2005 (12) TMI 254 - AT - Income Tax

Tribunal upholds validity of assessment under Income Tax Act, clarifies jurisdiction & legal heirs inclusion

The Tribunal held that the assessment completed within the extended limitation period under the Income Tax Act was valid. Non-issuance of notice under ... Block Assessment in search case Issues Involved:1. Limitation of assessment period under Section 142(2A) and 158BE of the Income Tax Act.2. Non-issuance of notice under Section 143(2) for block assessment.3. Difference between nomination and appointment.4. Jurisdiction and validity of the issuance of the warrant.5. Inclusion of all legal heirs in the assessment of a deceased person.Detailed Analysis:1. Limitation of Assessment Period:The primary issue was whether the assessment was barred by limitation under Section 142(2A) and 158BE of the Income Tax Act. The search was conducted on 1-7-1998, and the assessment was to be completed by 31-7-2000. However, the period taken for audit under Section 142(2A) (105 days) was excluded, extending the limitation period to 13-11-2000. The Tribunal held that the assessment completed on 13-11-2000 was within the permissible time limit, considering the extension provisions under Explanation 1 to Section 158BE.2. Non-Issuance of Notice Under Section 143(2):The Tribunal addressed the issue of non-issuance of notice under Section 143(2) for block assessment. It was admitted that no notice was issued during the block assessment. The Tribunal referred to the provisions of Section 158BC, which mandates the application of Sections 142, 143(2) and (3), and 144 'so far as may be'. It was concluded that the non-issuance of notice under Section 143(2) constituted a curable irregularity and not a nullity. The Tribunal set aside the assessments in some cases to allow the issuance of the required notice.3. Difference Between Nomination and Appointment:This issue was not pressed by the assessee during the hearing and was therefore dismissed as not pressed.4. Jurisdiction and Validity of the Issuance of the Warrant:The assessee challenged the jurisdiction of the warrant issued by the Deputy Director of Inspection (Investigation Unit), Coimbatore. However, it was clarified that the warrant was actually issued by the Director of Income-tax (Investigation), Madras. The Tribunal dismissed this issue based on the clarification provided.5. Inclusion of All Legal Heirs in the Assessment of a Deceased Person:The Tribunal considered whether the block assessment could be framed on a deceased person without including all legal heirs. The deceased had multiple legal heirs, and the assessment was framed without bringing all of them on record. Citing the jurisdictional High Court's decision in Muniyammal v. Addl. ITO, the Tribunal held that all legal heirs must be impleaded. The assessment was set aside to cure this irregularity by including all legal heirs.Conclusion:- Appeals in IT (SS) A Nos. 16/Mds./2001 and 23/Mds./2004 were dismissed.- Appeals in IT (SS) A Nos. 79, 80, 99 & 100/Mds./2005 were allowed for statistical purposes to cure procedural irregularities.