2012 (2) TMI 32 - AT - Income Tax

Invalid notice under section 143(2) leads to dismissal of revenue's appeal and allowance of cross objection.

Deputy Commissioner of Income tax 1(1), Bhopal Versus Shrikant Rathi

Deputy Commissioner of Income tax 1(1), Bhopal Versus Shrikant Rathi - [2013] 28 ITR (Trib) 576 (ITAT [Indore]) Issues:1. Proper assumption of jurisdiction under section 158BD of the Act.2. Validity of notice issued under section 143(2) of the Act.3. Applicability of section 292BB of the Act.Issue 1: Proper assumption of jurisdiction under section 158BD of the ActThe case involved a dispute regarding the assumption of jurisdiction under section 158BD of the Act. The Assessing Officer initiated proceedings under section 158BD after a search action on Malani and Chandak group. The appellant contended that the proceedings were initiated beyond the limitation period and proper satisfaction was not recorded. The first appellate authority held the assessment null and void, which was challenged by the revenue. The Tribunal analyzed the facts, noting the timeline of events and the challenge raised by the appellant on three grounds. The Tribunal referred to various judicial pronouncements and circulars to determine the validity of the proceedings under section 158BD. It was observed that the notice issued under section 143(2) was beyond the prescribed limit, rendering the appeal of the revenue without merit, and it was dismissed accordingly.Issue 2: Validity of notice issued under section 143(2) of the ActThe validity of the notice issued under section 143(2) of the Act was a crucial aspect of the case. The appellant challenged the notice on the grounds that it was issued beyond the stipulated time limit. The Tribunal examined the relevant provisions before and after the amendment introduced by the Finance Act, 2008. It was highlighted that the notice under section 143(2) is a mandatory requirement, and non-compliance would be fatal. The Tribunal delved into the procedural aspects of block assessment, emphasizing the importance of serving the notice within the specified period. The Tribunal concluded that the notice issued under section 143(2) was beyond the prescribed limit, leading to the allowance of the cross objection by the assessee and the dismissal of the revenue's appeal.Issue 3: Applicability of section 292BB of the ActThe applicability of section 292BB of the Act was a significant issue in the case. The appellant argued that section 292BB was introduced by the Finance Act, 2008, and therefore applied prospectively. The Tribunal analyzed the provisions before and after the amendment to ascertain the timeline for issuing notices under section 143(2). It was noted that the notice in this case was served after the expiration of the prescribed limit, rendering it invalid. The Tribunal emphasized the mandatory nature of the notice requirement and cited relevant judicial decisions to support its conclusion. Ultimately, the Tribunal allowed the cross objection of the assessee based on the expiration of the limitation period for issuing the notice under section 143(2) and dismissed the revenue's appeal.In conclusion, the Tribunal's judgment addressed the issues of jurisdiction under section 158BD, validity of the notice under section 143(2), and the applicability of section 292BB comprehensively, leading to the dismissal of the revenue's appeal and the allowance of the cross objection by the assessee.