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2011 (2) TMI 1418 - AT - Income TaxWhether the issue of notice u/s158BD r.w.s.158BC after expiry of more than 3 years from the date of completion of the block assessment in the case of person searched was valid or not - HELD THAT:- The observation of the Special Bench in Manoj aggrawal [2008 (7) TMI 446 - ITAT DELHI-A] shows that the time limit provided u/s158BE is also applicable for initiating proceedings u/s 158BD. In the case before us also admittedly the search proceedings was initiated and assessee was subject to search. However, the Revenue authorities found material against the assessee with regard to undisclosed income. The AO ought to have completed the assessment on or before 2.11.2003. This date also was not disputed by the Revenue. Therefore, the AO ought to have issued the notice u/s 158BC r.w.s.158BD against the assessee within a reasonable time after completion of block assessment was subjected to tax. Unfortunately, the AO has not taken any steps for more than three years and 7 months. there was a unreasonable delay on the part of the AO for initiating proceedings by issuing notice u/s158BD r.w.s.158BC. Therefore, the issue of notice after expiry of 3 years and 7 months is unreasonable which cannot be a basis for completing the assessment against the assessee. Therefore, in our opinion, the CIT(A) has rightly quashed the proceedings. Regarding the contention of the Department that the assessee has not challenged the notice before the AO, therefore, he cannot challenge the same in view of section 292BB. Admittedly section 292BB was inserted by Finance Act, 2008 with effect from 1.4.2008. The notice u/s 158 r.w.s. 158BC was issued in this case on 7.7.2006. Since the provisions of section 292BB curtail the right of the assessee, it would operate prospectively as held in Kuber Tobacco Products (P) Ltd. vs. DCIT [2009 (1) TMI 304 - ITAT DELHI]. Therefore, section 292BB may not be applicable to the notice issued on 7.7.2006.
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