June 2011
Search and seizure: Block assessment: Assessment of third person: Limitation: Section 158BC, section 158BD and section 158BE(2)(b) of Income-tax Act, 1961: Notice issued u/s.158BC: Later fresh notice issued u/s.158BD: Time for making assessment to be reconed from first notice.
By K. B. Bhujle | Advocate
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[CIT v. K. M. Ganesan, 333 ITR 562 (Mad.)]
Pursuant
to a search, notice u/s.158BC was issued to the assessee on 27-7-1999.
After noticing that the warrant was not issued in the name of the
assessee, a fresh notice u/s.158BC r/w.s. 158BD was issued on the
assessee on 7-2-2001. The assessee filed the block return on 29-1-2003
admitting ‘nil’ undisclosed income. The assessment was made on
27-2-2003. The assessee claimed that the assessment is invalid being
made beyond the period of limitation of two years from the date of
issuance of notice on 27-7-1999. The CIT(A) and the Tribunal accepted
the assessee’s claim.
On appeal filed by the Revenue, the Madras High Court upheld the decision of the Tribunal and held as under:
“(i)
The assessee knew very well the purpose for which the notice was issued
on 27-7-1999. The warrant was not issued in the name of the assessee
was admitted. In the circumstances, notice issued u/s.158BC was in
accordance with the requirement of section 158BD.
(ii)
Non-mentioning of section 158BD would not ipso facto invalidate the
earlier notice. Therefore, the assessment made against the assessee was
beyond the period prescribed u/s. 158BE(2)(b).”
