The block return was filed after the time given in the section 158BC notice and the notice under section 143(2) came more than twelve months later. The department says the return was non est. Is it?
For a search governed by the 1995 Chapter XIV-B, no. The Pune Tribunal held that there was no provision in the erstwhile section 158BC making a block return filed beyond the time specified in the notice non est, so the belated return was a valid return, the notice under section 143(2) had to issue within twelve months of the end of the month in which it was filed, and a notice issued later made the block assessment null and void. The Tribunal reached that conclusion partly BECAUSE the amended section 158BC, applicable from 1 September 2024, now says expressly that a return furnished beyond the period allowed shall not be deemed to be a return under section 139 — a provision it treated as absent from the earlier law.
Decided by the ITAT (Shri R.K. Panda, Vice President and Ms. Astha Chandra, Judicial Member (order by Astha Chandra, JM)) on 2026-05-06, reported as ITSSA No. 30/PUN/2025; Income Tax Appellate Tribunal, 'B' Bench, Pune; cause title assessment year 2000-01; block period 1990-91 to 1999-2000 and part period of AY 2000-01; heard 24 February 2026, pronounced 6 May 2026. It bears on section 158BC, section 158BFA, section 143(2), section 143(3), section 132, section 158BB, section 139 of the Income Tax Act 1961, in Search, Survey & Block Assessment, Assessment & Scrutiny, Appeals and How Tax Law Is Read matters.
This decision does two jobs at once and a practitioner must keep them apart. For old block assessments still in the system — and they are still in the system, this one being a second-round appeal from a 1999 search — it is direct authority that a belated block return does not lose its character, so the Hotel Blue Moon requirement of a section 143(2) notice within the statutory period continues to bite. For a search on or after 1 September 2024, the same reasoning cuts the other way: the second proviso to section 158BC(1)(a) now provides in terms that a late block return is not deemed to be a return under section 139, and the Tribunal treated that as a change in the law rather than a clarification of it. The corollary is that under the revived Chapter a client who files his block return even a day late may forfeit the section 143(2) argument altogether, and will additionally suffer interest under section 158BFA(1) running to the date the assessment is completed rather than to the date of filing — a contrast the Tribunal itself drew from the amended section 158BFA(1). Note also that the departmental representative's argument, recorded and rejected, was that the amendment was introduced 'only to clarify' the existing position; that argument is available to the Revenue elsewhere and has not been tested on appeal.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee was a partnership firm dealing in petroleum products, motorcycle spare parts and other commodities. A search under section 132 was conducted on 21 July 1999. A notice under section 158BC was issued on 15 October 1999 calling for a return for the block period. The assessee filed the block return on 16 December 1999 declaring undisclosed income of Rs 1,92,000, which was beyond the forty-five day period allowed by section 158BC(a)(ii) as it then stood. The Assessing Officer issued a notice under section 143(2) on 27 April 2001 and completed the block assessment on 30 July 2001 determining undisclosed income of Rs 19,77,401 on account of household expenses noted in seized diaries, deposits not treated as genuine with interest thereon, and excess stock and gross profit on unaccounted sales. The Commissioner (Appeals) partly allowed the appeal on 15 March 2004. On the assessee's further appeal the Tribunal, by order dated 28 September 2007 in ITA No. 932/PUN/2004, admitted an additional ground that the section 143(2) notice was issued beyond twelve months from the end of the month in which the block return was filed and remitted the matter to the Commissioner (Appeals). On remand the Commissioner (Appeals), by order dated 30 July 2025, dismissed the legal ground, holding that a return filed beyond the time specified in the section 158BC notice was not a valid return so that no section 143(2) notice was required, relying on PCIT v Broadway Shoe Co. (Jammu and Kashmir) and a Kerala High Court decision on section 80P. The assessee appealed again.
Grounds 1 to 3 were allowed and the block assessment under section 158BC was held null and void; ground 4 was not pressed and the remaining merits grounds (5 to 8) were left unadjudicated. The appeal was partly allowed. There was no provision in the erstwhile section 158BC that a block return filed beyond the time specified in the notice would not be a valid return; the belated return was therefore valid, and since the notice under section 143(2) was issued beyond twelve months from the end of the month in which the return was filed, that notice was invalid and the block assessment fell with it (paragraphs 13, 16, 19 and 21).
The Tribunal set the erstwhile section 158BC against the section as amended with effect from 1 September 2024 and found the answer in the difference between them. The earlier section, reproduced at paragraph 10, prescribed a period of not less than fifteen and not more than forty-five days for the block return but said nothing about the consequence of filing late; the Tribunal held at paragraph 11 that there was accordingly no provision making such a return invalid. The amended section, reproduced at paragraph 12, contains a second proviso providing that a return furnished beyond the period allowed in the notice shall not be deemed to be a return under section 139, and the Tribunal held at paragraph 13 that it was only after that amendment that a belated block return was rendered non est. It found further support in the interest provision: under the erstwhile section 158BFA(1), reproduced at paragraph 14, interest on a belated block return ran only to the date of furnishing the return, whereas under the amended section 158BFA(1), reproduced at paragraph 15, it runs to the date of completion of the assessment — which, the Tribunal reasoned at paragraph 16, is consistent only with the belated return having been valid under the old law and invalid under the new. Applying Hotel Blue Moon, it held at paragraph 19 that a notice under section 143(2) was required and that a notice issued beyond twelve months was not valid. It distinguished Broadway Shoe Co. at paragraph 20 on the footing that no return at all had been filed there, and the Kerala decision as not rendered in the context of section 158BC. The departmental representative's contention that the 2024 amendment was merely clarificatory was recorded at paragraph 17 and rejected at paragraph 19.
We have considered the relevant provisions of section 158BC both as applicable to the assessee and post its amendment effective from September 2024 and find some force in the arguments advanced by the Ld. AR that there was no such provision in section 158BC as applicable to the present case and hence the Ld. CIT(A) is not justified in holding that the belated return filed by the assessee is to be treated as non-est.
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Handle my notice → Ask a CA on WhatsAppFor a search governed by the 1995 Chapter XIV-B, no. The Pune Tribunal held that there was no provision in the erstwhile section 158BC making a block return filed beyond the time specified in the notice non est, so the belated return was a valid return, the notice under section 143(2) had to issue within twelve months of the end of the month in which it was filed, and a notice issued later made the block assessment null and void. The Tribunal reached that conclusion partly BECAUSE the amended section 158BC, applicable from 1 September 2024, now says expressly that a return furnished beyond the period allowed shall not be deemed to be a return under section 139 — a provision it treated as absent from the earlier law. This was decided by the ITAT (Shri R.K. Panda, Vice President and Ms. Astha Chandra, Judicial Member (order by Astha Chandra, JM)) and bears on section 158BC, section 158BFA, section 143(2), section 143(3), section 132, section 158BB, section 139 of the Income Tax Act 1961. It is reported as ITSSA No. 30/PUN/2025; Income Tax Appellate Tribunal, 'B' Bench, Pune; cause title assessment year 2000-01; block period 1990-91 to 1999-2000 and part period of AY 2000-01; heard 24 February 2026, pronounced 6 May 2026. This decision does two jobs at once and a practitioner must keep them apart. For old block assessments still in the system — and they are still in the system, this one being a second-round appeal from a 1999 search — it is direct authority that a belated block return does not lose its character, so the Hotel Blue Moon requirement of a section 143(2) notice within the statutory period continues to bite. For a search on or after 1 September 2024, the same reasoning cuts the other way: the second proviso to section 158BC(1)(a) now provides in terms that a late block return is not deemed to be a return under section 139, and the Tribunal treated that as a change in the law rather than a clarification of it. The corollary is that under the revived Chapter a client who files his block return even a day late may forfeit the section 143(2) argument altogether, and will additionally suffer interest under section 158BFA(1) running to the date the assessment is completed rather than to the date of filing — a contrast the Tribunal itself drew from the amended section 158BFA(1). Note also that the departmental representative's argument, recorded and rejected, was that the amendment was introduced 'only to clarify' the existing position; that argument is available to the Revenue elsewhere and has not been tested on appeal. If it applies to you, the first step is this: For any block assessment arising from a search up to 31 May 2003 that is still alive, check the date the block return was actually filed and the date the section 143(2) notice was issued, and take the limitation point if more than twelve months separate them.
The assessee was a partnership firm dealing in petroleum products, motorcycle spare parts and other commodities. A search under section 132 was conducted on 21 July 1999. A notice under section 158BC was issued on 15 October 1999 calling for a return for the block period. The assessee filed the block return on 16 December 1999 declaring undisclosed income of Rs 1,92,000, which was beyond the forty-five day period allowed by section 158BC(a)(ii) as it then stood. The Assessing Officer issued a notice under section 143(2) on 27 April 2001 and completed the block assessment on 30 July 2001 determining undisclosed income of Rs 19,77,401 on account of household expenses noted in seized diaries, deposits not treated as genuine with interest thereon, and excess stock and gross profit on unaccounted sales. The Commissioner (Appeals) partly allowed the appeal on 15 March 2004. On the assessee's further appeal the Tribunal, by order dated 28 September 2007 in ITA No. 932/PUN/2004, admitted an additional ground that the section 143(2) notice was issued beyond twelve months from the end of the month in which the block return was filed and remitted the matter to the Commissioner (Appeals). On remand the Commissioner (Appeals), by order dated 30 July 2025, dismissed the legal ground, holding that a return filed beyond the time specified in the section 158BC notice was not a valid return so that no section 143(2) notice was required, relying on PCIT v Broadway Shoe Co. (Jammu and Kashmir) and a Kerala High Court decision on section 80P. The assessee appealed again. The matter was decided on 2026-05-06 by the ITAT (Shri R.K. Panda, Vice President and Ms. Astha Chandra, Judicial Member (order by Astha Chandra, JM)). On those facts the ITAT held as follows. Grounds 1 to 3 were allowed and the block assessment under section 158BC was held null and void; ground 4 was not pressed and the remaining merits grounds (5 to 8) were left unadjudicated. The appeal was partly allowed. There was no provision in the erstwhile section 158BC that a block return filed beyond the time specified in the notice would not be a valid return; the belated return was therefore valid, and since the notice under section 143(2) was issued beyond twelve months from the end of the month in which the return was filed, that notice was invalid and the block assessment fell with it (paragraphs 13, 16, 19 and 21).
The Tribunal set the erstwhile section 158BC against the section as amended with effect from 1 September 2024 and found the answer in the difference between them. The earlier section, reproduced at paragraph 10, prescribed a period of not less than fifteen and not more than forty-five days for the block return but said nothing about the consequence of filing late; the Tribunal held at paragraph 11 that there was accordingly no provision making such a return invalid. The amended section, reproduced at paragraph 12, contains a second proviso providing that a return furnished beyond the period allowed in the notice shall not be deemed to be a return under section 139, and the Tribunal held at paragraph 13 that it was only after that amendment that a belated block return was rendered non est. It found further support in the interest provision: under the erstwhile section 158BFA(1), reproduced at paragraph 14, interest on a belated block return ran only to the date of furnishing the return, whereas under the amended section 158BFA(1), reproduced at paragraph 15, it runs to the date of completion of the assessment — which, the Tribunal reasoned at paragraph 16, is consistent only with the belated return having been valid under the old law and invalid under the new. Applying Hotel Blue Moon, it held at paragraph 19 that a notice under section 143(2) was required and that a notice issued beyond twelve months was not valid. It distinguished Broadway Shoe Co. at paragraph 20 on the footing that no return at all had been filed there, and the Kerala decision as not rendered in the context of section 158BC. The departmental representative's contention that the 2024 amendment was merely clarificatory was recorded at paragraph 17 and rejected at paragraph 19. In the words reproduced by the source cited on this page: "We have considered the relevant provisions of section 158BC both as applicable to the assessee and post its amendment effective from September 2024 and find some force in the arguments advanced by the Ld. AR that there was no such provision in section 158BC as applicable to the present case and hence the Ld. CIT(A) is not justified in holding that the belated return filed by the assessee is to be treated as non-est." The decision followed or applied ACIT v. Hotel Blue Moon (2010) 321 ITR 362 (SC) — applied; PCIT v. Broadway Shoe Co. (2018) 99 taxmann.com 83 (J&K) — distinguished; Nileshwar Rangekallu Chethu Thozhilali Vyavasaya Sahakarana Sangham v. CIT, Calicut (Kerala) — distinguished.
It was decided by the ITAT on 2026-05-06 and is reported as ITSSA No. 30/PUN/2025; Income Tax Appellate Tribunal, 'B' Bench, Pune; cause title assessment year 2000-01; block period 1990-91 to 1999-2000 and part period of AY 2000-01; heard 24 February 2026, pronounced 6 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 158BFA, section 143(2), section 143(3), section 132, section 158BB, section 139, 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 taxpayer. Grounds 1 to 3 were allowed and the block assessment under section 158BC was held null and void; ground 4 was not pressed and the remaining merits grounds (5 to 8) were left unadjudicated. The appeal was partly allowed. There was no provision in the erstwhile section 158BC that a block return filed beyond the time specified in the notice would not be a valid return; the belated return was therefore valid, and since the notice under section 143(2) was issued beyond twelve months from the end of the month in which the return was filed, that notice was invalid and the block assessment fell with it (paragraphs 13, 16, 19 and 21). It arises in Search, Survey & Block Assessment, Assessment & Scrutiny, Appeals and How Tax Law Is Read matters, on section 158BC, section 158BFA, section 143(2), section 143(3), section 132, section 158BB, section 139 of the Income Tax Act 1961, and was decided by Shri R.K. Panda, Vice President and Ms. Astha Chandra, Judicial Member (order by Astha Chandra, JM). 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. Do not let the department convert the point into a merits argument. The Tribunal decided it as a pure question of law on the wording of the erstwhile section 158BC and did not go into the additions at all. Meet the 'clarificatory amendment' argument head on: the Tribunal accepted that the earlier section contained no such provision and that the 2024 wording is new, and it drew support from the parallel change in the interest provision. For a search on or after 1 September 2024, treat the sixty-day period in the section 158BC notice as a hard deadline. File on time even with provisional figures, and use the thirty-day audit extension in the fifth proviso in writing if the conditions are met. Read this order together with ACIT v Md. Illyas Hussain (ITAT Patna, 13 May 2026), which took the opposite view on very similar facts and allowed the Revenue's appeal; the two are not reconciled.
Validity check could not be completed. A Tribunal order of 6 May 2026; no appellate treatment could exist yet and none was looked for. It is in direct tension with ACIT v Md. Illyas Hussain (ITAT Patna, 13 May 2026), decided a week later, which proceeded on the footing that a block return filed after the time allowed was invalid and that no section 143(2) notice was therefore required. The library's vocabulary has no label for a conflict between two Tribunal benches; that is what this is. Whether the Revenue has appealed under section 260A has not been checked. 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.
The record as printed contains several internal date conflicts, none of which affects the ratio. The cause title gives Assessment Year 2000-01; paragraph 1 says the appeal pertains to 'Assessment Year (AY) 1990-91'; paragraph 2 records the block period as 1990-1991 to 1999-2000 and part period of AY 2000-01. Paragraph 2 and paragraph 9 give the block return date as 16.12.1999, while paragraph 5 gives 06.12.1999; the reasoning proceeds on 16.12.1999. The Commissioner (Appeals) order reproduced at paragraph 3 says the return was due 'on or before 29.11.2019', plainly a slip for 1999. Ground 3 as reproduced says the section 143(2) notice was issued on 27.04.2021, while the body of the order consistently says 27.04.2001. Paragraph 2 refers once to 'the block assessment order passed u/s 153BC' — a slip for 158BC. The order runs to twenty-two numbered paragraphs ending with the disposal at paragraph 22 and the signatures of both members; I read the whole of it. Paragraph 13, from which the quotation is taken, is the Tribunal speaking in its own voice and not a reproduction of any other order — the long quoted passages in the order are at paragraphs 3 (the Commissioner (Appeals) order, which itself reproduces the Jammu and Kashmir and Kerala High Court decisions), 4 (the grounds of appeal), 10, 12, 14 and 15 (statutory text). 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.
Grounds 1 to 3 were allowed and the block assessment under section 158BC was held null and void; ground 4 was not pressed and the remaining merits grounds (5 to 8) were left unadjudicated. The appeal was partly allowed. There was no provision in the erstwhile section 158BC that a block return filed beyond the time specified in the notice would not be a valid return; the belated return was therefore valid, and since the notice under section 143(2) was issued beyond twelve months from the end of the month in which the return was filed, that notice was invalid and the block assessment fell with it (paragraphs 13, 16, 19 and 21).
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