The Supreme Court has ruled that it is mandatory for the Income Tax Department to issue notice within the prescribed time limit of one year where the assessing officer in repudiation of the block return filed by the assessee proceeds for an inquiry.
If an assessment is to be completed under section 143(3)read with section 158-BC (Income Tax Act), notice under section 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under section 143(2) cannot be dispensed with, said a bench comprising Justice SH Kapadia and Justice HL Dattu.
The Income Tax Appellate Tribunal while affirming the decision of the CIT(A) had said non-issue of notice under section 143(2) of the act is only a procedural irregularity and curable. It was overturned by the Guwahati high court.
Against it, the revenue department had filed six appeals in the apex court. The department had maintained that since the provisions incorporated in the Chapter XIV B (related to block assessment) constitute a special code to assess the undisclosed income in search cases, they would override the provisions of Chapter XIV, the procedure for normal assessments.
Rejecting the plea of department, the apex court said: Had the intention of the legislature was to exclude the provisions of Chapter XIV of the act, the legislature would have or could have indicated that also.