Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (10) TMI 397 - PUNJAB AND HARYANA HIGH COURT

2016 (10) TMI 397 - PUNJAB AND HARYANA HIGH COURT - TM - Procedure for block assessment - time limit entitled to file the return - unexplained income - Held that:- Section 158BC mandates that the Assessing Officer is to serve a notice to such person requiring him to furnish a return in the prescribed form and verified in the manner stipulated. The Assessing Officer must, therefore, serve such a notice, without which an assessee would not be liable to file a return in respect of a block assessmen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in Section 158BC(a)(ii) namely 45 days. Thus, while it is mandatory for the Assessing Officer to serve a notice requiring the assessee to file a return under Section 158BC and the assessee is entitled to not less than 15 days to file the return, the section does not indicate that if the notice inadvertently prescribes a period less than 15 days, it is void. Much less does the section indicate that the entire block proceedings relating to the block assessment would be void on account thereof. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e special auditor analyzed this balance sheet and the other documents, that were seized, as well. Based on the same and based on the independent analysis, the three Authorities had come to the conclusion that the said amount of ₹ 40 lacs was unexplained. The Assessing Officer added the same to the appellant's income. - The assessee also disowned the documents. He stated that he had nothing to do with the documents and was unaware how they were found at his place and at his residence. T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ture of the entries in documents have been sufficiently analyzed by the Authorities. They have, in fact, given the assessee credit for the amounts found in the regular books of accounts assessed the unexplained income only thereafter. - ITA No.346 of 2009 (O&M) - Dated:- 22-9-2016 - MR. S.J. VAZIFDAR AND MR. DEEPAK SIBAL, JJ. For The Appellant : Mr. S.K. Mukhi, Advocate For The Respondent : Mr. Yogesh Putney, Advocate S.J. VAZIFDAR, CHIEF JUSTICE (ORAL) This is an appeal against the order of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ppellant/assessee contends that the following substantial questions of law arise in this appeal:- i) That the ITAT is not justified in non-consideration of legal objections and not deciding the Grounds of Appeal legally taken by the appellant though reproduced in its order under Statutory appeal indicate non-application of mind by the ITAT while deciding the appeal and thus deserve indulgence of this Hon'ble Court in setting aside the orders of ITAT and the Authorities below. ii) That the IT .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

out considering the arguments, explanations and judicial decisions and also without passing any speaking order on the legal issue pertaining to Dumb Document giving no indication to prove having any connection any enquiry qua the said document and also not appreciating the legal principle that though any document found at the place of the assessee is presumed to be belonging to him but this presumption is rebuttable and having duly rebutted by the appellant the resultant addition of ₹ 32,7 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

terial/evidence has been brought on record by the AO to prove any nexus wherein the appellant relies upon the basis as adopted in item H (supra). v) That the ITAT has erred in concurring with the findings of the CIT (A) in confirming the additions to the extent of ₹ 40,000/-, in the A.Y. 1998-99, on the basis of estimation of undisclosed income from the alleged profit on sale of EO Plot and that of Bajaj Plot on the basis of the alleged dumb document copy at Annexure A-8 as so referred in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s of the alleged dumb document copy at Annexure A-9 as so referred in item No.(H)(supra) which does not belong to the appellant at all nor any material/evidence has been brought on record by the AO to prove any nexus wherein the appellant relies upon the basis as adopted in item H (supra). vii) That the ITAT has erred in concurring with the findings of the CIT (A) in confirming the additions to the extent of ₹ 6,000/- and ₹ 20,000/- on account of alleged loans on 06.05.1997 and 30.05 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

A) in confirming the additions to the extent of ₹ 22,43,258/- by wrongly presuming it to be cash found during the course of search as per para 3.8 of its order which factually incorrect as there was no such cash found during the search nor it was so held either by the AO or by the CIT(A) and thus ITAT without application of its mind concurred with the findings of AO. ix) That the order of the Tribunal is legally unsustainable & bad in law and perverse. 3. The appeal stands admitted onl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2.2015 issued by the CBDT. Re: Question No.(i) and question in CM No.17939 of 2014. 5. If the appellant succeeds on this issue, the rest of the issues must also be decided in his favour. 6. The appellant contended that the notice issued under Section 158BC is non-est and void and therefore, the entire proceedings relating to the block assessment are illegal. The contention is as follows: Section 158BC requires the notice to stipulate that the return should be filed in not less than 15 days. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l, dismissing the assessee's appeal, the assessee raised the issue before the Tribunal by filing a Miscellaneous Application No.381/DEL/2009 contending that it is a pure question of law. The Tribunal having rejected the application, these questions have been sought to be raised in CM No.17939 of 2014 filed in this appeal. The questions are as follows:-. a. It is contended that the learned CIT (Appeals) has erred in not deciding as to whether the Assessing Officer had the jurisdiction to from .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

same as nullity and hence proceeding culminating out of such a notice are bad in law . Mr. Putney, the learned counsel appearing on behalf of the respondent-revenue contended that the appellant ought not to be permitted to raise this issue as it had not been pressed earlier before the Authorities. We have, however, permitted the appellant to raise the issue. 8. Mr. Mukhi, the learned counsel appearing on behalf of the appellant-assessee contends that block assessment proceedings are null and voi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

come to be nil . During the search at the assessee's residence, several documents including ledgers, journals, cash books and stock register were seized. 9. Initially, the department served a notice dated 19.11.1997 upon the assessee. At the head of the notice, it is stated to be under Section 142 (1) of the Income Tax Act, 1961. This was an inadvertent error. The body of the notice makes it clear that it was in fact a notice under Section 158 BC. The notice states that it is in connection w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

id for it is stated to be under Section 142(1) and not under Section 158BC. 11. The contention is not well-founded. The reference to Section 142(1) was an obvious inadvertent error. This is clear from the fact that the notice itself states that the return should be in Form 2B as prescribed in Rule 12(1A). Rule 12(1A), as it stood at the relevant time, read as under:- 12. Return of income:- ...................... 12(1A)- The return setting forth the total income including the undisclosed income f .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

come for block assessment [See rule 12(1A) of Income-tax Rules, 1962] It is, therefore, clear that the assessee could not possibly have considered the notice to be under Section 142(1). 12. Even the facts and circumstances of the case do not indicate that the assessee could have been under the misapprehension that the notice was under Section 142(1) and not under Section 158BC. The assessee was admittedly aware of the search and seizure operation. He had already filed the return under Section 13 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ction 158B(a) which as it stood at the relevant time provided that unless otherwise required block period means the period comprising previous years relevant to the 10 assessment years preceding the previous year in which the search was conducted under Section 132. 15. In any event, this would be a mere technicality. The assessee was not prejudiced in any manner whatsoever. The assessee has not established that he was prejudiced on account of the notice not furnishing the block period or on acco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. 16. The reference to Section 142(1) and the absence of the block period being specified in the notice were mere mistakes, defects or omissions and the notice in substance and effect is in conformity with and/ or according .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

BC. The block period is specified as the financial year 1987-88 to 1996-97 and 01.04.1997 to 06.06.1997. The only infirmity that is pointed out in respect of this notice is that the return should be delivered within 15 days of the service of this notice . Mr. Mukhi, contended that the expression within 15 days indicates a period less than 15 days. In support of this submission, he relied upon a judgment of the Supreme Court in 'Commissioner of Income-Tax vs. Braithwaite and Co. Ltd.', [1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y search has been conducted under section 132 or books of account, other documents or assets are requisitioned under section 132A, in the case of any person, then,- (a) the Assessing Officer shall- (i) in respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997, serve a notice to such person requiring him to furnish within such time not being less than fifteen days; (ii) in respect of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

block period : Provided that no notice under section 148 is required to be issued for the purpose of proceeding under this Chapter : Provided further that a person who has furnished a return under this clause shall not be entitled to file a revised return; (b) the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143, section 144 and section 145 sh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o such person requiring him to furnish a return in the prescribed form and verified in the manner stipulated. The Assessing Officer must, therefore, serve such a notice, without which an assessee would not be liable to file a return in respect of a block assessment. The assessee is also entitled, as a matter of right, to a period not less than 15 days to file such a return. The Assessing Officer does not have the power to curtail this period. Thus, even if a notice under Section 158BC(a) specifi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

le the return, the section does not indicate that if the notice inadvertently prescribes a period less than 15 days, it is void. Much less does the section indicate that the entire block proceedings relating to the block assessment would be void on account thereof. 22. This is, in fact, the view taken by a Division Bench of this Court in 'Commissioner of Income-Tax vs. Naveen Verma', [2012]346 ITR 100 (P&H). The questions before the Division Bench were as follows:- (i) Whether the ho .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ings were vitiated on account of the assessee having not been given a clear period of 15 days for filing the return under Section 158BC. The Division bench held as under:- 8. The above provisions are statutory recognition of the principles of natural justice which are applicable to assessment proceedings under the Act. The affected party is entitled to the fair opportunity and fair procedure. Since the period of 15 days has been specified statutorily, it may not be fair to expect filing of retur .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

arma [1996] 3 SCC 364, after considering the case law on the point. The Division Bench answered the questions in favour of the Revenue. It was held as under: 33. We may summarise the principles emerging from the above discussion. (These are by no means intended to be exhaustive and are evolved keeping in view the context of disciplinary enquiries and orders of punishment imposed by an employer upon the employee) : . . . (3) In the case of violation of a procedural provision, the position is this .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he point of view of prejudice, viz., whether such violation has prejudiced the delinquent officer/employee in defending himself properly and effectively. If it is found that he has been so prejudiced, appropriate orders have to be made to repair and remedy the prejudice including setting aside the enquiry and/or the order of punishment. If no prejudice is established to have resulted therefrom, it is obvious, no interference is called for. In this connection, it may be remembered that there may .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the delinquent officer/ employee asking for it. The prejudice is self-evident. No proof of prejudice as such need be called for in such a case. To repeat, the test is one of prejudice, i.e., whether the person has received a fair hearing considering all things. Now, this very aspect can also be looked at from the point of view of directory and mandatory provisions, if one is so inclined. The principle stated under (4) hereinbelow is only another way of looking at the same aspect as is dealt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

it is held that the assessee suffered prejudice on account of shorter period mentioned in the notice. In any situation, it is not permissible to quash the assessment proceedings merely on the ground that the period mentioned in the notice was lesser than the statutory period specified under section 158BC(a). (emphasis supplied) There is no doubt that the judgment squarely covers the case against the appellant. Mr. Mukhi, however, submitted that we ought not to be bound by the judgment as the res .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

revenue and against the appellant. 24. Mr. Mukhi, however, relied upon the judgment of the Supreme Court in 'Assistant Commissioner of Income-Tax and another vs. Hotel Blue Moon', [2010] 321 ITR 362. The questions that fell for consideration before the Supreme Court were as follows:- (1) Whether on the facts and in circumstances of the case the issuance of notice under Section 143(2) of the Income-Tax Act, 1961 within the prescribed time limit for the purpose of making the assessment und .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

58BC stipulates that the Chaper would have application where search has been effected under Section 132 or on requisition of books of account, other documents or assets under Section 132A. By making the notice issued under this Section mandatory, it makes such notice the very foundation of jurisdiction. Such notice under the section is required to be served on the person who is found to be having undisclosed income. The section itself prescribes the time limit of 15 days for compliance. In respe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssessing Officer to apply the assets seized in the same manner as are applied under Section 132B. Indeed, the Supreme Court held the issuance of the notice under Section 158 BC to be mandatory. It is in that context that the Supreme Court held that such a notice is the very foundation for adjudication. It also held that the Section prescribed the time limit of 15 days for compliance. The Supreme Court, however, did not hold that if there is an inadvertent error such as the one in the present cas .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g under Chapter XIV-B and the provisions of Section 139 are different. A return filed under Section 139 is a voluntary return, A return under Chapter XIV-B cannot be filed voluntarily, it is only when a notice under Section 158BC is validly issued, only then a return could be filed. It is not in every case that a notice under Section 158 BC would be issued by the Revenue. However, as and when validly issued, it is only then that a return could be filed. When any search has been conducted under S .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sessment. Therefore, a notice under Section 158 BC cannot be equated with that of notice under Section 148. A notice under Section 158BC provides for a procedure to be adopted for block assessment. Under this procedure envisaged, the Assessing Officer shall serve a notice requiring the assessee to furnish his return within such time not being less than 15 days but not more than 45 days as specified in the notice. Therefore, the time to be granted to the assessee in terms of Section 158BC is a mi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

alid notice cannot confer any jurisdiction on the authority. Hence, the entire proceeding are bad in law. The notice ab initio void. 27. The judgment does support the appellant. We are, however, for the reasons already mentioned, with respect, unable to agree with the judgment. In any event, we are bound by the judgment of this Court in 'Commissioner of Income-Tax vs. Naveen Verma', [2012] 346 ITR 100 (supra). 28. In any event, in the case before us, there was also an earlier notice date .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

filed a return may not have made a difference on the ground that there can be no estoppel against statute. 30. The analogy sought to be drawn with Section 148 of the Act is not well-founded. In answer, Mr. Putney, relied upon the judgment of a Division Bench of the Bombay High Court in 'Shirish Madhukar Dalvi vs. Assistant Commissioner of Income-Tax', [2006] 287 ITR 242, where it was held :- 49. Having said so, now it is necessary to consider one more potent legal submission of Mr. Sath .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der section 147, notice under section 148(1) is a condition precedent ; whereas the scheme of Chapter XIV-B of the Act suggests that section 158BA is a section which provides that notwithstanding anything contained in any other provisions of this Act, where after June 30, 1995, a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of any person, then, the Assessing Officer shall proceed to assess the undisclose .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n the Assessing Officer and not section 158BC as submitted by Mr. Sathe. Thus, notice under section 158BC(a) cannot be equated with that of notice under section 148. That notice under section 158BC(a) only provides for procedure to be adopted for block assessment. It does not confer jurisdiction to assess in favour of the Assessing Officer. In these circumstances, the submission made by Mr. Sathe is devoid of any substance. 50. The judgment of the Calcutta High Court in the case of Shaw Wallace .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

148. The observations made in the judgment are required to be read in the context in which they are made. It is not permissible to read them in isolation or out of context. A stray sentence cannot be allowed to be put into service to draw a meaning which was never meant by the author himself. Thus, these observations by themselves do not mean that the rigour of section 148 stands substituted with that of section 158BC. Section 148 is a substantive section whereas section 158BC is a procedural se .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

void. 32. Question (i) and the questions raised in CM No.17939 of 2014 are, therefore, answered in favour of the Revenue-respondent. 33. As we mentioned earlier during the search and seizure operation several documents were seized. Many of them did not form part of the regular Books of Accounts including Ledger. Re: Question (ii) 34. This appeal is not maintainable in respect of this question. The appeal, is therefore, dismissed as regards question (ii). Re: question (iii) 35. The respondents r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

estion of fact. The Assessing Officer, CIT and the Tribunal had dealt with this document and considered it in detail. Further, the last page of this document spelt the name correctly as Surjeet Bahadur and against his name were written the words: Rokar Mein , which translated mean in cash . Further, as Mr. Putney pointed out, the appellant himself, in the appeal before the CIT(A) spelt his name as Surjit (Annexre A-5). There is no warrant for interference with the impugned order on this ground. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version