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2007 (9) TMI 336 - AT - Income TaxAssessment of income of the block period - Invalid and without jurisdiction - Notice u/s 143(2) issued beyond a period of 12 months from the end of the month in which the block returns filed - Power Of the Tribunal to pass an order u/s 254 - HELD THAT:- In view of the matter, it is difficult to hold, as has been strenuously argued before us by the ld DR, that the Hon'ble Bombay High Court's judgment in the case of Godavaridevi Saraf's [1977 (9) TMI 24 - BOMBAY HIGH COURT] stands overruled by their Lordships' judgment in the case of Thana Electricity Supply Ltd. [1993 (4) TMI 37 - BOMBAY HIGH COURT] The only way in which we can harmoniously interpret these judgments is that these decisions deal with two different issues and ratio decidendi of these decisions must be construed accordingly. Even if we are to assume that it is possible to interpret that Godavaridevi Saraf's decision stands overruled by judgment in the case of Thana Electricity Supply Ltd.'s case, one cannot be oblivious to the fact that an interpretation is indeed possible to the effect that even non-jurisdictional High Court's judgment, for the reasons set out, is binding on the Tribunal. This non-jurisdictional High Court's judgment is in favour of the assessee. Now, as held by the Hon'ble Supreme Court's judgment in the case of CIT vs. Vegetable Products Ltd.[1973 (1) TMI 1 - SUPREME COURT], when two interpretations are possible, one in favour of the assessee must be adopted. For this reason, in our humble understanding, the plea of the assessee deserves to be accepted. The issue is covered by a Special Bench decision in the case of Rahul Kumar Bajaj vs. ITO [1998 (12) TMI 115 - ITAT NAGPUR]which holds that once the issue is decided on the question of jurisdiction, it is not necessary to address the merits of the matter as well. Respectfully following the Same, we reject the contention of the ld DR. We are not really concerned with as to what should be done in ideal situation, but, as at present and given the fact that the assessment itself is quashed, we see no need to address matters which are rendered academic in the present context. Thus, we are inclined to uphold the preliminary objection raised by the assessee. As rightly pointed by the learned counsel, Hon'ble Gauhati High Court in the case of Smt. Bandana Gogoi vs. CIT & Anr.[2007 (1) TMI 110 - GAUHATI HIGH COURT] held that when the AO does not issue notice u/s 143(2) within one year from the end of the month in which block return is filed, it cannot be open to him to start the scrutiny assessment proceedings after the end of that period. A view indeed seems possible that it is not necessary that each of the block assessment return must be subjected to the scrutiny of the AO. According to this school of thought, in the scheme of things as they exist today, assessment by scrutiny is an option available to the AO and it is not always required to be followed in all the block assessment cases. We, however, see no need to go into all these issues. Suffice to say that respectfully following the Hon'ble Gauhati High Court's judgment and having noted the position that notice u/s 143(2) was admittedly not issued within one year from the end of the month in which block assessment return was filed, we quash the assessment proceedings. In the result, appeal filed by the assessee is allowed. As far as the appeals filed by the AO are concerned, these appeals challenge the part relief granted by the CIT(A) to the assessee in respect of additions made by the AO. However, as we have quashed the very assessment proceedings, these grievances are only academic in nature. We dismiss these grievances as infructuous. In the result, the appeal filed by the AO is dismissed. To sum up, while the appeal filed by the assessee is allowed, the appeal filed by the AO is dismissed. It was so pronounced in the open Court upon conclusion of hearing of these appeals.
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