2011 (12) TMI 558 - AT - Income Tax

Summary

Issues Involved:
1. Treating the return of block period as non-est.
2. Confirming various additions as undisclosed investments and capital gains.
3. Completing the assessment for the block period without issuing a notice u/s 143(2).

Summary:

Issue 1: Treating the Return of Block Period as Non-Est
The assessee filed a return of undisclosed income for the block period on 13.11.2000, admitting 'Nil' income, in response to a notice u/s 158BC dated 31.5.2000. The CIT (A) observed that the return was filed beyond the 45-day period prescribed u/s 158BC, making it invalid. The CIT (A) cited case laws, including CIT v. S Raman Chettiar and Auto & Metal Engineers v. Union of India, to support the position that a return filed after the statutory period is 'non est'. Consequently, the requirement to issue a notice u/s 143(2) did not arise, as the return was invalid. The Tribunal upheld this view, agreeing that the AO followed the correct procedure by issuing a notice u/s 142(1) to complete the assessment.

Issue 2: Confirming Various Additions
The AO made several additions, including Rs. 51,000 as undisclosed investment in the Santej/Kalol land transaction, Rs. 13 lakhs as unexplained investment, Rs. 2.80 lakhs for the construction of a boundary wall and borewell, Rs. 13.4 lakhs as short-term capital gains on the sale of Santej land, and Rs. 58.55 lakhs as undisclosed capital gain related to payments to M/s. Maruti Construction. The CIT (A) dismissed the grounds related to these additions, as the assessee's representative chose not to press these grounds during the appellate hearing. The Tribunal noted that the assessee did not dispute this during the hearing and thus, these grounds required no further adjudication.

Issue 3: Completing the Assessment Without Issuing Notice u/s 143(2)
The assessee argued that the assessment was invalid due to the lack of a notice u/s 143(2). The CIT (A) and the Tribunal found that since the return was filed beyond the statutory period, it was invalid, and thus, the AO was not required to issue a notice u/s 143(2). The Tribunal upheld the CIT (A)'s finding that the AO correctly proceeded with the assessment by issuing a notice u/s 142(1), as mandated by clause (b) of s. 158BC.

Conclusion:
The Tribunal dismissed the assessee's appeal, affirming the CIT (A)'s decision that the return was 'non est' and that the AO followed the correct legal procedure in completing the assessment.