The Commissioner (Appeals) annulled the block assessment because no section 143(2) notice was served. Can the department save it by showing the notice was issued?
The Patna Tribunal held that it could. It read section 158BC as requiring only the ISSUE of a notice under section 143(2) and not its service, found on the record that a notice had been issued on 20 August 1999 and received at the assessee's address, and added that in any event the assessee's block return, filed after the time allowed, was an invalid return so that no section 143(2) notice was required at all. It set aside the annulment and restored the appeal to the Commissioner (Appeals) to be decided on the merits.
Decided by the ITAT (Shri Laxmi Prasad Sahu, Accountant Member and Shri Sonjoy Sarma, Judicial Member (order by Laxmi Prasad Sahu, AM)) on 2026-05-13, reported as IT(SS)A No. 8/PAT/2019; Income Tax Appellate Tribunal, Patna Bench (virtual hearing at Kolkata); block period assessment years 1989-90 to 1998-99; heard 21 April 2026, pronounced 13 May 2026. It bears on section 158BC, section 143(2), section 143(3), section 292B, section 292BB, section 132, section 132(4), section 131(1A), section 250, section 253 of the Income Tax Act 1961, in Search, Survey & Block Assessment, Assessment & Scrutiny, Appeals and Evidence & Burden of Proof matters.
This is the Revenue's side of a line the library otherwise carries only one way, and it should be read for what it is. Two features make it a cautionary rather than a comfortable authority. First, the wording the Tribunal relied on for the issue-versus-service distinction is the wording of section 158BC(1)(a) AS SUBSTITUTED WITH EFFECT FROM 1 SEPTEMBER 2024, which the order reproduces at its paragraph 10 — but the search in the case was on 21 April 1998 and the block period was assessment years 1989-90 to 1998-99, so the governing provision was the 1995 Chapter. The order does not explain why the substituted section was applied. Second, the alternative reasoning — that a late block return is invalid, so no section 143(2) notice was needed — is the very proposition the Pune Tribunal rejected a week earlier in Sonaj And Company, and rejected precisely because the 'not deemed to be a return' provision is new. For a practitioner the practical lesson is that the substituted text is already being read back into old cases at Tribunal level, and that where the point matters the regime must be pleaded expressly. For a search on or after 1 September 2024 the first proviso to section 158BC(1)(a) does say that a notice under section 143(2) 'shall thereafter be issued', so the issue-versus-service argument will be made again on wording that genuinely applies.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
Read aloud by your device. Press again to stop.
The assessee had been Minister of Road Construction in the State of Bihar when what the order describes as the bitumen scam was reported by the Comptroller and Auditor General for 1995-96. A search under section 132 was conducted at his residential and office premises and at his ancestral house on 21 April 1998, with simultaneous searches at premises of associated persons and transporters. A notice under section 158BC was issued on 24 December 1998 allowing fifteen days. After correspondence in which the assessee sought copies of seized material and statements, and after further notices dated 26 July 1999 and a show cause notice dated 5 August 1999, the block return was filed on 13 August 1999 declaring nil undisclosed income. The Assessing Officer issued a notice under section 143(2) on 20 August 1999, which was received on 23 August 1999 at the assessee's official residence by one Shri Ram Chandra Prasad, and completed the block assessment under section 143(3) read with section 158BC on 28 April 2000 determining undisclosed income of Rs 3,87,51,289. The Commissioner (Appeals), by order dated 3 January 2019, allowed the assessee's appeal on an additional legal ground that no mandatory notice under section 143(2) had been issued and served, without deciding the merits. The Revenue appealed and later filed revised grounds, to which the assessee objected on the ground that they were filed long after the hearing had concluded.
The Revenue's appeal was allowed in the terms of the order. The assessee's objection to the revised grounds was rejected. On the substance, the Tribunal held that the section requires the issue of a notice under section 143(2) and says nothing about service; that the notice had in fact been issued on 20 August 1999 and received at the assessee's address, with the authorised representative thereafter participating in the assessment proceedings without objection; and that in any event, the assessee not having filed a valid return within the time granted and extended, the Assessing Officer was not bound to issue a notice under section 143(2) at all. The order of the Commissioner (Appeals) was set aside and the issue restored to him to be decided on the merits, with a direction to the assessee to appear and substantiate his case and not to seek unnecessary adjournments (paragraphs 8, 9 and 11).
The Tribunal first disposed of the objection to the revised grounds, holding at paragraph 8 that they had been filed pursuant to a direction of a coordinate bench and that the objection was not acceptable. It then narrowed the controversy to whether a notice under section 143(2) had been issued and served. Setting out the chronology of notices at paragraph 8 and the scanned notices at paragraph 9, it found that the notice dated 20 August 1999 bore the assessee's correct address, was received by a person present there, and that the authorised representative had participated in the proceedings on several dates without objection, so that it could not be said the notice was not served. It recorded at paragraph 9 the departmental reliance on the Delhi High Court's decision in Ashok Chaddha for the proposition that no notice under section 143(2) is required in a search case, and set out at length the Supreme Court's paragraph 15 in Hotel Blue Moon, on which both sides relied. At paragraph 10 it reproduced section 158BC(1)(a) together with its four provisos as substituted with effect from 1 September 2024, and at paragraph 11 held that on a careful reading the section states that the notice is to be issued and contains no word about service. It concluded that the Commissioner (Appeals) had wrongly allowed the appeal on the legal ground without deciding the merits, and restored the matter for a decision on the merits.
On careful reading of the above section the section itself states that the notice is to be issued but there is no any word for the service of the notice, the main section states only for the issue of notice
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppThe Patna Tribunal held that it could. It read section 158BC as requiring only the ISSUE of a notice under section 143(2) and not its service, found on the record that a notice had been issued on 20 August 1999 and received at the assessee's address, and added that in any event the assessee's block return, filed after the time allowed, was an invalid return so that no section 143(2) notice was required at all. It set aside the annulment and restored the appeal to the Commissioner (Appeals) to be decided on the merits. This was decided by the ITAT (Shri Laxmi Prasad Sahu, Accountant Member and Shri Sonjoy Sarma, Judicial Member (order by Laxmi Prasad Sahu, AM)) and bears on section 158BC, section 143(2), section 143(3), section 292B, section 292BB, section 132, section 132(4), section 131(1A), section 250, section 253 of the Income Tax Act 1961. It is reported as IT(SS)A No. 8/PAT/2019; Income Tax Appellate Tribunal, Patna Bench (virtual hearing at Kolkata); block period assessment years 1989-90 to 1998-99; heard 21 April 2026, pronounced 13 May 2026. This is the Revenue's side of a line the library otherwise carries only one way, and it should be read for what it is. Two features make it a cautionary rather than a comfortable authority. First, the wording the Tribunal relied on for the issue-versus-service distinction is the wording of section 158BC(1)(a) AS SUBSTITUTED WITH EFFECT FROM 1 SEPTEMBER 2024, which the order reproduces at its paragraph 10 — but the search in the case was on 21 April 1998 and the block period was assessment years 1989-90 to 1998-99, so the governing provision was the 1995 Chapter. The order does not explain why the substituted section was applied. Second, the alternative reasoning — that a late block return is invalid, so no section 143(2) notice was needed — is the very proposition the Pune Tribunal rejected a week earlier in Sonaj And Company, and rejected precisely because the 'not deemed to be a return' provision is new. For a practitioner the practical lesson is that the substituted text is already being read back into old cases at Tribunal level, and that where the point matters the regime must be pleaded expressly. For a search on or after 1 September 2024 the first proviso to section 158BC(1)(a) does say that a notice under section 143(2) 'shall thereafter be issued', so the issue-versus-service argument will be made again on wording that genuinely applies. If it applies to you, the first step is this: If your case is on the old Chapter, put the regime in issue in terms: identify the search date, identify the version of section 158BC that governs, and object to any reliance on the substituted section.
The assessee had been Minister of Road Construction in the State of Bihar when what the order describes as the bitumen scam was reported by the Comptroller and Auditor General for 1995-96. A search under section 132 was conducted at his residential and office premises and at his ancestral house on 21 April 1998, with simultaneous searches at premises of associated persons and transporters. A notice under section 158BC was issued on 24 December 1998 allowing fifteen days. After correspondence in which the assessee sought copies of seized material and statements, and after further notices dated 26 July 1999 and a show cause notice dated 5 August 1999, the block return was filed on 13 August 1999 declaring nil undisclosed income. The Assessing Officer issued a notice under section 143(2) on 20 August 1999, which was received on 23 August 1999 at the assessee's official residence by one Shri Ram Chandra Prasad, and completed the block assessment under section 143(3) read with section 158BC on 28 April 2000 determining undisclosed income of Rs 3,87,51,289. The Commissioner (Appeals), by order dated 3 January 2019, allowed the assessee's appeal on an additional legal ground that no mandatory notice under section 143(2) had been issued and served, without deciding the merits. The Revenue appealed and later filed revised grounds, to which the assessee objected on the ground that they were filed long after the hearing had concluded. The matter was decided on 2026-05-13 by the ITAT (Shri Laxmi Prasad Sahu, Accountant Member and Shri Sonjoy Sarma, Judicial Member (order by Laxmi Prasad Sahu, AM)). On those facts the ITAT held as follows. The Revenue's appeal was allowed in the terms of the order. The assessee's objection to the revised grounds was rejected. On the substance, the Tribunal held that the section requires the issue of a notice under section 143(2) and says nothing about service; that the notice had in fact been issued on 20 August 1999 and received at the assessee's address, with the authorised representative thereafter participating in the assessment proceedings without objection; and that in any event, the assessee not having filed a valid return within the time granted and extended, the Assessing Officer was not bound to issue a notice under section 143(2) at all. The order of the Commissioner (Appeals) was set aside and the issue restored to him to be decided on the merits, with a direction to the assessee to appear and substantiate his case and not to seek unnecessary adjournments (paragraphs 8, 9 and 11).
The Tribunal first disposed of the objection to the revised grounds, holding at paragraph 8 that they had been filed pursuant to a direction of a coordinate bench and that the objection was not acceptable. It then narrowed the controversy to whether a notice under section 143(2) had been issued and served. Setting out the chronology of notices at paragraph 8 and the scanned notices at paragraph 9, it found that the notice dated 20 August 1999 bore the assessee's correct address, was received by a person present there, and that the authorised representative had participated in the proceedings on several dates without objection, so that it could not be said the notice was not served. It recorded at paragraph 9 the departmental reliance on the Delhi High Court's decision in Ashok Chaddha for the proposition that no notice under section 143(2) is required in a search case, and set out at length the Supreme Court's paragraph 15 in Hotel Blue Moon, on which both sides relied. At paragraph 10 it reproduced section 158BC(1)(a) together with its four provisos as substituted with effect from 1 September 2024, and at paragraph 11 held that on a careful reading the section states that the notice is to be issued and contains no word about service. It concluded that the Commissioner (Appeals) had wrongly allowed the appeal on the legal ground without deciding the merits, and restored the matter for a decision on the merits. In the words reproduced by the source cited on this page: "On careful reading of the above section the section itself states that the notice is to be issued but there is no any word for the service of the notice, the main section states only for the issue of notice" The decision followed or applied ACIT v. Hotel Blue Moon (2010) 321 ITR 362 (SC) — considered; Ashok Chaddha v. ITO (2012) 20 taxmann.com 387 (Delhi) — relied on by the Revenue and recorded.
It was decided by the ITAT on 2026-05-13 and is reported as IT(SS)A No. 8/PAT/2019; Income Tax Appellate Tribunal, Patna Bench (virtual hearing at Kolkata); block period assessment years 1989-90 to 1998-99; heard 21 April 2026, pronounced 13 May 2026. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 158BC, section 143(2), section 143(3), section 292B, section 292BB, section 132, section 132(4), section 131(1A), section 250, section 253, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The Revenue's appeal was allowed in the terms of the order. The assessee's objection to the revised grounds was rejected. On the substance, the Tribunal held that the section requires the issue of a notice under section 143(2) and says nothing about service; that the notice had in fact been issued on 20 August 1999 and received at the assessee's address, with the authorised representative thereafter participating in the assessment proceedings without objection; and that in any event, the assessee not having filed a valid return within the time granted and extended, the Assessing Officer was not bound to issue a notice under section 143(2) at all. The order of the Commissioner (Appeals) was set aside and the issue restored to him to be decided on the merits, with a direction to the assessee to appear and substantiate his case and not to seek unnecessary adjournments (paragraphs 8, 9 and 11). It arises in Search, Survey & Block Assessment, Assessment & Scrutiny, Appeals and Evidence & Burden of Proof matters, on section 158BC, section 143(2), section 143(3), section 292B, section 292BB, section 132, section 132(4), section 131(1A), section 250, section 253 of the Income Tax Act 1961, and was decided by Shri Laxmi Prasad Sahu, Accountant Member and Shri Sonjoy Sarma, Judicial Member (order by Laxmi Prasad Sahu, AM). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where service of the section 143(2) notice is disputed, get the order sheet, the dispatch register and the acknowledgment on the record early. This Tribunal decided the point on the strength of an acknowledgment signed by a person present at the assessee's address and on the assessee's participation in the proceedings. Do not rely on section 292BB alone. The Tribunal here did not need to decide the section 292BB grounds; it found the notice had in fact been issued and received. If you act for the assessee, note that the Commissioner (Appeals) here decided only the legal ground and not the merits, and that the matter went back for the merits to be decided. Where a legal ground is taken, ask the first appellate authority to decide the merits in the alternative so that a reversal does not cost another round. Read this order alongside Sonaj And Company (ITAT Pune, 6 May 2026), which reaches the opposite conclusion on the validity of a belated block return, and cite both if you are before a Tribunal on the point.
Validity check could not be completed. A Tribunal order of 13 May 2026; no appellate treatment could exist yet and none was looked for. It is in direct tension with Sonaj And Company v DCIT (ITAT Pune, 6 May 2026) on whether a belated block return is valid, and it applies the post-1 September 2024 text of section 158BC to a search of April 1998, which the entry records but does not endorse. Ashok Chaddha v ITO, already in this library, is authority that no notice under section 143(2) is required for a section 153A assessment, and the Supreme Court in Hotel Blue Moon holds that one is required for a block assessment under Chapter XIV-B; the relationship between those two lines was not resolved here. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Three cautions. (1) The provision reproduced at paragraph 10, from which the operative reasoning at paragraph 11 is drawn, is section 158BC(1)(a) as substituted with effect from 1 September 2024, expressly limited by its own words to a search initiated on or after that date; the search in this case was on 21 April 1998. The order does not address that mismatch, and this entry does not endorse the approach. (2) The text as reproduced in the order contains obvious transcription corruption ('Where any search has beer' followed by a stray quotation mark and then 'initiated'; 'books ef account'; 'section 1324' for section 132A), which is in the source and not introduced here. (3) The printed order records blank pages at pages 10 to 48 where the Commissioner (Appeals) findings were to be reproduced, and scanned documents at pages 52 to 55 in place of the notices; those parts of the record could not be read. The order runs to twelve numbered paragraphs, ending with the disposal at paragraph 12 and the signatures of both members, and I read the whole of it. Paragraph 11, from which the quotation is taken, is the Tribunal speaking in its own voice; the long passage at paragraph 9 is a quotation from the Supreme Court's judgment in Hotel Blue Moon and its paragraph numbering belongs to that judgment, not to this order. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Revenue's appeal was allowed in the terms of the order. The assessee's objection to the revised grounds was rejected. On the substance, the Tribunal held that the section requires the issue of a notice under section 143(2) and says nothing about service; that the notice had in fact been issued on 20 August 1999 and received at the assessee's address, with the authorised representative thereafter participating in the assessment proceedings without objection; and that in any event, the assessee not having filed a valid return within the time granted and extended, the Assessing Officer was not bound to issue a notice under section 143(2) at all. The order of the Commissioner (Appeals) was set aside and the issue restored to him to be decided on the merits, with a direction to the assessee to appear and substantiate his case and not to seek unnecessary adjournments (paragraphs 8, 9 and 11).
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
We charge fees for our public utility work. Does that cost us charitable status under s.2(15)?
Is a notice under s.143(2) a jurisdictional precondition, or merely a procedural step the Assessing Officer can skip?
My return was only processed under 143(1). Does that stop the department reopening it later?
When must the satisfaction note be recorded before proceedings are taken against a third party?