TaxTMI 
TaxTMI 
2007 (3) TMI 304
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....ed to question." 2. Since the grounds of appeal raised in both the appeals are common, facts involved are similar and as they were heard together hence, they are being disposed off by this consolidated order for the sake of convenience. 3. The brief facts of the case are that the Assessing Officer vide order dated 30-4-2001 passed under section 158BC(c)/143(3) determined the income at Rs. 36,22,300 and Rs. 1,50,86,100 in the hands of Smt. Krishna Verma and Shri Subash Verma respectively. 4. Before the ld. CIT(A) the assessee submitted that mandatory time of 15 days had not been allowed from the date of issue of notice dated 12-10-1999. Therefore, the initiation of the proceedings under section 158BC of the Act on the basis of alleged notice dated 12-10-1999 is not valid being illegal and bad in law because of non-compliance with the mandatory requirements of provisions of section 158BC(a)(i) and section 158BC(a)(ii) of the Act. 5. The Assessing Officer present during the course of the hearing before the CIT(A) submitted that the notice under section 158BC calling for return within 10 days would not invalidate entire block assessment proceedings and it was in these circu....
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....ded that no notice under section 148 is required to be issued for the purposes 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; (b) the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143, section 144 and section 145 shall, so far as may be, apply; (c) the Assessing Officer, on determination of the undisclosed income of the block period in accordance with this Chapter, shall pass an order of assessment and determine the tax payable by him on the basis of such assessment; (d) the assets seized under section 132 or requisitioned under section 132A shall be dealt with in accordance with the provisions of section 132B." 9. He pointed out that clause (a) of section 158BC of the Act, mandates that where, inter alia, a search is conducted the Assessing Officer shall serve a notice to such person requiring him to furnish a return for the block period within the prescribed time. Since jurisdictio....
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....r any reason there is failure to serve a proper and valid notice, the Assessing Officer cannot be said to have assumed jurisdiction to make an order of assessment and consequently reassessment order passed would be nullity in the eyes of law. 12. He further submitted that the Special Bench in the case of Smt. Mahesh Kumari Batra v. Jt. CIT [2005] 95 ITD 152 (Asr.) noticed the distinction between jurisdiction to assess and jurisdiction to make an order of assessment by observing that "by virtue of section 158BA(1), Assessing Officer obtains the power connection. Under section 158BC, he switches on that power by issue of notice...". According to the Special Bench, the jurisdiction to assess is conferred on the Assessing Officer as a result of search. The jurisdiction to make an order of assessment is "switched on" by issue of notice under section 158BC of the Act. 13. It was his submission that the aforesaid distinction was also appreciated and recognized in the decision of the Special Bench of the Tribunal in the case of Motorola Inc. v. Dy. CIT [2005] 95 ITD 269 (Delhi). In para 38.1 (reproduced infra) the Tribunal observed that "The power for initiation of proceedings as per....
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....y within a period of 12 months from the end of the month in which the return is processed. That means after the expiry of such period, the Assessing Officer has no jurisdiction to make the assessment under section 143(2) or (3) and the only course open to the Assessing Officer is to accept return under section 143(1). Therefore, in my considered opinion, after the expiry of the period mentioned in sub-section (2) of section 143, no notice under section 142(1) can be issued because of the lack of power to assess." 15. It was submitted by him that the Revenue's appeal against the aforesaid order of the Tribunal has been dismissed by the jurisdictional Delhi High Court in CIT v. Dr. K.C. Verma [2004] 266 ITR 476. 16. He further argued that it is now pertinent to consider the mandate of section 158BC of the Act. Under section 158BC(a) of the Act, the Assessing Officer is directed that he, "shall..... 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." 17. The first limb of clause (a) of section 158BC of the Act, provides that "Assessing Officer 'shall' .... serve a notice ...".....
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....rt is binding on this Hon'ble Bench. (iii) The Rajasthan High Court in the case of Tinwari Automobiles v. Union of India [2002] 125 Taxman 1104 held that service of a notice under section 158BC of the Act, which can be termed as statutory notice, is a condition precedent for making an order under the provisions of the Act. (iv) The Jabalpur Bench of the Tribunal in the case of Sanjay Kumar Mishra v. Asstt. CIT [2006] 100 TTJ (Jab.) 862 held that it is mandatory on Assessing Officer to serve a notice under section 158BC of the Act. 21. It was his argument that the mandate of section 158BC(a) of the Act is not only to issue and serve a notice under that section but to issue a valid and proper notice, which must necessarily prescribe the minimum statutory period of 15 complete days for furnishing the return to the assessee. 22. It was further submitted that now the issue that arises is whether it would be sufficient if notice under section 158BC(a) is issued even though statutory period of 15 clear days is not provided therein. The Supreme Court in Lachmi Narain v. Union of India AIR 1976 SC 714 has observed that the requirement of the notice prescribing th....
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....ch mandatory period has no legal sanctity in the eyes of law. He submitted that reference, in this regard, may be made to the following decisions referred in the context of similar provisions requiring the notice issued to prescribe the specified complete days for furnishing the return of income. The Courts have consistently held that if the notice does not allow such prescribed time, the notice issued is illegal and bad in law: (i) Mir Iqbal Husain v. State of UP [1964] 50 ITR 625 (All.): Their Lordships observed as under: "We are unable to accept the contention advanced on behalf of the State. The notice under section 25 must contain the requirements which may be included in a notice under section 15(3). The notice under section 15(3) requires an assessee to furnish a return. The requisition does not stop there. It proceeds further, and, indeed, must proceed further. It requires the assessee to furnish a return within a certain period. It appears to us that unless the period for furnishing the return is specified in the notice, it is an incomplete notice. The very object of the Act, which is a fiscal statute, indicates that the assessment should be comp....
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....ry period prescribed in the relevant statute such notice is invalid in the eyes of law. 25. It was further submitted that the scheme of the Act, clearly requires that there must be strict compliance of aforesaid requirements of section 158BC of the Act as serious consequences follow from its non-compliance, as explained hereunder: (a) Section 158BFA grants immunity from imposition of penalty if any person furnishes return under clause (a) of section 158BC of the Act disclosing any 'undisclosed income'. When a person is not served with a notice under section 158BC(a), such person is denied a legal right to furnish the return of his undisclosed income and in such a case, such person is altogether deprived of his right to claim immunity from penalty under section 158BFA of the Act; (b) In a case where notice is issued and served on the assessee, but such notice does not prescribe the statutory period of 15 complete days for furnishing the return, such a notice has, as discussed supra, no legal sanctity in the eyes of law. Further, by the said notice the assessee is forced to furnish return within the short time prescribed in the notice. Since, the....
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....f an invalid notice will vitiate the block assessment and result in the order being declared as nullity. 27. Shri Ved Jain, CA, Intervener submitted that the question before the Bench is regarding Chapter XIV-B which is a special procedure for assessment of search cases. As per provision of section 158BC where a search has been conducted under section 132, the Assessing Officer is required to serve a notice to the person in whose case a search has been conducted asking him to furnish within such time, not being less than 15 days, return of his total income including undisclosed income for the block period. This is the requirement for making an assessment in respect of a person in whose case a search has been conducted. However, in the case of a person in whose case a search has not been conducted and the Assessing Officer is satisfied that any undisclosed income belongs to such person other than the person with respect to whom the search was made under section 132, then such Assessing Officer is required to hand over the books of account and other documents to the Assessing Officer having jurisdiction over such other person and then such other Assessing Officer has to proceed un....
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.... has not been searched. (i) Definitions Section 2 (ii) Taxability of income other than as a result of search Sections 4, 5 and 6 (iii) Computation of income Section 115 (iv) Procedure for assessment Chapter XIV where the heading is exactly same starting from section 139 to section 158. 30. Hence, it was his submission that thus, the 'Procedure for block assessment' which is the heading of section 158BC is a substitute for the heading given in Chapter XIV-Procedure for assessment in the case of regular assessment. In case the jurisdiction to assess the normal income arises under the provisions of section 139(2) to section 158, then the jurisdiction to assess the undisclosed income in the case of a search will definitely arise under section 158BC and not under any other section. 31. It was also his submission that section 158BA provides that where a search is initiated under section 132, then the Assessing Officer proceeds to assess the undisclosed income in accordance with the provision of this Chapter only, takes the case out of the normal assessment procedure prescribed under Chapter XIV and bring the case under Chapter XIV-B. It d....
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....ct whether regular assessment of anyone or more of the relevant assessment year(s) is pending or not. 34. It was also his submission that a combined reading of the provisions of sub-sections (1) and (2) of section 158BA clearly demonstrates that these provisions are akin to the provision of section 4 of the Income-tax Act and as such this section only classifies and takes out a case in the case of a search from normal procedure to the special procedure prescribed under Chapter XIV-B which as submitted earlier is a complete code in itself. 35. He further argued that sequencing of provisions of Chapter XIV-B also supports the above contention starting from 'Definitions', then 'Charging Provision to Computation', then 'Procedure for block assessment'. It is also important to note that the words used in section 158BA(1) are: "The Assessing Officer shall proceed to assess the undisclosed income in accordance with the provisions of this Chapter. The words 'shall proceed to assess' are different than the words 'shall assess'. The use of the words 'shall proceed to assess' make it very clear that it is only a classification whe....
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....) as may be specified in the notice, a return of his income of which he is assessable under this Act during the previous year corresponding to the relevant assessment year. The requirement of section 158BC prescribes that the Assessing Officer shall serve a notice to such person requiring him to furnish within such time not being less than 15 days a return setting forth his total income including the undisclosed income for the block period. As such, the requirement and the language of both the sections are exactly the same. Reliance in support of the above is being placed on the following judgments: (i) CIT v. Braithwaite & Co. Ltd. [1993] 201 ITR 343 (SC) (ii) CIT v. Ekbal & Co. [1945] 13 ITR 154 (Bom.) (iii) Prabhat Sawmill & Timber Merchants v. ITO [1994] 51 ITD 548 (Bang.) (iv) CIT v. Ramsukh Motilal [1955] 27 ITR 54 (Bom.) 37. It was further submitted that the issue of the notice determines the liability of the assessee as the assessee is liable to pay interest and penalty with reference to such notice only which is a very important consideration to make a distinction whether the section is machinery provision or a substantive provision. ....
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.... the provisions of section 158BA, as such, any error committed under section 158BC will be 'error in jurisdiction', not 'error of jurisdiction'. According to him that the analogy drawn is not correct. In para 18 a reference has been made to the main heading of Chapter XIV-B, i.e., 'Special procedure of assessment' of such cases and a distinction has been drawn that the first three sections are substantive and the remaining sections are procedural. In para 20 it has been stated that as per the provision of section 158BA(1), it is from this provision the Assessing Officer derives power to assess the undisclosed income of a person who has been subjected to search. On the basis of this interpretation it has been assumed that this provision is in consonance of the provision of section 120 which deals with the jurisdiction of IT authorities and as such the Assessing Officer gets the jurisdiction and what he does thereafter will be an error in executing the jurisdiction and here the fallacy lies. The provision of section 158BA(1), as submitted earlier, only makes a classification that in the case of a search the code of Chapter XIV-B will be applicable and not the ....
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....sent case, as submitted earlier, penal consequences follow as regards verification of the return, immunity from penalty, levy of interest which has a direct bearing with the issue of notice within the period prescribed and the filing of return in consequence thereof. As such, it cannot be interpreted that the word 'shall' used in section 158BC is not mandatory. 41. J.P. Gulati, Advocate, Intervener on behalf of Dharambir Bhadana, argued that the moot question; inter alia, is what would be the fate of the assessment where Assessing Officer has served notice under section 158BC requiring the assessee to file return of income 'within 15 days' from the receipt of notice, whereas section 158BC mandate that time 'not less than 15 days' but not more than 45 days, as may be specified in the notice has to be allowed. He submitted that the immediate and only answer would be that such a notice is contrary to the provisions contained under section 158BC of the Act. The next relevant question would arise as to whether such a notice suffers from a mistake, defect or omission but is in substance and effect in conformity with or according to the intent and purposes of th....
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....t does not contain any provisions whereby the assessee can file return for the Block period on his own. The proceedings can be initiated only when the Assessing Officer shall issue a notice as is prescribed under section 158BC requiring the assessee to file the return of income within the time mentioned in the notice and such time shall not be less than 15 days and not more than 45 days. For understanding the true import of the provisions of section 158BC, the provisions of section 158BFA(1) may be considered, which lays down that where return for the block period is furnished after the expiry of the period specified in such notice, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent of the tax on undisclosed income, for every month or part of the month comprised in the period commencing on the day immediately following the expiry of the time specified in the notice. It would thus be noticed that for charging interest, since a part of the month would be taken as one month, interest charged under certain circumstances would vary when time allowed in the notice is 15 days and not 16 days. For example, if notice under section 158BC is s....
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....pecified in the notice," 47. He also submitted that the Hon'ble Bombay High Court in CIT v. Sudhir S. Mehta [2004] 265 ITR 548 has upheld the Tribunal's order cancelling the assessment since notice under section 148(1) issued requiring the assessee to file the return within thirty days was held contrary to the provisions of section 148(1) as existing at that time. The Department's plea in the application under section 254(2) that section 148 has been amended with retrospective effect from 1-4-1989 was not admitted on the reason that the assent of the President was received on September 28, 1996 whereas the Tribunal had already passed the order on June 26, 1996. 48. He drew our attention to the decision of the M.P. High Court in Khialdas & Sons v. CIT [1997] 225 ITR 960. wherein at page 962 clarifying the provisions of section 292B and it has been opined that the idea is that if any minor defect is there which does not militate against the intent and purpose of the Act, then such minor defect can be cured but according to section 140 which is mandatory, every return has to be signed and verified. Section 140 says that a return under section 139 shall be signed and ....
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....imum time prescribed therein is not allowed. 53. He submitted that no doubt, on the face of it may appear that when in the notice under section 158BC it is mentioned that the return should be furnished 'within 15 days' instead of 'within 16 days', it is only a mistake, but it would be pertinent to consider as to whether such mistake could be rectified and if so, how it should be done, particularly when such a defect was not remedied by the Assessing Officer by giving another corrected notice before the assessment was completed. (i) Can such a defect be ignored by invoking the provisions of section 292B of the Act, where the assessee had filed the return either within 15 days or after 15 days and no objection was raised at the stage of assessment proceedings; or (ii) The assessment may be set aside with the direction that another notice under section 158BC should be served and assessment may be made afresh in accordance with the law; or Since the notice under section 158BC already served was an invalid one, the whole proceedings are bad in law and thus the assessment may be declared null and void. 54. He at last argued that to remedy the defec....
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....e has, accordingly, filed his return on 2nd November, 1998, declaring total income of Rs. 1,01,33,700. The same was accordingly assessed vide assessment order dated30th June, 2000. 48. It is not in dispute that notice dated 6th July, 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 alleged defective notice dated 6th July, 1998. He made a positive statement - no specific prejudice was suffered by the appellant. At any rate, the notice dated 6th July, 1998 suffered from only technical defects, if any, and, in our opinion, it was protected under the umbrella of section 292B of the Act." 56. The learned D/R also placed reliance on the decision of the Amritsar Special Bench of the Tribunal in Smt. Mahesh Kumari Batra v. It. CIT [2005] 95 ITD 152. The principles enunciated in the said decisions are as under :- (a) That the provisions of Chapter XIV-B provides for a special procedure for the assessment of undisclosed income found in the course of search; (b) That the concept of undisclosed income under Chapter XIV-B is narrower than....
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....uishing the decisions cited by the authorized representative of the assessee as well as the interveners, submitted that in those cases it has not been held that jurisdiction to assess an assessee for the block period is derived by the Assessing Officer by issue of a notice under section 158BC(a)(1) of the Income-tax Act, 1961. 60. He submitted that the concept of jurisdiction itself needs to be considered carefully lest the question of assuming jurisdiction and the question of following machinery provisions where jurisdiction already exists is confused. There is no dispute that the jurisdiction cannot be assumed if the same doesn't exist and the question of waiver does not arise in such cases. There are different dimensions of jurisdiction. The jurisdiction can be with reference to particular area, type of cases, with reference to a profession, monetary limit etc. or it can be with reference to specially assigned cases. In all such cases if the Assessing Officer does not have jurisdiction over certain cases, no amount of waiver on the part of assessee can confer this jurisdiction on him. Similarly if time-limit for issuing notice or framing assessment is over, the Assessing ....
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....ction 132 of the IT Act and is not dependent on issue of a notice. To this extent section 158BA is more akin to section 139 of the IT Act and similarly section 158BC is in tune with section 143 of the IT Act. 62. He vehemently argued that all the decisions of the various High Courts/Supreme Court cited can be seen in the light of above proposition. If it has been found that the jurisdiction was acquired by virtue of issue of a notice the courts have held that if the notice was not validly issued, it goes to the root of the matter and such a defect is not curable. However if notice was issued merely to comply with machinery provisions then it is a question of irregularity which can be set right. 63. He pointed out that in CIT v. Gyan Prakash Gupta [1987] 165 ITR 501 (Raj.) the issue was that, 'If non-issue of notice under section 143(2) vitiates the proceedings when the notice was not issued in the name of the legal heir and it was held that failure to serve notice on the assessee under section 143(2) of the Act is merely an irregularity and the Income-tax Officer, until and unless he gets the notices served, cannot complete the assessment. We find it difficult to hold tha....
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.... jurisdiction, acts in contravention of a mandatory provision, it would be open to the aggrieved party to waive its objection to such breach if the provision is not conceived in the public interest but in the interest of the party waiving it. The underlying principle appears to be that everyone has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any public right or public policy. In other words, if the statutory conditions are inserted simply for the security or benefit of the party to the proceeding and no public interests are involved, such conditions will not be considered as indispensable and either party may waive them without affecting the jurisdiction of the authority seized of the proceeding. 67. The ld. DR also relied on the decision of the Hon'ble Supreme Court in Ashok Lanka v. Rishi Dixit [2005] 5 SCC 598 wherein it was held that the question as to whether a statute is mandatory or directory would depend upon the statutory scheme. Use of the expression "shall" or "may" by itself is not decisive. The court while....
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....ty. The service of notice prior to the publication in the Official Gazette is merely an irregularity committed during the course of the proceedings and cannot have the effect of nullifying the entire proceedings which are validly commenced by publication in the Official Gazette. In fact, no prejudice is occasional to the transferor or transferee by service upon them of the notice prior to the publication of the Gazette. We are, therefore, of the opinion that prior service of notice under subsection (2) of section 269D is at best an irregularity but it cannot have the effect of rendering the proceedings either illegal or without jurisdiction. Hence, it was his submission that this case also supports his argument that giving of 10 days notice to the assessee for filing his return under section 158BC(a)(i) was an irregularity which would not make the assessment order framed as null and void. 70. In the rejoinder Shri Ajay Vohra, Advocate for the assessee submitted that at the outset, it is submitted that during the course of hearing and in the written submission filed, the Revenue has fairly conceded that the expression "shall" as used in section 158BC of the Act, makes it mandator....
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....ssment beyond the statutory period would invalidate the assessment and cannot be regarded as mere procedural irregularity. 73. It was his submission that under Chapter XIV-B notice is issued under section 158BC of the Act calling for the return of income for the block period. Unless such notice is validly issued and served on the assessee, the assessee is not suo motu required to furnish any return for the block period unlike the scheme of regular assessment. Such notice calling for the return, therefore, confers jurisdiction on the Assessing Officer for making an order of assessment. 74. It was also his submission that the Special Bench of the Tribunal in the case of Motorola Inc. v. Dy. CIT [2005] 95 ITD 269 at 334 (Delhi) noted in detail the distinction between initiating the assessment itself and exercising powers for making an assessment. On a careful reading of the decision it is patently clear that issuing of notice calling for the return results in initiation of the assessment and therefore, any illegality in validly initiating the assessment would vitiate the entire assessment resulting in assessment being declared as nullity. It is pertinent to reproduce the followi....
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....nder section 142(1) of the Act calling for the return of income was held to be bad in law. There being no return of income, there was, thus, no valid initiation of assessment and consequently the assessment was illegal and bad in law. 76. He further submitted that similarly, under the scheme of assessment under Chapter XIV-B of the Act, in the absence of a valid notice calling for the return of income, there is no valid initiation of assessment and consequently, assessment framed pursuant to invalid notice would be illegal and bad in law. 77. Further his submission was that under the amended scheme of the Act, where notice under section 143(2) of the Act must be served on the assessee within 12 months of the filing of the return by the assessee, it has been consistently held that issue and service of a valid notice is not merely a procedural requirement but a condition precedent for assuming valid jurisdiction to make an order of assessment under section 143(3) of the Act. Kind attention, in this regard, is invited to the following decisions : (a) Rind Book Rouse v. ITO [2005] 92 ITD 415 (Delhi) (b) World Wide Exports (P.) Ltd v. ITO [2004] 91 ITD 519 (De....
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....o to the same effect. 80. He stated that the aforesaid decisions relied upon by the Revenue, in our respectful submission, dealt with denial of opportunity of hearing to all legal heirs and consequent violation of principles of natural justice. The said decisions are thus not applicable and relevant for deciding the issue under consideration by the Hon'ble Bench. The aforementioned cases cannot be equated to cases of assessment made without issue and service of valid notice on the assessee. 81. It was his argument that in the aforesaid cases the defect was held to be procedural since notice was issued and served on one legal representative and not on all the legal representatives as required under law. The Court, therefore, held that non-service of notice on all legal heirs is only procedural. 82. He further argued that the aforesaid cases cannot be held to be authority for the proposition that where valid notice is either not issued and/or not served on the assessee under section 142 or under section 158BC of the Act calling for the return, there is only an irregularity which can be cured by setting aside the assessment order. 83. He pointed out that it is pertinen....
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....th the requirements of section 158BC(a) of the Act, the receipt of which was not disputed by the assessee and, therefore, the illegality of earlier notice dated 6th July, 1998 stood cured and the order of assessment could not be said to be bad and illegal. During the course of hearing Their Lordships asked the counsel for the assessee to specify the prejudice suffered by the assessee on account of the alleged effective notice dated 6th July, 1998, to which a positive statement was made that no prejudice was suffered by the assessee. 88. It was his submission that in the aforesaid factual matrix and on the concession of the counsel for the assessee. Their Lordships concluded that the block assessment completed in the case of the assessee was not invalid and was not bad in law. It is pertinent to reproduce the following observations of the Court: "Having examined factual matrix, statutory provision, law laid down by various Courts presently holding the field, if one turns to the facts of the case at hand, it is not in dispute that notice dated 6th July, 1998 did not mention correct provisions of the Act; it did not mention correct block period for which the return was req....
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.... proper notice under section 158BC of the Act, strictly complying with the requirements of that section and the assessee was not able to state any prejudice caused due to the earlier defective notice dated 6th July, 1998. The Court, therefore, concluded that the requirements of section 158BC(a) of the Act, were in sum and substance complied with. 93. It was his submission on the contrary, in the present case, the appellant was only served with one notice which, undisputedly, does not conform to the requirements of section 158BC of the Act, requiring/mandating that the assessee should be allowed 15 days clear time for filing the return. Further, the appellant has elaborately stated the prejudice that results if the requirements of section 158BC are not complied with (i) denial of opportunity to file revised return, (ii) imposition of penalty, and (iii) imposition of interest under section 158BFA of the Act. 94. He further submitted that the decision of the Special Bench of the Tribunal in the case of Smt. Mahesh Kumari Batra V. Jt. CIT [2005] 95 ITD 152 (Asr.) did not consider the issue referred before this Hon'ble Bench. In that case, the assessee had challenged the valid....
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....held to be obligatory. 98. It was also his submission that the Special Bench did not consider the aforesaid issue and dealt with defects such as incorrect mentioning of the block period and service on the advocate holding no valid power of attorney. The same were held to be mere procedural irregularities considering that :- (a) the block period is statutorily defined; . (b) the assessee had participated in the block proceedings pursuant to the issue of notice under section 158BC of the Act. The Special Bench decision aforesaid, therefore, supports the case of the assessee rather than being viewed as against the assessee. 99. He further submitted that the observation of the Karnataka High Court in the case of B.M. Reddy v. Asstt. CIT [2006] 284 ITR 245 to the effect that the machinery for passing the assessment orders in search cases commences with search itself is, in our respectful submission, not in accordance with the scheme of the Act and the judgments of the Courts where a distinction has been made between jurisdiction to assess and jurisdiction to make an order of assessment. The said observation has been made without analyzing the scheme of assessment....
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.... of the appellant to hold that the defect in the notice issued under section 158BC of the Act giving less than 15 days to the assessee to file the return affects the validity of the assessment, leading to annulment thereof. 105. We have carefully heard the rival submissions and perused the orders of the lower authorities and the materials available on record and have deliberated upon the submissions made by the parties and the decisions cited at the Bar. The issue to be decided by us is that whether issue of a notice under section 158BC(a) allowing a period of less than 15 days to submit the block return would render the order passed in the block assessment a nullity or an irregularity which can be cured. To answer the above question, the first and foremost question to be decided by us is whether the notice issued under section 158BC(a) is a jurisdictional notice like notice under section 148 (only on issuance of which the power or jurisdiction to proceed with the assessment is vested on the Assessing Officer) or is a procedural notice like notice under section 143(2) of the Act (the jurisdiction to make assessment already is conferred on the Assessing Officer by the operation o....
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....rity and not an illegality so that due to such defect the assessment cannot be annulled but the Assessing Officer may be directed to issue fresh notice whereby sufficient time as prescribed under the Act may be given to the assessee to file return and to frame assessment thereafter. 108. Chapter XIV-B is a code by itself for computation of undisclosed income found as a result of search. Section 158BA prescribes that notwithstanding anything contained in any other provisions of the Act whereafter the 30th day of June, 1995 a search is initiated under section 132, the Assessing Officer shall proceed to assess the undisclosed income in accordance with the provisions of this Chapter. Thus the jurisdiction to frame an assessment flows from provision contained in section 158BA(1) and not by issue of notice under section 158BC(a). Section 158BC as the title suggests is procedure to be adopted for block assessment. Thus it will be incorrect to equate the notice issued under section 158BC(a) as akin to notice under section 148. It is true that before framing any assessment, the assessing authority is required to assume jurisdiction for such assessment, reassessment etc. In the present ca....
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....ld have been to ignore the return filed beyond the time specified and complete assessment and levy interest as if no return has been filed. Thus it is clear that the Legislature has contemplated situations in which return is filed beyond the time specified. Thus it is clear that it is not the intention of the Legislature to make time in which the return is to be filed as the essence of notice under section 158BC(a) and the Assessing Officer has the authority to accept the return filed after the specified time. In such a situation the mentioning of a time in which the return is to be filed as within 10 days instead of 15 days or more is only a defect in the notice. Thus there is defect in the notice insofar as the assessee was asked to file the return within 15 days but for the reasons given above, time is not the essence of notice under section 158BC(a). The assessee filed the return much beyond 45 days' time and still the Assessing Officer accepted the same and proceeded to complete the assessment within the limitation period prescribed under section 158BE of the Act. Such defect can be only an irregularity and not an illegality. 110. Having noticed the relevant provisions ....
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....s the authority to act in the matter and not the power to do or order an act. There cannot be waiver of an objection to jurisdiction, for, consent cannot given jurisdiction where there is none. In Dhirendra Nath Gorai v. Sudhir Chandra Ghosh AIR 1964 SC 1300, the following observations were made in this context: "Where the court acts without inherent jurisdiction, a party affected cannot by waiver confer jurisdiction on it, which it 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 interest, but in the interest of the party that waives it." It would thus appear to be well-settled that where an authority, who does, not lack inherent jurisdiction, acts in contravention of a mandatory provision, it would be open to the aggrieved party to waive its objection to such breach if the provision is not conceived in the public interest but in the interest of the party waiving it. The underlying principle appears to be that everyone has a right to waive and to agree to wave the advantage of a law or rule made solely for the benefit and protection of the in....
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....r some other fact. We observed that the Hon'ble Bombay High Court in Shirish Madhukar Dalvi's case, the Karnataka High Court in B.M. Reddy's case, the Delhi Special Bench of the Tribunal in Promain Ltd.'s case and the Amritsar Special Bench of the Tribunal in the case of Smt. Mahesh Kumari Batra all have held that the jurisdiction to make a block assessment, in respect of a person in whose case search has been conducted, flows from section 158BA of the Act. No decision could be cited before us for the proposition that jurisdiction does not flow to an Assessing Officer from section 158BA to proceed for block assessment in case of a searched person. Further, the Amritsar Special Bench of the Tribunal in the case of Smt. Mahesh Kumari Batra has specifically held that in contradistinction to section 158BC of the Act, section 158BA bestows jurisdiction on the Assessing Officer to make block assessment in case of a searched person and it has also been held that the notice under section 158BC(a) is a step taken by the Assessing Officer for exercising the jurisdiction, which has already been bestowed upon him by virtue of section 158BA, and hence the issuance of the same do....
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....ction will be ousted, cannot be extended with delay in the service of notice under section 158BC of the Act. The last date of jurisdiction depends upon the date of execution of the last of authorization for search under section 132 of the Act. After taking into account the scheme of the Income-tax Act, in our considered opinion, had the notice under section 158BC would have been a jurisdictional one then the last date of completion of the block assessment, i.e., the end of the jurisdiction of the Assessing Officer in normal circumstances, would have been with reference to the service of such a notice. 114. In view of the above also, we find ourselves in full agreement with the decision of the Hon'ble Bombay High Court in Shirish Madhukar Dalvi 's case and the Amritsar Special Bench of the Tribunal in the case of Smt. Mahesh Kumari Batra that the notice issued under section 158BC is not a jurisdictional one and the same is procedural one, i.e., the notice issued after valid acquisition of the jurisdiction. 115. We have thus found that the notice under section 158BC in case of a person in whose case a search under section 132 of the Act has been conducted is a procedura....
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....espect of which original assessment is being made. 117. Our attention was also invited to the decision of the Jurisdictional High Court in the case of Janki Exports International v. Union of India [2005] 278 ITR 296 (Delhi) for the proposition that section 158BD is analogous to section 147 of the Act. We are in respectful agreement with the said proposition. But, in the instant case, we are concerned with the case of a person in whose case search was conducted and thus, the jurisdiction to assess flows to the Assessing Officer from the provisions of section 158BA whereas in the case of non-searched persons covered by section 158BD the jurisdiction is dependent upon the satisfaction of the Assessing Officer after taking into account the search materials. Thus, the said decision is found not applicable in the instant case. 118. As a consequence of the our above view that notice required to be issued under section 158BC in case of a searched person is a procedural notice issued after acquisition of the jurisdiction, we are of the opinion that for any curable defect in the notice served under section 158BC on a person in whose case a search under section 132 of the Act has been c....
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....#39;s Circular No. 179, dated September 30, 1975, held that section 292B seeks to provide against purely "technical objections without substance" coming in way of validity of assessment proceeding, notice etc. It was further held that a fundamental infirmity cannot be called a "technical objection" or a mere "irregularity" and vital infirmity which touches upon jurisdiction cannot be cured or obliterated by relying on section 292B of the Income-tax Act. 122. It was also observed that in Umashankar Mishra v. CIT [1982] 136 ITR 3302, the M.P. High Court has held that the provisions of section 292B is intended to ensure that an 'inconsequential technicality' does not defeat justice. Non-signing of notice is not merely an 'inconsequential technicality' with in the meaning of section 292B, hence, unsigned notice was not valid. 123. Keeping in view the above legal position when we examine the provisions of Chapter XIV-B of the Act, we find that section 158BC in no uncertain terms requires an Assessing Officer to serve a notice to searched person requiring him to furnish a return of income for the Block Period within such time not being less than 15 days, as may be s....
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....alling the return can be issued within the assessment year only and after the expiry of the assessment year, the Assessing Officer has no jurisdiction to issue notice under section 142(1) for calling the return. As notice under section 142(1) were found to be issued after the end of the relevant assessment year by the Tribunal and hence, invalid and therefore, the assessment made pursuant thereto were quashed by the Tribunal. In our considered opinion, the procedural defect are of two types, i.e., curable and non-curable. In the said case before the Tribunal because of the non-issuance of a notice within the relevant assessment year a non-curable defect has taken place. Because of the expiry of the time-limit, i.e., assessment year in that particular case, the defect of non-issuance of notice within time cannot be cured. Whereas in the instant case, notice under section 158BC was issued within the time-limit for making the assessment. Undoubtedly, the said notice contained a defect insofar as it did not allow the minimum statutory period for filing the return which can be cured by issuing a fresh notice. In our considered opinion, as far as possible a substantive right should not b....