E K LINGAMURTHY Vs. SETTLEMENT COMMISSIONER

JUDGEMENT

(1.) THE petitioners in these writ petitions are income tax assessees. The Income Tax Department conducted a search under Section 132 of the Income Tax Act, 1961, on 11. 10. 1996 in the business premises of the assessees as well as their family members who were partners in various firms. The assessment proceedings were initiated under Chapter XIV-B of the Income Tax Act. The writ petitioners, as well as the Group, filed a consolidated petition before the Settlement Commission, the first respondent herein in the writ petition, for the block period commencing from 1. 4. 1986 to 11. 10. 1996.

(2.) THE Settlement Commission admitted the application under Section 246-D of the Income Tax Act under order dated 27. 2. 1998.

(3.) THE petitioners claimed unabsorbed depreciation and business loss for the Assessment Years 1995-96 and 1996-97, comprised of the block period. The claim was rejected by the Settlement Commission, first respondent herein. Under Order dated 19. 11. 2001, referring to Section 158-BB (4) and Explanation-A to Section 158-BA (2), the Settlement Commission rejected this plea. It viewed that the assessment made under Chapter XIV-B shall be in addition to the regular assessment in respect of each previous year included in the block period. Consequently, the unabsorbed loss and current depreciation claimed in the regular return should be determined and allowed to be carried forward for future adjustment only in the regular assessments. Consequently, the claim for adjustment of unabsorbed depreciation against the undisclosed income in a block assessment would not be considered.