2015 (1) TMI 475 - HC - Income Tax

Block assessment - Whether was not barred by time? - whether assessee had not been afforded a reasonable opportunity of hearing during the assessment proceedings? Held that - The Tribunal has rightly held that the assessment cannot be said to be barred by limitation relying upon a judgment of T.O.Abrahim & Co. versus Assistant Director of Income Tax (Investigation) and others, (1998 (6) TMI 53 - KERALA High Court). - Decided against the assessee. The Tribunal has rightly while holding that adequate opportunity was not provided to assessee, remanded the matter to the Assessing Officer for adjudication afresh. We are unable to infer any prejudice that may have been caused to the assessee as the assessee s argument of lack of adequate opportunity was accepted. The assessment order was, therefore, rightly set aside and the matter was remitted to afford adequate opportunity to the assessee to put forth its case. - Decided against the assessee.

Summary

Issues:
1. Barred by time - Block assessment
2. Reasonable opportunity of hearing during assessment proceedings
3. Framing block assessment in the status of "association of persons"

Analysis:

Issue 1: Barred by time - Block assessment
The assessee contended that the block assessment was time-barred as the period of limitation for concluding assessment was one year from the date of the search. However, the subsequent amendment to Section 158BE of the Income Tax Act increased the limitation to two years. The revenue argued that the amendment was clarificatory and the assessment order was within the extended time limit. The High Court agreed with the revenue, citing the clarificatory nature of the amendment and referring to a judgment of the Kerala High Court for support. The Court held that the assessment was not barred by limitation.

Issue 2: Reasonable opportunity of hearing during assessment proceedings
The Tribunal acknowledged that the assessee was not provided with a reasonable opportunity of hearing during the assessment proceedings. Consequently, the Tribunal remanded the matter to the Assessing Officer for fresh adjudication. The revenue argued that the remand was justified to afford the assessee a fair opportunity to present its case. The High Court concurred, emphasizing the importance of adhering to principles of natural justice. The Court upheld the Tribunal's decision to set aside the assessment order and remand the matter for providing the assessee with a proper opportunity to be heard. The Court found no fault in the Tribunal's approach, deeming the order neither perverse nor arbitrary.

In conclusion, the High Court ruled against the assessee on both issues, holding that the assessment was not time-barred and that the remand for fresh adjudication was justified to ensure the assessee's right to a fair hearing. Consequently, all appeals were disposed of accordingly.