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Issues Involved:
1. Validity of the assessment order due to non-issuance of notice u/s 143(2) within the prescribed time. 2. Whether the penalty u/s 158BFA(2) was justified. 3. Consideration of additional grounds of appeal regarding the validity of the assessment order. Summary: Issue 1: Validity of the assessment order due to non-issuance of notice u/s 143(2) within the prescribed time. The Tribunal noted that the assessee filed the block return on 23-02-1998, and the notice u/s 143(2) was issued on 09-11-1999, beyond the prescribed 12-month period. The Hon'ble Supreme Court in the case of Hotel Blue Moon held that issuing notice u/s 143(2) within the prescribed time is mandatory, and non-issuance renders the assessment illegal. Consequently, the Tribunal concluded that the block assessment order was bad in law. Issue 2: Whether the penalty u/s 158BFA(2) was justified. The assessee argued that the income in question was already reflected in the regular assessment and books of account, thus not constituting concealment. The Tribunal found that the block assessment itself was without jurisdiction due to the invalid notice u/s 143(2). Therefore, the penalty u/s 158BFA(2) could not be sustained, as the underlying assessment was void. Issue 3: Consideration of additional grounds of appeal regarding the validity of the assessment order. The Tribunal admitted the additional ground of appeal, emphasizing that the validity of the assessment is a pure question of law and does not require further investigation of facts. The Tribunal referenced the decisions in Tidewater Marine International Inc. and Dhiraj Suri, which support raising the question of validity of assessment in penalty appeals. Conclusion: The Tribunal quashed the penalty imposed u/s 158BFA(2) due to the invalidity of the block assessment order, which was rendered void by the non-issuance of notice u/s 143(2) within the prescribed time. The appeal of the assessee was allowed.
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