prescribed under Section 158BB and 158BC of the Act. Once the authority, who conducted the search, arrives at a particular figure, as to undisclosed income, the block assessment order is to be passed in accordance with law. Broadly stated, the aggregate of the total income pertaining to the block period, which is arrived at on the basis of the search, is taken as standard. In case the assessee has any income to his credit for the aggregate of block period, as disclosed in the returns, it is to be deducted from that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argeable to tax for any previous year falling in the block period; (ca) where the due date for filing a return of income has expired, but no return of income has been filed, as nil, in cases not falling under clause (c); (d) where the previous year has not ended or the date of filing the return of income under sub- section (1) of section 139 has not expired, on the basis of entries relating to such income or transactions as recorded in the books of account and other documents maintained in the normal course on or before the date of the search or requisition relating to such previous years, (e) where any order of settlement has been made under sub-section (4) of section 245D, on the basis of such order; (f) where an assessment of undisclosed income had been made earlier under clause (c) of section 158 BC, on the basis of such assessment. (2) In computing the undisclosed income of the block period, the provisions of section 68, 69A, 69B and 69C shall, so far as may be, apply and references to financial year in those sections shall be construed as references to the relevant previous year falling in the block period including the previous year ending with the date of search or of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not warranted at all, having regard to the financial status of the concerned assessee. The Tribunal took the view that the scope of powers of an officer conducting search cannot be expanded to cover the adjudication or verification of the assessments already made. It has already been mentioned that Section 158BB of the Act takes away any item of wealth discovered in the course of search, from the purview of undisclosed income, if it had been the subject matter of proceedings under the Act, which may include a mere filing of return or a detailed order of assessment. If the authority, who conducted a search, is permitted to determine the correctness or otherwise of the returns or the orders of assessment passed earlier in respect of concerned assessee or a third party, virtually the exercise tends to partake the character of the one under Section 263 of the Act. In case the earlier proceedings were the subject matter of appeal before the Tribunal or this Court, the power gets widened even to cover such orders also. That was not, and can never be, the intention of the Parliament. It is only when the cash, bullion, negotiable instruments or other similar items of wealth which did ..... X X X X Extracts X X X X X X X X Extracts X X X X
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