TMI Blog2016 (12) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... rwal And Hon'ble Prabhat Chandra Tripathi, JJ. For the Appellant : Shambhu Chopra, Ashok Kumar, A.N. Mahajan, B. Agarwal, G. Krishna, Subham Agarwal. For the Respondent : S.K. Garg, Amit Shukla, R.S. Agarwal, Ashish Bansal. ORDER ( Delivered by Hon'ble Sudhir Agarwal, J. ) 1. We have heard Sri Subham Agarwal, learned counsel for appellants and Sri Ashish Bansal, learned counsel for respondent. 2. This appeal under Section 260-A of Income Tax Act, 1961 (hereinafter referred to as 'Act, 1961') has arisen out of judgement and order dated 30.06.1999 passed by Income Tax Appellate Tribunal, Allahabad Bench 'A', Allahabad (hereinafter referred to as 'Tribunal') in I.T.A. No.1377 (All) of 1997, allowing assessee's appeal partly. 3. Appeal was admitted on following substantial questions of law: (1) Whether in view of Section 292 B of Income Tax Act, 1961, notice under Section 158BC dated 12.12.1996 issued in the name of assessee-company M/s Monga Steels (P) Limited, is invalid and illegal? (2) Whether Income Tax Appellate Tribunal was justified in holding that notice under Section 158BC is equivalent to the notice un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of Assessee Company? In other words, whether notice dated 12.12.1996 purported to have been issued by Assessing Authority under Section 158 BC can be said to be a legal and valid notice complying all the requirements of statute? (2) Whether notice under Section 158 BC is mandatory and want of valid notice under said provision would render block assessment illegal? (3) Whether defect of notice under Section 158 BC can be protected by taking recourse to Section 292 B of Act, 1961? (4) Whether notice under Section 143(2) for block assessment was mandatory and want of such notice would render block assessment illegal? (5) Whether Tribunal was justified in holding that notice under Section 158 BC is at par with notice under Section 148 of Act, 1961 and the law applicable to Section 148 can be made applicable to notice under Section 158 BC? 6. Learned counsel for both the parties have advanced their submissions on the aforesaid questions of law. 7. Before adjudicating aforesaid substantial questions of law it would be appropriate to have a brief factual matrix of entire matter which may help us in arriving at a correct conclusion. 8. The assessee, M/s Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Balance undisclosed income. 55,38, 565 3 A.Y. 1997-98 (Upto the date of search) Total income being net cash introduced in the books of account 30,25,133 Less: Profits disclosed in the book of account. 31,60,957 Balance undisclosed income NIL Addition Rs.89,38,128 only As has been discussed on page 40 of assessment order, the undisclosed investment in the stock as found on the date of search amounting to ₹ 21,99,000/- is treated as covered by the undisclosed business income of the assessee company. Keeping in view of these facts, the undisclosed income of the assessee for the block period is worked out as below:- Total undisclosed income as worked-out on page no.40 of the assessment order. Rs.2,18,77,745 Add: Unexplained introduction of cash as discussed above Rs.89,38,128 ₹ 3,08,15,873 Deduct: Addition on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 158 BC was neither properly addressed nor given to proper person, therefore, it was invalid in law and defect was incurable and not protected by Section 292 B of Act, 1961. 14. Tribunal formulated following three questions for adjudication of appeal: (i) The first question is with respect to the nature/status of the notice required to be served U/s 158 BC of the Act i.e. is such a notice akin/analogous and within the parameter of a notice U/s 148 of the Act? (ii) If so can the points raised by assessee's counsel amounts to illegalities in the notice and consequently have they rendered the notice illegal, bad in law and vague; (iii) If the notice is found to be vague, can the assessment for block period be quashed as a nullity? 15. After examining scheme of Act, 1961 including Sections 143, 147, 148, 149, 158B, 158BA, 158BB and 158BC, it held that so far as regular assessment is concerned, Assessing Officer is to complete the same after serving notice upon assessee under Section 143(2) and on the date specified in such notice or as soon as afterwards, as may be, on the basis of evidence which assessee may like to produce or such other evidence whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal as noticed above, it held that a notice would be invalid or illegal if: (i) (a)it has not been addressed in accordance with the provisions of Section 282. (i) (b) Status of the person has not been mentioned. (iii) ..... Respectfully, following the ratio of this decision, we hold that for a notice U/s 158BC to be a valid notice, the Assessment Year covered by the block period, in a given case, must also be specified clearly. 18. Tribunal after considering the notice issued by Assistant Commissioner of Income Tax, Central Circle-II, Kanpur dated 03.09.1996 found that it had following shortcomings: (i) The notice has not been addressed to the Principal Officer as required U/s 282 of the Act. (ii) Status, in which the return of so called undisclosed income, was required to be furnished has not been mentioned. (iii) 'Assessment year' i.e. Previous Years relevant to Assessment year falling within the Block Period, which in a way is an Assessment Year for the purpose of Assessment of the Block period, has not been mentioned. On the contrary, the notice specifies the 'definition' of the Block period i.e. Assessment Years this pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing less than fifteen days but not more than forty-five days, as may be specified in the notice a return in the prescribed form and verified in the same manner as a return under clause (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g time to assessee to file return in the manner prescribed under Section 142 (1) (i) gives jurisdiction to Assessing Officer to proceed to make block assessment and hence it is a jurisdictional step and in our view mandatory. 30. We find support from judgement of Supreme Court in Assistant Commissioner of Income Tax and another Vs. M/s Hotel Blue Moon (2010) 3 SCC 259, decided on 02.02.2010. An argument was raised that for the purpose of block assessment under Chapter XIVB, service of notice under Section 143(2) within prescribed time limit was not a prerequisite. Court repelled this argument and held that Chapter XIV B provides for an assessment of undisclosed income unearthed as a result of search without affecting regular assessment made or to be made. Search is the sine qua non for block assessment. Special provisions are devised to operate in the distinct field of undisclosed income and are clearly in addition to regular assessments covering previous years falling in block period. Special procedure of Chapter XIV B is intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. It is not intended to be substitute for regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 143(2) cannot be a procedural irregularity and same is not curable and, therefore, requirement of notice under Section 143(2) cannot be dispensed with. It is mandatory. 33. This decision in our view answers the question that notice under Section 158 BC (a) as well as under Section 158 BC (b) are mandatory. Notice under Section 158 BC (a) has a different intent and requirement of notice under Section 143(2) read with 158 BC (b) is with different intent. Two are mutually exclusive but both have to comply with. In the present case, Tribunal has held that no valid notice under Section 158BC was given to assessee and provision being mandatory block assessment made by Assessing Officer is illegal. 34. Judgement of Bombay High Court in Shirish Madhukar Dalvi Vs. Assistant Commissioner of Income Tax and others [(2006) 287 ITR 242 (Bom)] cannot help Revenue in view of law laid down by Supreme Court in M/s Hotel Blue Moon (Supra), wherein notice under Section 158 BC (a) and (b) read with 143(2) of Act, 1961 have been held mandatory. 35. In view thereof we answer questions formulated above against Revenue and in favour of assessee. Judgement of Tribunal, therefore, in holding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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