2010 (7) TMI 41 - HC - Income Tax

Assessment u/s 158BC Block assessment notice u/s 143(2) issued after the expiry of period of limitation necessity to issue of notice u/s 143(2) for the purpose of block assessment calculation of period of limitation and exclusion of certain period u/s 153 - Held that - the filing of an application under Section 245C before the Settlement Commission does not create any bar on the Assessing Officer in proceeding with the assessment in the normal course. Therefore, there is no question of any exclusion of time when there was no impediment in proceeding with the assessment by issuing and serving upon the assessee a notice under Section 143(2) etc. In fact, there was no impediment in even passing an assessment order. - no exclusion of time having been provided for issuance / service of notice under Section 143(2) of the said Act in the Explanation 1 to Section 158BE, the notice under Section 143(2), which was issued on 05.07.2004, was clearly beyond time. - since the notice under Section 143(2) was issued beyond the prescribed period of limitation, the block assessment order under Section 158BC(c) of the said Act made in pursuance of such a notice was bad in law decided in favor of assessee

Summary

Issues:
1. Whether the notice under Section 143(2) of the Income Tax Act was issued beyond the prescribed period of limitation, rendering the block assessment order bad in law.
2. Whether the block assessment order dated 30.07.2004 was barred by limitation.

Analysis:

Issue 1:
The appeal under Section 260A of the Income-tax Act, 1961 pertained to the order passed by the Income-tax Appellate Tribunal concerning the block period from 01.04.1990 to 18.01.2001. The primary question was whether the notice under Section 143(2) was issued within the prescribed period of limitation. The court considered the case in light of a similar matter, Rajan Gupta v. Commissioner of Income-tax, where the question was answered in favor of the assessee. Consequently, the court decided in favor of the assessee in the present case as well, based on the precedent set in Rajan Gupta's case. As a result, the court did not find it necessary to address the second question raised in the appeal.

Issue 2:
Given the court's decision in favor of the assessee on the first issue, the appeal was allowed to the extent that the notice under Section 143(2) was deemed to have been issued within the prescribed period of limitation. Therefore, the block assessment order dated 30.07.2004 was not considered to be barred by limitation. The court's ruling led to the allowance of the appeal without any specific order as to costs.

This judgment, delivered by Hon'ble Mr. Justice Badar Durrez Ahmed and Hon'ble Mr. Justice V.K. Jain on July 05, 2010, clarified the issues concerning the timeliness of the notice under Section 143(2) and the validity of the block assessment order under the Income Tax Act, 1961. The decision was based on the precedent set in a similar case and resulted in a favorable outcome for the appellant, resolving the questions raised in the appeal comprehensively.