2012 (1) TMI 173 - AT - Income Tax

Tribunal quashes time-barred block assessment order due to delayed notice issuance

Smt. C.K. Ammukutty Amma Versus The Assistant Commissioner of Income-tax, Circle-1, Kottayam

The Tribunal ruled in favor of the assessee, holding that the block assessment order under section 158BD of the Income Tax Act was time-barred due to a ... - Issues involved: Challenge to the validity of block assessment order u/s 158BD of the Income Tax Act due to delay in issuing notice.Summary:The appeal was against the block assessment order dated 29-06-2004, initiated in the block period ending 29-11-1995. The main issue was the delay in issuing the notice u/s 158BD to the assessee, which was challenged on the grounds of being time-barred. The Department conducted a search and seizure operation in the hands of the assessee's husband on 29-11-1995, and the block assessment was completed on 29-11-1996. However, the assessing officer initiated block assessment proceedings in the hands of the assessee on 26.6.2003, more than three years after the completion of assessment in the husband's case. The delay in issuing the notice was contested by the assessee's counsel, citing a decision of a 5-Member Special Bench of the Tribunal.The Department argued that there was no prescribed time limit for issuing notice u/s 158BD and that as long as the assessment was completed within the prescribed period after issuing the notice, the delay did not invalidate the proceedings. The Tribunal referred to a similar case where it was held that issuing a notice u/s 158BD after three years from the completion of assessment in the searched person's case was time-barred. The Tribunal emphasized the importance of issuing the notice within a reasonable period after the completion of assessment in the searched person's case, as per the provisions of the Act.Based on the precedent and legal analysis, the Tribunal concluded that the block assessment order passed against the assessee u/s 158BD was indeed time-barred by limitation. Therefore, the order was quashed in favor of the assessee. As the legal issue was decided in favor of the assessee, other grounds raised were not adjudicated, and the appeal was allowed.This judgment highlights the significance of timely issuance of notices u/s 158BD in block assessment proceedings to ensure compliance with the statutory provisions and avoid being time-barred.