[CHAPTER
XIV-B
SPECIAL
PROCEDURE FOR ASSESSMENT OF SEARCH CASES
158B. In this
Chapter, unless the context otherwise requires,—
[(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 [, 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.
[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, [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 [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 [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;
[(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 [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:
[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;]
[(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 [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,—
[(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 form 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 [,
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;
[(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 [under section 158BC] against such
other person and the provisions of this Chapter shall apply accordingly.
Time
limit for completion of block assessment.
158BE. [(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.]
[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.]
[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.
[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 132or
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 [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 [or Deputy Commissioner] or the
Assistant Director [or Deputy Director], as the case may be, where the amount
of penalty exceeds twenty thousand rupees except with the previous approval of
the [Joint] Commissioner or the [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 [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.]
[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 [or Deputy Commissioner] or an Assistant Director
[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 [Joint]
Commissioner or the [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.]
[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.]