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2013 (10) TMI 66 - HC - Income TaxBlock assessment - Requirement of issue of Notice u/s 143(2) Held that - Reliance has been placed upon the judgment of Supreme Court in Asstt. CIT v. Hotel Blue Moon, 2010 (2) TMI 1 - SUPREME COURT OF INDIA , which has been followed by this Court in CIT vs. Mukesh Kumar Agrawal, 2012 (7) TMI 543 - Allahabad High Court - In response to notice under Section 158-BC (a) of the Act relating to the block assessment, the Assessing Officer, for any reason repudiates the return filed by the assessee, the AO must necessarily issue notice under Section 143 (2) of the Act within the time prescribed. In the proviso to Section 143 (2), the issuance of notice is mandatory and that the very foundation of the jurisdiction under Section 158-BC of the Act requires a notice to be served on the person, who is found to have undisclosed income. The requirement of notice under Section 143 (2) cannot be dispensed with Decided against the Revenue.
Issues:
1. Validity of assessment due to lack of notice under Section 143(2) in block search assessment proceedings. 2. Interpretation of Section 292-BB of the Income Tax Act, 1961 in relation to notice requirements. Issue 1: Validity of assessment due to lack of notice under Section 143(2) in block search assessment proceedings: The High Court considered whether the assessment was void and illegal due to the absence of a notice under Section 143(2) in block search assessment proceedings. The appellant-department argued that such a notice was not required as returns were filed under Section 158 BC, not under Section 139(1) or in response to Section 142(1) notices. However, the respondent-assessee relied on previous judgments, including one by the Supreme Court, emphasizing the necessity of a notice under Section 143(2) in block assessments. The Court upheld the requirement of such notice, stating that it is mandatory for establishing jurisdiction under Section 158-BC, thereby ruling in favor of the respondent-assessee based on precedent. Issue 2: Interpretation of Section 292-BB of the Income Tax Act, 1961 in relation to notice requirements: The Court delved into the interpretation of Section 292-BB, added by the Finance Act, 2008, to address circumstances where a notice is deemed valid. The respondent-assessee's counsel highlighted the purpose of Section 292-BB as a rule of evidence validating notice under specific conditions. However, another party argued that previous judgments did not adequately consider the impact of Section 292-BB and called for a reevaluation. The Court clarified that Section 292-BB serves as a rule of evidence, not a provision to bypass the necessity of issuing notices, particularly emphasizing the mandatory nature of a notice under Section 143(2) for assessment jurisdiction. The Court's decision aligned with the precedent set by the Supreme Court and previous judgments, ultimately dismissing the Income Tax Appeal in favor of the respondent-assessee based on established legal principles. In conclusion, the High Court's judgment in this case reaffirmed the importance of adhering to procedural requirements, such as issuing notices under specific sections of the Income Tax Act, to ensure the validity and legality of assessments in block search assessment proceedings. The interpretation and application of Section 292-BB were clarified, emphasizing its role as a rule of evidence rather than a substitute for mandatory notice provisions. The decision was based on established legal principles and previous judgments, ultimately ruling in favor of the respondent-assessee and dismissing the Income Tax Appeal.
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