TMI Blog2010 (12) TMI 1264X X X X Extracts X X X X X X X X Extracts X X X X ..... e seller, Shri Rajendra Kumar Gupta as well as purchasers Shri Suresh B. Dedhia, Shri Vadilal M. Dedhia Smt. Jagruti V. Dedhia and witnesses was seized along with cash ₹ 52 lakhs. The investment made in the property by assessee was cash of ₹ 26,00,000/- lakhs and draft of ₹ 11,25,000/-. During the assessment proceedings assessee explained the sources of income for the draft amount ₹ 11,25,000/- on the satisfaction of the Assessing Officer. But the source of cash payment of ₹ 26,00,000/- was not explained and the cash ₹ 26,00,000/- is treated as undisclosed income u/s 158BD for block period 1/4/87 to 10/9/97 after satisfaction that there is concealed income and assessee has filed inaccurate particulars of income, notice u/s 158 BFA(2) of I.T. Act was issued calling upon assessee to show cause why order imposing penalty should not be made. 3. The assessee submitted that the income in question was offered in his regular assessment and that the amount of ₹ 26 lakhs were duly reflected in the books and hence it cannot be concealment of income. The AO rejected the contention and levied a penalty of ₹ 15,60,000/- u/s 158BFA(2). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the decision of the Special Bench, the assessee did not pursue this ground and had not pressed the same. He further submitted that in the present appeal, the assessee did not raise this ground of appeal, due to lack of proper advice. He submitted that the additional ground of appeal may kindly be admitted in the interest of justice, equity and fair play. He further argued that the additional ground raises merely a legal issue which goes to the root of the matter and that all the facts are very much available on record and no further investigation of facts is required. Thus he submits that the additional ground should be admitted. He relied on the following case laws: i) Jute Corporation of India Ltd. vs CIT 187 ITR 383 (SC). ii) Ahmedabad Electricity Co. Ltd. vs CIT 199 ITR 351 (Bom)(FB). 6. The learned DR, Shri D. Songate, on the other hand, opposed the admission of the additional ground by submitting that in the quantum proceedings the assessee had not raised this ground and hence he is debarred from raising the issue in the penalty proceedings. 7. In reply, Mr. Vijay Mehta relied on the decision of the Delhi Bench of the Tribunal in the case of Tidewater Mari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in such cases would lack inherent jurisdiction and would be a void order or a nullity. If an original order is without jurisdiction it would be a nullity confirmed in further appeals. The appellate order of the Tribunal thereon would also be a nullity and the Tribunal cannot confer any jurisdiction on the Income-tax Officer by making a remand order. (Emphasis ours) Thus respectfully following the same, we admit this additional ground. 10. The learned counsel for the assessee referred to page 1 of the assessment order as well as the order of the CIT(Appeals) in quantum proceedings which is dated 20-01-2003 as well as the remand report of the AO on this issue and submitted that the fact that the assessee filed its return of income on 10-04-1997 and that the AO issued notice u/s 143(2) on 09-11-1999, which is beyond the period of 12 months is not in dispute. He pointed out that the AO in the remand report did not controvert the statement above but only advanced a legal argument that the assessment is not illegal. He submitted that once the notice is not issued u/s 143(2) within a period of 12 months from the end of the month in which the return of income was filed, the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under normal provisions of the Act and this has been disapproved by the Tribunal in the quantum proceedings. He pointed out that the assessee had not offered a convincing reason or some reasonable cause necessiting non-inclusion of income. He submitted that the assessee had in fact offered this income in the regular return, but he shuld have actually offered it in the block proceedings. He submitted that the assessee tried to avoid tax by paying only 50% by disclosing this income in the regular return. On this request, the DR was granted one week time to produce written submissions. 14. The learned DR in his written submissions submitted that, the assessee has not pressed the ground of jurisdiction in the quantum proceedings before the Tribunal and had also not filed an appeal before the Hon ble High court and thus the issue of validity of block assessment, has attained finality and cannot be questioned now. He argued that the additional ground of appeal cannot be admitted, as the issue is levy of penalty u/s 158BFA and not on validity of assessment. He submitted that the Tribunal cannot sit in judgment over the issue whether the assessment itself is bad in law as it would amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k assessment both in the appeal against the block assessment and in the appeal before the Commissioner (Appeals) against the levy of penalty. The Commissioner (Appeals) had actually rejected the plea following his order in the appeal against the block assessment, which implied that the assessee had taken the plea even in the appeal against the block assessment. Thus, the point had already been taken before the income-tax authorities and there was no element surprise of. In fact, even without the help of the additional ground the assessee could have canvassed the validity of the block assessment within the scope of the first and third grounds of the original grounds of appeal. Further, the additional ground did not involve an investigation into the facts. The panchanama and the search warrant were a matter of record. That apart, this went to the very root of the matter. The question of jurisdiction is of vital importance and it would be open to the assessee to raise the question of validity of assessment on account of lack of jurisdiction at any time and at any stage of the proceedings. In view of the importance of the question of validity of the assessment and since the matter invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year in the name of T treating it as agent of non-resident assessee. Thus, it would appear that a valid and proper notice under section 148 was not issued and served on the assessee, which is a condition precedent for assumption of valid jurisdiction for initiating proceedings under section 147. In the instant case, since initiation of the reassessment proceedings were vitiated as the notice under section 148 had been issued beyond the statutory period prescribed under section 149(3), consequently, assessment made on the basis of such notice would be null and void. Since in the instant case, the very basis of imposition of penalty ceased to exist by virtue of void assessment order, the penalty imposed under section 271(1)(c) was liable to be cancelled. In the result, the appeals of the assesses were to be allowed. 20. Respectfully applying these two decisions to the facts of this case, we have to necessarily to come to a conclusion that the block assessment order was bad in law for the reason that the notice u/s 143(2) was not issued within the time prescribed under the proviso to section 143(2). When the block assessment itself was without jurisdiction, then there w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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