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2007 (1) TMI 110 - HC - Income TaxUndisclosed income of the block period - Non-issuance of notice u/s 143(2) - Non-issuance of notice u/s 143(2), did not invalidate the assessment relating to the block period and was at best a mere procedural irregularity? - HELD THAT:- It is true that the return was filed by the assessee in response to a notice u/s 158BC(a). Clause (b) of section 158BC provides that the provisions of section 142 as well as sub-sections (2) and (3) of section 143 shall apply even in the case of a block assessment so far as may be. There is no dispute that in the case of assessment under Chapter XIV, a notice u/s 143(2) is mandatory where the Assessing Officer proceeds to make an inquiry as provided in section 142. Similarly, the provision of section 143(2) will be mandatorily applicable in the case of a block assessment also where the Assessing officer in repudiation of the return filed u/s 158BC(a) proceeds to make an inquiry in the proceeding under Chapter XIV-B. Once the power of inquiry u/s 142 is invoked, the Assessing Officer has no option but to follow the provisions of section 143(2). Thus, we hold that the provisions of section 142 and sub-sections (2) and (3) of section 143 will have mandatory application in a case where the Assessing Officer in repudiation of the return filed in response to a notice issued u/s 158BC(a) proceeds to make an inquiry. The defects crept in cannot be cured at this stage in view of the limitation provided in section 143(2). The assessment order in the instant case thus suffers from both procedural and jurisdictional error. The option left with the Assessing Officer is to compute the income and levy taxes on the basis of the return filed by the assessee. The question formulated is answered against the Revenue and in favour of the assessee. Consequent thereupon, the orders passed by the authorities below are set aside. The appeal, accordingly, stands allowed.
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