2015 (12) TMI 964 - AT - Income Tax

Assessment under section 158BC(c) - non issue of notice - whether issuance of notice happens to be within the statutory limitation of one year? - Held that - A perusal of section 143(2) proviso as it existed being substituted w.e.f. 1.4.2008 makes it clear that no notice under clause (ii) of Section 143(2) shall be served after the expiry of twelve month from the end of the month in which the return is furnished. The expression served in our view happens to be much distinct than the expression issued . We make it clear that the present is a tax statute wherein such expressions used have to be literally interpreted. We are of the opinion that the word shall used in the provision also highlights the expression to be of mandatory character. A co-ordinate bench of the tribunal in the case of ITO Vs. Shri Dinesh B. Gandhi 2015 (12) TMI 756 - ITAT AHMEDABAD has rejected a similar argument of the Revenue wherein the very dates of return followed by issuance and service of section 143(2) notices were involved. The Revenue s fails to point out any distinction on facts or law. We accordingly reject its first contention.- Decided in favour of assessee. Whether Section 158BC in chapter XIV-B is a complete code in itself wherein section 143(2) does not apply in toto? - Held that - Section 158BC(b) clearly stipulates the procedure to be followed by an Assessing Officer in determining undisclosed income of the relevant block period in the manner laid down in section 158BB and the provisions of 142 and 143(2) and (3) etc. We accordingly reject this second argument as well. The Revenue s sole substantive ground fails. The CIT(A) order quashing the impugned assessment on the ground of validity of section 143(2) notice stands upheld. - Decided in favour of assessee.

Summary

Issues:
Validity of notice served under section 143(2) for quashing the assessment order.

Analysis:
1. The appeal and cross objection for the assessment years 1990-91 to 1999-00 arose from the order of CIT(A)-II, Surat, dated 24.5.2010 under section 158BC(c) of the Income Tax Act, 1961. The Revenue's main ground challenged the validity of the notice issued under section 143(2) for quashing the assessment order dated 31.7.2001. The assessee's cross objection supported the CIT(A) order.

2. The assessee, an individual, was assessed after a search at his premises on 29.7.1999, leading to a section 158BC notice dated 15.10.1999. The assessee admitted undisclosed income in the return filed on 25.11.1999. The assessment completed on 31.7.2001 included additions for the block period from 1990-91 to 29.7.1999.

3. The assessee contended that the section 142(3) notice was not served within the prescribed time, rendering the assessment invalid. The CIT(A) accepted this argument based on the delay in serving the notice under section 143(2), citing the Hotel Blue Moon case and other judicial precedents.

4. The Revenue argued that the notice was served within the statutory limitation of one year from the end of the month of filing the return, emphasizing the distinction between "issued" and "served." The tribunal rejected this argument, interpreting the tax statute's expressions literally and emphasizing the mandatory nature of the provision.

5. The Revenue's second contention that section 158BC is a complete code where section 143(2) does not apply was also dismissed. The tribunal held that section 158BC(b) mandates following the procedures of section 158BB, 142, and 143(2) and (3). Consequently, the CIT(A) order quashing the assessment due to the invalid notice under section 143(2) was upheld, rendering the cross objection moot.

6. The Revenue's appeal was dismissed, and the assessee's cross objection was deemed infructuous. The tribunal affirmed the CIT(A) order and concluded the proceedings on 31st July 2015 in Ahmedabad.