2011 (1) TMI 449 - HC - Income Tax

Block assessment - Time limitation - Search and seizure - Undisclosed income - there is no dispute on the finalisation of the draft assessment by the Assessing Officer with the approval of the Commissioner on 23-5-1997 which is eight days prior to the last date provided for completion of assessment - this is a case where elaborate evidence is collected in the course of search and the processing of the document took several months before completion of the block assessment - The fact that the first copy of assessment order sent to the assessee on 30-5-1997 along with signed valid notice of demand issued under section 156 of the Act did not contain the signature of the Assessing Officer does not invalidate the assessment which was validly completed on 27-5-1997 within the period of limitation provided under section 158BE of the Act - Appeal is allowed by way of remand to Tribunal

Summary

Issues:
1. Difference of opinion between Judicial Member and Accountant Member on limitation in block assessment.
2. Validity of assessment completion within the prescribed period.
3. Impact of unsigned copy of assessment order on assessment validity.
4. Interpretation of relevant legal provisions and case laws.
5. Decision on the appeal against the Tribunal's majority decision.

Analysis:
1. The case involved a disagreement between the Judicial Member and Accountant Member of the Tribunal regarding the limitation period for a block assessment. The President of the Tribunal agreed with the Judicial Member that the assessment was barred by limitation, leading to the revenue filing an appeal against the Tribunal's majority decision.

2. The controversy arose from a search conducted under section 132 of the Income-tax Act, resulting in the recovery of undisclosed income records. The assessment process began with the approval of the draft assessment by the Commissioner of Income-tax on 23-5-1997, with the final assessment completed by the Assessing Officer on 27-5-1997. The department dispatched the assessment order and notice of demand to the assessee, with discrepancies in the signature on the copies received by the assessee.

3. The senior counsel for the appellant argued based on legal precedents, emphasizing the importance of issuing the assessment order beyond the control of the authority within the prescribed period. However, the respondent's counsel relied on similar judgments to support the contention that service of the assessment order is not a statutory requirement, focusing on the service of the notice of demand signed by the Assessing Officer.

4. The High Court analyzed the legal provisions and case laws cited by both parties. Referring to the Supreme Court decisions in B.J. Shelat's case and Kalyan Kumar Ray's case, the Court emphasized the completion of assessment before the deadline rather than the service of the assessment order. Section 292B of the Income-tax Act was also referenced to highlight that technical defects should not invalidate proceedings conforming to the Act's intent.

5. Ultimately, the High Court held that the assessment was completed within the limitation period, despite the discrepancy in the copies received by the assessee. The Court overturned the Tribunal's decision, directing a reevaluation on merits by the Income-tax Appellate Tribunal. The Court instructed the Tribunal to expedite the appeal process, considering the block period under assessment and mandating a final decision within three months from the judgment's receipt.