2014 (10) TMI 395 - HC - Income Tax

Section 153(2A) applies to fresh Chapter XIV-B block assessments after Section 250 orders; assessments beyond one-year limit are time-barred.

HC held that Section 153(2A) applies to a fresh block assessment under Chapter XIV-B made pursuant to an order under Section 250, because Section 158BH ... Applicability of section 153(2A) - Notice u/s 158BC – Computation of undisclosed income - Whether section 153(2A) of the Act is attracted to a block assessment framed in pursuance to an order under Section 250 and Chapter XIV B of the Act and whether this order passed on 28.03.2003 is in time as stipulated under Section 153 (2A) of the Act or not – Held that:- Though Chapter XIV B is a complete code by itself and an assessment order has to be passed under the Chapter and passing the assessment order under other provisions of the Act are not permissible - If the Chapter do not provide for contingency, then Section 158BH makes all other provisions of the Act apply to an assessment made under the Chapter - Section 153 (2A) being a provision which provides for limitation to pass assessment order under pursuance of Section 250 or 254 or 263 or 264 of the Act - The provision is attracted to an assessment which has to be made under Chapter XIV B of the Act - Section 158BH permits to look at the other provisions of the Act in the field in respect of which no provisions are made under Chapter XIV B - Section 153 (2A) of the Act is attracted to an order for fresh assessment to be passed under Chapter XIV B of the Act in pursuance of the order of the Section 250 of the Act. As decided in Assistant Commissioner of Income Tax & Anr. Versus M/s. Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT OF INDIA] - the assessment order for the block period was passed by the assessing authority on 30.09.1999 - The appellate authority u/s 250 of the Act had set aside the order by order dated 24.10.2000 - The order was communicated on 15.01.2001 - The period prescribed u/s 153(2A) of the Act is before the expiry of one year from the end of financial year in which order under Section 250 of the Act is received by the Chief Commissioner or Commissioner as the case may be - The copy of the appellate authority was received on 15.01.2001, 31.03.2001 is the end of the financial year and 31.03.2002 is one year there from before which the fresh assessment order ought to have been passed - The fresh assessment order is passed on 28.03.2003, nearly one year after the expiry of the period of limitation - Therefore, it is barred by time – Decided against revenue. Issues Involved:1. Whether the assessment order passed by the assessing authority was barred by the law of limitation.2. Applicability of Section 153(2A) of the Income Tax Act to a block assessment framed in pursuance of an order under Section 250 and Chapter XIV B of the Act.Detailed Analysis:Issue 1: Whether the assessment order passed by the assessing authority was barred by the law of limitation.The Revenue challenged the Tribunal's order which allowed the appeal filed by the assessee, directing the deletion of Rs. 50,25,000/-. The assessee, engaged in finance, chit funds, real estate, and construction, had a search conducted under Section 132 of the Income Tax Act, 1961, on 24.09.1997. A notice under Section 158BC was served on 26.02.1998, calling for the return of undisclosed income for the block period from 01.04.1987 to 24.09.1997. The assessee filed the return on 12.08.1999, declaring an undisclosed income of Rs. 1,42,297/-, with a delay of 17 months. The assessment was completed under Section 158BC read with Section 144 on 30.09.1999, determining the undisclosed income at Rs. 2,45,57,160/- due to the lack of explanation or objections from the assessee.The Commissioner of Income Tax (Appeals) set aside the assessment on 24.10.2000, directing a re-examination of the facts. A fresh order was passed on 28.03.2003, computing the undisclosed income at Rs. 51,67,300/-. The Tribunal allowed the appeal-in-part, granting relief of Rs. 50,25,000/-. The Revenue appealed, arguing that the assessment order was not barred by limitation.Issue 2: Applicability of Section 153(2A) of the Income Tax Act to a block assessment framed in pursuance of an order under Section 250 and Chapter XIV B of the Act.The Court formulated the substantial question of whether Section 153(2A) is applicable to a block assessment under Chapter XIV B. The assessing officer passed an order under Section 158BC read with Section 144 on 30.09.1999. The appellate authority set aside the order on 24.10.2000, and the order was received on 15.01.2001. A fresh order was passed on 28.03.2003.The Revenue contended that Chapter XIV B is a complete code in itself, and Section 153(2A) does not apply to block assessments under Section 158BC. They relied on the judgment of the Rajasthan High Court in Commissioner of Income Tax Vs. Ramesh Chand Soni, arguing that the order was not barred by limitation.The assessee argued that Chapter XIV B, while complete, does not provide a specific provision for framing an assessment when the original order is set aside under Section 250. Therefore, Section 153(2A) applies, and the order passed on 28.03.2003 is barred by limitation.Section 153(2A) prescribes a one-year time limit for fresh assessments following an order under Section 250. The Supreme Court in Assistant Commissioner Of Income-Tax & Another vs. Hotel Blue Moon held that Section 158BH makes all other provisions of the Act applicable to block assessments. The appellate order was received on 15.01.2001, and the fresh assessment should have been completed by 31.03.2002. The order passed on 28.03.2003 was beyond this period, making it time-barred.In conclusion, the Court answered the substantial question of law in favor of the assessee, dismissing the Revenue's appeal. Consequently, the Court did not address other substantial questions of law.Judgment:The appeal was dismissed, and the substantial question of law regarding the limitation period was answered in favor of the assessee. The assessment order passed on 28.03.2003 was deemed barred by limitation.