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2009 (1) TMI 304 - AT - Income TaxValidity of Block assessment and reassessment proceedings - default in issue of notice u/s.158BC - Whether the assessee who has participated in the block assessment proceedings is precluded from taking any objection that notice u/s.143(2) was not served upon him or was not served upon him in time in view of the provisions of s. 292BB inserted by the Finance Act, 2008 w.e.f. 1st April, 2008 and if so, since when he can be said to be so precluded? - assessment order is silent about issuance of notice u/s.143(2) - no such objection was raised by the assessee either before the AO or CIT(A) that in the absence of notice u/s.143(2) the assessment framed u/s.158BC cannot be held valid - first time the assessee raised this issue by way of an additional ground before the Tribunal. HELD THAT:- It can be noted that assessee has a right of being served with the notice in case proceedings are taken against him and in case of invalid notice the whole proceedings taken pursuant to that notice would be void ab initio (subject to provisions of s. 292B) and will have no legal consequences. To overcome some of such situations s. 292BB has been brought on the statute as explained in the Memorandum Explaining the Provisions as well as Notes on Clauses. It has already been pointed out that the applicability of s. 292BB is not strictly restricted to issue of notice u/s.143(2) but it is in respect of other notices relating to any provisions of the Act which include notice to initiate reassessment proceedings and other proceedings also. It has been the contention of the ld AR that in his case notice was not issued at all. Therefore, there was no question of valid service thereof and, hence, provisions of s. 292BB are not applicable. With regard to this contention of ld AR, it may be mentioned that if provisions of s. 292BB are held to be applicable to the case of assessee, then the question of considering the issuance of notice separately will become irrelevant according to well established rule of interpretation explained by Hon'ble Supreme Court in the case of CIT vs. S. Teja Singh [1958 (11) TMI 2 - SUPREME COURT]. It has, therefore, to be followed that in a situation when the statute says that you must imagine certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs. Therefore, where the statute u/s.292BB deems service of notice, it will always include issue of notice as service cannot be effected without issuance thereof. Thus, the argument of ld AR that unless there exists issuance of notice, service thereof cannot be presumed or deemed and s. 292BB will not be applicable, cannot be accepted and has to be rejected. No doubt, the issue of notice as well as service of notice are a procedural section, but when the same has time limitation; the obligation of the Department to issue notice within a prescribed time becomes the right of the assessee to receive that notice in time to validly commence the proceedings and validly completing the same. Their Lordships of Hon'ble Supreme Court in the case of H.V. Thakur vs. State of Maharashtra [1994 (7) TMI 343 - SUPREME COURT] have culled out the following principles of interpretation after considering the various cases decided by Hon'ble Supreme Court and have observed that these principles are illustrative though not exhaustive which will cover the ambit and scope of Amending Act and its retrospective operation. By insertion of s. 292BB such right of the assessee to challenge the validity of assessment or reassessment proceedings during the course of appellate proceedings has been taken away by the statute w.e.f. 1st April, 2008. It is also observed that the issue and service of notice relate to procedural law, but, at the same time, it created a new disability on the assessee litigant to the extent that he is debarred from taking a plea in the appellate proceedings to challenge the validity of the same on the ground of valid issuance/service of notice required to be given by the statute in a case where assessee has appeared in such proceedings or co-operated in the inquiry relating to assessment or reassessment. Therefore, applying the above principles of interpretation and keeping in view discussion it has to be held that s. 292BB cannot be construed to have retrospective operation and it has to be applied prospectively. Having arrived at the conclusion that s. 292BB has no retrospective effect and is to be construed prospectively, it has to be held that prior to 1st April, 2008, i.e., up to 31st March, 2008, as per s. 292BB, the assessee is not precluded from taking any objection (hereinafter referred to as 'such objection') regarding invalidity of assessment/reassessment on the ground of improper/invalid issuance/service of a notice. The second aspect which requires to be considered is that when assessee can be said to be precluded from taking such objection s. 292BB has been made applicable w.e.f. 1st April, 2008 by the Finance Act, 2008. As per well established law as explained by Hon'ble Supreme Court in the case of Karimtharuvi Tea Estate Ltd. vs. State of Kerala [1965 (12) TMI 35 - SUPREME COURT] (which is a decision rendered by five Judges of Hon'ble Supreme Court) that the IT Act as it stands amended on the first day of any financial year must apply to the assessments of that year. Summarising our findings, we hold as follows: (i) Sec. 292BB even if it is procedural it is creating a new disability as it precludes the assessee from taking a plea which could be taken as a right, cannot be construed retrospectively as the same is made applicable by the statute w.e.f. 1st April, 2008. (ii) Sec. 292BB is applicable to the AY 2008-09 and subsequent assessment years. Now, the matter will be placed before the regular Bench to decide the appeals in regular manner.
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