2012 (2) TMI 230 - AT - Income Tax

Validity of Block Assessments - Period of limitation - Search on 27.07.99 - Delay more than 3 years while issuing Notice under 158BD - Search completed after Seven from the date of Search - Held That - Issue of notice u/s 158BD after three years from the date of completion of the assessment in respect of the person against whom search was carried out is barred by limitation. Reliance placed on (Khandubhai Vasanji Desai & Ors vs DCIT (1998 - TMI - 16365 - GUJARAT High Court)) and Shri P Venkata Ramana (Hyderabad Bench Tribunal).

Summary

Issues:
Validity of block assessment order under section 158BD - Time limit for issuing notice u/s 158BD - Barred by limitation.

Analysis:
The judgment pertains to appeals filed by the revenue against two assesses regarding block assessment orders for the period 01-04-1989 to 27-07-1993. The assesses also filed cross objections against the same orders. The main issue raised was the validity of the block assessment order, specifically concerning the time limit for issuing notice under section 158BD. The senior counsel for the assessee argued that there was a significant delay in issuing the notice, citing a judgment from the Punjab & Haryana High Court. On the other hand, the Revenue contended that there is no prescribed time limit for issuing notice u/s 158BD for a person other than the searched person, and as long as the delay is not attributable to the assessing officer, the assessment order is valid.

The tribunal analyzed the arguments and the provisions of the Income-tax Act. While acknowledging the absence of a specific time limit for issuing notice u/s 158BD, the tribunal emphasized that finality of proceedings should not be taken lightly. Referring to Section 132(9A), the tribunal highlighted the obligation for the officer conducting the search to examine and hand over relevant material within 60 days. The tribunal noted that even though no specific time limit is set, the assessing officer must issue the notice within a reasonable period after the completion of related proceedings. Citing a previous tribunal decision and observations, the tribunal stressed the importance of following the provisions meticulously, including determining undisclosed income and the person to whom it belongs within a specified time frame.

Based on the analysis, the tribunal concluded that issuing the notice u/s 158BD after three years from the completion of assessment against the searched person is beyond a reasonable period and barred by limitation. The tribunal referenced similar views taken by other benches and courts to support its decision. Consequently, the block assessment order against the assessee u/s 158BD was deemed barred by limitation and quashed. As a result, the revenue appeals were dismissed, and the cross objections of the assessee were allowed, culminating in the pronouncement of the order on January 6th, 2012.