2016 (12) TMI 1569 - HC - Income Tax

Validity of notice u/s 158BC - AO asked the assessee to file the return within fifteen days of the service of the notice - Held that - The issue is squarely covered by the decision of the Gujarat High Court in case of Commissioner of Income Tax vs. Amit K. Jain @ Anil K. Jain 2016 (8) TMI 1088 - GUJARAT HIGH COURT wherein held that fifteen days means, clear fifteen days which is the requirement under law. In that view of the matter, we are of the view that the notice which was issued by the authority asking the assessee to file the return within fifteen days is not in accordance with the provisions of the Income-tax Act and therefore it is invalid. In our view, the authority who is issuing the notice must be aware of the Act and must construe the provision strictly. The words not less than fifteen days have to be interpreted correctly. Since the Assessing Officer asked the assessee to file the return within fifteen days of the service of the notice, the notice issued by the Assessing Officer is invalid. - Decided in favour of assessee

Summary

Issues Involved:
1. Validity of notice issued under Section 158BC of the Income Tax Act, 1961.
2. Approach adopted by the revenue for computing the undisclosed income of the block period and potential double taxation.

Issue-Wise Detailed Analysis:

1. Validity of Notice Issued under Section 158BC:
The primary issue was whether the notice issued under Section 158BC, which required the assessee to file the return "within 15 days," violated the statutory provision that mandates a period of "not being less than 15 days." The court examined whether this discrepancy rendered the assessment invalid. The counsel for the appellant argued that the issue was covered in favor of the assessee based on precedents, including decisions from the Gujarat High Court and the Bombay High Court. The court cited several judgments emphasizing that procedural requirements must be strictly complied with, especially when the statutory language is clear. The court concluded that the notice requiring the return to be filed "within 15 days" did not comply with the statutory mandate of "not less than 15 days," rendering it invalid. Consequently, the assessment based on such notice was deemed invalid.

2. Double Taxation of Undisclosed Income:
The second issue was whether the approach adopted by the revenue for computing the undisclosed income of the block period, based on both alleged unaccounted investment and expenses, led to double taxation of the same income. The court did not provide a detailed separate analysis for this issue but concluded that both issues were answered in favor of the assessee. This implies that the court found merit in the argument that the revenue's method could result in double taxation, which is not permissible under the law.

Conclusion:
The court allowed the appeal, ruling in favor of the assessee on both issues. The notice issued under Section 158BC was invalid due to non-compliance with the statutory period requirement, and the revenue's method of computing undisclosed income was found to potentially lead to double taxation. The appeal was thus allowed, and the assessment order was set aside.