2012 (7) TMI 543 - HC - Income Tax

s.292BB can validate service in limited cases but cannot replace mandatory issuance of notice under s.143(2)

Commissioner of Income-tax Versus Mukesh Kumar Agrawal

HC held that s.292BB is a rule of evidence and a deeming provision that can validate service in certain circumstances but does not negate the ... Consideration of section 292BB - Assessment - non-issuance/service of notice u/s 143(2) of the Act - Applicability of the judgment in Hotel Blue Moon case [2010 (2) TMI 1 - SUPREME COURT] - Held that:- Section 292BB is a rule of evidence, which validates the notice in certain circumstances. The newly inserted section 292BB provides that where an assessee has appeared in any proceedings or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the pro- visions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under the Act that the notice was not served upon him or not served upon him in time or served upon him in an improper manner. In the present case, the Tribunal has returned the findings that the notice under section 143(2) of the Act was admittedly not issued in this case. The assessing authority thus did not have jurisdiction to proceed further and make assessment. We do not find that the non-consideration of section 292BB, which is rule of evidence, and a deeming provision to validate the notice in certain circumstances, will have any effect on the judgment in Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT]. It was held in Hotel Blue Moon's case [2010 (2) TMI 1 - SUPREME COURT] that the very foundation of the jurisdiction of the Assessing Officer is on the issuance of the notice under section 143(2). The income-tax appeal is dismissed. Issues:1. Consideration of provisions of section 292BB of the Income-tax Act while allowing the assessee to raise an additional ground of appeal.2. Applicability of the judgment in Hotel Blue Moon case and the relevance of section 292BB in the present case.3. Whether the assessee raised the issue of non-issuance of notice under section 143(2) during assessment proceedings.Analysis:1. The first issue revolves around the consideration of section 292BB of the Income-tax Act when allowing the assessee to raise an additional ground of appeal. The Revenue contended that the provisions of section 292BB were not taken into account by the Commissioner of Income-tax (Appeals) and the Tribunal. However, the Court found that the non-consideration of section 292BB would not impact the reasoning and conclusions in the judgment. Section 292BB is a rule of evidence that validates the notice under certain circumstances when the assessee has cooperated in the assessment or reassessment proceedings. The Tribunal confirmed that the notice under section 143(2) was not issued in the present case, leading to the assessing authority lacking jurisdiction to proceed with the assessment.2. The second issue involves the applicability of the judgment in Hotel Blue Moon case and the relevance of section 292BB in the present scenario. The Supreme Court in the Hotel Blue Moon case emphasized the mandatory issuance of notice under section 143(2) for jurisdiction in block assessments. Section 292BB, inserted by the Finance Act, 2008, deems the notice served if the assessee participated in the proceedings. The Court clarified that the absence of consideration of section 292BB does not affect the judgment in Hotel Blue Moon case, as the foundation of the Assessing Officer's jurisdiction lies in the issuance of notice under section 143(2).3. The third issue questions whether the assessee raised the issue of non-issuance of notice under section 143(2) during the assessment proceedings. The Commissioner of Income-tax (Appeals) allowed the assessee to raise this issue despite participating in the assessment proceedings. The Tribunal confirmed the absence of the notice, leading to the assessing authority lacking jurisdiction. The Court upheld the Tribunal's findings, emphasizing the mandatory nature of the notice under section 143(2) for jurisdiction. Consequently, the income-tax appeal was dismissed based on these grounds.