2015 (11) TMI 646 - HC - Income Tax

Validity of assessment in the status of HUF - Held that - The fact that the assessee himself had filed the return in the status of HUF coupled with the provisions of Section 292BB of the Act, the Tribunal was not right in declaring the assessment order as non-est. In view of the above, the substantial questions of law are answered in favour of the revenue and against the assessee.

Summary

Issues:
1. Validity of assessment framed by the Assessing Officer in the status of HUF.
2. Applicability of Section 292BB of the Income Tax Act, 1961.
3. Interpretation of conflicting judgments regarding assessment status.

Analysis:

Issue 1: Validity of assessment framed in the status of HUF
The appeal was filed by the revenue challenging the order passed by the Income Tax Appellate Tribunal annulling the assessment framed in the status of HUF for the assessment year 2000-01. The assessee initially filed the return as an individual but later revised it to declare the status as HUF without any change in income. The Tribunal held the assessment in the status of HUF as invalid, stating that the grounds of appeal by the revenue were academic. The revenue contended that once the assessee filed the return as HUF and did not object to the assessment, contradictory stands could not be taken later. The court agreed with the revenue, emphasizing that the assessee's filing of the return as HUF precluded raising objections later.

Issue 2: Applicability of Section 292BB
The court discussed the introduction of Section 292BB in the Income Tax Act, effective from April 1, 2008. This section deems notice served upon an assessee if they appear or cooperate in proceedings, precluding objections later. Citing a relevant judgment, the court highlighted that this provision applies to all pending proceedings. The court noted that the assessee's cooperation in the assessment process prevented them from challenging the notice served or the assessment status later, in line with Section 292BB.

Issue 3: Interpretation of conflicting judgments
The court compared the present case with a previous judgment where an assessment in the status of HUF was held invalid due to discrepancies. In the current case, the assessee's revised return declared the status as HUF, and the assessment was made accordingly. The court emphasized that the assessee's actions and the application of Section 292BB rendered the assessment valid. The court rejected the Tribunal's decision, stating that the assessee could not benefit from the assessment's annulment. Consequently, the substantial questions of law were answered in favor of the revenue, the appeal was allowed, and the matter was remanded to the Tribunal for further consideration on merits.

This detailed analysis of the judgment addresses the issues raised, providing a comprehensive understanding of the legal reasoning and implications involved in the case.