TMI Blog2000 (1) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumtazbanu Ghoghabori, M/s Apollo Hotel, Bhavnagar is a registered partnership firm comprising of 8 members which include Shri Mohmed Rafiqbhai Ghoghabori and his relations. Mohd. Nadeem Ghoghabori is son of Smt. Mumtazbanu Ghoghabori. 4. The survey proceedings in the case of Smt. Mumtazbanu continued till late hours in the evening of 3rd Aug., 1995, and thereafter these were converted into search action under s. 132 at 11.30 p.m. on the basis of a warrant of search issued in the name of Smt. Mumtazbanu, by the learned CIT, Rajkot. The search was subsequently concluded on 4th Aug., 1995 at 11 A.M. All the materials noticed and inventorised at the time of survey which included papers/documents relating to Smt. Mumtazbanu, Shri Mohmed Refiqbhai, Shri Mohmed Nadeem, M/s Appollo Hotel, Manila Restaurant and Hotel White Rose which were inventorised at the time of survey were subsequently seized. 5. The block assessment in the case of Smt. Mumtazbanu was completed by the AO Shri R.B. Rande, Asstt. CIT Cir. 1, Bhavnagar on 29th Aug., 1996 under s. 158BC(c) of the IT Act, 1961, although no formal order was passed by the CIT transferring the jurisdiction of Smt. Mumtazbanu from ITO, War ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8BD was issued on 14th Oct., 1997. The assessee vide letter dt. 22nd March, 1997, challenged the assumption of jurisdiction of Asstt. CIT, Cir. I, Bhavnagar in terms of ss. 120 to 124 of the Act. The Asstt. CIT, Cir, 1, Bhavnagar vide letter dt. 3rd April, 1997, informed the assessee that in view of the order passed by the CIT under s. 127 he has validly assumed the jurisdiction stating that the copy of the order has already been received by the assessee Shri Mohmed Rafiqbhai and M/s Apollo Hotel whereas in fact that claim of the assessee is that no order under s. 127 passed by the CIT, Rajkot was ever served on the assessee. In the meanwhile, the ITO, Ward-5, Bhavnagar with whom M/s. Apollo Hotel was assessed prior to the alleged transfer under s. 127 by the CIT, issued a notice under s. 148 dt. 2nd April, 1997 for asst. yr. 1991-92 after taking prior approval/satisfaction of the CIT, Rajkot. Thereafter there is a protracted exchange of letters between the Asstt. CIT, Cir. 1, Bhavnagar and the assessee wherein the assessee has been challenging the jurisdiction of the Asstt. CIT, Cir. 1, Bhavnagar and the AO was requiring him to explain the various papers found during the search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the above grounds, on the facts and circumstances of the case and in law, the entire proceedings for the block assessment from their very inception are in violation of the principles of natural justice and for this reason also, such proceedings as well as the resultant block assessment order are invalid, illegal, null and void and so also altogether destitute of any legal force whatsoever. (4) Without prejudice to the above grounds, on the facts and circumstances of the case and in law, the various additions made to the total income of the assessee as per the block assessment order have no basis, reason, evidence or material to support these additions or any part thereof. (5) Your appellant reserves its right to add, to amend, to alter or to modify any of the above ground and to pursue any other or further ground, as may be required. 10. The learned authorised representative of the assessees has challenged the assessments framed by the AO being without jurisdiction and alternatively that even if the jurisdiction was validly assumed under s. 158BD, the assessments have become time-barred by 31st Aug., 1997 as the notices under s. 158BC r/w s. 158BD dt. 29th Aug., 1996, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March, 1997, written by the AO cancelling the same when the relevant section speaks of completion of assessment within one year of service of the notice under this chapter. (ii) Whether the order of the CIT for transferring the jurisdiction from ITO, Ward-5, Bhavnagar to Asstt. CIT Circle-1, Bhavnagar will ratify the jurisdiction which was exercised by the same Asstt. CIT; or: The limitation will be counted from the issue and service of second notice under s. 158BD. It was submitted by the learned authorised representative of the assessee that in his humble opinion the limitation will start from the service of first notice under s. 158BC r/w s. 158BD and not from the service of second notice because it is not a case of total lack of jurisdiction. It was submitted that had there been no objection to the jurisdiction well in time, then the assessees could not have objected to it subsequently as provided in s. 124. It was submitted that the application of the provisions of s. 124 is conditional and as such optional in the sense that if by his own discretion the assessee does not challenge the erroneously assumed jurisdiction, then the jurisdiction assumed will remain valid. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT 1977 CTR (Guj) 683 : (1978) 113 ITR 22 (Guj) at p. 31; the decision of the Hon'ble Supreme Court in the case of Guduthur Brothers vs. ITO (1960) 40 ITR 298 (SC) and the decision of the Tribunal Third Member in the case of Asstt. CIT vs. Shravan Mahipat Hedau (HUF) (1997) 58 TTJ (Nag)(TM) 771 : (1997) 62 ITD (Nag)(TM) 70. 11. The learned Departmental Representative supported the orders passed by the AO and pleaded that the initial notices under s. 158BD, dt. 29th Aug., 1996, issued by the AO were ab initio void as the AO who was Asstt. CIT, Cir. 1 Bhavnagar was not having jurisdiction over the cases of these three assessees who were being assessed by the ITO, Ward-5, Bhavnagar and this fact was known to the assessees who challenged the same by a letter dt. 14th Sept., 1996. It was pleaded that thereafter the cases of the assessees were transferred by the CIT, Rajkot under s. 127 to the Asstt. CIT, Cir. 1, Bhavnagar and accordingly the AO vide letter dt. 18th March, 1997 rightly cancelled the earlier notices issued under s. 158BD and issued fresh notices dt. 18th March, 1997, from which the jurisdiction was validly assumed by the Asstt. CIT, Cir. 1, Bhavnagar. It was submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd service of second notice under s. 158BD. 12.2. Block assessments under Chapter XIV-B have to be framed by an AO who necessarily has to be of the rank of Asstt. CIT and an ITO cannot frame the assessment. The Asstt. CIT, Cir. 1, Bhavnagar was one of the authorised officers who conducted the search in the case of Smt. Mumtazbanu and to whom the papers pertaining to Smt. Mumtazbanu as well as these three assessees, were handed over by Shri K.K. Kanwat/Shri L.R. Meena, Dy. CIT, Bhavnagar and Addl. DIT, Bhavnagar who were in-charge of survey/search party. Thereafter Shri R.B. Rande, Asstt. CIT, Cir. 1, Bhavnagar took up the proceedings in the case of Smt. Mumtazbanu although no valid order transferring the case of Smt. Mumtazbanu from ITO, Ward-5, Bhavnagar to Asstt. CIT, Cir. 1, Bhavnagar was passed by the CIT, Rajkot under s. 127. However, since the assessee (Smt. Mumtazbanu) never objected to the issue of notice under s. 158BC issued by Shri R.B. Rande, Asstt. CIT, Cir. 1, Bhavnagar within the time prescribed under s. 124(3), she is deemed to have waived the objection and the assessment framed by Shri R.B. Rande, Asstt. CIT, Cir. 1, Bhavnagar on 29th Aug., 1996, would have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO in the case of such "other person", at any time is ill-founded. There is no lifting of the limitation period for making the assessment order which is one year and the starting point of limitation in cases falling under s. 158BD by the very nature of things can be fixed only after the AO is satisfied that any undisclosed income belongs to such other person and in cases where the AO is different after the relevant material is transmitted to him ....... In the case before us, the AO being the same, the limitation will start with the service of notices under s. 158BC r/w s. 158BD on 30th Aug., 1996. 12.3. Even otherwise there appears to be something wrong with the functioning of the office of the CIT, Rajkot at the relevant time. Even if we accept the argument of the learned Departmental Representative that the CIT, Rajkot actually transferred the cases of M/s Apollo Hotel and Shri Mohmed Rafiqbhai on 28th Feb., 1997, making the order operative from 10th March, 1997, (a photo copy of that order under s. 127 has been filed by the learned Departmental Representative before us) yet it is strange that the same CIT gives approval to the ITO, Ward-5, Bhavnagar for issuing a notice und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which occurred when the notice was issued on 29th Aug, 1996 and it stood challenged when the objection was made by the assessees, and the same stood corrected when the jurisdiction of the Asstt. CIT, Cir. 1, Bhavnagar was acknowledged by the CIT, Rajkot vide his transfer order dt. 28th Feb., 1997 as stated by the AO in the assessment order. The validation or the correction of the irregularity/illegality of the earlier notices issued under s. 158BC r/w s. 158BD will not extend the period of limitation as provided in s. 158BE(2) of the Act. The order passed by the CIT under s. 127 cannot be a starting point for computing limitation under s. 158BE(2) particularly when the notice was issued earlier and the section speaks of one year from the end of the month in which the notice under this chapter was served. The section does not speak of "notices" and hence CIT's order of transfer cannot be a basis for extending the limitation when the notice was already issued by the same AO (Asstt. CIT, Cir. 1, Bhavnagar) before transfer order and who was holding the jurisdiction of Smt. Mumtazbanu's case where search was made and the cases under consideration are inter-connected with the search cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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