Block assessment notice and search evidence: delayed return, seized loose sheets, and sworn statement support additions.

In block assessment proceedings, the commentary explains that a delayed return filed close to the assessment deadline may make issuance of notice under section 143(2) impracticable, so non-issuance does not necessarily invalidate the assessment. It also notes that loose sheets seized in search can qualify as relevant documents, and statements recorded under section 132(4) may be used in later proceedings. A subsequent retraction is treated as ineffective where surrounding circumstances, including disclosure of undisclosed income, support the original statement and the seized material. On this analysis, the assessment and additions were sustained.

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Issues: (i) Whether the assessment made in block proceedings was invalid for want of notice under section 143(2); (ii) Whether additions based on loose sheets seized in search could be sustained in the light of the assessee's sworn statement and later retraction.

Issue (i): Whether the assessment made in block proceedings was invalid for want of notice under section 143(2).

Analysis: The return in response to the block notice was filed only after a long delay and very near the expiry of the time available for completing the block assessment. Clause (b) of section 158BC was read with the other assessment provisions, but section 143(2) was held to operate in the context of returns filed under section 139 or in response to section 142(1), and not as a rigid requirement defeating the block assessment where the assessee's delayed conduct made compliance impracticable. The Court distinguished the authorities relied on by the assessee and held that, on the peculiar facts, the absence of notice under section 143(2) did not nullify the assessment.

Conclusion: The objection based on non-issuance of notice under section 143(2) was rejected, in favour of the Revenue.

Issue (ii): Whether additions based on loose sheets seized in search could be sustained in the light of the assessee's sworn statement and later retraction.

Analysis: The loose sheets were treated as documents within the meaning relevant to the search provisions. Statements recorded during search under section 132(4) were held admissible in evidence in subsequent proceedings, and the assessee's later retraction was found ineffective in view of the surrounding circumstances, including the return showing undisclosed income. On that basis, the seized material and sworn statement were held sufficient to support the additions.

Conclusion: The additions based on the loose sheets and sworn statement were upheld, in favour of the Revenue.

Final Conclusion: The appeal succeeded and the Revenue's additions were restored, with the assessee's challenge to the assessment failing on both questions decided.

Ratio Decidendi: In block assessment proceedings, a delayed return cannot be used to invalidate the assessment for want of section 143(2) notice where compliance is rendered impracticable by the assessee's own conduct, and documents seized in search may sustain additions when supported by admissible statements under section 132(4).

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