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TMI Blog2006 (7) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... r the block period 1987-88 to 1997-98 which referred to the earlier notice dated July 6, 1998, though incorrectly and stated that the appellant did not file a return for the block period in response to the said notice dated July 6, 1998. The appellant by his letter dated September 28, 1998, denied receipt of the notice dated July 6, 1998, however, sought extension of time and, ultimately, filed his return for the block period Le., the assessment years 1989-90 to 1999-2000 on November 2, 1998. The Assessing Officer assessed the return for the said block on June 30, 2000, and passed an order under section 158BC read with section 143(3) of the Act. The appellant preferred an appeal before the Commissioner of Incometax (Appeals) challenging the validity of the said assessment order contending that the order was passed by the Assessing Officer without serving proper notice under section 158BC(a), as such assessment is illegal and without jurisdiction. The Commissioner (Appeals) decided the appeal against the appellant by his order dated July 28, 2000. Being aggrieved by the aforesaid order of the Commissioner (Appeals), the appellant preferred a second appeal before the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above infirmities/defects in the notice dated July 6, 1998, go to the root of the jurisdiction of the Assessing Officer to initiate proceedings for block assessment much less to assess the total income including undisclosed income for the block period under section 158BC. According to him, service of legal and valid notice under section 158BC(a) is a condition precedent for assumption of jurisdiction to assess the return for block period. He submits that the issue and service of notice under section 158BC(a) is not a procedural requirement; the compliance with the mandatory provision of section 158BC cannot be bypassed or waived. Mr. Sathe placed reliance on the judgment of this court in the case of Commissioner of Agricultural Income-tax v. Ramkuvar [1983] 141 ITR 85, to contend that defect in the alleged notice is not a procedural defect but a failure to comply with the condition precedent to assumption of jurisdiction must result in vitiating the assessment proceedings. Mr. Sathe placed reliance on the judgment of the apex court in the case of CIT v. Kurban Hussain Ibrahimji Mithiborwala [1971] 82 ITR 821 to contend that the Income-tax Officer's jurisdiction to reopen an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessarily all the 10 assessment years preceding the assessment year in which search is conducted, as undisclosed income for the block period is to be assessed is in the context of the material found during the search. He, thus, submits that the alleged notice dated July 6, 1998, which directed the appellant to file a return for the block period 1987-88 to 1997-98 had assumed juris,diction for assessing the income under section 158BC beyond the years as mandated by the definition of block period under section 158B. Mr. Sathe, while developing another shed of his submission leading to the shelter of section 292B of the Act taken by the respondents, urged that the glaring defects and/or infirmities in the notice gojng to the root of the jurisdiction of the authority cannot be cured by resorting to the provision of section 292B. The refuge of section 292B cannot be allowed to be taken in all cases to get over vital defects in the notice. If the defects are merely technical in nature, then such defects can be cured by the provision of section 292B of the Act. In support of his submission he pressed into service the Statement of Objects and Reasons leading to the introduction of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Revenue, while replying to the submissions with respect to the validity of notice issued under section 158BC(a) and protection of section 292B, submits that nowhere in the Act it is made mandatory to issue notice in the prescribed format. The subject notice dated July 6, 1998, can very well be said to be a valid notice because the said notice bears the signature of the issuing authority, having the stamp and seal of the officer concerned and the appellant was merely put on notice requiring him to comply with his legal obligation. He further submits that merely because a notice purports to make reference to a wrong provision of law that by itself would not make notice invalid which is otherwise within the four comers of law. That mere reciting a wrong source of power does not affect the validity of the notice. In his submission, the subject notice dated July 6, 1998, substantially complies with the provision of section 158BC of the Act. Mr. Kotangale further submits that in order to make the notice legal refuge of section 292B can very well be taken by the Revenue to get over technical defects, if any. Alternatively, he submits that subsequent to the notice dated July 6, 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been allowed. In support of his submission, he relied upon the judgment of the Calcutta High Court in the case of CIT v. Bhagwati Developers P. Ltd. [2003] 261 ITR 658 and the judgment of the Madras High Court in the case of R. Kanakammal v. CIT [2000] 244 ITR 152. He, thus, prayed for dismissal of the appeal holding it to be without any substance. Statutory provisions: Before proceeding to consider the rival contentions revolving around the questions raised, it is necessary to turn to the statutory provisions having direct impact on the questions raised. "148. Issue of notice where income has escaped assessment.-(l) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the pervious year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sitioned 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 search initiated or books of account or other documents or any assets requisitioned on or after 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 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 subsection (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.... 292B. Return of income, etc., not to be invalid on certain grounds.-No return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to appeal under section 246A and could be rectified and/or revised. It was possible to file a petition before the Settlement Commission against the block assessment for the settlement of case. Separate provisions for levy of interest for delay in filing the return for the block period were provided. The provisions were also made for levy of penalty on the amount of difference between the returned undisclosed income and the assessed undisclosed income. All the provisions of the Act other than those provided were made applicable to the assessment under this Chapter XIV-B 6f the Act. "Ruling authorities: 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 be made under a wrong provision of law, it does not become invalid so long as there is some other provision of law. In the case of Hukumchand Mills Ltd. v. State of Madhy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 sec 402, this court stated the law in the following terms: '96. Ordinarily, although word "shall" is considered to be imperative in nature but it has to be interpreted as directory if the context or the intention otherwise demands. 97. It is important to that in Crawford on Statutory Construction at page 539, it is stated: "271. Miscellaneous implied exceptions from the requirements of mandatory statutes, in general.-Even where statute is clearly mandatory or prohibitory, yet, in many instances, the courts will regard certain conduct beyond the prohibition of the statute through the use of various devices or principles. Most, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted factual matrix reveals that the appellant was served with another notice dated September 17, 1998, mentioning the block period for which the return was required to be filed incorporating the correct reference to the sections applicable to the case in question and it mentioned that the period of 45 days for filing the return was available to the appellant of which the appellant did not avail. He was directed to file a return. Pursuant to the above notice dated September 17, 1998, the appellant approached the Deputy Commissioner of Income-tax vide his letter dated September 28, 1998, and sought further extension of 45 days for filing the block period return. He has, accordingly, filed his return on November 2, 1998, declaring a total income of Rs. 1,01,33,700. The same was accordingly assessed vide assessment order dated June 30, 2002. It is not in dispute that notice dated July 6, 1998, did not cause any prejudice to the appellant. During the course of hearing, we specifically asked Mr. Sathe as to what prejudice was suffered by the appellant on account of the alleged defective notice dated July 6, 1998. He made a positive statement that no specific prejudice was suffered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, the Calcutta High Court was dealing with the power of the Assessing Officer to make a regular assessment in respect of a financial year which formed the subject matter of the block period of assessment. While considering this question, the observations were made by the Calcutta High Court to say that section 158BC substituted the procedure under section 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 section. Both sections definitely stand on different footings. As already observed, a procedural requirement can always be waived by the subject for which benefit they are enacted as such submission made by Mr. Sathe in this behalf does not hold water. So far as the last submission made by Mr. Sathe in respect of disallowance of deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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