2012 (12) TMI 847 - HC - Income Tax

Challenging limitation on issuing notice u/s 158BD - Block assessment - Held that - As per Section 158 BE(2)(b) the period of limitation for completion of block assessment in the case of other person referred to in Section 158BD shall be 2 years from the end of the month in which notice has been served on such other person in respect of the search conducted under Section 132. Therefore it is obvious that the limitation starts only from the service of notice and not from any point of time prior thereto. Admittedly notice in this case was served on the petitioner only by Ext.P6 dated 8.8.2012 and if it is so counted the proceedings are well within time. This view has been accepted by the Division Bench of this court in Ext.P9 judgment also. Unexplained or inordinate delay - Proceedings against the petitioner s brother culminated only by Ext.P5 order of the Tribunal rendered on 28.6.2011. If that be so as held in Ext.P9 judgment itself proceedings could have been initiated against the other person viz the petitioner only thereafter. If that be the case unable to agree with the counsel that there has been any unexplained or inordinate delay in this case - against assessee.

Summary

Issues:
1. Interpretation of Section 158 BE(2)(b) regarding the limitation for completion of block assessment.
2. Whether the delay in initiating proceedings against the petitioner renders the assessment arbitrary.

Analysis:
1. The judgment dealt with the interpretation of Section 158 BE(2)(b) of the Income Tax Act concerning the limitation for completing block assessment for other persons under Section 158BD. The court noted that the limitation period starts from the service of notice, as per the provision. In this case, the notice to the petitioner was served on 8.8.2012, and the proceedings were initiated within the prescribed time frame. The court referenced a previous judgment (Ext.P9) and a Division Bench decision supporting this interpretation, thereby upholding the validity of the notice served on the petitioner.

2. The petitioner contended that the delay between the search conducted in 1999 and the initiation of proceedings in 2012 was unreasonable, making the assessment arbitrary. However, the court pointed out that the proceedings against the petitioner's brother were concluded only in 2011. Therefore, as per the previous judgment (Ext.P9), proceedings against the petitioner could only commence after the conclusion of the brother's case. The court found no unexplained or inordinate delay in initiating proceedings against the petitioner, ultimately upholding the order rejecting the petitioner's objection based on delay.

In conclusion, the court dismissed the writ petition, emphasizing that the initiation of proceedings against the petitioner was within the statutory time limit and not arbitrary based on the sequence of events and relevant legal provisions.