2007 (3) TMI 747 - AT - Income Tax

Block Assessment Order Invalidated for Lack of Mandatory Notice; Revenue's Appeal Dismissed as Moot.

The tribunal declared the block assessment order null and void due to the non-issuance of a mandatory notice under section 143(2). The assessee's appeal ... Validity Of Block assessment made u/s 158-BC - non-issuance of notice u/s 143(2) - HELD THAT:- In view of the above facts, it is clear that the department has not been able to establish that any notice u/s 143(2) was issued and served upon the assessee during the course of assessment proceedings u/s 158BC. As held in the case of Smt. Bandana Gogoi vs. CIT and Another [2007 (1) TMI 110 - GAUHATI HIGH COURT], if the block assessment is not made on the basis of return filed then requirement of issuance of notice is mandatory and in absence of issuance and service of such notice, the assessment order cannot be held to be valid. Since in the instant case it is virtually admitted by the Revenue that no notice u/s 143(2) has been issued and served upon the assessee, the block assessment made u/s 158-BC cannot be upheld and the same is to be declared null and void. We order accordingly. Thus, we are not required to dispose of the other grounds taken by the assessee in its appeal - In the result, assessee's appeal stands allowed. Issues:1. Validity of block assessment order due to non-issuance of notice under section 143(2).Detailed Analysis:Issue 1: Validity of block assessment order due to non-issuance of notice under section 143(2)The appeal involved cross-appeals by the assessee and the Revenue against the order of the CIT(A) related to the block period ending on a specific date. The assessee contended that the block assessment order should be declared null and void due to the mandatory requirement of issuing notice under section 143(2) not being complied with, even though the return was filed in compliance with notice under section 158 BC. The Revenue conceded during the hearing that there was no material on record to show that any notice was issued to the assessee under section 143(2). The assessee relied on a decision of the Gauhati High Court to support their argument that issuance and service of notice under section 143(2) was mandatory for passing a block assessment order under section 158BC. The AO justified the validity of the assessment order without mentioning the issuance of notice under section 143(2). The tribunal held that in the absence of such notice, the block assessment order cannot be considered valid, citing the decision of the Gauhati High Court. Therefore, the block assessment made under section 158-BC was declared null and void, leading to the allowance of the assessee's appeal.The Revenue's appeal was dismissed as the assessment order passed by the AO under section 158BC was quashed, rendering the Revenue's appeal infructuous. Consequently, the Revenue's appeal was dismissed.