ASSISTANT COMMISSIONER OF INCOME TAX AND ANR. vs. M/S. HOTEL BLUE MOON

CIVIL APPEAL No. 1198/2010Supreme Court[2010] 2 S.C.R. 28202 February 2010Bench: 2 JudgesAuthor: S.H. KAPADIA, H.L. DATTU B15 pages
AI SummaryDismissed

What did the Supreme Court hold?

The Supreme Court held that the issuance of a notice under Section 143(2) of the Income Tax Act, 1961, within the prescribed time is mandatory for framing a block assessment under Chapter XIV-B. The Court reasoned that Section 158 BC(b) incorporates provisions of Section 143(2) and (3), making them applicable to block assessments. The omission to issue such a notice is not a procedural irregularity but a curable defect, and therefore, the requirement of the notice cannot be dispensed with. The Court disagreed with the revenue's interpretation of 'so far as may be apply,' stating that when an assessing officer repudiates the return filed under Section 158 BC(a) and proceeds to make an enquiry, they must necessarily follow the provisions of Section 142 and sub-sections (2) and (3) of Section 143. Section 158 BH further reinforces the applicability of other provisions of the Act to block assessments unless otherwise provided. The Court found no reason to restrict the scope and meaning of 'so far as may be apply' and concluded that no assessment could be made without issuing notice under Section 143(2). The appeals were dismissed.

What were the facts?

The Supreme Court was hearing appeals against a judgment of the Guwahati High Court concerning block assessment proceedings under Chapter XIV-B of the Income Tax Act, 1961. The core issue revolved around the mandatory nature of issuing a notice under Section 143(2) of the Act within the prescribed time for framing a block assessment, following a search conducted under Section 132. The appeals arose from similar facts and presented a common question of law. The revenue's contention was that the phrase 'so far as may be' in Section 158 BC(b) made the issuance of such a notice optional or applicable only to the extent practicable, not mandatory.

What were the issues?

1. Whether the issuance of a notice under Section 143(2) of the Income Tax Act, 1961, within the prescribed time for framing a block assessment under Chapter XIV-B is mandatory for assessing undisclosed income detected during a search under Section 132. (Question of law) Assessee's Contentions: The judgment does not explicitly record arguments made by the assessee. The High Court's decision, which the Supreme Court upheld, likely favored the assessee on this point. Revenue's Contentions: The revenue contended that the expression 'so far as may be apply' in Section 158 BC(b) indicates that the provisions of Section 142 and sub-sections (2) and (3) of Section 143 are not expected to be followed strictly for block assessments. They argued that the notice under Section 143(2) is not mandatory but optional and should be applied to the extent practicable. The revenue relied on observations in Dr. Pratap Singh v. Director of Enforcement (1985) 155 ITR 166 (SC) regarding the interpretation of 'so far as may be'.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 132,Section 158 BC,Section 142,Section 143(3),Section 144,Section 158 BB,Section 158 BH

AI-generated summary — verify with the full judgment below

Cited by 623 judgments on BharatTax

See all citing judgments →

Counted from the text of the judgments hosted here. Most recent first.

A B [201 OJ 2 S.C.R. 282 ASSISTANT COMMISSIONER OF INCOME TAX AND ANR. v. M/S. HOTEL BLUE MOON (Civil Appeal No. 1198 of 2010 ) FEBRUARY 2, 2010 [S.H. KAPADIA AND H.L. DATTU, JJ.] Income Tax Act, 1961: s.143(2) - Issuance of notice on C assessee under s. 143(2) for block assessment proceedings - Requirement of - Held: Is mandatory.

The question which arose for consideration in these appeals was whether service of notice on the assessee 0 under Section 143(2) of the Income Tax Act, 1961 within the prescribed period of time for framing the block assessment under Chapter XIV-B is mandatory for assessing the undisclosed income detected during search conducted under Section 132 of the Act. E Dismissing the appeals, the Court HELD: 1. 1. Chapter XIV-B of the Income Tax Act, 19'61 provides for an assessment of the undisclosed income unearthed as a result of search without affecting F the regular assessment made or to be made. Search is the sine qua non for the Block assessment. The special provisions are devised to operate in the distinct field of undisclosed income and are clearly in addition to the regular assessments covering the previous years falling G in

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 132

All 14,598 judgments and leading authorities on Section 132 →

Recent GST High Court judgments

Search GST case law →