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2020 (11) TMI 112 - AT - Income TaxValidity of notice u/s. 158BC - Whether a notice is invalid for not giving sufficient time as required u/s. 158BC? - HELD THAT - We find that pursuant to search and seizure operation, the assessee was issued a notice u/s. 158BC of the Act in response to which the assessee had filed his return of income. The notice u/s. 158BC of the Act has been held to be invalid by the Tribunal. The AO got the jurisdiction over the assessee only by issuance of the notice u/s. 158BC, and since such notice has been held to be invalid, all consequential proceedings also will become invalid. The right course of action for the assessee would have been to challenge the above order of the Tribunal. By not challenging it, the finding of the Tribunal has become final and this Bench has no authority to set aside the finding of earlier Bench. Therefore, the assessee's appeal fails.
Issues:
1. Validity of notice u/s. 158BC of the Income Tax Act, 1961 2. Consequential proceedings based on the invalid notice 3. Charging of interest u/s. 220(2) 4. Refund of cash found and seized during search Validity of Notice u/s. 158BC: The case involved an appeal by the assessee against the order of Ld. CIT(A)-7, Hyderabad dated 30.11.2016 for the block period 1987-88 to 1996-97. The search and seizure operation under section 132 of the Income Tax Act led to a notice u/s. 158BC being issued to the assessee. The Tribunal had earlier held this notice to be invalid, leading to the setting aside of the assessment order. The assessee argued that all consequential proceedings, including the return filed in response to the notice, should be considered invalid. However, the CIT(A) maintained that the income returned by the assessee must be taxed, citing the admitted liability to pay tax as per the return filed. Consequential Proceedings and Interest u/s. 220(2): The assessee raised several grounds in the second appeal, challenging the validity of the assessment order, demand raised, charging of interest u/s. 220(2), and the assumption that the return filed was in response to the notice u/s. 158BC. The Ld. Counsel for the assessee contended that since the notice u/s. 158BC was deemed invalid, all subsequent proceedings should be considered null and void. On the other hand, the Ld. DR supported the Tribunal's decision, which had rejected the assessee's request based on previous legal precedents. Refund of Cash Found and Seized: The Tribunal found that the notice u/s. 158BC was indeed invalid, rendering all consequential proceedings invalid as well. However, the Tribunal had previously rejected the assessee's request for a refund of taxes paid in response to the notice u/s. 158BC, citing the decision of the Hon'ble Supreme Court in the case of CIT vs. Shelly Products. The Tribunal emphasized that the admitted tax should not be refunded, as it signifies the assessee's acknowledgment of tax liability. The Bench concluded that the assessee should have challenged the earlier order if dissatisfied, as the findings had become final. Consequently, the appeal of the assessee was dismissed. This detailed analysis of the judgment highlights the key issues addressed by the Appellate Tribunal ITAT HYDERABAD and the rationale behind the decision rendered in the case.
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