2012 (5) TMI 198 - HC - Income Tax

Block assessment - Participation in assessment proceedings - validity of assessment in view of section 292BB - Notice u/s 143(2) was not serviced - held that - We find that a categorical finding has been recorded by the CIT (A) and the Tribunal that no notice under Section 143 (2) of the Act had been served upon the assessee and the block assessment has been made. They participated in the said proceedings. Matter is squarely covered by the law laid down by Hon ble Supreme Court in the case of Hotel Blue Moon (2010 -TMI - 35251 - SUPREME COURT OF INDIA). - Decided in favor of assessee.

Summary

Issues:
1. Consideration of Section 292BB of the Income Tax Act while allowing additional ground of appeal.
2. Applicability of the judgment of Hotel Blue Moon in the case.
3. Participation in assessment proceedings and raising of issues.

Analysis:
1. The first issue revolves around whether the CIT (A) and the Tribunal erred in not considering Section 292BB of the Income Tax Act while allowing the assessee to raise an additional ground of appeal. The Tribunal found that no notice under Section 143(2) of the Act had been served upon the assessee during the block assessment. The law laid down by the Hon'ble Supreme Court in the case of Hotel Blue Moon was cited, emphasizing the importance of proper notice issuance. The Court further referred to a previous judgment where it was held that Section 292BB is not applicable if the authority lacked jurisdiction to proceed further and make an assessment.

2. The second issue questions the applicability of the judgment of Hotel Blue Moon in the present case. The Revenue argued that the judgment was not relevant as it did not consider the provisions of Section 292BB, which was introduced after the judgment. However, the Court found that the decision in Hotel Blue Moon was indeed applicable as it established the necessity of serving a notice under Section 143(2) before proceeding with the assessment. The Tribunal's order, based on this principle, was upheld.

3. The third issue pertains to the participation of the assessee in the assessment proceedings and the subsequent raising of issues. The assessee had not objected to the non-issuance of notice under Section 143(2) during the assessment proceedings but raised the issue later. The CIT (A) allowed the assessee to raise this issue, which was confirmed by the Tribunal. The Court held that since no notice was served, the assessee's participation did not waive the requirement for proper notice. Therefore, the order of the Tribunal was deemed legally sound, and the appeal was dismissed.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the importance of following procedural requirements such as serving notices under the Income Tax Act. The judgment highlighted the significance of proper notice issuance and participation in assessment proceedings, ultimately leading to the dismissal of the appeal.