The main legal point established is that the assessment under Section 158BD was void ab initio due to being barred by time, as there was no provision for initiating reassessment proceedings for the block period.

K.S. Jhaveri, J.

1. This Tax Appeal u/s. 260A of the Income-tax Act, 1961 is filed against the order dated 28.04.2006 passed by the Income Tax Appellate Tribunal, Ahmedabad in IT (SS) A No. 03/Ahd/1998 raising the following substantial question of law for our consideration:

"Whether the Income Tax Appellate Tribunal was right in law and on facts in holding that the assessment for the block period was barred by limitation on the ground that initial notice, wrongly issued under Section 158BC of the Income Tax Act, 1961 was a valid notice?"

2. The assessee is a firm dealing in real estate and construction activities. During the course of a search u/s. 132 of the Act in the case of M/s. Gokul Corporation, the assessment was to be completed in assessee's case u/s. 158BC r/w. 158BC of the Act. The Assessing Officer, initially, issued a Notice u/s. 158BC of the Act to the assessee on 17.10.1996 instead of Notice u/s. 158BD of the Act. Subsequently, the A.O. issued a fresh Notice u/s. 158BD on 29.08.1997 in super session of the Notice issued earlier u/s. 158BC of the Act. In response to the Notice, the assessee filed return of income dated 29.09.1997 declaring "Nil" income. The A.O. proceeded to complete the block assessment u/s. 158BDon 01.12.1997 determining undisclosed income at Rs. 1,32,20,000/-; making addition of Rs. 66.20 Lacs on account of "on money" receipt on sale of flats and Rs. 66 Lacs on account of unexplained cash payment to a third party for acquiring development rights.

3. Being aggrieved by the assessment order, the assessee filed appeal before the Tribunal. The Tribunal allowed the appeal filed by the assessee vide impugned order dated 28.04.2006. Hence, this Tax Appeal at the instance of Revenue.

4. At the outset, Mr. Manish Shah, learned counsel for the assessee, submitted that the controversy raised in this appeal is already settled by a judgment of this Court passed in Tax Appeal No. 1449/2006 decided on 08.07.2016. For ready reference, the said judgment is reproduced hereunder;

"1. This Tax Appeal u/s. 260A of the Income-tax Act, 1961 is filed against the order dated 19.05.2006 passed by the Income-tax Appellate Tribunal, Ahmedabad in IT(SS)A No. 14/Ahd/1998 raising the following substantial question of law for our consideration:

"Whether the Appellate Tribunal is right in law and on facts in holding that block assessment passed u/s.158BD r/w. Section 158BC in the instant case was barred by time and therefore, void ab initio?"

2. The facts in brief are that a search operation under Section 132 of the Act was carried out in the premises of M/s. Gokul Corporation and its Partners on 21.09.1995 and certain incriminating documents pertaining to the assessee-firm were traced in the said search. The assessment in the present case was consequent upon the statements recorded during the proceedings of the aforesaid search. On 24.12.1997 assessment was completed u/s. 158 BC(c) r/w. Section 158BD and 158BA for the block period - 01.04.1985 to 31.03.1995 and 01.05.1995 to the date of search, i.e. 21.09.1995, on an undisclosed income of Rs. 50 Lacs. In the first instance, the A.O. issued Notice u/s. 158BC on 04.11.1996. Subsequently, when the A.O. realized that Notice u/s. 158BC had been issued to a person who was not searched, Notice u/s. 158BD of the Act was issued. The assessment order was passed u/s. 158BC r/w. Section 158BD and Section 158BA of the Act on 24.12.1997. The assessment was getting barred by limitation on 30.09.1998 according to the A.O., i.e. one year from the end of the month on which the Notice u/s. 158BD was served.

3. Being aggrieved by the order of A.O., the assessee filed appeal before the Tribunal raising the ground of validity of the Notice issued u/s. 158BD amongst other grounds. The Tribunal allowed the appeal by order dated 19.05.2006 whereby, it declared the assessment itself void ab initio. Hence, this appeal at the instance of Revenue.

4. Mr. Nitin Mehta, learned Standing Counsel appearing f