2009 (12) TMI 730 - AT - Income Tax

Summary

Issues:
Challenge to annulment of block assessment order by Commissioner of Income-tax (Appeals) due to time limitation under section 158BE(1)(b) of the Income-tax Act.

Analysis:
The appeal by the Revenue challenges the annulment of the block assessment order by the Commissioner of Income-tax (Appeals) based on the time limitation issue under section 158BE(1)(b) of the Income-tax Act. The crux of the matter revolves around the legality of the assessment framed under section 158BC, which was contended to be beyond the prescribed time limit. The appellant argued that the assessment, passed on June 3, 2005, was barred by limitation as per the provisions of section 158BE of the Act, citing the Supreme Court's judgment declaring the order directing audit under section 142(2A) as illegal and without authority of law.

The Commissioner of Income-tax (Appeals) extensively deliberated on the issue, considering the Supreme Court's decision and the absence of any communication confirming a stay on the Supreme Court's judgment. The Commissioner concluded that the block assessment order, dated June 3, 2005, had become time-barred as per the provisions of section 158BE of the Income-tax Act, as the extended period provided under the proviso to Explanation 1 to section 158BE(2) would not be available to the Assessing Officer. Consequently, the Commissioner annulled the assessment order due to being barred by limitation.

Upon appeal, the Tribunal referred to a Special Bench decision that analyzed similar issues and Supreme Court judgments. The Tribunal disagreed with the Commissioner's annulment of the assessment order, following the principle that the assessment should be set aside to the Assessing Officer for a fresh assessment after affording a reasonable opportunity of being heard to the assessee. The Tribunal held that the assessment cannot be annulled but should be restored back to the Assessing Officer for a fresh assessment, aligning with the decisions of the Supreme Court and the Tribunal's previous rulings.

In conclusion, the Tribunal allowed the Revenue's appeal for statistical purposes, restoring the matter to the Assessing Officer for framing a fresh assessment in compliance with the legal provisions and principles outlined in the judgments and decisions referenced during the proceedings.