Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2016 (10) TMI 397

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... equiring 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. Validity of notice - Though the notice under Section 158 BC is mandatory errors such as those in the present case which do not cause the assessee any prejudice do not render either the notice or the block assessment proceedings void. Document found during the search - Held that:- It is important to note that the Assessing Officer exercised power under Section 142(2A) directing the assessee to get the accounts audited by an accountant, as defined in the explanation to Section 288(2). The 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 inc .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... e legal issue of reference to special auditors u/s 142(2A)of the Income Tax Act, 1961 and that too having so done without affording any opportunity of being heard to the appellant being a basic and legal requirement of such reference. iii) That the ITAT is not justified in concurring with the findings of CIT(A) without 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 ₹ 32,72,595/- in the hands of appellant is bad in law. iv) That the ITAT has erred in concurring with the findings of the CIT (A) in confirming the additions to the extent of ₹ 50,000/-, 60,000/- and ₹ 70,000/- in the A.Y. 1991-92, 1992-93 and 1993- 94 respectively on the basis of estimation of undisclosed income from the alleged sale and purchase of land on the basi .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ther 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 only in respect of question No.(i). In our view, the other questions do not raise any substantial question of law. 4. This appeal was directed to be heard alongwith ITA No.121 of 2010, which is not on board today. In that appeal, another counsel is appearing on behalf of the respondent/assessee. However, learned counsel appearing on behalf of the department states that the appellant therein will be withdrawing that appeal as the tax effect therein is less than that prescribed in circular dated 10.12.2015 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 t .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... concern of the assessee. Documents were seized together with the regular books of accounts pertaining to the block period. The assessee filed the return on 12.05.1999 declaring his income 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 with the assessment for which the assessee was required to prepare a true and correct return of his income in respect of which he was assessable. The notice further stated that the return should be in the application Form 2B, as is prescribed in Rule 12(1A) of the Income Tax Rules, 1962. The return was directed to be delivered to the Assessing Officer on or before 24.12.1997, which was more than 15 days from the date of the said notice i.e. 19.11.1997. 10. This notice, it is contended, is also void for it .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... any manner whatsoever. The assessee has not established that he was prejudiced on account of the notice not furnishing the block period or on account of it stating to be under Section 142(1). Section 292B is a complete answer to this contention. Section 292B reads as under:- Return of income, etc., not to be invalid on certain grounds. ................ 292B. No return of income, assessment, notice summons or other proceeding, furnished or made or issued taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of 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 to the intent and purpose of th .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... i) of sub-section (1) of section 142, setting forth his total income including the undisclosed income for the 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 shall, so far as may be, apply; (c) the Assessing Officer, on determination of the undisclosed income of the block period in accordance with this Chapter, shall pass an order of assessment and determine the tax payable by him on the basis of such assessment; (d) the assets seized under section 132 or requisitioned under section 132A shall be dealt with in accordance with the provisions of section 132B. (emphasis supplied) 21. Section 158BC mandates that the Assessing Officer is to serve a notice to such person requiring him to furnish a return in the prescribe .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... torily, it may not be fair to expect filing of return in shorter period. At the same time, the effect of violation of the principles of natural justice is not to always nullify the exercise of jurisdiction unless prejudice is caused. Where period specified in the notice is less than the statutory period, no prejudice is caused if return filed is taken into account. The notice specifying lesser period can be read as specifying the statutory period. The principle is duly recognised under section 292B of the Act. In State Bank of Patiala v. S. K. Sharma [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 : procedural provisions are generally meant for affording a reasonable and adequate opportunity to the delinquent officer/employee. They .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... rejudice 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 respondent did not appear before the Court in that case. We are unable to agree. The doctrine of precedent applies even if one of the parties remains unrepresented. This was an appeal under Section 260-A of the Income Tax Act, 1961. The Court was not bound to allow the appeal merely because the respondent did not appear. The judgment is, therefore, binding on us. We are in any event entirely in agreement with the judgment. 23. The question of law is, therefore, answered in favour of the respondent/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 questi .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... are void on account thereof. The issue that falls for our consideration was neither raised before, nor decided by the Supreme Court. The judgment, therefore, is of no assistance to the appellant. 26. Mr. Mukhi then relied upon the judgment of the Karnataka High Court in 'Commissioner of Income-Tax and another vs. Micro Labs Ltd.', [2012] 348 ITR 75 , wherein it was held as under:- The proceeding 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 Section 132 or books of account, other document or assets are requisitioned under Section 132A, it is only then, the Assessing Officer shall proceed to assess the undisclosed income. Therefore, section 158BA provides for jurisdiction to the Assessing Officer to assess the undisclosed inc .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 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. Sathe that the provisions of sections 148 and 158BC are synonymous and pari materia. Having examined the provisions of sections 148(1) and 158BC, side by side, it would be clear that section 148(1) opens with the words Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him . . . . This very opening sentence, unequivocally, goes to suggest that in order to assume jurisdiction for assessment under 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 r .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... we have already held, though the notice under Section 158 BC is mandatory errors such as those in the present case which do not cause the assessee any prejudice do not render either the notice or the block assessment proceedings 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 referred to a document that was found during the search. This document comprises five pages. It is titled 'Chitha' 01.04.1993 to 31.12.1993. 'Chitha' translated means a balance-sheet. The very first entry refers to the assessee Sh. Surjit Bahadur. A sum of ₹ 40,14,126.18 is shown against his name. The assessee contended that the reference is to another person as his first name is spelt Surjeet and not 'Surjit' as .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates