M/s Kiran Prakashan vs The Department of Income Tax

Hemant Gupta, Actg. C.J. - Heard learned counsel for the parties.

The challenge in the present writ application is to an order passed by Commissioner, Income Tax (Appeals)-III, Patna on September 9, 2015 whereby, in the case of block assessment, a finding was returned that notice under Section-143(2) of Income Tax Act was not issued, and that the judgment of the Supreme Court in Asst. CIT v. Hotel Blue Moon, reported in (2010) 321 ITR 362, is per incuriam in view of the judgment reported in (2005) 3 SCC 212 (Govt. of A.P. And Another v. J.B. Educational Society And Another) and (1976) 1 SCC 719 (State of Punjab & Anr. v. Shamlal Murari & Anr.).

In Hotel Blue Moon (supra), it is categorically held that the block assessment cannot be framed until notice under Section-143(2) has been served upon the assessee. Since the Commissioner of Income Tax (Appeals) has recorded a finding that notice was not served, therefore, in view of the judgment in Hotel Blue Moon''s case (supra), an order of assessment could not have been passed.

The reasoning given by the learned Commissioner that the judgment is per incuriam is based upon two Supreme Court judgments. The said finding is not tenable. Neither of the judgments refers/deals with the case of block assessment and of not serving a notice under Section-143(2) which issue was raised and decided in Hotel Blue Moon''s case (supra).

In view of the judgment in Hotel Blue Moon''s case (supra), learned Commissioner, Income Tax (Appeals) has committed grave illegality in holding that such judgment is per incuriam.

Consequently the writ petition is allowed. The order passed by the learned Commissioner, Income Tax (Appeals) is set aside.