Rule 27 and mandatory notice limits: a pure legal objection was maintainable, and the block assessment failed for time-barred notice.

A respondent in an income-tax appeal may raise a pure question of law under Rule 27 to support the order under challenge, even if the ground was not taken earlier, so long as no fresh evidence is required. The Tribunal therefore treated the assessee's objection to the validity of the assessment notice as maintainable. It further held that in block assessment proceedings the notice under section 143(2) must be issued within the mandatory time limit; on the material before it, the notice was found to be time-barred, creating a jurisdictional defect. The block assessment was therefore held invalid.

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Issues: (i) whether the assessee, as respondent in the revenue's appeal, could raise a new legal ground under Rule 27 of the Income-tax Appellate Tribunal Rules challenging the validity of the assessment notice; and (ii) whether the notice under section 143(2) was issued within the mandatory time limit in the block assessment proceedings.

Issue (i): Whether the assessee, as respondent in the revenue's appeal, could raise a new legal ground under Rule 27 of the Income-tax Appellate Tribunal Rules challenging the validity of the assessment notice.

Analysis: The ground raised by the assessee was purely legal and did not require fresh evidence. The respondent in an appeal is entitled to support the order appealed against on any ground available in law, even if that ground was not urged earlier, so long as the Tribunal is not asked to convert the defence into an independent attack on the order. The challenge therefore fell within the permissible scope of Rule 27.

Conclusion: The assessee was entitled to raise the new legal ground before the Tribunal.

Issue (ii): Whether the notice under section 143(2) was issued within the mandatory time limit in the block assessment proceedings.

Analysis: On the material before it, including the departmental correspondence and the absence of production of the assessment records despite direction, the Tribunal held that the notice under section 143(2) was actually issued on 15/10/2001 and not on 15/10/2000. Since the notice was not issued within the mandatory period from the filing of the block return, the assessment suffered from a jurisdictional defect and could not be sustained.

Conclusion: The notice under section 143(2) was time-barred and the block assessment was invalid.

Final Conclusion: The revenue's challenge failed because the assessee's legal objection was maintainable and the assessment was vitiated by non-compliance with the mandatory notice requirement in block assessment proceedings.

Ratio Decidendi: A respondent in an appeal may raise a pure question of law to support the order under appeal, and in block assessment proceedings failure to issue the notice under section 143(2) within the prescribed time is a mandatory defect that invalidates the assessment.

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