70[R1] CHAPTER XIV-B
SPECIAL
PROCEDURE FOR ASSESSMENT OF SEARCH CASES
158B. In this Chapter,
unless the context otherwise requires,—
71[R2] [(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 72[R3] [,
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.
73[R4] [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, 74[R5] [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
75[R6] [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 76[R7] [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;
77[R8] [(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 78[R9] [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:
79[R9] [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;]
80[R10][(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 81[R11][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, 69, 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 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,—
82[R12] [(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 form83[R13] 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 84[R14] [, 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;
85[R15] [(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 86[R16] [under
section 158BC] against such other person and the provisions of this Chapter
shall apply accordingly.
Time
limit for completion of block assessment.
158BE. 87[R17] [(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 authorizations 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.]
88[R18] [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.]
89[R19] [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.
90[R20] [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 91[R21] [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 92[R22] [or Deputy Commissioner] or the Assistant
Director 93[R23] [or Deputy Director], as the case may be,
where the amount of penalty exceeds twenty thousand rupees except with the
previous approval of the 93[R24] [Joint] Commissioner or the 93[R25] [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 94[R26] [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.]
95[R27] [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 96[R28] [or
Deputy Commissioner] or an Assistant Director 96[R29] [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 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;
(b) the 97[R30] [Joint] Commissioner or the 97[R31] [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.]
97a[R32] [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]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;’
[R3]Inserted
by the Finance Act, 2002, w.r.e.f. 1-7-1995.
[R4]Inserted
by the Finance (No. 2) Act, 1998, w.r.e.f. 1-7-1995.
[R5]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.
[R6]Inserted by the Finance Act, 2002, w.r.e.f. 1-7-1995.
[R7]Substituted for “or section 147” by the Finance Act, 2002, w.r.e.f. 1-7-1995
[R8]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”
[R9]Substituted for “Chapter IV” by the Finance Act, 2002, w.r.e.f. 1-7-1995.
[R10]Substituted by the Finance (No. 2) Act, 1996, w.r.e.f. 1-7-1995.
[R11]Inserted
by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999.
[R12]Substituted by the Income-tax (Amendment) Act, 1997, w.e.f. 1-1-1997.
[R13]See rule 12(1A) and Form No. 2B
[R14]Substituted for “and section 144” by the Finance Act, 2002, w.r.e.f. 1-7-1995.
[R15]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”.’
[R16]Inserted by the Finance Act, 2002, w.e.f. 1-6-2002.
[R17]Substituted
by the Income-tax (Amendment) Act, 1997, w.e.f. 1-1-1997.
[R18]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 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.”
[R19]Inserted
by the Finance (No. 2) Act, 1998, w.r.e.f. 1-7-1995.
[R20]Inserted by the Income-tax (Amendment) Act, 1997, w.e.f. 1-1-1997.
[R21]Substituted for “one and one fourth” by the Taxation Laws (Amdt.) Act, 2003, w.r.e.f. 8-9-2003. Earlier it was substituted by the Finance Act, 2001, w.e.f. 1-6-2001.
[R22]Inserted
by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[R23]Substituted for “Deputy” by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[R24]Substituted for “Deputy” by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[R25] Substituted for “Deputy” by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[R26]Inserted by the Finance Act, 2000, w.e.f. 1-6-2000.
[R27]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.
[R28]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998
[R29]Inserted by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998
[R30]Substituted
for “Deputy” by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[R31]Substituted
for “Deputy” by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998.
[R32]Inserted
by the Finance Act, 2003, w.e.f. 1-6-2003.