Mandatory section 143(2) notice limitation in block assessments makes late service invalidate the assessment

In block assessment proceedings, section 143(2) notice must be issued within the prescribed limitation period because section 158BC applies sections 142 and 143 so far as may be. The text treats the proviso's time limit as mandatory, following the jurisdictional High Court view that the statutory notice requirement is not a curable irregularity in this context. It also notes that the contrary Special Bench approach was rejected. On this reasoning, a notice issued beyond twelve months from filing of the block return renders the assessment invalid and void ab initio.

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Issues: Whether the block assessment was invalid for want of a notice under section 143(2) of the Income-tax Act, 1961, issued within the prescribed limitation period after filing of the block return.

Analysis: The return in the block assessment was filed after search, but the notice under section 143(2) was issued beyond twelve months from the date of filing. The statutory scheme of section 158BC makes the provisions of sections 142 and 143 applicable in block assessments "so far as may be". The decision of the jurisdictional High Court holding the limitation in the proviso to section 143(2) to be mandatory was treated as applicable to block assessments as well, especially in light of the further High Court observation that section 158BC incorporates the relevant assessment provisions where the Legislature so intended. The contrary Special Bench view treating the defect as merely curable irregularity was not preferred.

Conclusion: The notice under section 143(2) having been issued beyond the prescribed period, the block assessment was held to be invalid and void ab initio, and the ground of the assessee succeeded.

Final Conclusion: The assessment was quashed, the assessee's appeal was allowed, and the Revenue's appeal failed as infructuous.

Ratio Decidendi: Where section 143(2) applies to block assessment proceedings through section 158BC, the limitation for service of the notice is mandatory, and failure to issue the notice within time renders the assessment invalid.

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