TaxTMI 
TaxTMI 
2009 (1) TMI 304
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....ter dt. 1st Aug., 2007 is as under: "That under the facts and circumstances, the block assessment proceedings and consequential block assessment order are without jurisdiction in the absence of issuance of mandatory legal notice under s. 143(2) of the IT Act." 2. For raising the contention that without issuance of notice under s. 143(2) the assessment is invalid, the assessee has placed reliance on the following three decisions: (i) Smt. Bandana Gogoi vs. CIT (2007) 209 CTR (Gau) 31 : (2007) 289 ITR 28 (Gau) (ii) Smt. Tulika Mishra vs. Jt. CIT 'E' Bench, Tribunal Delhi in IT(SS)A No. 81/Del/2003 vide order dt. 21st March, 2007. (iii) Gangaour Foods (P) Ltd. vs. Dy. CIT 'C' Bench, 1ribunal Delhi in IT(SS)A No. 11/Del/2002, vide order dt. 15th June, 2007. 3. As against that contention of the assessee, it was the contention of the Revenue that in view of insertion of s. 292BB which is inserted by Finance Act, 2008 w.e.f. 1st April, 2008, the assessee cannot take the plea that assessment should be held invalid merely for the reason that no notice under s. 143(2) was issued and the assessee is barred from taking this pica. It is in these circumstances, the following question was r....
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....n IT Appeal No. 1203 of 2008, dt. 20th Oct., 2008 (names of the appellant as well as the respondent were not mentioned in the copy of order supplied by learned Authorised Representative to us) wherein it has been observed by their Lordships that s. 292BB of the Act which is introduced w.e.f. 1st April, 2008 cannot be relied upon to uphold the validity of reassessment for the two reasons; firstly, the said provision is not applicable to asst. yr. 2001-02 and, secondly, that the said argument was not at all being raised before the Tribunal. 7. Learned Authorised Representative further pleaded that this appeal was heard by the Bench on 17th July, 2008 and it was listed for pronouncement on 8th Aug., 2008. He contended that the date of pronouncement is usually fixed when the order is ready in all respects. He contended that the issue regarding applicability of s. 292BB was not raised at all during the course of hearing therefore, applicability or otherwise of s. 292BB cannot be considered. Thus, it was pleaded by learned Authorised Representative that s. 292BB has no application to the facts of the present case and assessment framed in the case of the assessee should be held invalid f....
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....r after 1st April, 2008, in which the assessee participated. If it is considered to be a substantive provision, it will apply to the proceedings of the asst. yr. 2008-09 and subsequent years and not to any earlier year. Therefore, this provision does not advance the case of the Revenue." (ii) Gangour Foods (P) Ltd. vs. Dy. CIT order dt. 15th June, 2007 in IT(SS)A No. 11/Del/2002 wherein following the Hon'b1e Gauhati High Cow t in the case of Smt. Bandana Gogoi vs. CIT, the assessment was quashed in a case where assessment was framed without giving notice under s. 143(2). Reference was invited to the following observations: "10. It is to be pointed out that no other decision or authority has been brought to our notice by the Revenue against the decision of Hon'ble Gauhati High Court in the case of Bandana Gogoi vs. CIT & Anr. and it is a settled legal position that the decision of the Hon'b1e High Court is a binding authority which has to be followed by the Tribunal, unless there is any contrary decision of the jurisdictional High Court. It is to be clarified that there is no other decision of Hon'ble Delhi High Court on this issue, which is contrary 'to the view taken by the Hon'....
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.... High Court in the case of CIT vs. Raman Industries (1980) 14 CTR (P&H) 138 : (1980) 121 ITR 405 (P&H) held, "... From the above observation it emerges that a statute dealing with procedure is always retrospective and its provisions also apply to the proceedings pending at the time of its enactment but where some provisions of a statute of procedure affect vested rights, these are prospective in operation unless there is an indication in the statute to the contrary..." 11. He further invited our attention to the decision of Hon'ble Supreme Court in the case of Govindas & Ors. vs. ITO 1976 CTR (SC) 192 : (1976) 103 ITR 123 (SC) wherein it was observed at p. 132 as under: "11. Now, it is a well-settled rule of interpretation hallowed by time and sanctified by judicial decisions that, unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. The general rule as stated by Halsbury in Vol. 36 of the Laws of England (3rd Edn.) and reiterated in several decisions o....
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....atutory. Notice in the ordinary sense is to apprise of initiation of some proceedings against specific person to give him an opportunity to explain/defend the action proposed to be taken against such person. If the said person has attended the proceedings and is known of such proceedings then the very purpose of issuance/service of notice is served. In that circumstances it will be wrong to say that principle of "audi alteram partem" is not satisfied. Therefore, non-issuance/service of notice cannot render the assessment/reassessment invalid but at best it can be a case of irregularity which can be removed. In support of such contention, learned CIT-Departmental Representative relied on the decision of Madras High Court in the case of Areva T&D India Ltd. vs. Asstt. CIT (2007) 207 CTR (Mad) 497 : (2007) 294 ITR 233 (Mad). He submitted that where the invalid assessment is to be set aside, it should be remanded to the AO so that the assessee is not set at large without payment of tax as held in the case of CIT vs. Anaimugan Transports (P) Ltd. (1995) 129 CTR (Mad) 51 : (1995) 215 ITR 553 (Mad) 15. He further submitted that where an assessment order is passed without giving notice to....
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....(1993) 203 ITR 848 (Bom); and (7) CIT vs. Jai Prakash Singh (1996) 132 CTR (SC) 262 : (1996) 219 ITR 737 (SC). 16. It was also submitted that the presumption against retrospective construction has no application to enactments which affect only the procedure and the practice of the Courts as held in the case of CWT vs. Man Bahadur Singh (1994) 116 CTR (Raj) 47 : (1994) 208 ITR 658 (Raj). The appeal before the Tribunal is a continuation of assessment proceedings and hence the assessee who has participated in any proceedings or co-operated in any enquiry related to assessment or reassessment, s. 292BB deems that the notice which is required to be served has been duly served. Since no objection was raised before the AO, the assessee is precluded from raising such objection now before the Tribunal. 17. It was also submitted that since s. 292BB is introduced after the present appeal has been filed, though there is no curtailment of right of appeal, what is curtailed is only raising an objection as regards service of notice and not as regards computation of income. Therefore, there is only limited curtailment of right but such curtailment will apply even to the pending proceedings. 18....
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....sion of this Act, which is required to be served upon him. has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was- (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment." 21. Notes on Clauses explaining the aforesaid section read as under: "Clause 52 seeks to insert a new s. 292BB in the IT Act, laying down certain circumstances in which notice shall be deemed to be valid. It is proposed to provide that where an assessee has appeared in any proceeding 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 provisions of the Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this....
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.... improper manner. Similar amendment is also proposed in the WT Act. Further, it is also proposed to amend cl. (ii) of sub-s. (2) of s. 143 to provide that the notice under sub-s. (2) of s. 143 shall be served on the assessee within a period of 6 months from the end of the financial year in which the return is furnished. This amendment will take effect from 1st April, 2008." 23. It is observed that while in the Memorandum Explaining the Provisions of s. 292BB reference is made to sub-s. (2) of s. 143, however, the section does not limit its applicability only to notice under s. 143(2). The scope of section is that where any assessee has appeared in any proceedings or has co-operated in any inquiry relating to assessment or reassessment, then the consequences ensued will be that it will be deemed that any notice under any provisions of the Act which is required to be served on an assessee has been duly served on him and it will further be deemed to be served in time and in accordance with the provisions of the Act. The assessee is debarred from taking the defence or raise any objection in any proceedings or inquiry that the notice was- (a) not served upon him; (b) not served upo....
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....n his behalf, nor any other person on whom service can be made, the serving officer shall affix a copy of the summons on the outer door or some other conspicuous part of the house in which the defendant ordinarily resides or carries on business or personally works for gain, and shall then return the original to the Court from which it was issued, with a report endorsed thereon or annexed thereto stating that he has so affixed the copy, the circumstances under which he did so, and the name and address of the person (if any) by whom the house was identified and in whose presence the copy was affixed." 28. Order V, r. 19A provides for simultaneous issue of summons for service by post in addition to personal service and it reads as under: "Rule 19A Simultaneous issue of summons for service by post in addition to personal service-(1) The Court shall, in addition to, and simultaneously with, the issue of summons for service in the manner provided in rr. 9 to 19 (both inclusive), also direct the summons to be served by registered post, acknowledgement due, addressed to the defendant, or his agent empowered to accept the service, at the place where the defendant, or his agent, actually a....
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....ngs started thereafter would be without jurisdiction. Notice is a condition precedent for assumption of jurisdiction and, thus, is not merely a procedural requirement. (ii) Hon'ble Punjab & Haryana High Court in the case of Vijay Kumar Jain vs. CIT (1975) 99 ITR 349 (P&H), wherein it was held that AO has not issued notice under s. 148 disregarding a return filed under s. 139(4), Tribunal was not justified in refusing to consider the validity of notice under s. 148 simply on the ground that the same was not pressed before first appellate authority. Reference was made by Hon'ble High Court to the decision of Hon'ble Supreme Court in the case of CIT vs. Kurban Hussain Ibrahimji Mithiborwala 1973 CTR (SC) 454 : (1971) 82 ITR 821 (SC) wherein it was held that AO's jurisdiction to reopen an assessment under s. 34 depends upon the issuance of a valid notice and if notice is invalid for any reason the entire proceedings taken by him would become void for want of jurisdiction. (iii) In the case of CIT vs. Naraindas Dwarkadas (1976) 102 ITR 767 (Bom), it was held by Hon'ble Bombay High Court that the Tribunal was right in taking the view that the notices which have been served for both the....
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....on; "It is in the light of this distinction that the effect of the legal fiction enacted in s. 18A(9)(b) that when a person fails to send an estimate of tax on his income under s. 18A(3) he shall be deemed to have failed to furnish return of his income, will have to be judged. The respondent contends that its effect is only to place the estimate to be sent under s. 18A(3) on the same footing as the return under s. 22 for purposes of s. 28, and that does not abrogate the other conditions laid down in that section on which alone action could be taken thereunder and penalty imposed, and one of those conditions is the issue of notice under s. 22(1) or s. 22(2). But, it must be noted that s. 18A(9)(b) does not merely say that an estimate under s. 18A(3) shall be deemed to be a return. It enacts that the failure to send an estimate in accordance with s. 18A(3) is to be deemed to be a failure to make a return. Now, there can be no failure to make a return, unless notice had been issued under s. 22(1) or s. 22(2) and there has been a default in complying with that notice. Therefore, the fiction that the failure to send an estimate is to be deemed to be a failure to send a return necessari....
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....n to boggle when it comes to the inevitable corollaries of that state of affairs. Therefore, where the statute under s. 292BB deems service of notice, it will always include issue of notice as service cannot be effected without issuance thereof. Thus, the argument of learned Authorised Representative that unless there exists issuance of notice, service thereof cannot be presumed or deemed and s. 292BB will not be applicable, cannot be accepted and has to be rejected. 33. No doubt, the issue of notice as well as service of notice are a procedural section, but when the same has time limitation; the obligation of the Department to issue notice within a prescribed time becomes the right of the assessee to receive that notice in time to validly commence the proceedings and validly completing the same. 34. Their Lordships of Hon'ble Supreme Court in the case of H.V. Thakur vs. State of Maharashtra AIR 1994 SC 2623 have culled out the following principles of interpretation after considering the various cases decided by Hon'ble Supreme Court and have observed that these principles are illustrative though not exhaustive which will cover the ambit and scope of Amending Act and its retrospe....
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..... Dislike of ex post facto law is enshrined in the Untied States Constitution and in the Constitutions of many American States, which forbid it. The true principle is that lex prospicit non respicit (law looks forward not back). As Willes, J. said, retrospective legislation is 'contrary to the general principle that legislation by which the conduct of mankind is to be regulated ought, when introduced for the first time, to deal with future Acts, and ought not to change the character of past transactions carried on upon the faith of the then existing law.'" 36. In para 24 their Lordships have referred to the abovementioned decision of apex Court in the case of H.V. Thakur vs. State of Maharashtra and principles of interpretation laid down therein. 37. Now, we will proceed to examine the present issue in the light of principles of interpretations laid down in the abovementioned two cases decided by Hon'ble Supreme Court. 38. First and foremost rule of construction of interpretation is that in the absence of anything in the enactment to show that it is to have retrospective operation, the said enactment cannot be construed to have retrospective operation and when amendment relating....
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....assessee to challenge the validity of assessment or reassessment proceedings during the course of appellate proceedings has been taken away by the statute w.e.f. 1st April, 2008. It is also observed that the issue and service of notice relate to procedural law, but, at the same time, it created a new disability on the assessee litigant to the extent that he is debarred from taking a plea in the appellate proceedings to challenge the validity of the same on the ground of valid issuance/service of notice required to be given by the statute in a case where assessee has appeared in such proceedings or co-operated in the inquiry relating to assessment or reassessment. Therefore, applying the above principles of interpretation and keeping in view above discussion it has to be held that s. 292BB cannot be construed to have retrospective operation and it has to be applied prospectively. 42. Having arrived at the conclusion that s. 292BB has no retrospective effect and is to be construed prospectively, it has to be held that prior to 1st April, 2008, i.e., up to 31st March, 2008, as per s. 292BB, the assessee is not precluded from taking any objection (hereinafter referred to as 'such obje....
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....and s. 66(1), (2) and (5) and in the said case it was held that the proviso though came into force on 5th May, 1946 could not be made operative from 1st April, 1946 and, therefore, no retrospective effect could be given to that provision by accepting the contention of the Revenue. In that case the Revenue has sought to apply proviso for asst. yr. 1946-47 despite the fact that the proviso had come into force from 5th May, 1946 and it was held that the proviso is not retrospective and it was held that the Court cannot import into its construction matters which are 'ad extra legis' and thereby alter its true effect. It will be relevant to reproduce the observations of their lordships from the said decision: "It is well-settled that the IT Act, as it stands amended on the first day of April of any financial year must apply to the assessments of that year. Any amendments in the Act which come into force after the first day of April of a financial year, would not apply to the assessment for that year, even if the assessment is actually made after the amendments come into force. In Scindia Steam Navigation Co. Ltd. vs. CIT, a Division Bench of the Bombay High Court consisting of Chagla, ....