SPECIAL PROCEDURE FOR
ASSESSMENT OF SEARCH CASES
158B. In this
Chapter, unless the context otherwise requires,—
19[R3] (a) “block period” means the period
comprising previous years relevant to six assessment years preceding the
previous year in which the search was conducted under section 132 or any
requisition was made under section 132A and also includes the period up to the
date of the commencement of such search or date of such requisition in the
previous year in which the said search was conducted or requisition was made :
Provided that where the search is initiated or the
requisition is made before the 1st day of June, 2001, the provisions of this
clause shall have effect as if for the words “six assessment years”, the words
“ten assessment years” had been substituted;]
(b) “undisclosed
income” includes any money, bullion, jewellery or other valuable article or
thing or any income based on any entry in the books of account or other
documents or transactions, where such money, bullion, jewellery, valuable
article, thing, entry in the books of account or other document or transaction
represents wholly or partly income or property which has not been or would not
have been disclosed for the purposes of this Act 20[R4] [, or any expense, deduction or allowance
claimed under this Act which is found to be false].
Assessment
of undisclosed income as a result of search.
158BA. (1) Notwithstanding
anything contained in any other provisions of this Act, where after the 30th day
of June, 1995 a search is initiated under section 132 or books of account,
other documents or any assets are requisitioned under section 132A in the case
of any person, then, the Assessing Officer shall proceed to assess the
undisclosed income in accordance with the provisions of this Chapter.
(2) The total undisclosed income relating to the block period
shall be charged to tax, at the rate specified in section 113, as income of the
block period irrespective of the previous year or years to which such income
relates and irrespective of the fact whether regular assessment for any one or
more of the relevant assessment years is pending or not.
21[R5] Explanation.—For the removal of doubts, it is hereby declared
that—
(a) the assessment made under this Chapter shall be in addition
to the regular assessment in respect of each previous year included in the
block period;
(b) the total undisclosed income relating to the block period
shall not include the income assessed in any regular assessment as income of
such block period;
(c) the income assessed in this Chapter shall not be included in
the regular assessment of any previous year included in the block period.]
(3) Where the assessee proves to the satisfaction
of the Assessing Officer that any part of income referred to in sub-section (1)
relates to an assessment year for which the previous year has not ended or the
date of filing the return of income under sub-section (1) of section 139 for
any previous year has not expired, and such income or the transactions relating
to such income are recorded on or before the date of the search or requisition
in the books of account or other documents maintained in the normal course
relating to such previous years, the said income shall not be included in the
block period.
Computation
of undisclosed income of the block period.
158BB. (1) The
undisclosed income of the block period shall be the aggregate of the total
income of the previous years falling within the block period computed, 22[R6] [in accordance with the provisions of this
Act, on the basis of evidence found as a result of search or requisition of
books of account or other documents and such other materials or information as
are available with the Assessing Officer and relatable to such evidence], as
reduced by the aggregate of the total income, or as the case may be, as
increased by the aggregate of the losses of such previous years, determined,—
(a) where assessments under section 143 or section 144 or
section 147 have been concluded 23[R7] [prior to the date of commencement of the
search or the date of requisition], on the basis of such assessments;
(b) where returns of
income have been filed under section 139 24[R8] [or in response to a notice issued under
sub-section (1) of section 142 or section 148] but assessments have not been
made till the date of search or requisition, on the basis of the income
disclosed in such returns;
25[R9] (c)
where the due date for filing a
return of income has expired, but no return of income has been filed,—
(A) on the basis of
entries 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 where such
entries result in computation of loss for any previous year falling in the
block period; or
(B) on the basis of
entries 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 where such
income does not exceed the maximum amount not chargeable 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 158BC, on the basis of such assessment.
Explanation.—For the purposes of
determination of undisclosed income,—
(a) the
total income or loss of each previous year shall, for the purpose of
aggregation, be taken as the total income or loss computed in accordance with
the provisions of 26[R10] [this
Act] without giving effect to set off of brought forward losses under Chapter
VI or unabsorbed depreciation under sub-section (2) of section 32:
27[R11] Provided
that in computing deductions
under Chapter VI-A for the purposes of the said aggregation, effect shall be
given to set off of brought forward losses under Chapter VI or unabsorbed
depreciation under sub-section (2) of section 32;]
28[R12] (b) of
a firm, returned income and total income assessed for each of the previous
years falling within the block period shall be the income determined before
allowing deduction of salary, interest, commission, bonus or remuneration by
whatever name called
29[R13] [to
any partner not being a working partner] :
Provided that undisclosed income of the firm so determined shall not be
chargeable to tax in the hands of the partners, whether on allocation or on
account of enhancement;]
(c) assessment under section 143 includes determination of
income under sub-section (1) or sub-section (1B) of section 143.
(2) In computing the undisclosed income of the block period, the
provisions of sections 68, 6969A, 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 requisition.
(3) The burden of proving to the satisfaction of the Assessing
Officer that any undisclosed income had already been disclosed in any return of
income filed by the assessee before the commencement of search or of the
requisition, as the case may be, shall be on the assessee.
(4) For the purpose of assessment under this Chapter, losses
brought forward from the previous year under Chapter VI or unabsorbed
depreciation under sub-section (2) of section 32 shall not be set off against
the undisclosed income determined in the block assessment under this Chapter,
but may be carried forward for being set off in the regular assessments.
Procedure
for block assessment.
158BC. Where
any search has been conducted under section 132 or books of account, other documents or assets
are requisitioned under section 132A, in the case of any person, then,—
30[R14] [(a) the
Assessing Officer shall—
(i) in respect of
search initiated or books of account or other documents or any assets
requisitioned after the 30th day of June, 1995, but before the 1st day of
January, 1997, serve a notice to such person requiring him to furnish within
such time not being less than fifteen days;
(ii) in respect of
search initiated or books of account or other documents or any assets
requisitioned on or after the 1st day of January, 1997, serve a notice to such
person requiring him to furnish within such time not being less than fifteen
days but not more than forty-five days,as may be
specified in the notice a return in the prescribed form31[R15] and
verified in the same manner as a return under clause (i) of sub-section (1) of section 142, setting forth his total
income including the undisclosed income for the block period :
Provided that no notice under section 148 is required
to be issued for the purpose of proceeding under this Chapter:
Provided further that a person who has furnished a return under
this clause shall not be entitled to file a revised return;]
(b) the
Assessing Officer shall proceed to determine the undisclosed income of the
block period in the manner laid down in section 158BB and the provisions of
section 142, sub-sections (2) and (3) of section 143 32[R16] [,
section 144 and section 145] shall, so far as may be, apply;
(c) the Assessing Officer, on determination of the undisclosed
income of the block period in accordance with this Chapter, shall pass an order
of assessment and determine the tax payable by him on the basis of such assessment;
33[R17] (d) the
assets seized under section 132 or requisitioned under section 132A shall be
dealt with in accordance with the provisions of section 132B.]
Undisclosed income of any other person.
158BD. Where
the Assessing Officer is satisfied that any undisclosed income belongs to any
person, other than the person with respect to whom search was made under
section 132 or whose books of account or other documents or any assets were
requisitioned under section 132A, then, the books of account, other documents
or assets seized or requisitioned shall be handed over to the Assessing Officer
having jurisdiction over such other person and that Assessing Officer shall
proceed 34[R18] [under
section 158BC] against such other person and the provisions of this Chapter
shall apply accordingly.
Time limit
for completion of block assessment.
158BE. 35[R19] (1) The order under section 158BC shall be passed—
(a) within one year
from the end of the month in which the last of the authorisations for search under
section 132 or for requisition under section 132A, as the case may be, was
executed in cases where a search is initiated or books of account or other
documents or any assets are requisitioned after the 30th day of June, 1995, but
before the 1st day of January, 1997;
(b) within two years
from the end of the month in which the last of the authorisations for search
under section 132 or for requisition under section 132A, as the case may be,
was executed in cases where a search is initiated or books of account or other
documents or any assets are requisitioned on or after the 1st day of January,
1997.
(2) The period of limitation for completion
of block assessment in the case of the other person referred to in section
158BD shall be—
(a) one year from the
end of the month in which the notice under this Chapter was served on such
other person in respect of search initiated or books of account or other
documents or any assets requisitioned after the 30th day of June, 1995, but
before the 1st day of January, 1997; and
(b) two years from
the end of the month in which the notice under this Chapter was served on such
other person in respect of search initiated or books of account or other
documents or any assets are requisitioned on or after the 1st day of January,
1997.]
36[R20] Explanation 1.—In computing the period of limitation for the purposes of this section,—
(i) the period during which the assessment proceeding is stayed
by an order or injunction of any court; or
(ii) the period
commencing from the day on which the Assessing Officer directs the assessee to
get his accounts audited under sub-section (2A) of section 142 and ending on
the day on which the assessee is required to furnish a report of such audit
under that sub-section; or
(iii) the time taken in reopening the whole or any part of the
proceeding or giving an opportunity to the assessee to be re-heard under the
proviso to section 129; or
(iv) in a case where
an application made before the Settlement Commission under section 245C is
rejected by it or is not allowed to be proceeded with by it, the period
commencing on the date on which such application is made and ending with the
date on which the order under sub-section (1) of section 245D is received by
the Commissioner under sub-section (2) of that section,shall be excluded:
Provided that where immediately after the exclusion of the aforesaid period, the
period of limitation referred to in sub-section (1) or sub-section (2)
available to the Assessing Officer for making an order under clause (c) of section 158BC is less than
sixty days, such remaining period shall be extended to sixty days and the
aforesaid period of limitation shall be deemed to be extended accordingly.]
37[R21] Explanation 2.—For the removal of doubts, it is hereby
declared that the authorisation referred to in sub-section (1) shall be deemed
to have been executed,—
(a) in the case of
search, on the conclusion of search as recorded in the last panchnama drawn in
relation to any person in whose case the warrant of authorisation has been
issued;
(b) in the case of requisition under section 132A, on the actual
receipt of the books of account or other documents or assets by the Authorised
Officer.]
Certain
interests and penalties not to be levied or imposed.
158BF. No
interest under the provisions of section 234A, 234B or 234C or penalty under
the provisions of clause (c) of
sub-section (1) of section 271 or section 271A or section 271B shall be levied
or imposed upon the assessee in respect of the undisclosed income determined in
the block assessment.
38[R22] Levy of interest and penalty in certain
cases.
158BFA. (1) Where
the return of total income including undisclosed income for the block period,
in respect of search initiated under section 132 or books of account, other
documents or any assets requisitioned under section 132A on or after the 1st
day of January, 1997, as required by a notice under clause (a) of section 158BC, is furnished
after the expiry of the period specified in such notice, or is not furnished,
the assessee shall be liable to pay simple interest at the rate of 39[R23] [one]
per cent of the tax on undisclosed income, determined under clause (c) of section 158BC, for every month
or part of a month comprised in the period commencing on the day immediately
following the expiry of the time specified in the notice, and—
(a) where the return is furnished after the expiry of the time
aforesaid, ending on the date of furnishing the return; or
(b) where no return has been furnished, on the date of
completion of assessment under clause (c)
of section 158BC.
(2) The Assessing Officer or the Commissioner
(Appeals) in the course of any proceedings under this Chapter, may direct that
a person shall pay by way of penalty a sum which shall not be less than the
amount of tax leviable but which shall not exceed three times the amount of tax
so leviable in respect of the undisclosed income determined by the Assessing
Officer under clause (c) of
section 158BC :
Provided that no order imposing penalty shall be made in respect of a person if—
(i) such person has furnished a return under clause (a) of section 158BC;
(ii) the tax payable on the basis of such return has been paid
or, if the assets seized consist of money, the assessee offers the money so
seized to be adjusted against the tax payable;
(iii) evidence of tax paid is furnished along with the return; and
(iv) an appeal is not filed against the assessment of that part
of income which is shown in the return :
Provided further that the provisions of the preceding proviso
shall not apply where the undisclosed income determined by the Assessing
Officer is in excess of the income shown in the return and in such cases the
penalty shall be imposed on that portion of undisclosed income determined which
is in excess of the amount of undisclosed income shown in the return.
(3) No order imposing a penalty under sub-section (2) shall be
made,—
(a) unless an assessee has been given a reasonable opportunity
of being heard;
(b) by the Assistant
Commissioner 40[R24] [or
Deputy Commissioner] or the Assistant Director 40[R25] [or
Deputy Director], as the case may be, where the amount of penalty exceeds
twenty thousand rupees except with the previous approval of the 41[R26] [Joint]
Commissioner or the 41[R27] [Joint]
Director, as the case may be;
(c) in a case where
the assessment is the subject-matter of an appeal to the Commissioner (Appeals)
under section 246 42[R28] [or
section 246A] or an appeal to the Appellate Tribunal under section 253, after
the expiry of the financial year in which the proceedings, in the course of
which action for the imposition of penalty has been initiated, are completed,
or six months from the end of the month in which the order of the Commissioner
(Appeals) or, as the case may be, the Appellate Tribunal is received by the
Chief Commissioner or the Commissioner, whichever period expires later;
(d) in a case where the assessment is the subject-matter of
revision under section 263, after the expiry of six months from the end of the
month in which such order of revision is passed;
(e) in any case other
than those mentioned in clauses (c)
and (d), after the expiry of
the financial year in which the proceedings, in the course of which action for
the imposition of penalty has been initiated, are completed, or six months from
the end of the month in which action for imposition of penalty is initiated,
whichever period expires later;
(f) in respect of
search initiated under section 132 or books of account, other documents or any
assets requisitioned under section 132A, after the 30th day of June, 1995 but
before the 1st day of January, 1997.
Explanation.—In computing the period of limitation for the
purpose of this section,—
(i) the time taken in giving an opportunity to the assessee to
be reheard under the proviso to section 129;
(ii) the period during which the immunity granted under section
245H remained in force; and
(iii) the period during which the proceedings under sub-section
(2) are stayed by an order or injunction of any court,shall
be excluded.
(4) An income-tax authority on making an
order under sub-section (2) imposing a penalty, unless he is himself an
Assessing Officer, shall forthwith send a copy of such order to the Assessing
Officer.]
43[R29] Authority competent to make the block
assessment.
158BG. The
order of assessment for the block period shall be passed by an Assessing
Officer not below the rank of an Assistant Commissioner 44[R30] [or
Deputy Commissioner] or an Assistant Director 44[R31] [or Deputy
Director], as the case may be :
Provided that no such order shall be passed without the previous approval of—
(a) the Commissioner
or Director, as the case may be, in respect of search initiated under section
132or books of account, other documents or any assets requisitioned under
section 132A, after the 30th day of June, 1995 but before the 1st day of
January, 1997;
(b) the 45[R32] [Joint]
Commissioner or the 45[R33] [Joint]
Director, as the case may be, in respect of search initiated under section 132
or books of account, other documents or any assets requisitioned under section
132A, on or after the 1st day of January, 1997.]
Application
of other provisions of this Act.
158BH. Save as
otherwise provided in this Chapter, all other provisions of this Act shall
apply to assessment made under this Chapter.]
46[R34] Chapter not to apply after certain date.
158BI. The provisions
of this Chapter shall not apply where a search is initiated under section 132,
or books of account, other documents or any assets are requisitioned under
section 132A after the 31st day of May, 2003.]
[R1]Chapter XIV-B, consisting of sections 158B to 158BH, inserted by the Finance Act, 1995, w.e.f. 1-7-1995. Earlier Chapter XIV-B, dealing with “Charge of additional income-tax in certain cases” was inserted along with section 158B by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 and later on omitted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989.
[R2]Non-operative qua search, etc., made after 31-5-2003, see section 158BH.
[R3]Substituted by the Finance Act, 2001, w.e.f. 1-6-2001.
Prior to its substitution, clause (a), as amended by the Finance (No. 2)
Act, 1996, w.r.e.f. 1-7-1995, read as under :
‘(a) “block period” means the previous years relevant to ten assessment years preceding the previous year in which the search was conducted under section 132 or any requisition was made under section 132A, and includes, in the previous year in which such search was conducted or requisition made, the period up to the date of the commencement of such search or, as the case may be, the date of such requisition;
[R4]Inserted by the Finance Act, 2002, w.r.e.f. 1-7-1995
[R5]Inserted by the Finance (No. 2) Act, 1998, w.r.e.f. 1-7-1995
[R6]Substituted for “in accordance with the provisions of Chapter IV, on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with the Assessing Officer” by the Finance Act, 2002, w.r.e.f. 1-7-1995.
[R7]Inserted by the Finance Act, 2002, w.r.e.f. 1-7-1995
[R8]Substituted for “or section 147” by the Finance Act, 2002, w.r.e.f. 1-7-1995
[R9]Clauses (c) and (ca) substituted for
clause (c), by the Finance Act, 2002, w.r.e.f. 1-7-1995. Prior to its
substitution, clause (c) read as under :
“(c) where the due date for filing a return of income has expired but no return of income has been filed, as nil”
[R10]Substituted for “Chapter IV” by the Finance Act, 2002, w.r.e.f. 1-7-1995
[R11]Inserted by the Finance Act, 2002, w.r.e.f. 1-7-1995
[R12]Substituted by the Finance (No. 2) Act, 1996, w.r.e.f. 1-7-1995
[R13]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999
[R14]Substituted by the Income-tax (Amendment) Act, 1997, w.e.f. 1-1-1997.
[R15]See rule 12(1A) and Form No. 2B
[R16]Substituted for “and section 144” by the Finance Act, 2002, w.r.e.f. 1-7-1995
[R17]Substituted by the Finance Act, 2002, w.e.f.
1-6-2002. Prior to its substitution, clause (d) read as under :
‘(d) the assets seized under section 132 or requisitioned under section 132A shall be retained to the extent necessary and the provisions of section 132B shall apply subject to such modifications as may be necessary and the references to “regular assessment” or “reassessment” in section 132B shall be construed as references to “block assessment”.
[R18]Inserted by the Finance Act, 2002, w.e.f. 1-6-2002.
[R19]Substituted by the Income-tax (Amendment) Act, 1997, w.e.f. 1-1-1997
[R20]Substituted by the Finance Act, 2002, w.e.f. 1-6-2002.
Prior to its substitution, Explanation 1, as inserted by the Finance
(No. 2) Act, 1996, w.r.e.f. 1-7-1995 and amended by the Finance (No. 2) Act,
1998, w.r.e.f. 1-7-1995, read as under :
“Explanation 1.—In computing the period of limitation for the
purposes of this section, the period—
(i) during which the assessment proceeding is stayed by an order
or injunction of any court, or
(ii) commencing from the day on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and ending on the day on which the assessee is required to furnish a report of such audit under that sub-section,shall be excluded.”
[R21]Inserted by the Finance (No. 2) Act, 1998, w.r.e.f. 1-7-1995.
[R22]Inserted by the Income-tax (Amendment) Act, 1997, w.e.f. 1-1-1997
[R23]Substituted for “one and one-fourth” by the Taxation Laws (Amendment) Act, 2003, w.e.f. 8-9-2003. Earlier the quoted words were substituted for “two” by the Finance Act, 2001, w.e.f. 1-6-2001
[R24]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[R25]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998
[R26]Substituted for “Deputy” by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998
[R27]Substituted for “Deputy” by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998
[R28]Inserted by the Finance Act, 2000, w.e.f. 1-6-2000
[R29]Substituted by the Income-tax (Amendment) Act, 1997, w.e.f. 1-1-1997. Earlier section 158BG was amended by the Finance (No. 2) Act, 1996, w.e.f. 1-10-1996.
[R30]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998
[R31]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[R32]Substituted for “Deputy” by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998
[R33]Substituted for “Deputy” by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998
[R34]Inserted by the Finance Act, 2003, w.e.f. 1-6-2003