2015 (3) TMI 307 - AT - Income Tax

Validity of the assessment framed in pursuance of the notice issued u/s. 158BC - period of limitation - Held that - In the present case the notice issued by the Assessing Officer u/s. 158BC(a) of the Act dated 30-11- 2000 did not give the minimum time of 15 days to the deceased assessee for filing his return of income for the Block Period, the said notice was notice in compliance with mandatory requirement of Sec. 158BC(a) of the Act and the assessment framed in consequence of the legally void notice u/s. 158BC r.w.s. 144 of the Income-tax Act vide order dated 22-08- 2002 is bad in law and we cancel the assessment order. - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality and validity of the assessment framed in pursuance of the notice issued under Section 158BC of the Income-tax Act.
2. Whether the notice issued under Section 143(2) was served on the appellant beyond the prescribed period of one year.

Issue-wise Detailed Analysis:

1. Legality and Validity of the Assessment under Section 158BC:

The assessee challenged the legality and validity of the assessment framed pursuant to the notice issued under Section 158BC of the Income-tax Act. The facts revealed that a search and survey action was conducted at the residential and business premises of the deceased assessee and other concerns on 11-08-2000. Consequently, the Assessing Officer issued a notice under Section 158BC dated 30-11-2000, which was served on the deceased assessee on 09-12-2000, requiring the filing of a return for the Block Period by 24-12-2000. The deceased assessee requested and was granted an extension until 22-01-2001, and filed the return on that date declaring NIL undisclosed income. The assessment was completed determining the total undisclosed income at Rs. 3,39,63,210/-. The assessee objected that the notice issued under Section 158BC did not provide the minimum legal time of 15 days to file the return. The CIT(A) did not accept this objection, and the assessee appealed.

The Tribunal examined whether the notice issued complied with the mandatory requirement of Section 158BC(a). It was observed that the notice must be served on the searched person and must provide a minimum of 15 days to file the return. The Supreme Court in Hotel Blue Moon held that issuing a notice under Section 158BC is a mandatory requirement and the foundation for the jurisdiction of the Assessing Officer. The Tribunal noted that the notice issued in this case did not comply with the mandatory requirement, rendering the assessment void ab initio and bad in law.

2. Notice under Section 143(2):

The second ground challenged the validity of the assessment framed in pursuance of a notice issued under Section 143(2) served beyond the prescribed period of one year. However, the assessee's counsel did not press this ground, and it was dismissed as not pressed.

Conclusion:

The Tribunal allowed the assessee's appeal on the first ground, holding that the assessment framed based on the invalid notice under Section 158BC was void ab initio and bad in law. The second ground was dismissed as not pressed, and the grounds on merit were not adjudicated as the assessee succeeded on legal grounds. The assessment order was canceled, and the appeal was allowed.

Pronounced in the open Court on 20-02-2015