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2011 (5) TMI 856 - AT - Income Tax

Issues Involved:

1. Validity of the block assessment order due to non-service of notice under section 143(2) of the Income-tax Act.
2. Examination of the procedural compliance regarding the issuance and service of notice under section 143(2).
3. Applicability of section 292BB of the Income-tax Act.
4. Authority of the representative to receive notice on behalf of the assessee.

Issue-wise Detailed Analysis:

1. Validity of the Block Assessment Order Due to Non-Service of Notice under Section 143(2) of the Income-tax Act:

The assessee contended that the block assessment order dated July 28, 2000, was wholly unauthorized and illegal due to the absence of a notice under section 143(2) after filing the block return on December 27, 1999. The Tribunal admitted this as a legal ground based on the Supreme Court's decision in National Thermal Power Co. Ltd. v. CIT. The Tribunal emphasized that the issue of service of notice under section 143(2) is mandatory for the Assessing Officer to verify the correctness of the block return. Without issuing such a notice, the Assessing Officer cannot proceed to make an assessment under section 143(3) in relation to the block return, as established by the Supreme Court in Asst. CIT v. Hotel Blue Moon.

2. Examination of the Procedural Compliance Regarding the Issuance and Service of Notice under Section 143(2):

The Tribunal examined the chronology of events and affidavits submitted by the assessee and his representative, which claimed that no notice under section 143(2) was ever served. The Revenue, on the other hand, presented a copy of the notice dated June 12, 2000, and claimed it was served on the assessee's chartered accountant, Sri Murli Dhar Vaish. However, the Tribunal found discrepancies and contradictions in the Revenue's counter affidavit and noted the absence of any entry in the order sheet regarding the issuance and service of the notice. The Tribunal concluded that the onus of proving the issuance and service of the notice was not discharged by the Revenue.

3. Applicability of Section 292BB of the Income-tax Act:

The Revenue argued that the judgment in Hotel Blue Moon did not consider the applicability of section 292BB, which presumes valid service of notice if the assessee has participated in the proceedings. However, the Tribunal noted that section 292BB was inserted by the Finance Act, 2008, with effect from April 1, 2008, and has no retrospective application. The Tribunal also highlighted that the Supreme Court in Hotel Blue Moon had stated that the omission to issue notice under section 143(2) is not curable.

4. Authority of the Representative to Receive Notice on Behalf of the Assessee:

The Tribunal scrutinized whether Sri Murli Dhar Vaish had the authority to receive the notice on behalf of the assessee. It was found that there was no evidence of a power of attorney or any written authority empowering him to receive the notice. The Tribunal referred to the provisions of section 288 and section 282 of the Income-tax Act and relevant rules under the Code of Civil Procedure, which differentiate between an authorized representative to appear and an agent authorized to receive notice. The Tribunal concluded that mere appearance by Sri Murli Dhar Vaish did not meet the legal requirement for valid service of notice.

Conclusion:

The Tribunal held that the mandatory notice under section 143(2) was not served on the assessee, rendering the block assessment order dated July 28, 2000, void ab initio. Consequently, the appeal of the assessee was allowed, and the appeal of the Revenue was dismissed. The Tribunal did not address other grounds of appeal or merits of additions due to the quashing of the block assessment order on the preliminary ground.

 

 

 

 

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