DAVINDER MEHRA vs. C I T

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ITA/291/2007HC Punjab & HaryanaPHHC01072981200707 April 2010Bench: MR. JUSTICE M.M. KUMAR,MR. JUSTICE JITENDRA CHAUHAN3 pages
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What did the High Court hold?

The High Court held that Question II, concerning the applicability of the proviso to Section 143(2) to block assessments under Section 158 BC, is answered in favour of the assessee-appellant. This decision is based on the Supreme Court's judgment in M/s Hotel Blue Moon (supra), which established that the time limit for notice under Section 143(2) applies to block assessments. As a consequence of this finding, the Court determined that Question I, regarding the Tribunal's competence to examine satisfaction under Section 132 prior to search during a Section 158 BC assessment appeal, has been rendered academic. Therefore, Question I was left open and not adjudicated upon. The appeal and the related application were disposed of accordingly.

What were the facts?

The appeals were filed by assessees Davinder Mehra (ITA No. 291 of 2007) and Baldev Raj Mehra (ITA No. 372 of 2009) against the order dated January 31, 2007, passed by the Income Tax Appellate Tribunal (ITAT), Amritsar Bench. The appeals pertained to block assessment periods. For ITA No. 291 of 2007, the block assessment period was April 1, 1979, to July 22, 1979. The High Court framed two substantive questions of law for determination. The assessee filed an application stating that the second question of law was covered by a Supreme Court judgment, rendering the first question academic.

What were the issues?

The High Court was to decide the following substantive questions of law: 1. Whether, in the facts and circumstances of the case, the ITAT was correct in law in holding that while deciding an appeal against an assessment order passed under Section 158 BC, the Tribunal was not competent to go into the satisfaction recorded under Section 132 of the Income Tax Act prior to the initiation of search? (Question of law) 2. Whether, in the facts and circumstances of the case, the ITAT was correct in law in holding that the proviso to Section 143(2) did not apply to the Block Assessment framed under Section 158 BC of the Income Tax Act? (Question of law) Assessee's Contentions: The assessee argued that Question II is settled in their favour by the Supreme Court in Asstt. Commissioner of Income Tax and another v. M/s Hotel Blue Moon (2010) 321 ITR 362 (SC). They contended that the Supreme Court held that service of notice on all assessees under Section 143(2) must be within the prescribed period for block assessment under Chapter XIV B. Consequently, if Section 143(2) applies to block assessments, the appeal should be allowed, and the Tribunal's order quashed, rendering Question I academic. Revenue's Contentions: The revenue's counsel conceded that Question II is covered against the revenue and in favour of the assessee by the Supreme Court's judgment in M/s Hotel Blue Moon (supra).

Which sections of the Income-tax Act were involved?

Section 158 BC,Section 132,Section 143(2),Section 260A

AI-generated summary — verify with the full judgment below

ITA No. 291 of 2007 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT

CHANDIGARH. ITA No. 291 of 2007 Date of decision 7 .4.2010 Davinder Mehra ... Appellant Versus Commissioner of Income Tax, Amritsar ... Respondent ITA No. 372 of 2009 Baldev Raj Mehra ...Appellant Versus Commissioner of Income Tax, Amritsar ... Respondents CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JITENDRA CHAUHAN Present: Mr.Salil Kapoor ,Advocate for the appellant Ms. N.P.K.Singh, Advocate for the respondent revenue 1.To be referred to the Reporter or not ? 2.Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. This order shall dispose of two appeals bearing ITA No.291 of 2007 and 372 of 2009 as the issue raised in both the appeals is common. For the purposes of this order, facts are being taken from ITA No.291 of 2007. The instant appeal filed by the assessee under Section 260A of the Income Tax Act, 1961(for brevity 'the Act') is directed against order dated 31.1.2007 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar in ITA No.29 (ASR)/2004 in respect of block assessment period 1.4.1979 to 22.7.1979. When the appeal was admitted, the following substantive questions of law were framed for determination of this Court: “ I) Whether the facts and circumstances of the case, the ITAT was correct in law in holding that while deciding the appeal

ITA No. 291 of 2007 2 against the assessment order passed under Section 158 BC, the Tribunal was not competent to go into the satisfaction recorded under Section 132 of the Income Tax Act prior to initiation of search ? II)Whether in facts and circumstances of the case, the ITAT was correct in law in holding that the proviso to Section 143(2) did not apply to the Block Assessment framed under Section 158 BC of the Income Tax Act.” The assessee- appellant has filed an application asserting that question No. II is now covered by a judgement of Hon'ble the Supreme Court rendered in the case of Asstt. Commissioner

of Income Tax and

another v. M/s Hotel Blue Moon(2010) 321 ITR 362 (SC). It has been claimed that the above question of law has been settled in the aforesaid judgement in favour of the assessee and against the revenue. Hon'ble the Supreme Court has opined that service of notice on all the assessee under Section 143(2) of the Act has to be within the prescribed period of time for framing block assessment under Chapter XIV B of the Act. Notice of the application was issued with a view to find out whether question No. II is covered by the judgement of Hon'ble the Supreme Court in the case of M/s Hotel Blue Moon (supra). Ms. N.P.K.Singh, counsel for the Revenue has put in appearance. Mr. Salil Kapoor, learned counsel for the assessee has submitted that question No. II has been answered by Hon'ble the Supreme Court in favour of the assessee in the case of M/s Blue Moon (supra) and in view thereof question No. I has been rendered academic. According to the

ITA No. 291 of 2007 3 learned counsel once the period of limitation provided by Section 143(2) of the Act is applicable to the block assessment then the instant appeal has to be allowed and the order of the Tribunal is liable to be quashed. The Ist question would pale into insignificance and does not require to be answered. Ms. N.P.K.Singh, Counsel for the Revenue has not been able to successfully controvert the submission made by the counsel for the assessee and has conceded that question No.2 is covered against the Revenue and in favour of the assessee. As a sequel to the above discussion, question No. II is answered in favour of the assessee- appellant and question No. I is left open as the adjudication on question No. I has been rendered academic. The appeal and application stands disposed of. A copy of this order be placed on the file of connected appeal (M.M.Kumar) Judge (Jitendra Chauhan) 7.4.2010 Judge okg

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