Chand Bihari Agrawal Vs CIT (Patna High Court)
The Patna High Court allowed the assessee’s appeal after re-framing three questions of law concerning the validity of a block assessment under Section 158BC of the Income-tax Act. The case arose from a search conducted on 27.02.2003, following which a notice under Section 158BC was issued requiring the assessee to file a block return. A subsequent notice under Section 142(1) was issued, and the assessee filed a return on 22.11.2004 declaring undisclosed income of ₹2,25,000. The Assessing Officer completed the assessment under Section 158BC without issuing a notice under Section 143(2), determining undisclosed income at ₹7,71,955. The Tribunal upheld the assessment on the ground that the return was filed beyond the prescribed period and that the absence of notice stood cured under Section 292BB. The High Court examined Section 158BC and held that it prescribes only the period to be provided in the notice and does not prescribe a limitation for filing the return. It held that the assessee could file a return any time before completion of assessment and, once such return was filed, issuance of a notice under Section 143(2) became mandatory in view of Assistant Commissioner of Income-Tax v. Hotel Blue Moon. The Court further held that complete absence of a mandatory notice could not be cured by Section 292BB, relying on Commissioner of Income Tax v. Laxman Das Khandelwal. Accordingly, the assessment under Section 158BC was set aside, and the assessment was deemed to have been completed on the basis of the block return filed by the assessee in response to the notice under Section 142(1).
