TMI Blog2017 (10) TMI 1009X X X X Extracts X X X X X X X X Extracts X X X X ..... over such other person; and (iii) the assessing officer has proceeded under Section 158-BC against such other person. Because of the authoritative assertion of the legal principles in Manish Maheshwari about section 158 BD, we may obviate any reference to Panchajanyam, whose holding turns on its own facts. The upshot of the discussion is that the assessment order, dt.28.07.2005, is vitiated. The statutory requirement for completing the block assessment under section 158BE(2)(b) is “two years from the end of the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January 1997.” Determining the limitation under section 158BE (2)(b) of the Act, the Madras High Court in Commissioner of Income Tax vs. K.M. Ganesan [2009 (11) TMI 572 - Madras High Court] has held that if the notice is given first under section 158BC and then correctly given under section 158BD, the limitation runs from the date of first notice. Here, the search under section 132 of the Act was conducted on 04.11.2000; the notice under section 158BC was issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on remand and passed an order solid on facts and sound in reasoning. The Assessing Officer has, overall, done an impeccable job-its correctness not counting here. When the matter finally reached the Tribunal, it allowed the second appeal, excluding the issue not pressed by Premkumar. 6. Here, we must observe that, more than merits, the jurisdictional, procedural, and technical issues have weighed heavily with the Tribunal in its deciding the second appeal. And we cannot take exception to the Tribunal s approach for the life of the law has not been logic; it has been experience. In expropriatory proceedings, as with the penal ones, technicalities matter as much as the substantial justice counts. So, we touch on the facts to the extent they are necessary to dispose of this appeal. The Search: 7. Both the Department and the CBI on 4 November 2000 conducted simultaneous, if not joint, search at Premkumar s residence. On the basis of the material found during search, such as duplicate copies of documents relating to the land transactions, various passbooks, diaries, list of documents and bank locker keys seized by the CBI and evidence gathered subsequently, the De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. Finally, Assessing Officer directed Premkumar to pay, on the above undisclosed income, tax as follows: 14. Income Tax: ₹ 1,21,63,002/-; surcharge (at 17%): ₹ 20,67,710/-; Addl. Interest (u/s.158BFA for 18 months):Rs. 26,32,679/-. Total tax and interest payable was rounded to ₹ 1,68,63,390/- The Tribunal s Findings: ( A) About the Properties: ( i) Immovable: 15. Only two properties, out of nine, were in the assessee s name. The residential property was purchased in 1990-91 and was shown in the regular return filed for the relevant assessment year. About the 1/3rd share in the land at Mundaveli, the assessee explained that he used his chit amount to buy it. ( ii) Movable: 16. The movable properties belong to the family members, all of whom are individual assessees ( B) About the Income: 17. All the records were seized only by the CBI, not the Department. The Binani Zinc Diary received from the CBI should not have been taken as evidence for the block assessment. 18. The Department found no material to hold that the assessee had any professional income by way of MACT cases. And, in fact, all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the case may be, asserts the learned Senior Counsel. Assessee s: 25. Sri K. I. Mayankutty Mathar, the learned counsel for assessee-Premkumar, has supported the Tribunal s findings in their entirety. According to him, both the Assessing Officer and the Appellate Commissioner have misdirected themselves. And the Tribunal has corrected what he terms the glaring adjudicatory lapses and, so, quashed the proceedings, justly. 26. According to Sri Mather, the Appellate Commissioner s direction to the Assessing Officer to reassess Premkumar under section 158 BD amounts usurpation of his legitimate adjudicatory powers as a primary authority. So he asserts that the resultant reassessment has been vitiated. To repel the Revenue s contention that Premkumar ought to have challenged the Appellate Commissioner s findings-remand and direction to reassess under a particular provision-Sri Mather submits that once an authority lacks power, the order renders itself a nullity, and it needs no challenge. 27. Sri Mather has diligently cited numerous decisions, but we will refer to those that are necessary for our purpose. Substantial Questions of Law: 28. The Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the Commissioner (Appeals) and after making such further inquiry as may be necessary, the Assessing Officer shall thereupon proceed to make such fresh assessment and determine, where necessary, the amount of tax payable on the basis of such fresh assessment; . 31. Sri Mather relies on a CBDT s circular to drive home how the amendment has affected the Appellate Commissioner s powers. He has cited the circular in his written submissions. Para 78 of the clarificatory circular notes that the power of the Appellate Commissioner does not include the power to set aside the assessment. It was to finalize the assessment early and to avoiding prolonged litigation. The Appellate Commissioner will not set aside the assessment and refer the case back to the Assessing Officer for making fresh assessment. But the Appellate Commissioner continues to have the powers under Section 250 to inquire further, or to direct the Assessing Officer to inquire and report the result to him. After receiving the Assessing Officers enquiry report, the authority can rely on it or gather additional facts or evidence. 32. Sri Mather argues that the Appellate Commissioner has been stripped of the power to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not. Where such jurisdiction is not wanting, a directory provision can obviously be waived. But a mandatory provision can only be waived if it is not conceived in the public interests, but in the interests of the party that waives it. 37. A distinction exists between the provisions that confer jurisdiction and those that regulate procedure. Jurisdiction can neither be waived nor created by consent, holds a Constitution Bench of the Supreme Court in Supdt. of Taxes, Dhubri v. Onkarmal Nathmal Trust AIR 1975 SC 2065 . A procedural provision may be waived by conduct or agreement. Quoting with approval Kammins Ballrooms Co. Ltd. v. Zenith Investments (Torquay) Ltd. , 1971 A.C. 850 . Onkarmal , per C. N. Ray, C.J., further observes that waiver arises where a person is entitled to alternative rights inconsistent with one another. A person is sometimes said to have waived the alternative right, as for instance a right to forfeit a lease or to rescind a contract of sale for wrongful repudiation or breach of condition. This is also sometimes described as election rather than waiver . 38. Onkarmal goes on to observe that there can be no waiver of a statutory requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, by no stretch, he acted without authority; nor has his order become nullity. 44. When an order under section 271 (1) (C) is passed in violation of section 274 (1), it is statutory violation, observes the High Court of Andhra Pradesh in Thakur V. Hari Prasad. The order may have violated a statute, and it may amount to an illegal order. But it can be corrected under section 254 of the Act. The order does not, thereby, become void. Uncorrected in appropriate proceedings, the order continues to hold good and remains in currency. 45. In Sea Pearl Industries the Supreme Court examined Section 80-HHC of the Act. The Court observed that the object of Section 80- HHC is to grant an incentive to earners of foreign exchange. The matter will, therefore, must be considered by referring to this object. In other words, Sea Pearl advocates the well-entrenched rule of purposive interpretation. 46. In Okayti Tea , relied on by the Revenue, the Calcutta High Court has held that it is not open to a party to make a grievance about applying a rule unless he comes up with appropriate proceedings to have the rule s applicability property tested. Once the person acts at his own peril by no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted from the Assessment Officer s failure to record his satisfaction under Section 158BD; it is only to transfer the file. Once the file is transferred, the transferring officer becomes functus officio and the jurisdiction for all purposes is transferred to the officer to whom file is transferred and who has jurisdiction to assess the Assessee about whom details are obtained while searching another assessee. 50. Contrary to Panchajanyam are the Supreme Court s precedents. While dealing with a taxing provision, the principle of strict interpretation should be applied. The court shall not, observed the Supreme Court in Sneh Enterprises v. Commr. of Customs (2006) 7 SCC 714 , interpret the statutory provision in such a manner as would create an additional fiscal burden on a person. It is also trite that while two interpretations are possible, the court ordinarily would interpret the provisions in favour of a taxpayer and against the Revenue. 51. Quoting Sneh Enterprises with approval, another Division Bench of the Supreme Court in Manish Maheshwari v. CIT (2007) 3 SCC 794 has held that section 158-BD provides for taking recourse to a block assessment in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X
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