Authority competent to make assessment of block period.

299(1)

The order of assessment for the block period shall be passed by an Assessing Officer not below the rank of a Deputy Commissioner or an Assistant Commissioner or a Deputy Director or an Assistant Director.

299(2)

The order referred to in sub-section (1) shall be passed with the previous approval of the Additional Commissioner or the Additional Director or the Joint Commissioner or the Joint Director, in respect of search initiated or requisition made on or after the commencement of this Act.

Explanation

Section Summary:

This section specifies the authority responsible for making assessments for the "block period" under the Income Tax Act. The block period refers to a specific timeframe (usually 6 years) during which undisclosed income is assessed following a search or requisition. The section ensures that such assessments are conducted by senior tax officers and require approval from higher-ranking officials.

Key Changes:

1. Designation of Assessing Officers: The section clarifies that only officers of a certain rank (Deputy Commissioner, Assistant Commissioner, Deputy Director, or Assistant Director) are authorized to pass assessment orders for the block period.
2. Approval Requirement: For searches or requisitions initiated after the commencement of this Act, the assessment order must be approved by higher-ranking officials (Additional Commissioner, Additional Director, Joint Commissioner, or Joint Director).

Practical Implications:

• For Taxpayers: Ensures that assessments for undisclosed income during the block period are handled by experienced and senior officers, reducing the likelihood of arbitrary decisions.
• For Tax Authorities: Introduces a layer of oversight by requiring approval from higher-ranking officials, promoting accountability and consistency in assessments.
• For Businesses: Businesses subject to search operations can expect a more structured and transparent assessment process.

Critical Concepts:

• Block Period: A specific timeframe (typically 6 years) during which undisclosed income is assessed following a search or requisition.
• Search or Requisition: A search refers to the physical inspection of premises by tax authorities, while requisition refers to the seizure of documents or assets.
• Approval Mechanism: The requirement for higher-ranking officials to approve assessment orders ensures checks and balances in the process.

Compliance Steps:

1. For Tax Authorities:
   • Ensure that only authorized officers (Deputy Commissioner, Assistant Commissioner, Deputy Director, or Assistant Director) pass assessment orders for the block period.
   • Obtain prior approval from higher-ranking officials (Additional Commissioner, Additional Director, Joint Commissioner, or Joint Director) for assessments related to searches or requisitions initiated after the commencement of this Act.
2. For Taxpayers:
   • Be aware that assessments for undisclosed income during the block period will be conducted by senior officers and subject to additional oversight.

Examples:

• Scenario 1: A business undergoes a search operation, and undisclosed income is identified for the block period. The assessment order is passed by an Assistant Commissioner and approved by a Joint Commissioner, ensuring compliance with this section.
• Scenario 2: A taxpayer challenges an assessment order, arguing that it was passed by an officer below the required rank. The tax authorities must demonstrate that the officer was authorized under this section and that the order was approved by a higher-ranking official.

This section ensures a structured and accountable process for assessing undisclosed income during the block period, benefiting both taxpayers and tax authorities.