“block period”
The decision most relied on for block period is CIT v. Calcutta Knitwears (362 ITR 673), cited in 528 judgments on BharatTax.
Leading authorities on block period
The recording of a satisfaction note by the Assessing Officer is a jurisdictional prerequisite for assessments under Section 153C, and the six-year limitation period for such assessments is reckoned from the date this satisfaction is recorded.
For assessments under Section 153C, the commencement point for calculating the six or ten assessment year block period is the date of issuing the Section 153C notice, or the date of the satisfaction note/handing over of books, as clarified by the first proviso to Section 153C(1).
An assessee cannot claim deductions or expenditures in a Section 153A assessment that were not claimed in the original completed assessment, even if documents were found during a search.
For assessments under Section 153C concerning a non-searched person, the relevant date for calculating the block of assessment years is the date on which the jurisdictional Assessing Officer of that person assumes possession of the seized material, not the date of the original search. This date determines the look-back period for reopening assessments under Section 153A read with 153C.
A consolidated satisfaction note covering multiple assessment years is valid for initiating proceedings under section 153C, provided the seized material and the additions rest on incriminating evidence pertaining to those years.
An assessment initiated under Section 153C against a person other than the searched person is invalid if the Assessing Officer of the searched person fails to record a proper satisfaction note as mandated by the section. The procedural requirement of a satisfaction note is crucial for the validity of such an assessment.
The 20% tax rate under Section 112 applies to capital gains arising from the transfer of a depreciable asset, even if it is deemed a short-term capital gain under Section 50, provided the asset was held for more than 36 months. The fiction created by Section 50 for treating such gains as short-term does not alter the long-term nature of the asset for applying the tax rate under Section 112.
Additions cannot be made to assessments under Sections 153A and 153C if no incriminating material was found during a search operation. Assessments for each year preceding the search are distinct and separate.