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AUGUST 11, 2011 Section 158BFA of the Income-tax Act, 1961 - Block assessment in search cases - Levy of interest and penalty in certain cases - Block period 1988-89 to 1998-99 - When there is no assessed tax under section 158BC, interest under section 158BFA would be nil [In favour of assessee] On the annulment of the assessment proceedings, there would be no assessed undisclosed income and assessed tax under section 158BC and when there is no assessed tax under section 158BC, interest under section 153BFA(1) would be nil. M. Thirumalesh for the Appellant. S. Parthasarathi for the Respondent. JUDGMENT Ravi Malimath, J. - This appeal is by the Revenue being aggrieved by the order of the Tribunal dismissing the appeal by confirming the finding of the lower authority that the refund may be granted in accordance with the provisions of section 240(b) of the Income-tax Act, 1961. 2. The assessee is carrying on the business of pharmaceuticals. A search was conducted and accordingly, a notice under section 158BC was issued requesting the assessee to file a return of income for the block period 1988-89 to 1998-99. By a letter dated January 2, 1998, the assessee sought time to file his return of income. On June 16, 1999, the assessee once again sought time to file its return and, consequently, on June 29, 1999, the assessee filed the return of income declaring a sum of Rs. 153 lakhs as undisclosed income for the block period April 1, 1987, to November 5, 1997. The Assessing Officer passed an order and arrived at the same undisclosed income for the block period at Rs. 153 lakhs. Aggrieved by the same, the assessee preferred an appeal to the Commissioner of Income-tax (Appeals). The Appellate Commissioner by following the conclusion drawn by him in the case of the assessee's sister concern, viz., Micro Labs Ltd. proceeded to hold that the notice issued under section 158BC of the Act was invalid and, consequently, the assessment was annulled. It was further held that since the amount of tax computed by the Assessing Officer was the exact amount, on which the assessment order came to be passed, there is no question of making any refund. Consequently, the appeal was allowed.…

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