C I T KOTA vs. CHANAN DAS

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ITA/340/2011HC RajasthanRJHC02060116201121 February 2012Author: ARUN MISHRA,NARENDRA KUMAR JAIN2 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the miscellaneous applications filed by the assessee, seeking to set aside the previous order, were to be allowed. The Tribunal reasoned that the Supreme Court's decisions in ACIT Vs. Hotel Blue Moon, 321 ITR 362(SC) and ACIT Vs. Saurashtra Kutch Stock Exchange Ltd., 305 ITR 227(SC) were applicable. These decisions clarified that the issuance of a notice under Section 143(2) of the Income Tax Act is indeed necessary for framing assessments, even in block assessment proceedings under Section 158BC. Consequently, assessments conducted without serving a notice under Section 143(2) are without jurisdiction and therefore void ab initio. The Tribunal noted that these Supreme Court decisions were not available at the time of its initial order. Since the applications for correction were not contested by the Revenue and were acceded to, the Tribunal found no grounds to interfere with its corrected order. The appeal filed by the Revenue was dismissed, and no substantial question of law arose.

What were the facts?

The Commissioner of Income Tax, Kota, has challenged an order dated 12.10.2010 passed by the Income Tax Appellate Tribunal (ITAT) in four miscellaneous applications. These applications arose from cross-objections filed in Income Tax Settlement Application (ITSSA) numbers 84/JP/2004, 62/JP/2005, 100/JP/2004, and 64/JP/2005. The core issue in the cross-objections was whether a notice under Section 143(2) of the Income Tax Act was served upon the assessee before framing the block assessment. Initially, the ITAT had dismissed this ground, holding that Section 143(2) notice was not necessary for assessment under Section 158BC. However, the Tribunal later corrected its order, relying on Supreme Court decisions, to hold that assessments made without a Section 143(2) notice were without jurisdiction and void ab initio. The revenue's appeal challenges this corrected order.

What were the issues?

1. Whether the Income Tax Appellate Tribunal erred in holding that a notice under Section 143(2) of the Income Tax Act, 1961, is mandatory for assessments made under Section 158BC of the Act, thereby rendering assessments without such notice void ab initio? (Question of law) The Revenue contended that the ITAT's initial order, which held that Section 143(2) notice was not necessary for block assessments under Section 158BC, was correct. It argued that the subsequent correction of this order by the ITAT, based on Supreme Court decisions, was erroneous. The Revenue relied on the Supreme Court's decision in ACIT Vs. Hotel Blue Moon, 321 ITR 362(SC) and ACIT Vs. Saurashtra Kutch Stock Exchange Ltd., 305 ITR 227(SC) to support its contention that the ITAT's corrected order was justified, especially since the applications for correction were not objected to by the Revenue and were indeed acceded to. The Revenue's prayer was for the misc. applications to be disposed of in line with the corrected order.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 158BC

AI-generated summary — verify with the full judgment below

1 D.B. INCOME TAX APPEAL NO.340/2011 HON'BLE THE CHIEF JUSTICE MR. ARUN MISHRA HON'BLE MR. JUSTICE NARENDRA KUMAR JAIN-I Ms.Parinitoo Jain for the appellant. Order dated 12.10.2010 passed by the Income Tax Appellate Tribunal in four misc.applications arising out

of Cross

Objections

No.1/JP/2005(ITSSA No.84/JP/2004),

80/JP/2005(ITSSA

No.62/JP/2005), 16/JP/2005(ITSSA No.100/JP/2004 and 79/JP/2005(ITSSA No.64/JP/2005) has been questioned. (NARENDRA KUMAR JAIN-I),J. (ARUN MISHRA),C.J. Skant/- All the corrections made in the judgment/order have been incorporated in the judgment/order being emailed. Shashi Kant Gaur, PA

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