Prakashchand C. Desai v. Dy Commissioner Of Income Tax Special Range 2

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 3021 of 1998 withSPECIAL CIVIL APPLICATION No 3160 of 1998 to SPECIAL CIVIL APPLICATION NO 3176 of 1998 For Approval and Signature: Hon'ble MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE A.R.DAVE ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements? 2. To be referred to the Reporter or not? 3. Whether Their Lordships wish to see the fair copy of the judgement? 4. Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? -------------------------------------------------------- KHANDUBHAI VASANJI DESAIVersus DY COMMISSIONER OF INCOME TAX SPECIAL RANGE 2 -------------------------------------------------------- PRAKASHCHAND C. DESAI VS DY COMMISSIONER OF INCOME TAX SPECIAL RANGE 2 ------------------------------------------------------- NARENDRA LAXMICHAND GAJIWALA VS -------------------------------------------------------- DEVENDRA AJITRAI DESAI VS DY. COMMISSIONER OF INCOME TAX -------------------------------------------------------- GAURANG SUBHODRAI DESAI VS DY COMMISSIONER OF INCOME TAX -------------------------------------------------------- NAISHADRAI RAMCHAND DESAI VS DY COMMISSIONER OF INCOME TAX -------------------------------------------------------- KIRTIDA MAHESH DESAI VS DY COMMISSIONER OF INCOME TAX -------------------------------------------------------- REVANT MAHESH DESAI VS DY COMMISSIONER OF INCOME TAX -------------------------------------------------------- INDUBEN SUBHODRAI DESAI VS DY COMMISSIONER OF INCOME TAX -------------------------------------------------------- DAXA RAMCHANDRA DESAI VS DY COMMISSIONER OF INCOME TAX SPECIAL RANGE 2 -------------------------------------------------------- KANISHA SHYAMBHAI LOKHANDWALA VS DY COMMISSIONER OF INCOME TAX -------------------------------------------------------- HARSHIDA DHIRUBHAI DESAI VS DY COMMISSIONER OF INCOME TAX --------------------------------------------------------- SANDHIYA RAJENDRA DESAI VS DY COMMISSIONER OF INCOME TAX --------------------------------------------------------- SABNAM AKBAR LOKHANDWALA VS DY COMMISSIONER OF INCOME TAX --------------------------------------------------------- USHABEN DAYABHAI JARIWALA VS DY COMMISSIONER OF INCOME TAX --------------------------------------------------------- HANSABEN AJITRAI DESAI VS DY COMMISSIONER OF INCOME TAX --------------------------------------------------------- NEELABEN BHIKHUBHAI DESAI VS DY COMMISSIONER OF INCOME TAX --------------------------------------------------------- Appearance: Mr. K.H. Kaji for Petitioners in all the petitions. Mr. Mihir Joshi for Mr. M.R. Bhatt for Respondent No. 1 in all the petitions. Mr. Jayant Patel for Respondent No. 2 in all the petitions. petitions. -------------------------------------------------------- CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE A.R.DAVE Date of decision: 15/10/98 ORAL JUDGEMENT (Per R.K. Abichandani, J.) �This group of petitions seeks to challenge the constitutional validity of the provisions of Sec. 158BD of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') on the ground that they violate the fundamental rights of the petitioners guaranteed by Articles 14, 19(1)(g) and 21 of the Constitution of India and the impugned Notice dated 15.5.1998 and the Assessment Order dated 14.7.1998 passed pursuant thereto as having been passed without jurisdiction on that ground. petitions. -------------------------------------------------------- CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE A.R.DAVE Date of decision: 15/10/98 ORAL JUDGEMENT (Per R.K. Abichandani, J.) �This group of petitions seeks to challenge the constitutional validity of the provisions of Sec. 158BD of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') on the ground that they violate the fundamental rights of the petitioners guaranteed by Articles 14, 19(1)(g) and 21 of the Constitution of India and the impugned Notice dated 15.5.1998 and the Assessment Order dated 14.7.1998 passed pursuant thereto as having been passed without jurisdiction on that ground. 2.�Earlier, by an order dated 6.5.1998, the Division Bench comprising of Hon'ble the Chief Justice and one of us (A.R. Dave, J.) had made an order directing all these matters to be posted for final disposal on 15.7.1998 in the Admission Board itself and that is how this group of maters came to be finally heard while they were on the admission board. Both the sides have referred to and argued on the basis of the record of Special Civil Application No. 3021/98 which is the lead matter since all other matters of the group are identical. 3.�The petitioners' case in these matters is that they were members of Dhawal Co-operative Housing Society which was registered under the provisions of the Gujarat Co-operative Housing Societies Act on 3.4.1978. The promoters of that society had entered into an agreement for purchase of a plot of land with one Lalitkumar T. Desai on 29.10.1975 for the purpose of putting up a building for providing residential accommodation to its members. Since the land was agricultural land, N.A. permission was required to be obtained by the seller. The necessary permission under Sec. 20 of the Urban Land (Ceiling & Regulation) Act, 1976, came to be obtained on 21.4.1990. In the meantime, the vendor had passed away on 22.8.1989 and ultimately the sale deed came to be executed by his heirs on the said date when permission was obtained, i.e., on 21.4.1990. Under the sale deed, the said land admeasuring 3383 square meters was sold for Rs. 67,660/-. Thereafter, the society entered into a development agreement on 11.8.1995 with one Madhavji Dhanjibhai Patel, who, as it transpired, was the sole owner of M/s. Dhruvin Enterprises. Under the terms of that agreement, it was stipulated that each of the original members of the society, who were 17 in number, had to pay Rs. 1,21,000/- as the cost of each flat to be allotted to such member. The said developer became entitled, under the agreement, to enrol new members for the said society with a written consent of the society after the original 17 members were handed over the possession of the flats which were to be constructed by him. Accordingly, after the building was constructed by the developer, Madhavji Dhanjibhai Patel, the society issued allotment letters on 3.4.1996 to the said original 17 members who are the petitioners before us in this group of petitions and the possession thereof was taken by them some time in February 1997. They had paid the stipulated amount of Rs. 1,21,000/- as the cost of construction of each flat as per the agreement. According to the petitioners, the society had thereafter, as per the agreement, inducted additional members on the request of the developer. �In the meantime, on 14.7.1996, the Income-tax request of the developer. �In the meantime, on 14.7.1996, the Income-tax Department initiated search and seizure proceedings against Madhavji Dhanjibhai Patel at his residence and office premises as well as in respect of bank lockers and assessment proceedings as per the special procedure laid down by Chapter XIV-B of the Act were initiated against him which were completed on 30.7.1997, assessing the total undisclosed income at Rs. 5,65,66,211/-. In those proceedings against Madhavji, his statements were recorded at various stages and on 24.7.1997 it was recorded in Question-Answer form. In August 1997, the petitioners received notices dated 25.7.1997 from the respondent No. 1, the Deputy Commissioner of Income-tax, under Sec.158BD calling upon the petitioners to file returns of income including the undisclosed income in respect of which they were assessable for the block period of 10 years mentioned in Sec. 158B(a) of the Act. A similar notice was also issued in the name of the Association of Persons consisting of these 17 members. A copy of such notice is at Annexure-A to the petition. The petitioners had initially taken up a contention that the impugned notice which was issued to them by the Assessing Officer, the Respondent No.1, who was assessing the person subjected to raid, i.e., Madhavji, was without jurisdiction since the Assessing Officer having jurisdiction over the petitioners was different and not the first respondent. It was contended that the notice under Sec. 158BD could be issued only by the Assessing Officer having jurisdiction over the petitioners after the record is handed over to him. After the filing of these petitions fresh notices dated 15.5.1998 were issued by the respondent No.1 under Sec. 158BD in identical terms since he was, by then, vested with the jurisdiction to assess these petitioners. In view of this development, the petitioners amended the petitions by adding paragraph 18A in which it is now stated that the contention raised by the petitioners in para 16 of the petition, which was against the validity of the earlier notice issued on 25.7.1997 as per Annexure-A to the petition, did not now survive. The assessment orders have thereafter been made in case of all these petitioners on 14.7.1998. It is stated by the petitioners in the said amended para 18A that the merits of the assessment are not in issue in these petitions and will be contested before the appellate authorities in due course. The fresh notice dated 15.5.1998 and the assessment orders dated 14.7.1998 are however challenged as illegal and void on the ground that the provisions of Sec. 158BD are ultra vires Article 14, 19(1)(g) and 21 of the Constitution and, therefore, all action taken under that provision is equally without jurisdiction and void. 4.�The respondents in their affidavit-in-reply have contended that the Assessing Officer who was given jurisdiction over these petitioners has issued a fresh notice to them. The earlier notice dated 28.7.1997 was issued before the block assessment proceedings in the case of Shri Madhavji Dhanjibhai Patel were completed since the information regarding the Wards/Circles in which these 17 petitioners were being assessed was not forthcoming. As noted above, the petitioners have themselves stated by an amendment in the petition that the contentions which were raised by them in para 16 of the petition against the earlier notice dated 28.7.1997 did not now survive. �According to the respondents, Shri Madhavji void. 4.�The respondents in their affidavit-in-reply have contended that the Assessing Officer who was given jurisdiction over these petitioners has issued a fresh notice to them. The earlier notice dated 28.7.1997 was issued before the block assessment proceedings in the case of Shri Madhavji Dhanjibhai Patel were completed since the information regarding the Wards/Circles in which these 17 petitioners were being assessed was not forthcoming. As noted above, the petitioners have themselves stated by an amendment in the petition that the contentions which were raised by them in para 16 of the petition against the earlier notice dated 28.7.1997 did not now survive. �According to the respondents, Shri Madhavji Dhanjibhai Patel was the proprietor of M/s. Dhruvin Enterprises and not its partner. Though Madhavji was permitted to enrol new members for the said society with the written consent of the society, after the original 17 members were given possession of the flats, all the new members had already been enrolled as on 30.6.1995 as per the details filed during the course of the block assessment proceedings in the case of Shri Madhavji. It was held in the case of Shri Madhavji that the development agreement was a sham agreement because, in fact, the entire land belonging to the society had been transferred to Madhavji. It is stated in the said affidavit-in-reply that Madhavji for whom the search and seizure was made had stated on oath in his statement taken on 24.7.1997 in reply to Question No. 4 as under: Qn. No. 4 --------- "As per seized diary B-2 page No. 19 where the area of land and the rate per sq.yd. has been written by you, the total price of land was written as 329. After making the calculation for 17 flats of 2200 sq.ft. at the rate of Rs. 641 approx. the value was calculated at Rs. 237. The value of land to be paid after deducting 237 from 329 was calculated at 92. This reconcile the payment made to the 17 land owners." Answer: ------ "As per document referred above, the total price of land was Rs. 3.29 crores. Against the above land price, 17 flats were delivered and, therefore, the payment was calculated at Rs. 2.37 crores in kind. Rs. 92 lakhs was paid alongwith the total expenditure on account of U.L.C. permission, Corporation permission, N.A. permission, land filing and other expenses the details of which has not been kept by me. It is not possible for me to give the details of land filling expenses separately." the payment made to the 17 land owners." Answer: ------ "As per document referred above, the total price of land was Rs. 3.29 crores. Against the above land price, 17 flats were delivered and, therefore, the payment was calculated at Rs. 2.37 crores in kind. Rs. 92 lakhs was paid alongwith the total expenditure on account of U.L.C. permission, Corporation permission, N.A. permission, land filing and other expenses the details of which has not been kept by me. It is not possible for me to give the details of land filling expenses separately." It is further stated in the affidavit-in-reply that in the Satisfaction Note recorded before the issuance of notice under Sec.158BD of the Act, it was noted that the land had been transferred to Shri Madhavji Dhanjibhai Patel for the consideration of Rs. 2.37 crores in kind and Rs. 92 lakhs in cash paid to the 17 persons who were the initial members of the co-operative society. According to the respondents, there was no question of the 17 members paying any amount for getting the said flats in addition to Rs. 1,21,000.00 per flat since these 17 members had transferred the land valuing Rs. 3.29 crores in consideration for 17 flats and Rs. 92 lakhs in cash. It is stated that the detailed satisfaction note was recorded on the basis of the documents and other material seized in the case of Shri Madhavji Dhanjibhai Patel for whom the search and seizure proceedings were initiated, before a notice under Sec. 158BD of the Act was issued on the petitioners. The reasons for issuance of the notice under Sec. 158BD have been annexed at Annexure-A to the affidavit-in-reply. For very detailed reasons which are given in the said satisfaction note for issuance of the notice under Sec. 158BD of the Act to these petitioners, the Assessing officer was satisfied that the agreement with the co-operative society was a sham agreement and the land had, in fact, been transferred to Shri Madhavji D. Patel for a consideration of Rs. 2.37 crores in kind and Rs. 92 lakhs in cash paid to 17 persons who were the initial members of the said society, that is, these petitioners. From the said satisfaction note, it appears that the Assessing Officer had reached his satisfaction for issuing notice under Sec. 158BD of the Act on these petitioners on the basis of the material which was seized during the search and the statements which were recorded under Sec. 132(4) of the Act. �In the affidavit-in-rejoinder filed by the petitioners, it is contended that, even assuming that the reasons recorded in the said satisfaction note are on the basis that Rs. 92 lakhs were paid to the original 17 members of the society, there was no basis for recording such reasons and that the reasons were recorded by the first respondent who was the Assessing Officer of the raided person Madhavji and not the Assessing Officer of the petitioners. It is contended that Sec. 158BD of the Act unreasonably bifurcated the functions of the Assessing Officer who is to record satisfaction and the Assessing Officer who is required to issue notice under Sec. 158BD of the Act. �In the affidavit-in-rejoinder filed by the petitioners, it is contended that, even assuming that the reasons recorded in the said satisfaction note are on the basis that Rs. 92 lakhs were paid to the original 17 members of the society, there was no basis for recording such reasons and that the reasons were recorded by the first respondent who was the Assessing Officer of the raided person Madhavji and not the Assessing Officer of the petitioners. It is contended that Sec. 158BD of the Act unreasonably bifurcated the functions of the Assessing Officer who is to record satisfaction and the Assessing Officer who is required to issue notice under Sec. 158BD of the Act. 5.�During the arguments, the Learned Counsel appearing for the petitioners has confined his challenge to the constitutionality of the provisions of Sec. 158BD of the Act on the ground that it violates the fundamental rights of the petitioners under Art. 14 of the Constitution inasmuch as it creates an invidious discrimination against the petitioners vis-a-vis similarly situated persons who can be dealt with under the provisions of sections 147 and 148 of the Act. Elaborating his argument, the Learned Counsel contended that the provisions of Sec. 158BD of the Act were really an interloper in providing for special assessment in search cases because the person other than the person with respect to whom the raid was made was never searched and no warrant of authorisation was issued nor any belief or information that any undisclosed income existed in his hands was reached under Sec. 132 of the Act. He contended that discrimination was writ large on the provisions of Sec. 158BD of the Act because they not only discriminated the persons who were not actually searched vis-a-vis the persons who could have been proceeded under sec. 147 read with sec. 148 of the Act for assessment or reassessment of any income that may have escaped assessment, but, they also discriminated such "other persons" vis-a-vis the person who was raided. It was submitted that the procedural discrimination against these "other persons" was hostile inasmuch as it entailed automatic reopening of the assessment of the block period of 10 years. Moreover, the time-limit, for completion of the assessment of such "other persons", was to commence only from the end of the month in which the notice was given to such other persons under sec. 158BD read with sec. 158BC(1) read with rule 12 of the Rules by which the assessee was required to fill in return in Form 2B prescribed thereunder unlike the time-limit fixed for the raided persons on the basis of the execution of the last authorisation. It was also contended that the method of computation of the undisclosed income was also specially devised and was more stringent than the normal method of assessment of total income; and finally, a flat rate of tax of 60% was prescribed in respect of total undisclosed income of the block period as provided by sec. 113 of the Act. It was contended that the distinction between persons other than the raided person whose undisclosed income is found in the course of the raid, and persons who could be proceeded against under Section 147 on the ground that their income had escaped assessment which would also include undisclosed income, was not warranted, as they belonged to the same class. Moreover, as regards the raided party, the limitation was fixed at one year from the end of the month in which the last authorisation for search or requisition was executed while in the case of 'other person' referred to in sec. 158BD, the limitation provided was one year from the end of the month in which the notice under Chapter XIVB was served on such other person in the cases where search was initiated after 30.6.1995 but before 1.1.1997 as in the present case. It was contended that "other person" referred to in sec. 158BD of the Act was thus treated in a more disadvantageous manner than the raided person himself because a notice under Chapter XIVB may be served on such other person at any time. It was submitted that since there was no time prescribed in the Act for issuance of such notice to the "other person" referred to in sec. 158BD of the Act, it was not for the court to read any time-limit for issuance of such notice. It was submitted that virtually the time-limit stood lifted in case of such other persons while the time-limit of one year from the end of the month in which the last authorisation for search or requisition was executed operated to the benefit of the person who was searched. Thus, there was invidious discrimination between the raided person and the other person to whom the undisclosed income belonged as per the satisfaction of the Assessing Officer. The learned counsel relied upon the decisions of the Supreme Court in Suraj Mall Mohta and Anr. v. A.V. Visvanatha Sastri and Anr., reported in 26 ITR 1 and in S.C. Prashar and Anr. v. Vasantsen Dwarkadas and Ors., reported in 49 ITR 1, in support of his contentions. 6.�The Learned Counsel appearing for the respondents contended that the said procedure for assessment of search cases had to be devised because of the inefficacy of the earlier provisions, which led to complications which are referred to in the memorandum of explanation of the new provisions. He referred to the Notes on Clauses and Memorandum explaining the provisions in the Finance Bill 1995 to point out the reasons which promoted the framing of the present scheme. He submitted that the persons to whom the undisclosed income detected in the search and seizure proceedings belonged form a separate class. This had to be done because earlier, while proceeding to make assessments and reassessments in respect of the undisclosed income which was estimated under sec. 132B, it became very difficult to relate the undisclosed income to any particular year and in the process of assessment where the facts remained clouded, the assessees were not too co-operative to help the department in relating the undisclosed income to the particular years. It was submitted that a person whose undisclosed income is detected could be legitimately classified separately from the other persons in whose case the Assessing Officer can initiate proceedings under sec. 147 read with sec. 148 of the Act on a reason to believe that some income of a particular previous year had escaped assessment. In the latter case, there was no detected undisclosed income which was required to be related to particular previous years. It was further submitted that the Assessing Officer who was required to proceed against the raided person in respect of the undisclosed income found from his possession or control had no reason to wait any further after the material was transmitted to him under sec. 132(9A) of the Act and that is why the time-limit for assessment of such persons was fixed as one year from the end of the month in which the last authorisation was executed. It was argued that the fact that the undisclosed income belongs to some other person may come to light when the assessment proceedings against the raided person are commenced. Such other person to whom the undisclosed income belongs also stands on the same footing as the raided person to whom a part of the undisclosed income belongs. However, the commencement of the point of limitation in case of such other persons could not be the same as was provided for the raided persons and by the very nature of things the time-limit was made to commence in such cases from the date of receipt of the notice by such other person. It was argued that there was no warrant for any assumption that the notice to such other person could be issued at any time. He submitted that there were sufficient indications in the provisions of sec. 132 as well as Chapter XIVB to show that such notice was required to be issued soon after the Assessing Officer was satisfied that any undisclosed income belonged to such other person. If any notice is unduly delayed, that would be a lapse in executing the provisions of the Act for which the statutory provision cannot be struck down. He submitted that a wide range and flexibility is permissible to the legislature in fiscal statutes and the legislature need not be all embracing in making such provisions. He relied upon the decisions of the Supreme Court in R.K. Garg v. Union of India reported in 133 ITR 239, Sakhawant Ali v. State of Orissa reported in AIR 1955 SC 166,Twyfold Tea Co. v. The State of Kerala reported in AIR 1970 SC 1133, and State of Bihar v. S.K. Sinha reported in AIR 1995 SC 885 in support of his contentions. He also referred to the decisions of the Constitution Bench of the Supreme Court in A. Thangal Kunju Musaliar v. M. Venkatachalam Potti and Anr. reported in 29 ITR 349 and ITO v. Murlidhar Bhagwandas reported in 52 ITR 335 in which the earlier decisions in Prashar v. Vasantsen (supra) and Suraj Mall Mohta (supra) were considered, and the decision of the Supreme Court in Hungerford Investment Trust Ltd. v. ITO and ors. reported in 231 ITR 175 in which ITO v. Murlidhar Bhagandas (supra) was explained and applied and the decision in Prashar v. Vasantsen (supra) was also considered. reported in 29 ITR 349 and ITO v. Murlidhar Bhagwandas reported in 52 ITR 335 in which the earlier decisions in Prashar v. Vasantsen (supra) and Suraj Mall Mohta (supra) were considered, and the decision of the Supreme Court in Hungerford Investment Trust Ltd. v. ITO and ors. reported in 231 ITR 175 in which ITO v. Murlidhar Bhagandas (supra) was explained and applied and the decision in Prashar v. Vasantsen (supra) was also considered. 7.�Under the proviso to Sec. 4(1) of the said Act, it is laid down that, where, by virtue of any provision of the Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. Therefore, the charging section clearly envisaged that there could be made a provision in the Act for charging income-tax in respect of the income of a period other than the previous year. But for this proviso under sec. 4(1), income-tax could be charged only for any assessment year in respect of the total income of the previous year. The block period contemplated by Chapter XIV-B would be a period other than the previous year within the meaning of the proviso to Sec. 4(1) of the Act and the income for such block period would be an income of a period other than the previous year as per that proviso. 8.�Chapter XIV of the Act provides for the procedure for assessment and it contains Sec. 147 relating to income escaping assessment whereunder the Assessing Officer, having reason to believe that any income chargeable to tax has escaped assessment for any assessment year, can proceed to assess or reassess such income and also any other chargeable income which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under sec.147 for the assessment year concerned. Thus, the provision of sec. 147 enabled the Assessing Officer to tax income that has escaped assessment for any assessment year and was inapplicable to any assessment of income for a block period. A time-limit for issuance of notice under sec. 148 for the purpose of assessment, reassessment or recomputation is prescribed under sec. 149 of the Act and this time-limit extended upto 10 years from the end of the relevant assessment year depending upon the amount of income chargeable to tax which had escaped assessment. Such notice may be issued at any time if assessment, reassessment or recomputation was required to be made to give effect to any finding or direction contained in the order in appeal, reference or revision or by a Court, provided such assessment, reassessment or recomputation was not time-barred when reassessment or recomputation was not time-barred when the order subject to appeal, revision or reference was made, as laid down in Sec. 150(2) of the Act. If assessment under sec. 143(3) or sec. 147 has already been made for the relevant assessment year, no notice under sec. 148 could be issued unless the officer of appropriate higher rank, as provided in sec. 151(1), was satisfied on reasons recorded that it is a fit case for issuance of such notice. Sec. 153 provides for time-limit for completion of assessments and reassessments and in sub-sec. (2) it is provided that no order shall be made under sec. 147 of assessment, reassessment or recomputation after the expiry of 2 years from the end of the financial year in which notice under sec. 148 of the Act was served. Thus, outer limit for assessment, reassessment or recomputation under sec. 147 of the Act was upto 10 years from the end of the relevant assessment year for the notice and within 2 years after the end of the financial year in which such notice under sec. 148 was given. We have set out the provisions relating to the time-limit when proceedings are taken under sec. 147 of the Act because in his attack against the provisions of sec. 158BD, the learned counsel for the petitioners laid much emphasis on the fact that the other persons who fall within the provisions of sec. 158BD were unduly discriminated against in the matter of time-limit for completion of block assessment as separately provided in respect of such other persons under sec. 158BE(2) of the Act. 9.�Chapter XIV-B lays down special procedure for assessment of search cases. As noted above, it deals with assessment of a `block period' as defined in clause (a) of sec. 158B being a period of previous years relevant to ten assessment years preceding the previous year in which the search was conducted under sec. 132 or requisition made under sec. 132A of the Act and including the period upto the date of the commencement of the search in the previous year in which the search was conducted. In cases where a search is initiated under Sec. 132 or books of account, other documents or any assets are requisitioned under sec. 132A in the case of any person after 30th June 1995, the Assessing Officer is required to proceed to assess the undisclosed income in accordance with the provisions of Chapter XIV-B and the total undisclosed income relating to the block period has to be charged to tax at the rates specified in sec. 113 as the 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, as provided in sec. 158BA of the Act. "Undisclosed income" as defined by sec. 158B(b) 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, whether such money, bullion, jewellery, valuable article, thing, entry in the books of account or other documents or transactions represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of the Act. Where the assessee proves to the satisfaction of the Assessing Officer that any part of the income referred to in sub-sec. (1) of sec. 158BA relates to an assessment year for which the previous year has not ended or the date of filing the return of income under sub-sec. (1) of sec. 139 for any previous year has not expired and such income or 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 will not be included in the block period as provided in sub-sec. (3) of sec. 158BA of the Act. The computation of undisclosed income of the block period is to be done as provided in sec. 158BB of the Act 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. 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, is on the assessee as laid down by sub-sec. (3) of sec. 158BB of the Act. The procedure for block assessment is laid down in sec. 158BC of the Act and the provision clearly indicates that it will operate where any search has been conducted under sec. 132 or books of account, other documents or assets are requisitioned under sec. 132A in the case of any person. Section 158BG provides that 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. The first step that such Assessing Officer is required to take under sec. 158BC in such cases is that of serving a notice to such person in whose case search has been conducted or books, documents or assets are requisitioned, requiring him to furnish a return in the prescribed form within such time not being less than 15 days where the search is initiated or books of account etc. are requisitioned after 30th of June of account etc. are requisitioned after 30th of June 1995 but before the 1st of January 1997 being the period in which the present cases fall. The return is to be filed in Form No. 2B prescribed under rule 12(1)(A) of the Rules framed under the said Act in which such person is required to set forth his total income including the undisclosed income for the block period. The Assessing Officer has then to proceed to determine the undisclosed income of the block period in the manner laid down in sec. 158BB and the provisions of sec. 142, sub-sec. (2) and (3) of sec. 143 and sec. 144 are made applicable to the extent that they may apply. On determination of the undisclosed income for the block period in accordance with Chapter XIV-B, the Assessing Officer has to pass an order of block assessment and determine the tax payable by such person on the basis of such assessment. Thus, the Assessing Officer in cases where such return has been filed in Form 2B if he considers it necessary or expedient to ensure that such person has not understated the undisclosed income, then he may call upon such person to produce evidence in support of his return as envisaged by sub-sec. (2) of sec. 142 of the Act. He can proceed under sub-sec. (3) to hear the evidence as may be produced and after taking into account all the relevant material which, he may gather during such inquiry, make an order under clause (c) of sec. 158BC of assessment determining the tax payable by such person on the basis of such assessment. The assets seized under sec. 132 or requisitioned under sec.132A are required to be retained to the extent necessary and the provisions of sec. 132B are made applicable subject to such modifications as may be necessary and the references to "regular assessment" or "reassessment" in sec. 132B is required to be construed as references to "block assessment" as provided in clause (d) of sec. 158BC of the Act. 10.�Then follows the provision of sec. 158BD which is impugned in these petitions and therefore we reproduce the same hereunder: "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 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 against such other person and the provisions of the Chapter shall apply accordingly." 10.�Then follows the provision of sec. 158BD which is impugned in these petitions and therefore we reproduce the same hereunder: "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 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 against such other person and the provisions of the Chapter shall apply accordingly." This provision indicates that where the Assessing Officer, who is seized of the matter and has jurisdiction over the person other than the person with respect to whom search was made under sec. 132 or whose books of account or other documents or any assets were requisitioned under sec. 132A, shall proceed against such other person as per the provisions of Chapter XIV-B which would mean that on such satisfaction being reached that any undisclosed income belongs to such other person, he must proceed to serve a notice to such other person as per the provisions of sec. 158BC of the Act. If the Assessing Officer who is seized of the matter against the raided person reaches such satisfaction that any undisclosed income belongs to such other person over whom he has no jurisdiction, then, in that event, he has to transmit the material to the Assessing Officer having jurisdiction over such other person and in such cases the Assessing Officer who has jurisdiction will proceed against such other person by issuing the requisite notice contemplated by sec. 158BC of the Act. �The time-limit for completion of block assessment is provided by sec. 158BE and it is one year from the end of the month in which the last of the authorisations for search under sec. 132 or for requisition under sec. 132A was executed in cases where a search is initiated or books of account etc. requisitioned after the 30th of June, 1995, but before the 1st day of January, 1997. It will be noticed that the time-limit for completion of assessment provided in clause (a) of sec. 158BE(1) essentially relates to the assessment of the undisclosed income of the raided person because sub-sec. (2) of sec. 158BE specifically provides that in case of person other than the person with respect to whom search was made or books of account etc. requisitioned, the period of limitation for completion of block assessment would be one year from the end of the month in which the notice under Chapter XIV-B was served on such other person in cases where the search was initiated after 30th June 1995 but before 1st January, 1997. 11.�It will be noticed from the provisions of Chapter XIV-B that the special procedure devised therein is required to be followed for assessment in search cases covered by the provisions of sec. 132 and 132A of the Act. Section 132(1) spells out the contingency in which authorisation can be issued by the high officials but before 1st January, 1997. 11.�It will be noticed from the provisions of Chapter XIV-B that the special procedure devised therein is required to be followed for assessment in search cases covered by the provisions of sec. 132 and 132A of the Act. Section 132(1) spells out the contingency in which authorisation can be issued by the high officials designated therein for search and seizure where any such designated authority, that is, Director-General or Director, Chief Commissioner or Commissioner, Joint Director or Joint Commissioner as may be empowered by the Board has reason to believe, in consequence of information in his possession, that any person on whom summons was issued has omitted or failed to produce or cause to be produced books of account or other documents as required by such summons or notice or that any person to whom summons or notice has been or might be issued will not or would not produce any books of account or documents which will be useful or relevant to any proceeding under the Act or where any person is in possession of any money, bullion, jewellery or other valuable article or thing which represents either wholly or partly income or property which has not been or would not be disclosed for the purposes of the Act, then such authority may authorise any of the named officers to conduct search and seizure in the manner