2007 (4) TMI 613 - AT - Income Tax

Summary

Issues:
1. Addition of Rs. 10 lakhs on account of two FDRs in the name of individuals.
2. Legality and time limitation of the block assessment order passed under sections 158BC and 144 of the Income-tax Act.

Analysis:
1. The appeal was against the addition of Rs. 10 lakhs on account of two Fixed Deposit Receipts (FDRs) in the names of two individuals. The appellant contended that the addition was unjust, unlawful, and against the directions of the Income-tax Appellate Tribunal. The Tribunal admitted additional grounds challenging the legality and time limitation of the block assessment order. The appellant argued that the block assessment was completed beyond the time limit prescribed under Chapter XIV-B of the Income-tax Act. The Tribunal admitted the additional ground based on legal nature and relevant facts on record. The appellant's counsel argued that the block assessment completion period should adhere to the limitations set by section 158BE(2)(a) due to the search date. However, the Departmental representative contended that the completion was within time as per section 153(2A) applicable to set aside assessments. The Tribunal analyzed the provisions, including section 158BH, and held that section 153(2A) applies to block assessments, rejecting the appellant's argument on the limitation period. The additional ground challenging the time limitation was dismissed.

2. The Tribunal examined the legality and time limitation of the block assessment order passed under sections 158BC and 144 of the Income-tax Act. The appellant argued that the assessment was beyond the time limit provided under Chapter XIV-B. The Tribunal considered the provisions of section 158BH, which states that all other provisions of the Act apply to assessments made under Chapter XIV. It was noted that there was no specific section in Chapter XIV prescribing a time limit for completing a set-aside block assessment. The Tribunal held that section 153(2A) prescribing the period for set-aside assessments under various sections applies to block assessments as well. The Tribunal emphasized that the assessment year or block period is not crucial for applying other provisions of the Act, focusing on the term "assessment." Consequently, the Tribunal rejected the appellant's argument that section 158BE(2)(a) should govern the completion period, affirming that section 153(2A) is applicable to block assessments. The challenge on the legality and time limitation of the block assessment order was dismissed.