2023 (8) TMI 158 - HC - Income Tax

Block assessment u/s 158BC - limitation for filing a return - HELD THAT - The provision mandates that in a notice issued under Section 158 BC, the assessee shall be provided a minimum period of fifteen days; which is a reasonable period for the assessee to file a return or a maximum period of forty-five days; after which the Assessing Officer can proceed with the assessment. In the present case, a notice, as we see from the orders on record, provides a time of thirty days to file a return which is in accordance with the above quoted provisions. Since there is no limitation for filing a return, the assessee cannot be faulted if a return is filed at any time before the completion of assessment. No notice u/s 143(2) issued - AO also, after the time provided in the notice, if it is within 15 to 45 days can proceed further if no return is filed. In the present case, a subsequent notice was issued u/s 142(1), which was responded with a return filed, within almost twelve days. The assessment was completed much after, but without issuing a notice u/s 143(2). This is not a case where there was no return filed, in which event it was also held in CIT v Devendranath G. Chaturvedi 2017 (6) TMI 732 - GUJARAT HIGH COURT that a notice is required u/s 143(2). As held that in the circumstances when there was no return filed pursuant to a notice u/s 142(1), there is a requirement for a further notice u/s 143(2), which provision has been made applicable to Section 158BC. The assessment completed under Section 158BC without a notice under Section 143(2) cannot be sustained and the same has to be set aside Whether curable defect u/s 292BB? - Since Section 292BB only speaks of a notice being deemed to be valid in certain circumstances, when the assessee has appeared in any proceeding and cooperated in any enquiry relating to assessment or re-assessment. It does not take in the circumstances of a complete absence of notice; which does not stand cured under Section 292BB, especially in the teeth of such notice being found to be mandatory under the Act. We need to only notice the decision of Laxman Das Khandelwal 2019 (8) TMI 660 - SUPREME COURT to find the last question also in favour of the assessee and against the Revenue.

Summary

Issues involved:
The judgment addresses the following Issues:
1. Whether the return filed by the appellant was beyond the time limit prescribed under Section 158BC of the Income Tax Act?
2. Whether the notice under Section 143(2) of the Income Tax Act is required to complete the assessment under Section 158BC?
3. Whether the lack of notice under Section 143(2) stands cured by the provisions of Section 292BB of the Income Tax Act?

Issue 1 - Time Limit for Filing Return:
The appellant was directed to file a return within one month after a notice was issued under Section 158BC of the Income Tax Act. The appellant filed the return on 22.11.2004, declaring undisclosed income. The Tribunal held that any return filed after the prescribed 45-day limit is non-est, allowing the assessing officer to proceed for assessment without further notice under Section 143(2).

Issue 2 - Requirement of Notice under Section 143(2):
The Tribunal distinguished a previous Supreme Court decision and found that the absence of a notice under Section 143(2) was cured by Section 292BB, a procedural clarification. It was held that the lack of notice was cured by the principle of waiver and acquiescence, as the assessee cooperated in the assessment without objection.

Issue 3 - Cure under Section 292BB:
Section 292BB deems a notice to be valid in certain circumstances when the assessee has cooperated in the assessment process. However, the absence of a mandatory notice under Section 143(2) cannot be cured under Section 292BB, as clarified by the Supreme Court in a previous case.

The judgment emphasized that the assessment under Section 158BC requires a notice under Section 143(2) for completion, as it is a complete code in itself. The Court held that the absence of such notice renders the assessment incomplete and must be set aside. The assessment is deemed to be completed based on the return filed by the assessee in response to the initial notice under Section 142(1) of the Act.