TMI Blog2009 (10) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to be observed. The Larger Bench of Supreme Court decided the matter in Sahara India (Firm) vs. CIT and agreed with the decision of the Supreme Court in the case of Rajesh Kumar Ors. vs. Dy. CIT. Firstly, it is to be noted that the Supreme Court itself has earlier raised a doubt about the correctness of its decision in the case of Rajesh Kumar Ors., therefore, Larger Bench was constituted. Hon'ble Supreme Court while referring the matter to Larger Bench observed as under: A close reading of the decision shows that the observation in this regard appears to have been made in the context of the assessment in terms of s. 158BC (block assessment). Such assessments are relatable to a case when raid has been conducted at the premises of an assessee. Had that being so, limited to the facts involved in that case, we would have negatived the contentions of the learned counsel for the petitioner. But certain observations of general nature have been made. The effect of these observations appears to be that in every case where the AO issued a direction in terms of s. 142(2A), the assessee has to be heard before such an order is passed. This does not appear to be the correc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case but is required to be restored back to the file of the AO for framing an assessment afresh after affording reasonable opportunity of being heard to the assessee. In the result, the appeal of the Revenue is allowed - Member(s) : G. E. VEERABHADRAPPA., R. P. TOLANI., DEEPAK R. SHAH. ORDER-DEEPAK R. SHAH, A.M.: This Special Bench was constituted to decide the following question: "Whether on the facts and in the circumstances of the case, keeping in view two decisions of Hon'ble Supreme Court, namely, (i) Rajesh Kumar Ors. vs. Dy. CIT (2006) 206 CTR (SC) 175 : (2006) 287 ITR 91 (SC) and (ii) Sahara India (Firm) vs. CIT (2008) 216 CTR (SC) 303 : (2008) 7 DTR (SC) 27 : (2008) 300 ITR 403 (SC), assessment is required to be set aside to the file of AO to pass a fresh assessment as held in the case of Rajesh Kumar vs. Dy. CIT by Tribunal in its order dt. 3rd (sic-30th) June, 2008 in IT(SS)A No. 10/Del/2007 or the assessment is time-barred as held by the Tribunal in its order dt. 25th Aug., 2008 in IT(SS)A No. 101/Del/2007 in the case of Asstt. CIT vs. Rakesh Kumar?" and also to decide the entire appeal of the Revenue. 2. From the question referred itself it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is to be noted that the assessee is one of the firm of the same group namely, Rajesh Kumar Others as also Rakesh Kumar. Therefore, need arise to refer the matter to Larger Bench and accordingly the above-mentioned question referred to the Special Bench as also the appeal of Revenue on the following ground: "On the facts and circumstances of the case, the learned CIT(A) has erred in annulling the block assessment order passed by the AO." 3. At the time of hearing the counsel for the assessee Shri Anil Sharma has filed written representation. The contention of Shri Sharma is- (i) The issue involved before this Hon'ble Special Bench is keeping in view the two judgments of the Hon'ble Supreme Court in the case of Rajesh Kumar Ors. vs. Dy. CIT and in the case of Sahara India (Firm) vs. CIT, assessment framed in the instant case is required to be set aside to the AO to pass a fresh assessment or the assessment framed is held to be time-barred. (ii) It is submitted that the present assessee i.e., M/s Sushila Milk Specialities (P) Ltd. was also a party before the Hon'ble Supreme Court in the judgment delivered in the case of Rajesh Kumar Ors. vs. Dy. CIT and as such the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order dt. 30th June, 2008 in IT(SS)A No. 10/Del/2007, the Hon'ble Delhi High Court vide its order dt. 9th April, 2009 in IT Appeal No. 184 of 2009 [reported at (2009) 31 DTR (Del) 131-Ed.] has dismissed the appeal filed under s. 260A(1) of the Act holding that the appellant's case is covered by the observations made by the Larger Bench in Sahara India (Firm) and the order of the Tribunal based on Sahara India (Firm) to be valid. However, it is submitted that the aforesaid order dt. 9th April, 2009 has not been accepted by the assessee and an appeal is being filed before the Hon'ble Supreme Court. (v) It is further submitted that observations made by the Hon'ble Supreme Court in the case of Sahara India (Firm) with regard to limitation, as is evident from the bare reading of the observations, are relevant and applicable only to the case of Sahara India (Firm) and would be applicable universally to the forthcoming cases and not to the decided cases. (vi) It is further submitted that the judgment rendered in assessee's own case has to be read as it is in its own context and the observations relating to limitation made in the case of Sahara India (Firm) cannot be imported. Reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Supreme Court in the case of Deepak Agro Food vs. State of Rajasthan Ors. in Civil Appeal Nos. 4327 and 4328 of 2008, dt. 11th July, 2008. He accordingly, pleaded that the answer to the question referred for the opinion of Special Bench be decided holding that the assessment is required to be set aside to the file of the AO to pass a fresh assessment and not to annul the assessment. He also pleaded that the appeal of the Revenue be allowed and the matter be restored back to the file of the AO. 6. We have carefully considered the relevant facts, arguments advanced and the case laws cited. The learned counsel for the assessee through his written submissions has made a fervour appeal that since the present assessee was also a party before the Hon'ble Supreme Court in the judgment delivered in the case of Rajesh Kumar Ors. vs. Dy. CIT, the said decision is to be considered as rendered in assessee's own case also. The decision rendered by the Division Bench of Hon'ble Supreme Court in the case of Rajesh Kumar has not been overruled by the Larger Bench of the Supreme Court in the case of Sahara India (Firm) and therefore, the assessment should be annulled. We arc unable to ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer under s. 142(2A) leads to serious civil consequences, and, therefore, even in the absence of any express provision for affording an opportunity of pre-decisional hearing to the assessee and in the absence of any express provision in s. 142(2A) barring the giving of reasonable opportunity to the assessee, the requirement of observance of the principles of natural justice is to be read into the said provision. Even an administrative order or decision in matters involving civil consequences has to be made consistently with the rules of natural justice. The concept of natural justice is invariably read into administrative actions involving civil consequences, unless the statute conferring the power excludes its applications by express language." In the said judgment the Hon'ble apex Court upheld the principles laid down in the case of Rajesh Kumar Ors. that an order passed under s. 142(2A) directing the assessee to get his accounts audited entails civil consequences and therefore, rule of "audi alteram partem" is required to be observed and assessee has to be provided reasonable opportunity of being heard before passing an order under s. 142(2A). However, Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he judgment of Sahara India (Firm) are as under: 'There is no denying the fact that the law on the subject was in a flux in the sense that till the judgment in Rajesh Kumar was rendered, there was divergence of opinion amongst various High Courts. Additionally, even after the said judgment, another two Judge Bench of this Court had expressed reservation about its correctness. Having regard to all these peculiar circumstances and the fact that on 14th Dec., 2006, this Court had declined to stay the assessment proceedings, we are of the opinion that this Court should be loathe to quash the impugned orders. Accordingly, we hold that the law on the subject clarified by us, will apply prospectively and it will not be open to the appellants to urge before the appellate authority that the extended period of limitation under Expln. 1 (iii) to s. 153(3) of the Act was not available to the AO because of an invalid order under s. 142(2A) of the Act. However, it will be open to the appellants to question before the appellate authority, if so advised, the correctness of the material gathered on the basis of the audit report submitted under sub-so 2(A) of s. 142 of the Act.' The case of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cit that "it will not be open to the appellants to urge before the appellate authority that the extended period of limitation under Expln. 1(iii) to s. 153(3) of the Act was not available to the AO because of an invalid order under s. 142(2A) of the Act". Therefore, the law to be applied will be propounded by the Larger Bench of the Supreme Court and not the Division Bench. Even the issue before the Division Bench of the Supreme Court is not whether the assessment framed after direction of special audit without affording opportunity of being hear to the assessee is bad in law. Directing special audit without affording reasonable opportunity of being heard to the assessee is merely an irregularity and not an illegality. We also find that the decision relied upon by the learned Departmental Representative in the case of Deepak Agro Food squarely applies. In the said case the facts were that- "The appellant, a proprietorship concern, is a dealer under the Act. For the asst. yr. 1995-96, an ex parte assessment was framed on 19th May, 1998. On appeal, the order of assessment was set aside by the Dy. CST(A) vide order dt. 8th June, 2000 on the ground that proper opportunity of hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2002 is apparent, which makes the assessment order as an outcome of these mechanisations, by ante dating the proceedings and pass the order by ante dating it and in the allegation of assessee cannot be reasonably ruled out. The assertion of assessee stands fully corroborated by the record of the proceedings which speaks eloquently about its tempering with. Obviously, the assessee would not be a party to it to suffer ante dated ex parte order to his detriment. It can reasonably be attributed to the AO, who had chosen this path for the reasons best known to him. More so the AO having been impleaded as party respondent by name has not chosen to appeal and answer the assertions. It is a case in which it can very well be said that the record speaks for itself. In the aforesaid circumstances, an order alleged to have been passed on 7th June, 2002 in the absence of the assessee by tempering with the record of the proceedings dt. 23rd March, 2002 and 25th June, 2002 cannot be sustained.' The Division Bench strongly felt that it was a fit case in which arm of the Court in exercise of its extraordinary jurisdiction must reach to remedy the breach of principles of natural justice, arising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the date of order in appeal; as is pleaded by the appellant. 13. As afore-stated, in the counter-affidavit as well as in the written submissions filed on behalf of the respondents, it is stated that the order of the appellate authority, dt. 8th June, 2000, was received by the assessing authority on 13th July, 2000 and, therefore, fresh assessment, pursuant to the said order, could be completed by 12th July, 2002 (ignoring further period of six months, which could be extended by the CST). That being so, even if it is assumed that the assessment order, for the asst. yr. 1995-96, had, in fact, been passed on 29th June, 2002, as alleged by the appellant, it was still very much within the time-limit prescribed under the aforenoted provision i.e., 12th July, 2002. We are, therefore, unable to accept the stand of the appellant that the assessment having been made after the expiry of the time-limit, it was null and void and should have been annulled. 14. Having come to the above conclusion, the next question which requires consideration is whether in the light of the observations of the Division Bench in the afore-extracted para on the irregularities as also the conduct of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat on a plain reading of s. 29(8)(b) of the Act, it is manifestly clear that fresh assessment for the asst. yr. 1995-96, framed pursuant to the order passed by the appellate authority on 8th June, 2000, was well within the prescribed time, even otherwise, in the light of the aforestated settled law, the assessment orders in question could not be held to be null and void on account of the stated irregularities committed by the AO during the course of assessment proceedings. In our opinion, therefore, despite scathing observations by the Division Bench on the conduct of the AO, it was a case of an irregularity in assessment proceedings by the officer, who was not bereft of authority to assess the appellant. At best, it was an illegality, which defect was capable of and has been cured by the High Court by setting aside the orders and by granting consequential relief. 19. In the conspectus of the circumstances aforesaid, we do not find any infirmity in the impugned directions given by the Division Bench of the High Court warranting interference in the exercise of our jurisdiction under Art. 136 of the Constitution. The appeals are devoid of any merit and are dismissed accordingly wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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