Block assessments can be reopened u/s 147/148 : Guwahati High Court

SUMMARY OF CASE LAW

The AO passed a block assessment order u/s 158BC by which he assessed the undisclosed income of the assessee at Rs. 24.37 L. Subsequently, he passed an order by which he added a further sum of Rs. 13.66 L to the said undisclosed income without issuing a notice u/s 148. The Tribunal allowed the appeal on the ground that the AO could not have made the addition without reopening the block assessment u/s 147. On appeal by the Revenue, the High Court upheld the Tribunal’s order. However, on the question whether the AO had jurisdiction to issue notice u/s 148 in respect of a block assessment made under Chapter XIV-B in view of the judgement of the Gujarat High Court in Cargo Clearing Agency 307 ITR 1, HELD dissenting from the judgement:The view of the Gujarat High Court that while s. 147 permits re-assessment of income that has escaped assessment for any assessment year, assessment under Chapter XIV-B is for a block period of 10/6 years without reference to any particular assessment year and that, therefore, s. 147 does not apply to a block assessment cannot be accepted in view of the judgement of the Supreme Court in Suresh N. Gupta 297 ITR 322 where it was held that the other provisions of the Act would be applicable to the scheme under Chapter XIV-B, if no conflict arises upon such application. The provisions of Chapter XIV prescribing the period of limitation for reopening of assessments apply to block assessments under Chapter XIV-B and there is no conflict between the two.

Note:

(i) The ITAT Bombay Bench has taken the view in Western India Bakers 87 ITD 607 that a block assessment cannot be reopened u/ss 147 & 148.

(ii) Suresh Gupta 297 ITR 322 (SC) has been doubted and referred to a larger Bench in Vatika Township 314 ITR 338 (SC).

CASE LAW DETAILS:-

In The Case of : Commissioner of Income Tax – versus – M/S Peerchand Ratanlal Baid (HUF), Decided by:- HIGH COURT OF GUWAHATI, Appeal No.:- IT Appeal No.19 of 2006, Date of delivery of Judgment:15/05/2009.

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