2014 (9) TMI 609 - AT - Income Tax

Order u/s 158BC r.w. section 254 Validity of assessment on jurisdiction Time period to made reply by assessee as per the provisions - Held that - Notice issued by the AO u/s.158BC requiring the assessee to furnish the return in the prescribed Form No.2B within 15 days from the service of notice - the time period to be allowed for furnishing the return of income is not less than 15 days which means the time period must be more than 15 days but not more than 45 days - there is a clear difference between the time period allowed for furnishing the return within 15 days and not less than 15 days, which means more than 15 days with a rider of 45 days relying upon Assistant Commissioner of Income Tax & Anr. Versus M/s. Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT OF INDIA - when the subsequent notice was issued then the alleged defective notice did not cause any prejudice to the assessee thus, the period of time stipulated u/s 158BC being not less than 15 days therefore, the notice allowing the assessee to file the return within 15 days is contrary to the mandatory condition as provided u/s.158BC the notice is invalid in view of the decisions of Supreme Court in Assistant Commissioner of Income Tax & Anr. Versus M/s. Hotel Blue Moon 2010 (2) TMI 1 - SUPREME COURT OF INDIA also, the assessment framed by the AO based on the invalid notice is void and liable to be set aside Decided in favour of assessee. Admission of additional ground - Taxes paid should be refunded or not - Held that - The additional ground even though stated to be legal ground, could not be admitted as it involves examination of facts - assessee himself has declared incomes in the block assessment - whether assessee has paid taxes or not require examination as nothing is available on record nor assessee placed any submissions in this regard whether taxes have been paid by him or collected by the Revenue relying upon CIT vs Shelly Products and another 2003 (5) TMI 4 - SUPREME Court - admitted tax should not be refunded Decided against assessee.

Summary

Issues Involved:
1. Validity of assessment on jurisdiction.
2. Merits of the additions made in the block assessment.
3. Refund of taxes paid if the assessment is held invalid.

Issue-wise Detailed Analysis:

1. Validity of Assessment on Jurisdiction:
The primary issue raised by the assessee was the validity of the assessment due to jurisdictional defects. The assessee contended that the notice issued under section 158BC was invalid as it required the return of income to be filed within 15 days, contrary to the mandatory requirement of providing not less than 15 days and not more than 45 days. The assessee's argument was supported by Circular No.717 dated 14.08.1995 and the Supreme Court decision in ACIT vs. Hotel Blue Moon, which emphasized that the notice under section 158BC is foundational for jurisdiction and must comply with the stipulated time frame. The Tribunal considered the rival submissions and relevant material, noting that the notice indeed mentioned a period of 15 days, which is less than the mandatory period of "not less than 15 days." The Tribunal referenced the Karnataka High Court's decision in CIT vs. Micro Labs Ltd., which held that a notice stipulating a period of less than 15 days is invalid and renders the entire proceedings void. Consequently, the Tribunal concluded that the assessment framed based on the invalid notice was void and set aside the assessment order.

2. Merits of the Additions Made in the Block Assessment:
Given that the assessment itself was held void due to the invalid notice, the Tribunal decided not to delve into the merits of the case or the specific additions made in the block assessment. The additions included undisclosed investments in jewelry, shares, girvi business, auto finance business, hand loan business, unexplained expenditures, and income from diamond trading and interest. However, since the assessment was invalidated on jurisdictional grounds, these issues were not addressed substantively.

3. Refund of Taxes Paid if the Assessment is Held Invalid:
In the course of the proceedings, the assessee raised an additional ground seeking a refund of taxes paid if the assessment was held invalid. The Tribunal declined to admit this additional ground as it involved the examination of facts not available on record. The Tribunal referenced the Supreme Court's decision in CIT vs. Shelly Products, which held that admitted tax should not be refunded if the assessment is set aside or nullified, as the tax paid reflects the assessee's admitted liability. Consequently, the Tribunal rejected the additional ground regarding the refund of tax.

Conclusion:
The appeal was partly allowed, with the Tribunal setting aside the assessment order due to the invalid notice under section 158BC. The Tribunal did not address the merits of the additions made in the block assessment due to the invalidation of the assessment on jurisdictional grounds. The additional ground regarding the refund of taxes paid was rejected.