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The Tax PublishersI. T. A. Nos. 818, 904 and 905 of 2006 & 314 of 2007 2013 TaxPub(DT) 1490 (Karn-HC) : (2013) 052 (I) ITCL 0598 : (2013) 353 ITR 0622 INCOME TAX ACT, 1961 --Search and seizure--Notice under section 143(2) Issued after 1 year from the date of filing return--Assessee had filed a return under section 158BC(a) after conclusion of search and seizure and the same was rejected by assessing officer. Assessing officer had issued notice under section 143(2) which was beyond the period of limitation. Assessee contended that assessing officer had no jurisdiction to pass any assessment orders for the block period however, over-ruling the said contention, assessing officer passed an order and levied tax. *Held:* Was not justified, as even for the purpose of Chapter XIV-B for determination of the undisclosed income for the block assessment under the provisions of section 158BC, the provisions of section 142 and sub-sections (1) and (3) of section 143 were applicable. No assessments could be made without issuance of notice under section 143(2) where the assessing officer in repudiation of the return filed under section 158BC, proceeds to make an enquiry he had to necessarily follow the provisions of section 142, sub-sections (2) and (3) of section 143. If there is violation of the mandatory provision then the assessment order passed was illegal and liable to be set aside. Income Tax Act, 1961, Section 158BC Income Tax Act, 1961, Sections 142, 143(1)(2) & (3) In the Karnataka High Court N. Kumar & Ravi Maumath, J.J. Pai Vinod v. Dy. CIT I. T. A. Nos. 818, 904 and 905 of 2006 & 314 of 2007 Block Period 1988-89 to 1998-99 24 August, 2011 A Shankar and M. Lava, Advocates, for the appellant in ITA No. 818 of 2006 and for the respondent in ITA Nos. 905 and 904 of 2006 and 314 of 2007 M. V. Seshachala for the appellant in ITA No. 905 and 904 of 2006 and 314 of 2007 M. Thirumaleshi, Advocate, for the respondent in ITA No. 818 of 2006. JUDGMENT *N. Kumar, J.* 1. All these four appeals are taken up for consideration together as it pertains to the same assessee and regarding the same dispute. It relates to the block assessment years 1988-89 to 1998-99. After conclusion of the search and seizure, the assessee filed a return on May 4, 1999. The assessing officer repudiated the said return filed under section - 158BC(a) and wanted to hold an enquiry. Therefore he issued a notice under section 143(2) of the Income Tax Act, 1961 (for short hereinafter referred to as the Act) on 3-7-2000 : The period stipulated for issue of notice is one year from the date of filing of the return. The said period expired on 31-5-2000. Therefore, admittedly the notice issued on 3-7- 2000, was beyond the period of limitation. Therefore, the assessee contended that the assessing authority has no jurisdiction to pass any assessment orders for the block period. However, overruling the said objection and holding those provisions are not applicable to the block assessment proceedings he has passed an order on the merits and levied tax under section 113 of the Act. Aggrieved by the same, the assessee preferred an appeal to the. Appellate Commissioner who partly allowed the appeal and granted partial relief to the assessee. Aggrieved by the said order both the assessee as well as the Revenue preferred appeals to the Tribunal. The Tribunal on the merits granted relief to the assessee. Aggrieved by the same, the Revenue has preferred I. T.A. No. 905 of 2006 and I. T. A. No. 904 of 2006 herein as before the Tribunal there were two appeals. The assessee filed miscellaneous application bringing it to the notice of the tribunal that the notice was issued beyond one year period and, therefore, the entire proceedings is void ab initio. Following the judgment of the Special Bench the Tribunal held that those mandatory provisions are not applicable to block assessment proceedings. The said application was rejected. In the said application two grounds were urged one is regarding limitation. The second ground is that the satisfaction required under law did not exist. On the ground of limitation the contention of the assessee was rejected. In so far as the ground of non-satisfaction is concerned the matter was remanded to the assessing authority. Against that portion of the order remanding the matter to the assessing authority the Revenue has preferred an I. T. A. No. 314 of 2007 herein. Challenging the order passed by the Tribunal on the ground that it was not barred by time, the assessee has preferred I. T. A. No. 818 of 2006 herein. That is how all these four appeals arising out of the very same proceedings are before us and they are taken up for consideration together. SUBSCRIBE FOR FULL CONTENT

The Tax PublishersI. T. A. Nos. 818, 904 and 905 of 2006 & 314 of 2007
2013 TaxPub(DT) 1490 (Karn-HC) : (2013) 052 (I) ITCL 0598 : (2013) 353 ITR 0622

INCOME TAX ACT, 1961

--Search and seizure--Notice under section 143(2) Issued after 1 year from the date of filing return--Assessee had filed a return under section 158BC(a) after conclusion of search and seizure and the same was rejected by assessing officer. Assessing officer had issued notice under section 143(2) which was beyond the period of limitation. Assessee contended that assessing officer had no jurisdiction to pass any assessment orders for the block period however, over-ruling the said contention, assessing officer passed an order and levied tax. Held: Was not justified, as even for the purpose of Chapter XIV-B for determination of the undisclosed income for the block assessment under the provisions of section 158BC, the provisions of section 142 and sub-sections (1) and (3) of section 143 were applicable. No assessments could be made without issuance of notice under section 143(2) where the assessing officer in repudiation of the return filed under section 158BC, proceeds to make an enquiry he had to necessarily follow the provisions of section 142, sub-sections (2) and (3) of section 143. If there is violation of the mandatory provision then the assessment order passed was illegal and liable to be set aside.

Income Tax Act, 1961, Section 158BC

Income Tax Act, 1961, Sections 142, 143(1)(2) & (3)

In the Karnataka High Court

N. Kumar & Ravi Maumath, J.J.

Pai Vinod v. Dy. CIT

I. T. A. Nos. 818, 904 and 905 of 2006 & 314 of 2007

Block Period 1988-89 to 1998-99

24 August, 2011

A Shankar and M. Lava, Advocates, for the appellant in ITA No. 818 of 2006 and for the respondent in ITA Nos. 905 and 904 of 2006 and 314 of 2007 M. V. Seshachala for the appellant in ITA No. 905 and 904 of 2006 and 314 of 2007 M. Thirumaleshi, Advocate, for the respondent in ITA No. 818 of 2006.

JUDGMENT

N. Kumar, J.

1. All these four appeals are taken up for consideration together as it pertains to the same assessee and regarding the same dispute. It relates to the block assessment years 1988-89 to 1998-99. After conclusion of the search and seizure, the assessee filed a return on May 4, 1999. The assessing officer repudiated the said return filed under section - 158BC(a) and wanted to hold an enquiry. Therefore he issued a notice under section 143(2) of the Income Tax Act, 1961 (for short hereinafter referred to as the Act) on 3-7-2000 :

The period stipulated for issue of notice is one year from the date of filing of the return. The said period expired on 31-5-2000. Therefore, admittedly the notice issued on 3-7- 2000, was beyond the period of limitation. Therefore, the assessee contended that the assessing authority has no jurisdiction to pass any assessment orders for the block period. However, overruling the said objection and holding those provisions are not applicable to the block assessment proceedings he has passed an order on the merits and levied tax under section 113 of the Act. Aggrieved by the same, the assessee preferred an appeal to the. Appellate Commissioner who partly allowed the appeal and granted partial relief to the assessee. Aggrieved by the said order both the assessee as well as the Revenue preferred appeals to the Tribunal. The Tribunal on the merits granted relief to the assessee. Aggrieved by the same, the Revenue has preferred I. T.A. No. 905 of 2006 and I. T. A. No. 904 of 2006 herein as before the Tribunal there were two appeals. The assessee filed miscellaneous application bringing it to the notice of the tribunal that the notice was issued beyond one year period and, therefore, the entire proceedings is void ab initio. Following the judgment of the Special Bench the Tribunal held that those mandatory provisions are not applicable to block assessment proceedings. The said application was rejected. In the said application two grounds were urged one is regarding limitation. The second ground is that the satisfaction required under law did not exist. On the ground of limitation the contention of the assessee was rejected. In so far as the ground of non-satisfaction is concerned the matter was remanded to the assessing authority. Against that portion of the order remanding the matter to the assessing authority the Revenue has preferred an I. T. A. No. 314 of 2007 herein. Challenging the order passed by the Tribunal on the ground that it was not barred by time, the assessee has preferred I. T. A. No. 818 of 2006 herein. That is how all these four appeals arising out of the very same proceedings are before us and they are taken up for consideration together.