2011 (9) TMI 241 - HC - Income Tax

Block Assessment - Section 158BC - giving the assessee 15 days time to file the return of income and further time of eighteen months has been granted to the assessee to file the return of income - As in the case of CIT v. Micro Labs Ltd - Section 139 is a voluntary return. A return under Chapter XIV-B cannot be filed voluntarily. It is only when a notice under Section 158BC is validly issued - the time to be granted to the assessee in terms of Section 158BC is a minimum of 15 days and a maximum of 45 days. If the said period of time is not granted, the notice is invalid - Held that in view of aforesaid judgement in this case also as the time stipulated in the notice under Section 158BC is within 15 days time it is void ab initio - Appeal dismissed - Decided against the favour of Revenue.

Summary

Issues:
1. Validity of notice issued under Section 158BC of the Act
2. Conformity with Section 292B of the Act
3. Direction to pass fresh order of assessment

Analysis:

Issue 1: Validity of notice under Section 158BC
The High Court considered whether the notice issued under Section 158BC of the Act, which gave the assessee 15 days to file the return of income, was valid. The Assessing Officer later granted a further 18 months by issuing fresh notices, and the assessee filed the return after this extended period. The Court emphasized that a notice under Section 158BC provides a specific procedure for block assessment, requiring the assessee to file a return within a minimum of 15 days and a maximum of 45 days. In this case, the notice demanded submission within "a period of 15 days," which was less than the minimum stipulated time. Consequently, the Court deemed the notice invalid, rendering the entire proceedings without jurisdiction. As an invalid notice cannot confer any authority, the Court held the proceedings as void ab initio, leading to the dismissal of the appeal.

Issue 2: Conformity with Section 292B
The Court addressed whether the notice issued under Section 158BC(a)(i) of the Act could be considered valid despite granting the assessee an additional 18 months to file the return of income. The Court referred to Section 292B of the Act, which deals with defects in notices, and emphasized that compliance with the mandatory time period specified in Section 158BC is essential for the validity of the notice. Since the notice in this case did not adhere to the prescribed time frame, it was deemed invalid, and the subsequent proceedings were declared void.

Issue 3: Direction for fresh assessment order
The Court deliberated on whether the tribunal, after declaring the notice invalid, should have directed the Assessing Officer to pass a fresh assessment order in accordance with the law by providing sufficient time for compliance. However, based on the precedent set in a previous judgment, the Court maintained that the invalidity of the notice inherently invalidated the proceedings, leading to the dismissal of the appeal. The substantial question of law was resolved in favor of the assessee, emphasizing the importance of procedural compliance in such assessments.

In conclusion, the High Court's judgment highlighted the significance of strict adherence to procedural requirements in notices issued under Section 158BC of the Act for block assessments, ultimately leading to the dismissal of the appeal due to the invalidity of the notice and subsequent proceedings.