2014 (9) TMI 689 - HC - Income Tax

Validity of notice issued u/s 158BC - Whether the notice issued u/s 158BC is invalid for non-mentioning of the block period in respect of which the said notice is issued Held that - In the notice issued u/s 158BC, the time granted to the assessee to file return, was less than 15 days - when the statute specifically prescribes 15 days time as the minimum and 45 days as the maximum, if the requirement of law is not complied with, the notice is defective and it is not curable one u/s 292B of the Act relying upon Assistant Commissioner of Income Tax & Anr. Versus M/s. Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT OF INDIA - after service of notice the assessee promptly engaged a Chartered Accountant, who is fully aware of the meaning of the word block period - Within the time prescribed he filed NIL returns on 06.03.1988 - Therefore the assessee had no doubt in his mind what he is expected to do in law and there was no breach to any extent in non-mentioning of the block period in the notice issued to him - it is not the requirement of law that in a notice issued u/s 158BC, the period of block period is to be specifically mentioned by the authorities - If it is not mentioned, it would not invalidate the notice - Section 292B to be attracted, the condition precedent is, there should be a defect in the notice - If the notice is not defective at all, the question of validating the said mistake by recourse to Section 292B would not arise Decided against assessee.

Summary

Issues Involved:
1. Validity of the notice issued under Section 158BC of the Income Tax Act, 1961, due to non-mentioning of the block period.
2. Applicability of Section 292B to cure defects in the notice.
3. Whether the Tribunal was justified in directing the Assessing Officer to issue a fresh notice and make an assessment order, considering the limitation period under Section 158BC.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 158BC:
The core issue was whether the notice issued under Section 158BC was invalid due to the non-mentioning of the block period. The court examined the statutory provisions, particularly Section 158BC, which mandates the issuance of a notice to the assessee requiring the filing of a return for the block period. The court noted that the term "block period" is defined under Section 158B(a) and includes the previous years relevant to six assessment years preceding the year in which the search was conducted. The court concluded that there is no statutory requirement to mention the block period in the notice. The term "block period" has a definite meaning under the Act, and the absence of its mention in the notice does not invalidate the notice or the proceedings initiated. The court emphasized that the assessee, being aware of the search date, would know the block period for which the return is to be filed.

2. Applicability of Section 292B:
The Revenue argued that the defect in the notice (non-mentioning of the block period) could be cured under Section 292B of the Act, which states that a notice should not be invalidated due to any mistake, defect, or omission if it is in conformity with the intent and purpose of the Act. However, the court observed that Section 292B applies only if there is a defect in the notice. Since the court found that the non-mentioning of the block period does not constitute a defect, Section 292B was deemed inapplicable. The court referenced the Supreme Court's judgment in Hotel Blue Moon, which highlighted the mandatory nature of the notice under Section 158BC but did not require the block period to be mentioned.

3. Tribunal's Direction to Issue Fresh Notice:
The Tribunal had directed the Assessing Officer to issue a fresh notice and make a new assessment order. The assessee contended that such a direction would extend the period of limitation prescribed under Section 158BC, which is not permissible. The court agreed with this contention, stating that the statute prescribes a specific period of limitation for completing the block assessment. Extending this period by directing the issuance of a fresh notice would be beyond the jurisdiction of the appellate authority and would infringe upon the assessee's rights. The court cited various judgments, including the Supreme Court's decision in Manish Maheshwari, emphasizing that the jurisdiction to reopen an assessment depends on the issuance of a valid notice, and any defect in the notice invalidates the proceedings.

Conclusion:
The court held that the notice issued under Section 158BC is valid despite the non-mentioning of the block period. It is not a requirement of law to mention the block period in the notice, and the absence of such mention does not render the notice defective. Consequently, Section 292B does not apply as there is no defect to cure. The court also found that the Tribunal's direction to issue a fresh notice and make a new assessment order was unjustified, as it would extend the limitation period unlawfully. The matter was remanded to the Commissioner of Income-Tax (Appeals) for fresh consideration on merits, without addressing the question of the notice's validity further.