Manish Prakash Gupta vs The Commissioner of Income Tax, Allahabad

We have heard Shri H.R. Misra, Senior Advocate assisted by Shri R.S. Agarwal for the appellant-assessee. Shri Bharat Ji Agrawal, Senior Advocate assisted by Shri A.N. Mahajan, appears for the Commissioner of Income Tax.

This income tax appeal has been preferred by the revenue on the following questions of law:

(iii) Whether, the Tribunal was legally correct in holding that in view of the phraseology "so far as may be" as appearing in Section 158-BC(b), the applicability of Section 143(2) as a whole, to the block assessment proceedings, was optional at the end of the Assessing Officer and non-issuance (by the Assessing Officer) and non-service (on the assessee) of such a notice does not affect the validity of block assessment order?

(iv). Whether, the Tribunal was legally correct in holding that the Circular No. 717 dated 14.8.1995 as issued by the CBDT, whereby issuance and service of notice U/s 143(2) on the assessee has been made absolute, was wholly redundant having no bearing on the applicability of the said provision on the block assessment.

Shri H.R. Misra, Senior Advocate appearing for the assesses states that the case is covered by the judgment in Assistant Commissioner of Income Tax and Another Vs. Hotel Blue Moon, .

We have gone through the judgment in Hotel Blue Moon (Supra) and Section 292BB as inserted in the Income Tax Act by the Finance Act, 2008 and do not find that the consideration of Section 292BB would have made any difference to the reasoning and the conclusions in the judgment.

The Supreme Court held in Hotel Blue Moon''s case that if the Assessing Officer, for any reason, repudiates the return filed by an assesses in response to notice u/s 158BC(a) of the Act relating to a block assessment, the Assessing Officer must necessarily issue notice u/s 143(2) of the Act within the time prescribed in the proviso to Section 143(2). It was further held that by making the issue of notice mandatory, Section 158BC, dealing with block assessments, makes such notice the very foundation for jurisdiction. Such notice is required to be served on the person, who is found to have undisclosed income. The requirement of notice u/s 143(2) cannot be dispensed with.

Section 292BB is a rule of evidence, which validates the notice in certain circumstances. The newly inserted Section 292BB provides that where an assesses has appeared in any proceedings or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assesses shall be precluded from taking any objection in any proceeding or inquiry under the Act that the notice was not served upon him or not served upon him in time or served upon him in an improper manner.

In the present case the Tribunal has returned the findings that the notice u/s 143(2) of the Act was admittedly not issued in this case. The Assessing Authority thus did not have jurisdiction to proceed further and make assessment.

We do not find that the non-consideration of Section 292BB, which is rule of evidence, and a deeming provision to validate the notice in certain circumstances, will have any effect on the judgment in Hotel Blue Moon (Supra). It was held in Hotel Blue Moon''s case that the very foundation of the jurisdiction of the Assessing Officer is on the issuance of the notice u/s 143(2).

The income tax appeal is dismissed.