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M/s Kumawat Udyog Bus Stand, Bandanwara Versus The Commissioner of Income Tax, Ajmer, Dy. Commissioner of Income Tax Inv. Circle, Ajmer

2017 (3) TMI 391 - RAJASTHAN HIGH COURT

Validity of notice u/s 158BC - AO asked the assessee to file the return within fifteen days of the service of the notice - Held that:- While block assessment is to be made, the Assessing Officer is having knowledge about the statutory provision and while issuing notice he should have mentioned in it about his source of power and should have referred to time which is required to be given for the purpose of filing of return under section 158BC of the Act. The words mentioned in the notice are `wit .....

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the Income-tax Act and therefore it is invalid. In our view, the authority who is issuing the notice must be aware of the Act and must construe the provision strictly. The words `not less than fifteen daysí have to be interpreted correctly. In that view of the matter, since the Assessing Officer asked the assessee to file the return within fifteen days of the service of the notice, the notice issued by the Assessing Officer is invalid. We are, therefore, of the opinion that the Tribunal has righ .....

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assessee and remanded the matter back to the Assessing Officer. 2. This Court while admitting the appeal on 04.12.2009 had framed the following substantial questions of law: (i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in sustaining validity of notice dated 10.12.1998 under section 158BC of the Act, and assessment order passed by the Assessing Officer dated 28.01.2000 irrespective of the fact that a notice under Section 158BC of the Act, does not fu .....

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irrespective of the fact that the appellant has already disclosed undisclosed debtors of ₹ 625000/- and cash found is out of realization from the debtors? 3. Counsel for the appellant has contended that the issues are squarely covered by the decision of this Court in the case of Brahmadev Kumawat vs. CIT, Ajmer in DB Income Tax Appeal No.183/2004 decided on 08.12.2016, wherein relying upon the earlier decision in the case of Venad Properties Private Limited vs. Commissioner of Income Tax ( .....

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r contended that the notice which is contemplated within fifteen days from the date of service is to be construed keeping in mind the decisions which are rendered by different High Courts. He contended that the notice was issued which the assessee has received and no contention was raised against the same before the Assessing Officer. The assessee filed return of income on 13.1.1999 for the relevant assessment year and thereafter, the assessee has raised the contention before the Tribunal that t .....

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x and others [2006) 287 ITR 242 (Bom) where the Bombay High Court has observed as follows: Before we deal with the aforesaid contentions raised on behalf of the rival parties in the light of the above extracted statutory provisions, it is appropriate to first consider the law laid down by the apex court with various other High Courts relevant to the facts of the case at hand. In the case of State of Karnataka v. Muniyalla, AIR 1985 SC 470, it is held that merely because an order is purported to .....

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ase of a procedural provision which is not of a mandatory character, the complaint of violation has to be examined from the standpoint of substantial compliance. The order passed in violation of such provision can be set aside only where such violation has occasioned prejudice to the subject. It further went on to observe that even a mandatory requirement can be waived by the person concerned, if such mandatory provision of law is conceived in his interest and not in the public interest. The con .....

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utory provision in question in determining whether the same is mandatory or directory. No universal principle of law could be laid down in that behalf as to whether a particular provision or enactment shall be considered mandatory or directory. It is the duty of the court to try to get the real intention of the Legislature by carefully analysing the whole scope of the statute or section or a phrase under consideration. In the case of P.T. Rajan v. T.P.M. Sahir (2003) 8 SCC 498, the apex court ha .....

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settled law that even where the expression shall is used, the same may not be held to be mandatory. Even a mandatory provision having regard to the text and context of the statute may not call for strict construction. 75. In U.P. State Electricity Board v. Shiv Mohan Singh (2004) 8 SCC 402, this court stated the law in the following terms: ( SCC p. 440, paras 96-97) 96. Ordinarily, although word shall is considered to be imperative in nature it has to be interpreted as directory if the context .....

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ost, if not all of these devices find their jurisdiction in considerations of justice. It is a well-known fact that often to enforce the law to its letter produces manifest injustice, for frequently equitable and humane considerations, and other considerations of a closely related nature, would seem to be of a sufficient calibre to execute or justify a technical violation of the law. In the case of Balchand v. ITO (1969) 72 ITR 197, the apex court ruled that merely because of a defect in service .....

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12 and 18 which are reproduced as under: 11. In Sardar Amarjit Singh Kalra v. Smt. Pramod Gupta (2003) 3 SCC 272, a Constitution Bench of the Supreme Court has held: 26. Laws of procedure are meant to regulate effectively, assist and aid the object of doing substantial and real justice and not to foreclose even an adjudication on the merits of substantial rights of citizen under personal, property and other laws. Procedure has always been viewed as the handmaid of justice and not meant to hamper .....

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compliance, tho procedural, will thwart fair hearing or prejudice doing of justice to parties, the rule is mandatory. But, grammar apart, if the breach can be corrected without injury to a just disposal of the case, we should not enthrone a regulatory requirement into a dominant desideratum. After all, courts are to do justice, not to wreck this end product on technicalities. 18. In view of our findings on the second contention, which are against the appellant- assessee and in favour of the reve .....

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ala v. S.K. Sharma (1996) 3 SCC 364 applies. In the said case, the Supreme Court held that in the case of a procedural provision which is not of a mandatory character, the complaint of violation has to be examined from the standpoint of substantial compliance. An order passed in violation of such provision can be set aside only when such violation has occasioned prejudice to the subject. Even mandatory requirement can be waived by the person concerned, if the mandatory provision is conceived in .....

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nditions were missing or not satisfied. Reasons to believe have been recorded. Notice has also been issued within the limitation period. The question whether the notice was addressed to the correct person has been examined and dealt with by us above. Service of notice is not the jurisdictional precondition but a matter pertaining to making of the order of assessment. Before an assessment order is passed, the notice must beserved. As noticed above, on February 21, 2002, Vijay Narain Seth, directo .....

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there were defects in drafting the preamble of the notice, it did not affect its validity as the notice itself clearly informed the assessee that he had to file a return of income for the relevant year. 4. K. Sakthivel v. Assistant Commissioner of Incometax, Central Circle 1, Coimbatore (2012) 26 taxmann. 35 (Madras), particularly, paragraph Nos. 14, 16 and 17 where it is observed as under: 14- Even though learned counsel appearing for the assessee reiterated the contentions in the grounds as ha .....

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52 (Asr.) (SB) as well as Sakthivel Bankers case (supra) (255 ITR 144) and submitted that when the assessee had acted on the notice and filed the return knowing fully well the period of block assessment, yet considering the fact the notice issued under section 158BD is only procedural and not related to assumption of jurisdiction, it is not open to the assessee to contend that the assessment was not valid. 16. As far as the non mentioning of the block period in the notice issued under section 15 .....

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ection 158BB provides for computation of undisclosed income for the block period, whereas section 158BC provides the procedure for block assessment. In the decision in Sakthivel Bankers (supra) this court held that failure to mention the provision in the notice was not a circumstance which could be said to vitiate the ultimate order. The said decision relates to the assessment made consequent on the search conducted in assessee s place and notice was issued thereon to eight firms and to the wife .....

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oning of the block period would defeat the very assessment. Quite apart from this, the assessee participated in the inquiry conducted under section 131 of the Income- tax Act and had also made a statement confirming the purchase of the land. Subsequent thereto, the assessee had participated in the enquiry and on 15.5.2002, in response to the notice under section 142(1) the assessee expressed his inability to file the return on or before 15.5.2002 on account of liquidity problem, hence he sought .....

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re initiated. In the circumstances, it is too late for the assessee to contend that non mentioning of the block period would defeat the assessment proceedings. In the circumstances, we reject the assessee s contention. 5.1 He has further relied on the decision of the Karnataka High Court in the case of Commissioner of Income-tax v. Micro Labs Ltd. reported in (2012) 348 ITR 75 (Karnataka) to submit that calling upon the assessee to file the return of income within a period of 15 days is in viola .....

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be granted in terms of section 158BC is mandatory. Having failed to comply with the same, granting another opportunity to the revenue is highly improper. If that were to be so, then each and every violation of law by the revenue would stand rectified by orders of remand. That is not the intent and purport of the Act. The period as specified in the Act requires to be strictly complied with. Therefore, the plea of the revenue for a direction to pass fresh orders of assessment after complying with .....

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