2020 (7) TMI 647 - HC - Income Tax

Dismissal of Writ Petition Challenging Block Assessment Order Upheld

Dr. Bharat Mehta (Deceased), Mehul Metha Versus Deputy Commissioner of Income Tax Central Circle I (3) Chennai, Additional Commissioner of Income Tax Central Range I Chennai

The court dismissed the writ petition, upholding the Block Assessment Order dated 30.06.2003. It found that the order was within the limitation period as ... Block Assessment Order u/s 158BC r/w Section 158BD - assessment barred by limitation as per Section 158BE (1)(b) - no notice u/s 143(2) which is mandatorily to be issued even in respect of 158BC proceedings, had been issued - HELD THAT:- Allegation that a notice u/s 143(2) was not issued and that a notice u/s 142(1) only was issued is not correct since the notices u/s 143(2) and 142(1) were issued on the same date (6.6.2003) and also served on the same date (10.6.2003). In the above assessment order, the Assessing Officer was mentioning the reason why the notice u/s 142(1) was issued 'only on 6.6.2003' whereas the petitioner attempts to read the word 'only” in connection with the words 'notice u/s 142(1)' to present as if only the notice u/s 142(1) was issued. This is not correct and the petitioner is well aware of the same. The allegation that no notice u/s 143(2) was issued and that the petitioner represented his case before the first respondent only on the basis of oral requirement is factually incorrect. The allegation that adequate opportunity was not given to the petitioner before the completion of the block assessment is factually incorrect since the case was discussed with the petitioner and his representatives on as much as six occasions. Block Assessment Orders as barred by limitation - Search operation commences at the second premises of the petitioner on 25.01.2001, continued till 12.06.2001, therefore each time separate panchanamas were drawn and prohibitory orders were issued with the endorsement that, 'search continues'. However it has been misquoted by the petitioner that, even though the panchanama, dated 25.01.2001 discloses with an endorsement of the Revenue that, the 'search concluded', subsequent issuance of prohibitory order and on that strength, subsequent searches made till 12.06.2001 was unauthorised - in the second premises the search continued and in view of the specific provisions referred to above in Section 132(1)(iib), which, even though came into effect only from 01.06.2002, the continuous search went up to 12.06.2001 can very well said to be authorised and therefore the Revenue cannot be found fault with by compelling them to calculate the limitation within the meaning of Section 158BE(1)(b) from 01.02.2001 by taking into account the panchanama, dated 25.01.2001 as the last panchanama and by not taking the 12.06.2001 panchanama as the last panchanama. Therefore independently, on the basis of Section 132(1)(iib), the Revenue's continuous search operation taken place on various dates from 25.01.2001 till 12.06.2001 can very well be construed as an authorised search operation, therefore the panchanama issued on 12.06.2001 shall be deemed to be the last authorisation within the meaning of Explanation 2 to Section 158BE. If that being the position, the impugned Block Assessment Order, dated 30.06.2003 is within the limitation of two years under Section 158BE(1)(b) commencing from 01.07.2001 since the end of the month in which the last of authorisation for search under Section 132 was to be reckoned only as 30.06.2001. Ground raised by the petitioner side in the context of Section 158BE(1)(b) to state that, the impugned order is barred by limitation, is unsustainable. Block Assessment Order, dated 30.06.2003 cannot be said to be defective for want of limitation, within the meaning of Section 158BE(1)(b) of the Act and also the other reasons and grounds urged by the petitioner side since cannot be said to be the advancing factor of the petitioner's case, this Court feel that, the impugned order can very well be sustained, that means, on the grounds urged by the petitioner, it cannot be successfully assailed. Issues Involved:1. Limitation Period for Block Assessment Order under Section 158BE(1)(b)2. Issuance and Validity of Notice under Section 143(2)3. Requirement of Prior Approval under Section 158BG4. Alleged Violation of Principles of Natural JusticeIssue-wise Detailed Analysis:1. Limitation Period for Block Assessment Order under Section 158BE(1)(b):The petitioner contended that the Block Assessment Order dated 30.06.2003 was barred by limitation under Section 158BE(1)(b), arguing that the search concluded on 25.01.2001, and thus the limitation period ended on 31.01.2003. The Revenue, however, maintained that the search continued until 12.06.2001, making the Block Assessment Order within the permissible two-year period. The court examined the panchanamas and noted that the search at one premise concluded on 25.01.2001, but at another premise, it continued until 12.06.2001 due to the petitioner not providing the necessary password for electronic documents. The court ruled that the search was indeed continuous and authorized under Section 132(1)(iib), and thus the Block Assessment Order was within the limitation period.2. Issuance and Validity of Notice under Section 143(2):The petitioner argued that no notice under Section 143(2) was issued or, if issued, it was beyond the limitation period. The Revenue countered that the notice was issued on 06.06.2003 and served by affixture on 10.06.2003 after unsuccessful attempts to serve it directly. The court found that the notice under Section 143(2) was indeed issued and served appropriately, rejecting the petitioner’s claim.3. Requirement of Prior Approval under Section 158BG:The petitioner claimed that the Block Assessment Order was invalid as it lacked prior approval from the Joint Commissioner of Income Tax (JCIT) as required under Section 158BG. The Revenue asserted that the necessary approval was obtained, though not explicitly detailed in the documents. The court accepted the Revenue's assertion, noting that the assessment was conducted following the necessary authorizations and approvals.4. Alleged Violation of Principles of Natural Justice:The petitioner alleged that the assessment proceedings violated principles of natural justice due to lack of proper opportunity to present their case. The Revenue provided evidence of multiple notices and correspondences with the petitioner, demonstrating that ample opportunities were given. The court concluded that there was no violation of natural justice principles, as the petitioner had sufficient opportunities to participate in the proceedings.Conclusion:The court dismissed the writ petition, concluding that the Block Assessment Order was within the limitation period, the notice under Section 143(2) was validly issued, the necessary approval under Section 158BG was obtained, and there was no violation of principles of natural justice. The court upheld the Block Assessment Order dated 30.06.2003.