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2010 (4) TMI 733 - HC - Income TaxLimitation - Service of notice - Block assessment - Held that - the service of notice on the assessee u/s 143(2) within the prescribed period of time is a pre-requisite for framing the block assessment under Chapter XIV-B of the Act. It is mandatory - Non-issuance of notice is not a mere procedural irregu-larity and the same is not curable - For the purpose of Chapter XIV-B of the Act, for the determination of undisclosed income for a block period under the provisions of section 158BC the provisions of section 142 and sub-sec-tions (2) and (3) of section 143 are applicable and no assessment could be made without issuing notice under section 143(2) of the Act within the time specified - Where the Assessing Officer in repudiation of the return filed u/s 158BC(a) proceeds to make an enquiry, he has neces-sarily to follow the provisions of section 142 and sub-sections (2) and (3) of section 143 - Hence, the Tribunal that the proviso to section 143(2), which provides limitation for serving of the notice, does not apply to the block assessment under section 158BC under Chapter XIV-B, is erro-neous - The order of the Tribunal as well as the order of the authority below are set aside.
Issues Involved:
1. Applicability of Section 143(2) notice to block assessment procedure under Section 158BC. 2. Validity of restoring the matter to the Assessing Officer to cure the defect of non-service of notice under Section 143(2) in terms of Section 292B. Issue-wise Detailed Analysis: 1. Applicability of Section 143(2) Notice to Block Assessment Procedure under Section 158BC: The appellants contended that issuing and serving a notice under Section 143(2) within the specified time is mandatory for block assessment under Section 158BC. They argued that the absence of such notice renders the entire block assessment orders illegal and without jurisdiction, necessitating their quashing. The Tribunal, however, held that while the provisions of Section 143(2) are applicable, the time limit specified in its proviso does not apply to block assessments. Consequently, the Tribunal remanded the matter back to the Assessing Officer to cure the defect. The High Court analyzed the statutory framework and relevant case law, including the decisions of the Gauhati High Court in Smt. Bandana Gogoi v. CIT and the Delhi High Court in CIT v. Pawan Gupta, both of which affirmed the mandatory nature of issuing a notice under Section 143(2) within the prescribed period for block assessments. The Supreme Court's decision in Asst. CIT v. Hotel Blue Moon further reinforced this view, stating that the omission to issue such notice is not a procedural irregularity but a fundamental flaw that cannot be cured. 2. Validity of Restoring the Matter to the Assessing Officer to Cure the Defect of Non-Service of Notice under Section 143(2) in terms of Section 292B: The appellants argued that the defect of non-service of notice under Section 143(2) is not curable under Section 292B, which only addresses defects or omissions in the notice itself, not the complete absence of notice. The High Court agreed, stating that non-issuance of the notice is a jurisdictional error that cannot be remedied by remanding the matter to the Assessing Officer. The Court concluded that the Tribunal's decision to remand the case to the Assessing Officer was unjustified. The Tribunal's interpretation that the proviso to Section 143(2) does not apply to block assessments was also deemed erroneous. The High Court emphasized that the service of notice under Section 143(2) within the specified period is a prerequisite for framing block assessments, and failure to do so invalidates the assessment. Conclusion: The High Court allowed both appeals, setting aside the orders of the Tribunal and the lower authorities. It reaffirmed that the issuance and service of notice under Section 143(2) within the prescribed period is mandatory for block assessments under Section 158BC, and non-compliance with this requirement is a jurisdictional defect that cannot be cured by remanding the matter to the Assessing Officer.
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